Economics

President Barack Obama’s speech to the Australian Parliament, like those of his predecessors, was indeed an historic occasion.

Amidst the hype and ceremony, I can’t help but wonder if a couple of Labor Ministers didn’t squirm a little in their seats as the President reminded us: “We seek trade that is free and fair. And we seek an open international economic system, where rules are clear and every nation plays by them.”

In a reference to the G20 and the World Trade Organisation, which just days earlier had welcomed Russia to its ranks, the President stressed: “We need growth that is fair, where every nation plays by the rules – where workers’ rights are respected and our businesses can compete on a level playing field… so no nation has an unfair advantage.”

Continue reading "To be fair we need to stop people dumping on Australia" »

Matt Granfield is a typical Gen Y guy with a social conscience. He joined his friends in protesting at the Occupy Sydney movement. His Uncle Barry was shocked to see him on the television. The Vietnam war veteran doesn’t understand what Matt’s generation could possibly have to complain about. While Matt thinks his Uncle, with his Medicare assisted health care and addiction to consumer goods, should question what he hears on the news every night. Below is a copy of their email exchange.

From: Barry Granfield Sent: Sunday, 30 October 2011 10:20 AM
To: Matt Granfield
Subject: Occupy Wall Street Protests

Dear Matthew, I saw you on the news last week. I have to say, I’m most disappointed. This Occupy Sydney thing is a farce. I know you’ll say it’s hypocritical of me, but back in the 70s we were fighting against The Vietnam War and a government who locked people in jail for refusing to be conscripted. We had a good reason. This is just silly. What on earth are you protesting against? And since when did you learn to play the bongos?

Uncle Barry

Continue reading "In my day, we had a whole war to protest about" »

According to Andy Warhol, everyone has their “15 minutes of fame”. Looking back at four decades of work as a health scientist mine will probably be the development of ‘GutBusters’, the world’s first men’s “waist loss” program in 1991.

GutBusters lasted for over a decade before it was taken over by Weight Watchers and closed down for being unprofitable (men won’t admit to having anything wrong with their health and hence won’t pay for it).

This is despite the fact that it achieved (and still has) world-wide acknowledgement as an ethically-based and economic scientific weight loss program. Those are rare, by the way.

Continue reading "Economic growth is making you really, really fat" »

Christmas is going to be awkward at the Swans’ this year.

And it won’t be an inappropriate gift causing the tension and a possible barney.

It’ll be Labor’s mandatory pre-commitment policy for poker machines.

Continue reading "Little brother’s Big Brother law dumps the local surf club" »

“The Future’s So Bright, I Gotta Wear Shades” was a 1980s American Top 20 hit for a husband-and-wife-led band called Timbuk3. They went on to release six albums but - sadly for them - they were one-hit wonders.

The Gillard Government is about to put 180 economic and social policy wonks into Federal Parliament’s Great Hall for two days, feed them rubber chicken and red cordial and ask them to sing for their supper by chorusing about tax reform.

The Tax Forum has modest aims - so let’s hope it doesn’t go the way of Timbuk3.

Continue reading "Don’t adjust your glasses: It’s a tax forum" »

Sometimes it’s all too easy to dismiss the significance of public protests.

Like so many others, I scoffed contemptuously at the truck convoy that rolled into Canberra last month, with its very clear statement of anger against… something? I know it had something vaguely to do with the carbon tax, but that message got lost somewhere amidst all the frothing at the mouth, and the placards warning us that the United Nations is secretly plotting to take over the world.

Of course, it’s easy for me, as a young, commie, pinko elitist to have a go at a bunch of hard-working truckies, so in the interests of balance it’s worth acknowledging that many of the rallies attended by people who share similar ideological dispositions to me are often no better.

Continue reading "Bloody rabblerousers and their ridiculous protests" »

We shouldn’t lose sight of the fact that Australia is still in a “different” economic league to the rest of the world and there are five rocks underpinning those solid foundations.

The global financial turmoil is definitely a worry. Many are saying it’s based on fear… and they’d be right.

But it is also based on reality. Some of the economic numbers coming out of the US and Europe are seriously bad. So bad that the global market reaction has been justified.

Continue reading "Aussie economy kicking goals, a league above the rest" »

With the debate on the carbon tax getting very emotive it’s essential to understand the economics of the tax and whether it will achieve what it’s setting out to do.

Here the issue is very simple. Will the introduction of a carbon tax lead to a significant reduction in carbon dioxide and other greenhouse gas emissions?

Given that the stated objective of a carbon tax is to reduce greenhouse gas emissions, it’s clear that the success or failure of the tax will depend on the whether or not a reduction is achieved and at what cost. Understanding the cost of the carbon tax is fundamental to understanding its impact on the consumer, particularly given that it’s the consumer who will ultimately pay the tax.

Continue reading "Carbonomics is nice in theory but does it add up?" »

Just as it sinks in here that an election is two full years away, the political circus that is American politics is sending in the clowns and pegging out its big-top for another round of primary races.

As it does so, one sobering factoid for the Obama administration is that no president in the modern era has been re-elected with an unemployment rate above 7.5 per cent. Which is just another way of saying Bill Clinton famous maxim, “it’s the economy stupid’‘.

