ABSTRACT In the 2026 Freebairn lecture, I argue that Australia's prosperity can no longer be taken for granted. Despite strong foundations—stable institutions, natural resources and a diverse population — the country faces weakening productivity, unaffordable housing, stagnant wages and a deteriorating global order. I contend that reform failure is not primarily a failure of individual politicians, but of systemic incentives—short election cycles, hyperbolic discounting, information asymmetry and media dynamics that reward outrage over nuance. Drawing on my own tax reform work, I identify four lessons for driving change: (1) start with ‘why’; (2) build unusual coalitions; (3) meet people where they are; and (4) prioritise effectiveness over elegance. However, I also argue better strategies alone are insufficient. I am calling for three institutional reforms: (1) clear outcome goals with rigorous ex‐post evaluation of spending and policy; (2) transparency by default across government processes; and (3) regulatory reform—including deregulation KPIs, sunset clauses and independent regulatory cost assessments. Australia must choose its future deliberately rather than rely on luck. Becoming The Plucky Country requires institutional discipline, political courage and genuine optimism.
Background Some previous macroeconomic studies report puzzling responses of variables due to monetary policy shocks. This paper argues that these anomalies occur because information regarding inflationary expectations utilized by central banks for policy decisions is not sufficiently incorporated into traditional VAR models. Given the significant impact of expected inflation and ex-ante real interest rates on households, firms, and policymakers, a more comprehensive approach is needed.Methods This study identifies the Bank of Canada's monetary policy function by incorporating expected inflation and ex-ante real interest rates alongside other domestic and foreign variables within an open-economy structural VAR model. This framework aligns the identified reaction function more closely with actual policy behavior to yield a more precise measure of exogenous monetary policy shocks.Results The empirical findings indicate that the Bank of Canada significantly contracts monetary policy in response to an unexpected rise in expected inflation. Furthermore, the results demonstrate that the monetary transmission mechanism in Canada operates effectively through both the interest rate and exchange rate channels.Conclusion By sufficiently accounting for inflationary expectations and ex-ante real interest rates, this open-economy framework successfully resolves traditional monetary policy puzzles and provides a more accurate depiction of the transmission channels in Canada.
Background Building on our previous study, which identified six convergence clubs among Vietnam's 63 provinces, this paper provides the first comprehensive examination of the evolution and dynamics of provincial GDP per capita inequality within each club over the period 2010-2023.Methods This study employs sigma-convergence, the Theil index, and the Gini coefficient to assess trends and patterns of inequality in provincial GDP per capita within each convergence club. In addition, time-series techniques are used to analyse the growth trajectory of each province or city relative to the national average. The analysis is complemented by an exploration of key provincial characteristics and the main factors underlying the observed patterns of inequality across convergence clubs.Results The findings indicate a general decline in GDP per capita inequality across all convergence clubs over the study period. Whereas only nine provinces recorded GDP per capita above the national average in 2010, a considerably larger number of provinces exhibited upward convergence toward the national benchmark by 2023. Despite this progress, a group of persistently underperforming provinces remains, predominantly located in geographically remote and economically disadvantaged areas. The results also underscore the important roles of total investment and foreign direct investment in driving the observed reduction in output inequality across convergence clubs.Policy Implications There is a need to strengthen spillover effects from high-performing provinces, foster more inclusive economic growth in lagging regions, and implement targeted interventions to reduce interprovincial income disparities in Vietnam.
Research Question/Issue This study examines the impact of the Chronic Disease Dental Scheme (CDDS), introduced in 2007 to provide subsidised dental care for people with chronic conditions. Specifically, it asks whether the CDDS improved access to dental care among eligible women and what characteristics were associated with receiving higher rebates.Research Findings/Insights The analysis finds no statistically significant increase in dental visits among eligible women compared to ineligible women, despite the substantial fiscal outlay of the scheme. However, CDDS rebates were more likely to benefit women experiencing financial stress, those holding concession cards and those reporting poorer dental health. Conversely, women living in regional or remote areas received substantially lower rebate, underscoring persistent geographical inequities in access.Practitioner/Policy Implications The CDDS did not increase dental access overall but did provide financial relief to some disadvantaged groups, suggesting partial success in targeting need. Future dental policy must carefully weigh costs against outcomes and address equity challenges, particularly for rural and remote populations where service provision is limited.Methods Used The study employs a difference-in-differences approach using panel data from the Australian Longitudinal Study on Women's Health (1946-51 cohort) and linked Medicare claims, alongside a Heckman selection model. The analysis is causal in design with complementary descriptive insights.
