Let's stop pretending the old normal is just around the corner

Just as a new chief executive makes sure their first act is to clear out all the stuff-ups left by their predecessor, so a new federal government needs to release its econocrats from the ever-more dubious proposition that nothing in the economy has changed and we’ll soon be back to the old normal. That’s the old normal of productivity improving by 1.5 per cent a year, the economy growing by 2.75 per cent and wages growing more...

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Don't trust pollies to tell you the truth about tax

"You don’t grow the economy by taxing it more,” Scott Morrison declared in the ABC’s election debate. Then his Treasurer, Josh Frydenberg, claimed the Coalition’s $300 billion in tax cuts would make income tax “more progressive” not less. As a prospective major beneficiary of those cuts, I’d love to believe both claims. Unfortunately, there’s little evidence to support either. Meanwhile, higher income-earners should be in no...

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Interest rate cuts are coming, which isn't good news

The Reserve Bank may have decided not to cut interest rates right now, but it’s likely to be only a few months before it does start cutting, and it’s unlikely to stop at one. So, is it just waiting until after the election? I doubt that’s the reason. The Reserve has moved interest rates twice during election campaigns – raising them in 2007 (much to the surprise of Peter Costello, whose mind was on politics at the time) and...

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Universities: both sides should clean up the mess they've made

Among the many issues needing early attention from the winner of the federal election is universities. Trouble is, neither side seems to have much idea of how to fix the mess both parties spent decades creating, before Julia Gillard brought things to a head with the brainwave of moving to “demand-driven” funding. Her idea of shifting control over the size of annual federal-funded undergraduate admissions from budget-conscious...

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Only the stupid think the cost of climate change is simple

You know an election campaign has run off the rails when the pollies start hurling the results of economic modelling at each other. Voters find it incomprehensible and cover their ears, and the only people who think it proves something are the pollies themselves and the journalists silly enough to imagine their incessant demands to “show us your modelling” will expose the truth. The more you know about modelling, the less it...

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THE HEALTH OF THE AUSTRALIAN ECONOMY

May 2019In Josh Frydenberg’s recent budget speech, he referred to our “strong economy” no less than 14 times. Turns out the Morrison government is using the claim that it has delivered a strong economy as its main argument that it should be re-elected at the federal election on May 18. Unfortunately for Scott Morrison, the release of recent key economic indicators of the health of the economy have caused many economists to abandon...

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Endless fights over money don’t improve education results

One of the few things both sides agree on in this election campaign is that we must get education right. A highly educated and well-trained workforce is our best insurance that all the benefits that digital disruption brings don’t come at the cost of many people unable to find decent jobs. As a rich nation, our workers are highly paid. That’s not bad, it’s good. But it does mean we have to ensure our workers continue being equipped...

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Treasury signs off on budget fantasy forecasts

While we were preparing for the Easter-Anzac super long weekend, the secretary to the Treasury and the secretary of the Finance Department released the PEFO – pre-election economic and fiscal outlook – their official, once-every-three-years licence to tell us anything the government hasn’t told us but should have. And what was that? Not a sausage. They made trivial updates to the budget figures and solemnly swore that all the...

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Election competition over infrastructure is too costly

The popular view of infrastructure is that we don’t have nearly enough of the stuff, so the more we spend the better for the economy. The sad reality is that every year huge amounts of taxpayers’ money are wasted on infrastructure – and much of the damage is begun in election campaigns. This is not to deny that well-chosen and executed infrastructure projects contribute significantly to improving the productivity of the economy...

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A present-laden kiss from Santa won't make healthcare better

Whenever voters are asked what are their main issues of concern, one worry always comes top: healthcare. That explains why we’re hearing so much about health in this ever-so-exciting election campaign. Bill Shorten wants to talk about health because it’s one of the issues voters always regard as better handled by Labor than by the Coalition. (Voters habitually favour the Coalition on running the economy and on taxation, which...

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If you’re virtuous, don’t be afraid to signal it to the world

I’m troubled by the fashion of accusing others of “virtue signalling”. This world could use more virtue and less vice. And if people want others to see their virtue, well, there are worse sins. Usually, it’s an accusation hurled at those on the other side of the political fence as a way of impugning their motives. They’re not genuinely virtuous, they just want people to think they are when they’re not. They want to be seen...

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Sidney Kidman: how to make a buck out of a terrible climate

You may not have heard of Sir Sidney Kidman, once known as Australia’s Cattle King. He died in 1935. But when it comes to using “innovation” to get rich, he was tops – certainly, the most amazing. And he’s about to become our patron saint of climate change adaptation. He chose to farm in the most arid, unpredictable and unforgiving part of Australia, and he made his pile. His company, S. Kidman & Co, exists to this day,...

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The great election diversion: arguments about tax, tax, tax

No one’s more interested in taxation than me, but there’s got to be more to this election campaign than claims about which side is high taxing and which low taxing, and interminable arguments and scare campaigns about franking credits and negative gearing. Fortunately, the nation’s best and most independent think-tank, the Grattan Institute, has taken a much broader view of the issues to which the winning side should pay most...

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Strong economy? No, but maybe it will be eighth time lucky

Scott Morrison wants the Coalition re-elected because of its superior management of the economy. In Josh Frydenberg’s budget speech he referred to our “strong economy” 14 times. Why? He had to keep saying it because it ain’t true. But get this: it’s not the government’s fault. It’s happening for reasons far beyond the government’s control. Growth is weak in Australia and throughout the developed world for deep reasons economists...

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