Yet here in Australia, it ain’t just the economy.

Continue reading "Obama and Gillard defy the theory of voternomics" »

Australia is not heading for a recession but our precise economic destination over the next few years can’t be forecast because of the swirl of factors buffeting certainty around the globe.

We simply don’t know exactly what is going to happen in Greece, Spain, Portugal, the United States and China. Or even in Australia.

This means the Government will have to be careful as it tip-toes towards a Budget surplus in 2012-2013; and the Opposition will have to use caution when predicting calamity from carbon pricing.

Continue reading "Forget the cat calls, the economy still has claws" »

Tony Abbott’s left-wing instincts are destroying the economic credibility of the Liberal Party.

Although he’s an effective opposition leader, it’s important to ask what sort of economic agenda Abbott will pursue as Prime Minister, apart from repealing the carbon and mining taxes. It’s becoming increasingly clear that it won’t be liberal.

To the extent it’s possible to decipher Abbott’s economic philosophy - his book Battlelines and the Budget Reply speech certainly provide little assistance - it would be democratic socialism. It’s a political ideology that sees the government playing a major role in the economy and is a far cry from the free-market liberalism normally associated with the Liberal Party.

Continue reading "Abbott’s dirty economic secret: he’s just like Labor" »

In sport, teams go to great lengths to paint themselves as the underdog. It’s a tired old tactic designed to lull the other team into unwittingly going a bit easier on them, and it rarely works.

The same principle has been eagerly adopted by families in the wake of this week’s budget, and the decision to freeze the indexing of family payments to families earning in excess of $150,000. And to some extent, the tactic appears to be working.

The logic of families at or just above the $150k threshold is pretty simple, and can be loosely summarised like this: We’re not rich. In fact, we’re struggling to get ahead. Gimme gimme gimme!

Continue reading "We’re not rich, we’re battling middle class welfare addicts" »

You might have picked up a theme in Wayne Swan’s fourth budget. It was tough. How do we know this? Because the government told us so.

In a major pre-budget speech, Treasurer Wayne Swan said “tough decisions are required” and “this will be a tough Budget.” Finance Minister Penny Wong, in an interview in the lead up to the budget, used the word “tough” more than ten times, including four times in one answer.

But did the reality match the rhetoric? In his budget speech, Swan announced $22 billion in “savings” over the next four years. Yet much of those so-called savings are actually tax increases like the flood levy, and regardless, they have been almost completely offset by increased spending in other areas. They’ve been roundly criticised already for failing to deliver a tough budget.

Continue reading "That’s not a tough budget - this is a tough budget" »

In search of mates for their unloved climate tax, Labor phoned a friend and the ACTU answered on The Punch last week. That was predictable. But it was the shallowness of Ged Kearney’s contribution which surprised many, because it demonstrated a limited understanding of the debate and scant regard for the best interests of her members.

The ACTU case is simple enough; it’s Labor’s case. Belief in the climate science and that someone must pay. The ACTU’s more nuanced perspective is that their members shouldn’t pay a cent. In the pantheon of climate hypocrisy, that places Kearney right up there next to Paul Howes. Someone must pay; so long as that someone isn’t me.

Credit to Kearney for conceding she isn’t an expert in the field. Nor am I. But ignorance is no excuse for refusing to seek simple answers to fair questions on behalf of her members. It is implausible that an ACTU president could be both unaware of membership doubts around both the science and the tax. It is breathtaking that she is unwilling to address them with reasoned reflection.

Continue reading "Unions abandon their members on carbon" »

Every time you pay tax or rates you are subsidising other people’s religion. These include mainstream religions, and cult-like groups opposed to the values of normal Australian life.

Put simply, less than 20 per cent of Australians are seriously religious and the rest of us subsidise their religious organisations. There are a lot of wonderful people who do good work in the name of their particular belief, but do we need taxpayer-funded bureaucracies for them to be effective?

Australia is one of the few nations that make all investment earnings by religious bodies tax free, regardless of whether these are spent on charitable activities. And all the property they own is free of rates and land tax.  If they sell these assets for a profit they pay no capital gains tax. And often these are properties that were gifted to them many years ago by government.

Continue reading "Rich men in the tax-free kingdom of God" »

Wayne Swan could be forgiven if he puffed out his chest a little during a TV interview in New York couple of days ago.

“You’re a combination of what, in the US, would be Timothy Geithner and Joe Biden all in one person,” said CNBC business anchor Erin Burnett.

Geithner is the US Treasury Secretary, Biden the Vice-President. All Burnett was trying to do was explain Swan’s twin roles as Australia’s Treasurer and Deputy Prime Minister, but she made him sound like some kind of super-politician.

Continue reading "Super Swan ready to hang tough on Budget" »

On April 1, health insurance premiums rose across the board by an average of 5.56 per cent. The increase happens every year, while the percentage that premiums increase by differs. This year’s increase, according to research by iSelect, equates to around five million baskets of groceries or eight million tanks of petrol. It would also be enough to buy groceries for 100,000 families for a year. In individual dollar terms it works out to an average annual increase in premiums of $190 per family.