In this paper, we analyse whether two key macroeconomic relationships in Australia-Okun's law and the Phillips curve-have been stable over time. This is done by estimating hybrid time-varying parameter Bayesian VAR models using quarterly data from 1978 to 2024. Model comparison based on marginal likelihoods indicates that Okun's law has been stable, whereas the Phillips curve has not. Using the preferred specification of the BVAR for the unemployment rate and inflation, we also calculate trend values for both variables. The model's trend unemployment rate at the end of the sample is approximately 5%; estimated trend inflation at the same point in time is close to the Reserve Bank of Australia's inflation target.
Introduction The income returns to a bachelor's degree in Australia declined in the period from 2001 to 2016. We attempt to uncover the drivers of this decline.Methods Our analysis investigates the income premium to a bachelor's degree through two lenses: (1) the effects of the demand for and supply of skill in the economy and (2) the effect of changes in the occupation composition of employment by education attainment and changes in weekly earnings within occupations.Findings We find the 2001-2016 decline in returns is potentially explained by strong earnings growth in low-skill occupations, due to increases in real minimum and award wages, as well as possibly the mining boom. Downgrading of the occupations in which bachelor's degree holders worked was also a significant phenomenon from 1986 to 1996, but its (otherwise negative) impact on the income premium to a bachelor's degree was offset by higher relative growth in weekly earnings in occupations in which bachelor's degree holders were concentrated.
This article reviews Mark Wooden's contributions over the last 40 years to Labour Economics and Industrial Relations, the HILDA Survey, and inter-disciplinary research relating to work, family and well-being. He has had an extraordinary academic career, including 23 years as Director of the HILDA survey. His early career was spent at the National Institute of Labour Studies (NILS) at Flinders University, where he undertook important and pioneering quantitative research on industrial relations research and had a significant impact on Australia's economic reform agenda. After his move to the Melbourne Institute, he led the establishment of the HILDA survey (Household Income and Labour Dynamics in Australia), which is a major national data asset for Australia. Mark's own prolific research has greatly increased our understanding of a wide range of topics, including especially: casual employment; the effect of income, wealth, education health and other factors on life satisfaction; jobless families; family dynamics and working arrangements; the effects of COVID 19 and lockdowns; and working from home.
An important group of interest for industrial tribunals in Australia is employees who are reliant on awards for their pay and other employment conditions. The HILDA Survey has collected information on the method of pay setting of employees since 2008, allowing identification of award-reliant workers. This paper describes the characteristics, employment, wages and incomes of award-reliant workers over the period 2008-2023 and examines trajectories in labour market and income outcomes. While award-reliant workers are on average low-paid and less likely to be employed full-time than other workers, it is found that they tend not to live in poor households and, moreover, have greater growth in full-time employment and wages than other employees. However, it is also found that their more favourable labour market trajectories do not, overall, translate into improvements in their economic wellbeing over time.
Research Questions How does temporary employment, that is, fixed-term contract and casual employment, affect the transition into first-time homeownership among young people in Australia? Does the effect differ by employment type, gender, relationship situation, or parents' socio-economic status?Research Findings Both fixed-term and casual contracts are associated with a reduced likelihood of entering homeownership; however, the association is significantly stronger for casual contracts. Associations are also significantly stronger among unpartnered people and (in the case of casual work) among men. By contrast, there are no differences by parental socio-economic status.Policy Implications The employment and income insecurity associated with temporary contracts in combination with high house prices are a significant contributor to young people's low homeownership rates. Policies fostering transitions into permanent employment besides measures supporting first-time homebuyers, increasing housing supply and strengthening renters' rights could help improve the housing situation of young workers.Methods The study used longitudinal data from 12,689 individuals aged 18-39 who were interviewed in the Household, Income and Labour Dynamics in Australia (HILDA) Survey, covering the period 2001-2023. Discrete-time event history models were estimated that investigate the effect of contract type and various socio-demographic characteristics on entering homeownership in the following year.
Background Inflationary pressures in an increasingly interconnected production system reflect not only aggregate or isolated sectoral shocks but also their propagation through supply-chain networks.Methods This paper examines the mechanisms underlying inflation transmission in a small open economy, using industry-level data for Australian manufacturing from 1995 to 2023. Inflation connectedness is quantified using both static and time-varying Diebold-Yilmaz forecast error variance decompositions, and linked to domestic and imported input-output structures.Results Cross-industry spillovers are economically substantial and time-varying, accounting for 44%-61% of total producer price inflation variability. Linking these spillovers to production structures shows that inflation transmission is highly asymmetric and concentrated in upstream industries with high reliance on imported inputs, particularly fuel- and chemical-related sectors.Policy Implications The results highlight the importance of production-network exposure for inflation dynamics and have implications for inflation monitoring, supply-chain resilience and policy design in small open economies.
