We've handled the resources boom surprisingly well

Are we in for big trouble in the aftermath of a misspent resources boom, or has the boom been over-hyped, leaving us in good shape to face the future? This is a matter of debate among some of Australia's most prominent economists. Professor Ross Garnaut, of the University of Melbourne, advanced the former argument last year in his book Dog Days: Australia After the Boom, and Dr John Edwards, a fellow of the Lowy Institute...

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The news on our health is good

It's good news week. There are lots of bad things happening in the world and journalists regard it as their job to dig them out and wave them in front of your face. No piece of disheartening news should go unreported. But good things are happening, too. And I often think people would enjoy reading the news more if we didn't ignore so many of them. One of the main jobs of the federal government's Australian Institute of...

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Ulterior motives abound in privatisation push

The trouble with the latest round of state government privatisations is that those who oppose them do so for the wrong reasons, but their promoters are also pushing them through for the wrong reasons. Joe Hockey's 15 per cent incentive payment to encourage "asset recycling" - selling existing government-owned businesses to fund the building of new infrastructure - has fallen on receptive pockets in the NSW and Queensland...

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Why weaker demand means lower pay rises

Just about everyone assumes we can never have enough jobs. So it's funny that our unending discussion about how the economy's growth is doing rarely delves into the detail of what's happening in the labour market. But that's what Dr Chris Kent, an assistant governor of the Reserve Bank, did in a speech last week. He shows it really is a market, with the demand for labour interacting with the supply of labour to help determine...

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No handouts for miners not paying enough tax

It's in the nature of the news media to focus on the new, on the bit that's changing. So when people like me bang on about the resources boom - as we've been doing for about a decade - it's probably inevitable we leave many people with an exaggerated impression of the size of the oh-so-important mining industry. Most people have little idea how mining compares with the rest of the economy. Some, when asked, say it may...

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Economists face criticism over poor ethics

Are economists ethical? Short answer: no more than most. Long answer: well, it's not something they think about much. The question of ethics is starting to raise its head among economists, both overseas and in Australia, particularly in NSW. It's an issue the Sydney branch of the Economic Society is likely to start debating in the next few months. The issue is arising as more economists find ways to sell their services...

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States change lanes in two-speed economy

You've heard of a Goldilocks economy where everything is just right. Well, when it comes to the states, welcome to the biblical economy, where the last shall be first and the first shall be last. We're still looking at a two-speed economy, but the fast lane is turning into the slow lane and the slow lane into the fast. During the 10 years of the resources boom to 2012-13, the West Australian economy grew by 62 per cent...

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How to get more happiness per dollar

If I wanted to get more happiness into my life, I wouldn't do it by trying to earn more money. I'd concentrate on spending more time with family and friends and getting more satisfaction from work itself rather than the money it brings in. That's because, though money does buy happiness, it buys far less than we expect it to. It suffers from rapidly diminishing "marginal utility" - each extra $1000 you spend brings less...

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Mike Baird's high-risk election strategy

Mike Baird is nothing if not game. His first budget as Premier is a model of fiscal rectitude - which wins him high marks from people like me, but makes this a most unusual budget for a politician facing an election early next year he can no longer be certain of winning easily. The budget offers little in the way of tax breaks and few new spending initiatives, save for more money on child protection, disability services...

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We're a nation of stay-at-homes

Would you be surprised if I told you the resources boom and its two-speed economy had led to a big increase in the number of people shifting between states? No, I thought not. Well here's my surprise: it hasn't gone up, it has gone down. Research by Professor Jeff Borland, of the University of Melbourne, finds that the rate of interstate migration has declined over the past decade. The eternal lament of oldies (me included)...

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Botched reform causes higher power prices

There's no subject more likely to stir people up than rising electricity bills. With prices roughly doubling since 2007, that's hardly surprising. But why have prices risen so fast? And will they keep rising? It has suited various business lobbies and Coalition politicians - federal and state - to leave people with the impression the main reason is the carbon tax and the renewable energy target, which requires that 20...

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THE CHANGING MACRO POLICY MIX

Economics Seminar Day, Pymble Ladies’ College, Friday, June 13, 2014The mangers of the macro economy have various economic policy objectives. They also have various instruments, or tools, available to use to meet those objectives. So they have to decide which instruments are best-suited to use to achieve which objectives. This choice of ‘policy mix’ is fairly settled, but does change over time in line with changing circumstances...

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Budget shows Abbott's true priorities and values

Tony Abbott has turned out to be a chameleon. Before the election, he took the guise of a populist, opposed to all things nasty and in favour of all things nice. Since the election, he's revealed himself to be a hard-line ideologue, intent on reshaping government to suit the interests of big business and high-income earners. Before the election, he was the consummate vote-seeking politician. Since the election, he has...

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Why Hockey's budget is unsustainable

Coalition governments have been banging on about the need for "smaller government" since Malcolm Fraser started echoing Maggie Thatcher and Ronald Reagan. They've talked without doing anything. Until now. Few have noticed, but the goal of this budget is to reduce government spending by 1.1 per cent of gross domestic product (GDP), from 25.3 per cent this financial year to 24.2 per cent in 2024-25. If that doesn't impress...

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Mining hides news of non-mining recovery

And the smarties told you the resources boom was finito. Now it's being given most of the credit for this week's news that the economy grew by a rip-roaring 1.1 per cent in the March quarter and by an above-trend 3.5 per cent over the year to March. The boom is far from finished. It will be adding to - and subtracting from - the growth in real gross domestic product for several years yet. Media reports that "the mining...

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