So last week I did a number of radio interviews, talking about the increase and suggesting ways that consumers can try to reduce their personal cost while making sure that they have appropriate cover. And one question that I was asked (fortunately off-air, because it took me aback a little) was whether I thought it was fair that everyone – regardless of size or health – paid the same premium.

It’s a version of a question that I’ve been asked a number of times: Should health insurance should be medically underwritten. In other words, should the overweight, underweight, smokers and otherwise-unhealthy among us be paying more for their health insurance? The crux of the reasoning, of course, being that the healthy consumers in the population are paying more than their fair share of premiums. And that’s not fair, right?

Continue reading "Are healthy people ripped off by health insurance?" »

A growing population is not the result of over-zealous politicians and bureaucrats or big business trying to expand their market.

It is a result of Australians being healthier, living longer, and having more children. It is because people from around the world want to come here to work, travel, live and study.

Population growth is neither an impending disaster nor something we should blindly strive for—it is simply happening as a result of our economic progress and the collective desires of millions of people.

Continue reading "Population growth is not all about immigration" »

A radio host the other day was discussing the iPod-full of Australian artists that our Prime Minister gave to Barack Obama. Reviewing the collection of songs - which included Midnight Oil - he claimed it proved “political correctness has gone mad’.

(Glenn Beck on political correctness gone mad)

These sentiments were echoed in The Punch the other morning when Kevin Donnelly warned us that the proposed national curriculum was much too ‘politically correct’. The entire curriculum, Donnelly argued, is overwhelmed by politically correct messages and ignores Christianity.

Feeling under siege by political correctness I decided to do something about it: I called a Muslim friend and made some jokes about her cultural background. I figured it was OK, because some of my best friends are Muslim.

Continue reading "Economic correctness - the new political laziness?" »

As the 100th anniversary of International Women’s Day approaches, we can and should celebrate a century of achievements for women, both small and gigantic.

But no-one could say gender equality is ‘done and dusted’. As we celebrate, we should pause to acknowledge the areas in which there has been insufficient progress, including in our working lives.

Our workplaces are still fraught with gender pay inequity, an underrepresentation of women in leadership positions, unequal treatment of men and women with caring responsibilities and the omnipresent scourge of sexual harassment.

Continue reading "When domestic violence comes to work" »

You’ve got to wonder how genuine Union boss Paul Howes’ latest headline-grabbing attempt to put himself centre-stage really is.

He’s launched the “Don’t Dump on Australia” campaign, ostensibly on behalf of his union members, to encourage people to protest Australia’s ineffective anti-dumping laws.

Fair enough.  But the question is – why doesn’t he just get on the phone to the woman he installed as PM?  Why doesn’t he remind Julia that he knifed Kevin to get her there and, after all, this is the year “of decision and delivery”. 

Continue reading "Howes will dump on anyone, except for Gillard" »

There are a lot of tricks and short cuts taken in modern discourse, with its short attention span and abundance of professional spin doctors. In particular, when discussing policy there is a certain word which is often uttered as if it was magic spells that can silence one’s detractors.

The word is “jobs”. It is increasingly favoured by politicians and rent-seeking lobby groups, but are we finally becoming too skeptical for it to work?

Whenever the debate turns to an economic issue, this word is sure to surface early on in the rhetoric for or against any proposal. It is implicit in such an argument that whichever decision creates more jobs must be the right one. Unemployment is, after all, a calamity we would hardly wish on our worst enemy. The more jobs, the better things must be for Australians and our economy.

Continue reading "The threat of job cuts is a smokescreen" »

This is the first in a series of essays adapted from The Centre for Policy Development‘s book More Than Luck: Ideas Australia needs now. Stayed tuned to The Punch this week for more Big Ideas.

What use is politics? It’s a question many Australians began to ask in the lead-up to the 2010 election as the Rudd and then the Gillard government ditched what seemed like a policy a day in a bid to lighten their electoral baggage. It was as if the government stood for nought except getting re-elected. What do we expect our governments to deliver, beyond our narrow self-interest?

Some say we get the governments we deserve. To some extent, this is true. When we stop paying attention to politics, we make it easier for politicians to stop paying attention to us.

Yet it is also true that governments get the citizens they deserve. If politicians treat elections as a marketing campaign instead of a genuine contest of ideas, then they should expect people to shop around for the best deal they can get for themselves.

Continue reading "Big ideas for Australia’s future" »

The battle of the sexes is over. Sorry to break the bad news blokes, but women have won. Well, this round at least.

The last three years have represented a global tectonic shift in women’s economic, political and professional fortunes that has unravelled gender roles centuries in the making.

This new financial reality in which many women out earn men or are the family breadwinners has triggered a startling and widespread identity crisis for men.

Continue reading "Can men handle women economically on top?" »

The Korean War stopped for practical purposes in 1953, but technically, it never ended.

This is a matter of theory for most people around the world, but clearly for the North Korean leadership – and many of its brainwashed people – it’s a brutal reality.

This week’s shelling by North Korea of the South Korean island of Yeonpyeong was just the latest illustration of this attitude.

Continue reading "The Korean War never ended" »

With Parliament set to wind up in the coming week and the ructions of an explosive year beginning to fade, the reality of a more featureless landscape in the next two years is becoming clearer.

