By MILLIE MUROI, Economics Writer Eventually, Donald Trump will backpedal. Economists get plenty wrong, but one thing most believe – and get right – is that widespread tariffs are stupid. Why? Because they create more losers than winners.Trump is smart enough to know this. But he’ll look to twist arms with his tariffs until some of his demands are met (seemingly at the top of his wishlist: Mexico, Canada and China curbing...
Friday, March 21, 2025
The outlook for house insurance is much worse than we're being told
The big news on house insurance this week was the response of the insurance industry’s peak body to a parliamentary committee’s extensive criticisms of its treatment of people claiming on their policies after the massive floods of 2022.The Insurance Council of Australia accepted some of the committee’s recommendations, announced an “industry action plan” and generally promised to be good boys in future. But the consumer groups...
Monday, March 17, 2025
Argy-bargy on the way to next week's off-again, on-again budget
According to the business press, Anthony Albanese was desperately hoping for an early election so he could avoid next week’s budget and the drubbing he’ll get when Treasurer Jim Chalmers is forced to reveal projections of a decade of budget deficits.If you think that, you don’t know much about budgets. But, more to the point, nor do I expect to believe the budget’s forecasts for the economy in 2025-26.The first reason I don’t...
Friday, March 14, 2025
Fixing the economy is like training for a marathon: not much fun
By MILLIE MUROI, Economics WriterIt used to completely baffle me how addicted runners seem to be to their sport. My dad, who has run nearly 200 marathons, used to drive my brother and I to park runs at the crack of dawn as kids. Not my idea of fun.But the more I think about it, the more I realise running is like competition reform: often a pain in the glutes, but a habit that’s rewarding (and actually a bit enjoyable) if you...
Wednesday, March 12, 2025
How many more cyclones before our leaders finally do something?
Forgive me for being hard-headed while everyone’s feeling concerned and sympathetic towards those poor flooded Queenslanders and people on NSW’s northern rivers, but now’s the time to resolve to do something about it.As the rain eases, the rivers go down, the prime minister flies back to Canberra and the TV news tires of showing us one more rooftop in a sea of rushing water, the temptation is to leave the locals to their days...
Monday, March 10, 2025
Maybe the inflation surge didn't happen the way we've been told
According to Reserve Bank deputy governor Andrew Hauser last week, we’ve entered a world characterised not just by volatility, complexity and uncertainty, but also by “ambiguity” – a world where “you don’t know the model”, meaning that “judgment and instinct are as important as formal analysis”.At last, someone is talking sense.Academic economists may be locked into their maths and econometric models, but practising economists...
Friday, March 7, 2025
Our jobs market is booming, but the RBA needn't be so worried
Despite the economy only just popping its head up after 21 months of “per-person recession”, our jobs market has been going gangbusters. How can it possibly be so strong? It’s this strength that has made the Reserve Bank so reluctant to cut interest rates.This week we learnt from the “national accounts” that the economy – real gross domestic product – grew by a princely 0.6 per cent during the three months to the end of December....
Wednesday, March 5, 2025
Our home-building industry is going nowhere fast
You may think that a newly built home or unit looks pretty swish. But what no one’s noticed until now is that our home building industry is clapped out. Gone to pot. It’s going nowhere fast. While most of our industries have improved greatly over the past 30 years, the housing industry hasn’t. If anything, it’s getting worse.As I’ve mentioned before, now that the ever-worsening affordability of home ownership has reached a crisis...
Monday, March 3, 2025
The real truth on productivity: the bosses aren't trying hard enough
At last, some sense on the causes of our poor productivity performance. For ages, we’ve been told it’s the government’s fault – maybe even the voters’ fault – for failing to make economic reforms. But last week the econocrats finally set the record straight: the problem is, our businesses have stopped doing the things that make us more productive.For about a decade, we’ve had little improvement in the economy’s productivity –...
Friday, February 28, 2025
Women still being kept in the home, but not by what you think
By MILLIE MUROI, Economics WriterIt’s a topic that, despite its horrific consequences, makes us avert our eyes, close the tab, and turn the page.Usually, sadly, it’s only when there’s a death that readers – and the click-hungry media – pay attention. But before I lose you, I want to reassure you that it’s not all bad news. And I want you to hear from people who have defied the odds.We already know domestic violence kills one...
Wednesday, February 26, 2025
To make Medicare healthy again, the pollies must fix its symptoms
I don’t know if you noticed, but the federal election campaign began on Sunday. The date of the election has yet to be announced – it may be mid-April or mid-May – but hostilities have begun. And they began with an issue that’s been big in election campaigns for 50 years: Medicare.On Sunday, Anthony Albanese revealed his election masterpiece, the knockout punch that would send Peter Dutton reeling, something Albo has had up his...
Monday, February 24, 2025
RBA is lost in the frightening territory of full employment
The Reserve Bank’s behaviour last week can only be described as bizarre. It’s a sign that it’s lost its bearings and isn’t sure what’s happening in the economy or where it’s headed. What has caused its befuddlement? Our unexpected return to near full employment. Sheesh. Whadda we do now?The way “monetary policy” – the Reserve’s manipulation of interest rates – normally works is that, when the rate of price inflation gets too...
Friday, February 21, 2025
Why did profit-hungry banks act so quickly to cut interest rates
By MILLIE MUROI, Economics WriterLike dominoes, the country’s big four banks moved briskly on Tuesday, pledging to knock down their interest rates – some within minutes of the Reserve Bank’s decision to cut the cash rate for the first time in more than four years.The country’s oldest bank was the first to jump, one minute after the Reserve Bank’s rate cut. From March 4, Westpac’s variable home loan rates will fall by 0.25 of...
Wednesday, February 19, 2025
Sorry, this isn't the day we stop feeling sorry for ourselves
I’m sorry to be the one to break it to you, but I very much doubt that this small cut in interest rates will be the circuit breaker everyone from Treasurer Jim Chalmers down has been hoping for. After our many months of longing for this moment, such a modest saving can only be an anticlimax.I doubt this will be the reason the economy begins to recover as we all go out and shop. Nor will it be the sea change that secures another...
When does bipartisanship happen? When there's mutual self-interest
If you think Labor and the Liberals are always at each other’s throats and never agree on anything, you haven’t been watching closely enough. Sometimes – last week, for instance – they do deals with each other they hope we won’t notice.When they’ve reached an agreement they don’t want seen, it’s because they’ve colluded to do something that advances their interests at the expense of the voters.It reminds me of economist Adam...
Monday, February 17, 2025
We may be short of leaders, but we're not short of false prophets
With this year’s federal budget supposedly brought forward to March 25, the seasonal peak in business bulldust has come early. Last week Canberra kicked off an annual ritual little noticed in real-world Australia, the call for “pre-budget” submissions on what the government should do in its budget.I’ve never known any of that free advice to be acted on but, as all the participants in the ritual understand, that’s not the point....
Friday, February 14, 2025
Maths or no maths? Ross Gittins and Richard Holden have it wrong
By MILLIE MUROI, Economics WriterWe’ve heard the old(er) boys argue over the optimal level of maths in economics, but they’ve delivered some imperfect information. Don’t know what I’m talking about?Seven years after sitting my final high school economics exam, four years after farewelling university economics, and three years since exiting the economics profession (almost) entirely, I’ve been reflecting.The reason? A clash between...
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