Such apparent predictability seems almost foreign after 2010 which kicked off with the game-changing retreat on emissions trading and then lurched from one crisis to the next - think the rise and fall of the mining super-profits tax, various boat controversies, the spectacular Rudd / Gillard coup, and of course the closest election in history.

Nonetheless, barring the disappearance of the Government’s numbers in some unforseen crisis of confidence, 2011 and 2012 should by rights be years of sound governance - unaffected by elections. The country needs it and in their own ways, both leaders are depending on it too.

Continue reading "For Gillard it will all be about the tough decisions" »

If you’re reading this consider yourself lucky. You’ve managed to find time out of a stressful work day to squeeze in a moment of media consumption despite a new study finding we’re all working way too hard and far too much.

The Australian Institute survey Long time, no see will no doubt provoke a round of handwringing from social researchers using it as proof that Australia is slave to a brutal corporate beast that eats up families and destroys “community”.  This will be accompanied by calls to move toward a more European model of work, replete with biweekly cheese fairs in our new found tight knit villages.

The glaring problems with this survey and others like it are not the results, but the fact that there’s no recognition of the gap between what people say they want, what they actually want and what they’re willing to do about it.

Continue reading "Are we working too much or just whingeing more?" »

Our major banks are not like other businesses.

If a boat builder in Taren Point, or a plastics manufacturer in Chipping Norton or a motel owner on the Central Coast of NSW gets into trouble, there will be no taxpayer bail out. There will be no funding guarantee to support their continued access to credit. There will be no Reserve Bank to act as their own on-call lender of last resort to see them through their troubles.

The GFC proved that our four big banks are too important to fail. They know it and the taxpayers know it. The banks may be a legitimately protected species, but that does not give them a license to be precious, striking out at anyone who would dare raise questions about how they do business.

Continue reading "Banks can complain all they want but Hockey’s right" »

Does anyone else have a creepy feeling about the strength of the Australian economy?

I can’t seem to shake the sensation that we’re all in some kind of 80s teen horror film: all dancing to the drum machine at summer camp with a frothing cup of beer in one arm and the entire cheerleading team in the other. This is of course moments Jason returns from the dead once more – announcing his entrance to the party by beheading the captain of the football team with an efficient slash of his machete.

If you think this overly pessimistic just remember all good things end: the record high Dow Jones Industrial Average was recorded on this date, October 11 2007, on day high 14,198.10 points. Almost exactly one year later, October 10 2008, the you have the largest intra day point swing on the Dow Jones since 1987, of 1,018.77, that day the market hits a low of 7,882.51 points.

Continue reading "What does Martin Place think of the Aussie economy?" »

The likelihood of interest rates rising is back on the agenda, following explicit warnings from the Reserve Bank that it is considering the need for tighter monetary policy.

The Coalition has consistently warned that the Labor Government’s heavy borrowing and build up of debt will put upward pressure on interest rates.

These warnings have been rejected by the government and by a few select commentators in the media.

Continue reading "Big spending equals big rates - no buts about it" »

The Australian Bureau of Statistics has released what it calls a study of “estimates of personal income for small areas.” For ease however we will call it our shameless guide to class warfare and rich people’s suburbs.

View Larger Map

According to the study - conducted between 2003-04 and 2007-08 - the North Sydney waterside suburb of Mosman has the highest average income in the country at $131,606. If a suburb with an average income like that isn’t reference point enough, the national average is $44,402.

Second are the battlers of Woollahra in East Sydney on $116,376.  One begins to feel a bit dirty heading over to Hunters Hill on a mere $95,027, and then if you would actually want to be seen there you can get into North Sydney on $83,997 and Ku-ring-gai at $82,195.

Continue reading "The Punch guide to our rich suburbs and big houses" »

One of the many elements of Tony Blair’s memoir to have created headlines was his admission that he “stretched the truth past breaking point in order to get agreement” during negotiations in the Northern Ireland peace process.

Send out an SMS alert, create an explanatory graphic - a politician has admitted lying. Blair was pressed about this by a newspaper and, in the customary manner of a former national leader freed from the shackles of office, here’s what he said:

I actually think that with normal people, when you go to them and ask: do you think a politician should ever be obliged to, you know, stretch the truth in order to achieve a greater national objective, they would look at you as if you were bonkers for asking the question. There’s no walk of professional life that you can exist in where you literally open up everything to everybody.

Continue reading "Politicians have a licence to tell some lies" »

The Australian Greens is a political party that comes to wreck and to not build.

Their grand plan is to turn Australia, the fourteenth largest economy in the world into Tasmania writ large.

Modern Tasmania lives off the redistributionist largesse of Commonwealth subsidies and public service salaries. Two thirds of the island State is locked up in national parks and its population growth has been historically anaemic for many decades. Through the Hare-Clarke system, development and entrepreneurialism is gridlocked – a happy outcome if you are an advocate of zero population growth and genteel poverty.

Continue reading "The Greens plan for Australia: A big Tasmania" »

I was at a pub a couple of weeks ago and a friend asked my prediction about the election. Not much into making predictions I speculated that Abbott would do better than anyone expected and the ALP were running a campaign that could ruin them. One of my other friends jumped in and said, ‘it’s the tax, the mining tax, the idiots should never tax the one thing that makes us rich’.

An interesting debate followed that only ended when someone reminded me that it was ‘my shout’. Being a Saturday night and with the footy on the big screen, I think we simultaneously decided that this discussions about tax do not make for an ideal night out.

While the country remains in political limbo and the power brokers are cutting deals, the mining tax is one of those issues that seem to be bubbling below the service.

Continue reading "Why the Independents should dig the mining tax" »

In an election campaign marked by both sides saying as little as possible about tax reform, yesterday’s National Press Club showdown continued the pattern of inertia.

Treasurer Wayne Swan and Opposition spokesman Joe Hockey talked about stimulus packages, waste and costings. They talked around tax reform. They mostly avoided talking directly about it.

Coalition leader Tony Abbott had already flagged that a Coalition Government would re-visit the Henry Review, with a view to announcing a plan within a year. That’s just a plan for a plan.

Continue reading "Both the Coalition and Labor are bottling it on tax reform" »

The Treasurers debate in Canberra today was a good one by the standards of these ministerial rumbles.

It was also worthwhile watching because it reminds us there is a pretty important economic debate in this election that has largely been overshadowed by the Labor leadership hoopla.

Prior to Labor’s knifing of Kevin Rudd and its back down on the mining tax, this election was one that was set almost solely to be about tax. Now, despite the best efforts of the Coalition and smaller miners, the mining tax has largely been neutralised as an issue.

Continue reading "Remember the economy stupids?" »

The queasy feeling in my stomach as I flew into Sydney after five weeks in Europe had little to do with the turbulence and even less to do with the 764 unopened emails that found their way into my inbox between London and Singapore. Rather, the source of the unease was that I was landing at the beginning of an election cycle. Most of us suspect that this election is going to be short on substance and will provide us with little vision for our future.

As someone who consumes political commentary, I have grown increasingly disillusioned by both a government and opposition who swing from the banal to the ridiculous. For many of us, this election is less about voting for who inspires us, and more about who is least likely to offer an absurd policy vision.

My sense of dread has not eased as we enter the second week of the election cycle marked by a leaders debate that was focussed on the bland. The question is whether this is likely to continue?  Here are five policy areas that may well provide a guide: will we see real policy discussion or be served up glib one-liners?

Continue reading "This campaign is enough to turn off even political junkies" »

With the major parties flexing their muscles on border protection, the Australian public has sent Canberra a message that it is the protection of Australian jobs that is the real security issue for them.

In what looms as the sleeper issue for the 2010 election campaign, a quarter of all voters placed “Australian jobs and the protection of local industries” as key election issue, behind only economic management and health.

As the latest Essential Report shows that economic protectionism towers over headline-grabbing issues like climate change, asylum seekers, housing affordability, industrial laws and population growth as a priority election issue.

Continue reading "Even with a strong economy, jobs are a top concern" »

Listening to Wayne Swan’s press conference to update us on the state of the economy yesterday it was as if Little Britain’s Vicky Pollard had been asked to explain our finances.

(Dramatic recreation)

“Treasurer: Yea but, no, but yea, but no but. That wasn’t even there before da mining tax cause so we didn’t lose da $7.5 billion. Anyway commodities are worth more now. Anyway shut up!”

Listening to it you were conscious of the fact the words were English, but as it progressed it became apparent those words had no necessary connection to one another. It was a kind of absurdist, avant-garde approach to answering questions which could see our treasurer hailed at the forefront of the “Aussie new wave” of economic analysis.

Continue reading "Campaign countdown: Yeah but, no but, Swan explains" »

The Labor government is clearing the decks to position itself for the forthcoming federal election. After resolving the mining tax dispute, and adopting a position on asylum seekers, climate change is the last issue Gillard must address before the campaign. Whatever policy the Gillard government adopts must account for the scale of the climate crisis.

Current levels of greenhouse gases in the atmosphere are already so high that if unchecked will push the climate system past significant tipping points. This worst-case scenario poses an unacceptable risk of dangerous and irreversible changes to the climate, to biodiversity, and human civilisation. These adverse climate changes will affect Australia’s food and water security, and increase the risk of regional instability.

The worst of these impacts can be avoided, but only if Australia, together with other major polluters acts now and at a scale the challenge demands.

Continue reading "The route to make Australia a world leader in clean energy" »

There is a wildcard hanging over the upcoming election, a factor outside the control of the any politician – it resembles an angry fish, and it is looking for someone to bite.

It is the long-term trend line on people’s economic confidence, and it shows that after we sounded a collective sigh of relief last year, we are beginning to fear the worst again, a sense of economy insecurity that can affect our work, our home lives - and the way we look at politics.

The story of the fish charts the highs and lows of first term Labor, it also offers some tantalising clues about what happens next. Why a fish? As the graph above shows, the competing stories of confidence and despondency have taken a wild journey over the past two years.  With fear surging as the GFC hit, curtailing as stimulus stabilised the economy, but now rising again.

Continue reading "The angry fish that could change Australia" »

So what is the Resource Super Profits Tax all about?  And what is a resource rent tax anyway? 

As it happens, I did a PhD in economics on these very questions, under the supervision of Professor Ross Garnaut.  And as an economic adviser to Resources and Energy Minister, Senator Peter Walsh in the Hawke Government, I had the opportunity to implement my PhD findings by helping design the Petroleum Resource Rent Tax in 1984.

Let’s start with resource rent.  Minerals like iron ore, coal, oil and gas possess two special features – they are non-renewable and deposits of them vary in quality and closeness to markets.  These features give rise to resource rent.

Continue reading "Going boom: the economic case for the mining tax" »

It is increasingly apparent that Australia’s well developed cultural bias towards egalitarianism is part of the leverage that the Rudd Government will seek to exploit to ensure its re-election this year.

Since 2007 Mr Rudd and Mr Swan have regularly gone out of their way to promote that they are some sort of modern day Robin Hoods. This carefully crafted illusion has been built around the idea that by taxing the “rich” we can somehow pay for a Mount Everest of around $93 billion of debt, racked up in reckless cash splashes and handed out on sometimes completely illogical grounds.

Now the Rudd Government tells us that we need to increase tax by 40 per cent on the most productive sector of our economy. They argue this is a “Robin Hood style” redistribution of wealth that will make us all richer.

Continue reading "Rudd, Swan and the myth of Robin Hood" »

The only use of the word ‘debt’ that’s justified in the same sentence as John Howard and Peter Costello is ‘debt of gratitude’.

If we are hearing a lot about the need to return Government to surplus, and hearing the PM use the word ‘conservative’ as much as he can, it is because Howard and Costello set the governance benchmark and changed our political culture in their term in office.

The Westpac Chief Economist, Bill Evans, put up a telling set of graphs at the bank’s budget night dinner showing the debt situation of Australia compared to the US and European countries.

Continue reading "The only debt these two are owed is gratitude" »

Well, I hope you all feel comfortable that you now owe $140 billion. If you take our population as approximately 22 million, that means you owe in excess of $6300 for each man, woman and child in Australia.

I will keep talking about debt until people realise the dangerous position it puts us in. We are borrowing in excess of $1 billion each week. We see every night on the news the problems of other countries that have not dealt with their debt but have waited for the inevitable when the debt deals with you. How could we be so foolish as a nation to be mounting up debt the way we are?

Then, to all intents and purposes, nationalise half of the sector of our economy which has actually kept us from the jaws of recession – the mining sector. This is something that would be more appropriate for Hugo Chavez or Evo Morales or Castro in Cuba. Australia hasn’t experienced this sort of insanity since the failed approach by the Labor party when they decided to nationalise the banking industry in 1949.

Continue reading "‘Til debt do tear us apart" »

Predictions for Australia’s population seem to be going up like bids at an auction.

Three years ago the Australian Bureau of Statistics predicted 28 million by 2050 and more recently Kevin Rudd has mentioned a figure of 35 million. Media reports in the last few days have put the figure at more like 40 million by 2050. Any advance on 40 million?

So where are these figures coming from? Many experts agree that the current focus on growing Australia’s population to 35 million or more by 2050 is not founded on sound science but on short term trends with a large dash of wishful thinking.

Continue reading "It’s time we had an actual discussion about population" »

Now I have vacated the job of helping edit news.com.au, let me reveal my dreadful desire to write an almost unthinkable headline: “Rates hike means more gain for savers”.

It’s pretty well inconceivable that any major media outlet would lead with this sentiment for fear of alienating all the hard-pressed homeowners, the millions of working families and Aussie battlers feeling the pinch in the ever-tightening mortgage belt.

This holds true from the most rabid reactionary radio shock jock, through the marching minions of Murdochdom (I am yet to hand back the company-issued electric shock collar), to the fairy floss fops of Fairfax and even unto the ABC commissars of collectivist cant.

Continue reading "Come on RBA, get those rates up you good thing" »

The leaks have started, the little details of the federal government’s plans to rescue the health system are starting to filter out, with stories in newspapers hailing Health’s Shot in the Arm and Rudd to Cut Away Dead Tissue.

But beneath the gushing promises of more beds and more money there are signs that the government is considering changing the way it funds hospitals.

NSW doctors support any measures that untangle the way health is currently delivered. There are too many layers of management, too much complexity in the funding, and not enough focus on patients. So we agree there are problems. But our starting point is that any solutions should be focussed on untangling the current mess.

Continue reading "How bureaucrats could step in and ruin health reforms" »

The experiments went like this. Scientists took pairs of people and gave one of them a big wad of money. Then they wired them up and watched what happened as more cash was handed out.

“People who started out rich had a stronger reaction to other people getting money than to themselves getting money,” Colin Camerer, one of the study’s coauthors, told the Freakonomics blog. “In other words, their brains liked it when others got money more than they liked it when they themselves got money.”

The science part: the circuitry of the brain’s reward centres is sensitive to inequality. The basic finding is that regardless of how much money you have, humans respond better to poor people getting money than rich people.

Continue reading "Are people hard-wired for income redistribution?" »

Update 3pm: The RBA surprised everyone and left interest rates on hold today.

In recent years a horrendous new phrase has appeared to describe people struggling to make ends meet. They’re suffering from “mortgage stress.”

This week it was reported almost half of the young people who availed of the Rudd Government’s increased help for first-home buyers were suffering from this terrible condition. If true life will get a whole lot more stressful for them over the coming months as interest rates return to normal, starting most likely with a Reserve Bank announcement this afternoon.

Where did this “mortgage stress” phrase come from, anyway? It sounds like some kind of psychological disease that should be covered by Medicare. As far as I can tell what it actually means is you have borrowed too much money.

Continue reading "Are your stress levels going up with interest rates?" »

If things are looking good for 2010, just think about where we will be by 2020 in Kevin Rudd’s Australia.

In 2020, I will be 31 and the Prime Minister will be exactly double that.

Rudd will be at his peak having surpassed John Howard as the second longest serving PM only a few months beforehand. A good consolation prize, after his failed bid for the UN Secretary Generalship in 2016.

Continue reading "Looking forward to a sterile life in Rudd’s 2020 Australia" »

Tomorrow might be the official national holiday but today will be a mass celebration of a great Australian institution as hundreds of thousands of workers call in sick.

Up to half a million workers are expected to chuck a sickie, voting themselves an extra day off. Even if you’re the conscientious type and decide to rock up to work today, it’s only a four-day week. Wouldn’t it be great if every week was like that?

Well for many workers it could be, with no loss of productivity plus the benefits of reduced energy consumption, lower carbon emissions, less congestion on the roads and more time for family and leisure. The key is extending the four working days to 10 hours, so all the work still gets done. And one US state has proved it can work.

Continue reading "Enjoy a sickie? There could be four-day weeks for life" »

Watching Kevin Rudd exhort the nation to work harder to deliver greater national productivity reminded me of a university attack that humanities students used to level at graduating students in the engineering faculty.

Arts students used to mock engineering graduates for what they claimed was an inability to communicate beyond formulas and equations. 

They used to assert engineers would say on graduation: “Last year I couldn’t spell enganeer, this year I are one.”

Continue reading "Hard lessons Rudd is learning about the economy" »

The Prime Minister of Haiti has estimated the death toll of this week’s earthquake to be over 100,000. Reports yesterday suggest the death-toll could soon rival that of the Boxing Day Tsunami.

It is my firm belief that we could have done more to minimise the magnitude of loss as a result of the earthquake. Neither you nor I have the ability to play God and predict a quake or even lessen its power but what we do have is the ability to alter the death toll from such a horrific disaster.

Over 78% of Haitian residents live in poverty, which is defined by the World Bank as living on US$2 per day, and it is these conditions that are responsible for the saddening predictions from the Haitian Prime Minister.

Continue reading "The high death toll in Haiti is due to poverty, not nature" »

I recently attended the opening of the Templestowe Community Bank in my electorate. As a result of more than two years hard work by local traders and residents, the village has a bank for the first time in over a decade.

The branch was the 248th to open under the Bendigo Community Bank umbrella, one of the great local success stories of the past decade across Australia.

As the big banks closed their branches, and forced people to use ATMs and online services, many local communities lost an important institution. In some rural areas, this was devastating. In most, it caused considerable inconvenience to local residents.

Continue reading "Save money this year because thrift isn’t a four letter word" »

Global economics rarely moves as fast as it has over the last twelve months. Inflation genie, global financial crisis and now, just eight months later, the interest rate rises are back. So was Australia’s providential passage through the economic storm the product of great economic management, a fortuitous escape or just an expensive hoax?

Up until now mainstream media have almost exclusively subscribed to the first theory.  Slowly some commentators are arriving at the second. Ultimately it is likely to be proven to be the third.

The “never waste a crisis” mentality of politicians means that overreaction is always rewarded.

Continue reading "Doomsayers are doomed to be proven wrong" »

On 23 November Richard Fleming of the Global Poverty Project wrote an article on the Punch entitled “You don’t have to be a brain surgeon to rejuvenate a life”.

I think it is perhaps fair to say that I am more deeply involved with the beautiful journey of Trishna and Krishna than Richard. 

While I cannot avoid discussing the twins, my response is aimed at the broader issues of development and poverty Richard raises in his article rather than focusing only on the unique story of Trishna and Krishna.

Continue reading "Money’s no answer to global poverty" »

It’s official. We are getting ripped off on food and grocery prices.

A review of OECD statistics over the past 10 years clearly demonstrates that Australia consistently has some of the highest levels of food inflation in the developed world.

This is a wake-up call for Federal Minster for Competition Policy and Consumers Affair, Craig Emerson. The evidence of the power of the supermarket duopoly is now overwhelming and the Minister must move quickly to inject new competition into the Australian grocery sector.

Continue reading "Mr Emerson, tear down this supermarket duopoly" »

Fathers Day - or in our house Feathrs or Farthers day depending upon the cards I received last year - is nearly upon the kids. Last year I got lots of cards - approximately 8 by my count. I don’t have that many children nor did I discover I had some I didn’t know about. Instead my known children were extremely productive; to the tune of 2.67 cards per child. What is more, they were all self-made.

We now have a rule at home that Hallmark holidays should mean that no money should be spent that would go anywhere near Hallmark. That means everything is made.

Not only did I get the cards but several paintings and a treasure hunt. The last one was imaginative but, ultimately fast, because my then 6 year old son organised the whole thing but didn’t have the patience to wait for me to decipher his clues and took me straight to the treasure.

Continue reading "Don’t buy my book for Fathers Day" »

There is nothing like an Equal Pay Day to make a man see red.

Writing on Tuesday about research that claims women earn 17.5 per cent less than men in Australia, I drew the wrath of blokes from around the country.

That figure came from the Australian Bureau of Statistics but was used by the newly formed Equal Pay Alliance of 135 organisations to make their point.

Continue reading "Men can’t keep it level when it comes to equal pay" »

In 2007, Chris Goodall contended that walking may cause more environmental harm than driving.

A noted that a 5km drive would add 1kg of carbon to atmosphere while a walk would seemingly add nothing if you just looked at its direct effects. However, Goodall contended that for many people, they would need more energy to sustain a regular 5km walk. To make up the 180 calories would likely generate 3.6kg in carbon emissions. The trade-off wasn’t even close.

What is significant is that Goodall wasn’t some member of an anti-environmental think tank but himself a strong environmentalist and the author of How to Live a Low-Carbon Life.

And it was he who was suggesting, contrary to one of Al Gore’s dicta in An Inconvenient Truth, that substituting driving for physical transportation might not be environmentally-friendly at all; even if it is friendly to your physical health.

Continue reading "How and why the ETS could cost you" »

This week in Parliament will be an important test of the Opposition’s commitment to both health reform and economic responsibility.

Right now we’re looking at making some of the biggest reforms to our health care system since the introduction of Medicare. 

We can’t do that unless we make the hard decisions. 

Continue reading "Coalition is being reckless on private health insurance" »

IT seems incredible but barely two years into the greatest depression/recession/downturn/hiccup (take your pick) the world has suffered since the 1930s, we’re already talking about bubbles again.

Experts fear the 30 per cent surge in the local stock market since March – mirroring a similar spike on Wall Street – is building into a premature and unsustainable bubble crying out to be pricked.

Reserve Bank boss Glenn Stevens reckons the housing market, fuelled by record low interest rates and the government’s first-home owners giveaway, is looking dangerously like a bubble that could need a dose of higher interest rates to deflate.

Continue reading "Human nature is to be forever blowing bubbles" »

A few days ago, I was part of a group of 6 economists who wrote an open letter arguing for a new Inquiry into the financial system—a so-called “Son of Wallis, Daughter of Campbell.”

Put simply, so much had changed in our understanding of finance, banking and economics and so much ‘on the fly’ policy had been undertaken, that surely stepping back and reviewing our policies above the political fray would be a good idea.

We had hoped that this might get a little media and perhaps push the government into putting an inquiry onto the agenda. Our letter was a long and not particularly reader-friendly affair. But towards the end we asked the following:

Continue reading "Mad furore surrounding the so-called “people’s bank”" »

More data today suggest the national economy is in a holding pattern. More than 21,000 people found themselves out of work in June, a rise of just 0.1 of a percentage point in the national unemployment figure.

The Reserve Bank cut interest rates to 3 per cent in April and hasn’t budged them since. And this week the Fair Pay Commission,  in defiance of the government and unions, effectively gave low-income earners a pay cut when it froze the minimum wage. The commission argued that it would cost jobs and, as Clive Mathieson pointed out this week, jobless people can’t help the economy as they have zero money to spend.

These consumer sentiment figures show that significantly more Australians are feeling upbeat rather than gloomy about the economy. This is despite a range of forecasts - from banks and the federal government - predicting significant job losses over the coming year.

The unemployment figure today was 5.8 per cent. The crystal ball-gazers say it’s heading for around 8 per cent. Clive also pointed out recently that economists’ predictions are often useless and change tack with the economic winds.

There may yet be some nasty surprises as cuts in business budgets for the new financial year, which started just eight days ago, start to bite. Today, though, I’d like to ask where you think the economy is heading over the next six months. Are we out of the woods yet?

IT has become so hard to be a smoker. At a recent wedding I was the only person nipping outside during the bad songs for a quick gasper, and I’m sure the smell of tobacco was following me around the room. Lately I’ve noticed security guards starting to move us on when lighting up outside certain buildings. The next logical step in this “ban creep” is for councils to outlaw smoking in public spaces such as parks and on footpaths. The only place you could smoke would be inside your own home - which would be the end of smoking for me, as there’s a ban there too.

Anti-smokers now believe a fresh round of punitive tax increases could wean a million Australians off the cancer sticks. The price of some packs would be headed for around $20. This is exasperating. If everybody knows the dangers and costs, as the latest unnecessarily revolting ad campaign says, why is this state-sponsored suicide still legal at all? Why don’t we just outlaw cigarettes?

This graph, in its unedited form, shows the relationship between consumption of tobacco and the price of a pack. It demonstrates that price rises work, but I’ve added in what I believe to be an additional force on consumption - the dramatic fall in the social acceptability of smoking that began in the 80s and has more recently fallen like a ciggie butt to the footpath.

Continue reading "Stop being polite about smoking, and just outlaw it" »