Background Australia has one of the highest rates of gambling among developed countries, with important consequences for public health and well-being. Identifying the underlying drivers of gambling behaviour is therefore a key public policy issue, particularly in understanding how early-life experiences shape later-life risk-taking behaviours.Methods This study investigates the long-term impact of childhood exposure to parental smoking on adult gambling behaviour using longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey and explores underlying mechanisms. To address endogeneity concerns, it employs a heteroskedasticity-based instrumental variable approach alongside the Oster (2019) bounding approach.Results Individuals exposed to parental smoking in childhood are significantly more likely to engage in gambling as adults. The relationship is mediated through several key mechanisms, including locus of control, educational attainment and labour market outcomes, indicating that early-life environments shape both preferences and constraints influencing later behaviour.Policy Implications The findings provide evidence of intergenerational transmission of risky behaviours and suggest that early-life interventions, particularly those targeting family environments and child development, may reduce harmful gambling behaviours in adulthood. The findings also highlight the importance of preventive public health strategies to mitigate long-term behavioural risks.
The Australian economy grew at a moderate pace in 2024-2025. Monetary policy gradually eased through 2025, with three rate cuts bringing the cash rate down to 3.6%. The labour market has softened further from its post-pandemic state, but a resurgence of inflation in recent months places further monetary easing in doubt. Weak productivity growth remains a major domestic policy challenge. Geopolitical tensions, volatile tariff policies and the prospect of a stock market correction regarding the AI boom are downside risks heading into 2025/2026.
Research Question/Issue Do college application fees contribute to gender disparities in higher education, particularly at STEM-focused institutions in decentralised admissions systems?Research Findings/Insights Using U.S. data from 2001-2020, we find that a 1% increase in application fees is associated with a 1.77 percentage-point decline in the female share of applicants at STEM-focused institutions, with larger effects at public universities. No comparable effect is observed at non-STEM institutions. Additional analysis indicates that application fees primarily alter the composition of applicants rather than overall application volumes, with male applications responding more strongly than female applications.Practitioner/Policy Implications Although application fees are typically viewed as administratively neutral, our results suggest they can disproportionately deter women from applying to STEM-focused institutions. In decentralised systems common across the Asia-Pacific region, reviewing fee structures or introducing targeted fee waivers may help promote greater gender equity in STEM participation.Methods Used We use institution-level panel data from the Integrated Postsecondary Education Data System (IPEDS) and estimate fixed-effects models exploiting within-institution variation in application fees.
The market for non-GP specialist services in Australia is characterised by widely dispersed fees and out- of- pocket costs, creating uncertainty about the price patients will have to pay. This is primarily driven by doctor-level variation in pricing rather than patient characteristics, clinical risk or quality, which reflects a referral-based market with severe information asymmetry and weak price competition. A response to help patients navigate this system has been the promotion of fee transparency websites. While this is a welcome step to empower patients, evidence suggests such tools have limited impact and may increase prices in concentrated markets. We argue that to improve transparency tools, risk-adjusted information on expected costs and quality indicators must be provided and this information should be targeted at the referee, often the general practitioner.
This article presents a 5-year review of Australia's labour market from early 2020 through to the end of 2024, what I term the 'COVID-19 era'. A first objective is to provide a history of the main developments in the labour market during this period. The evolution of employment outcomes is charted, together with analysis of how adjustment happened, which jobs and workers were most affected, and the role of government policy. Topics relating to wage growth, labour supply and labour productivity are also covered in detail. A second objective is to demonstrate that understanding the COVID-19 era enables important lessons to be drawn about the operation of Australia's labour market and about policy-relevant both for today and for similar future episodes.
This policy forum brings together four evidence-based opinion articles that examine specialist affordability and access from contemporary and complementary perspectives. The authors argue that current policy settings fail to deliver coherent financial signals to patients and providers, inadequately protect vulnerable populations and fall short of addressing the structural drivers of fee growth and access inequities.
Economic insecurity in childhood may shape not only children's opportunities but also the traits that govern how they think, behave and engage with the world. Using 17 years of longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey (n = 3792), this study examines whether sustained exposure to parental joblessness during childhood is linked to poorer personality trait outcomes in later years. We apply multilevel random-effects models to capture cumulative exposure to joblessness prior to personality assessment. The results show that prolonged parental joblessness is associated with lower levels of agreeableness, conscientiousness, extraversion and openness to experience, while effects on emotional stability are small and statistically insignificant. These associations are not evenly distributed: they are strongest for boys, younger children and those growing up in lower-income households. By linking parental employment histories to the formation of non-cognitive skills, this study identifies personality development as an important, and largely overlooked, mechanism through which childhood economic disadvantage may generate long-run inequality.
Introduction: Equitable access to care is a core principle of Medicare and Australia's broader health policy frameworks, yet access to specialist care remains marked by persistent inequities. People with disability experience longer waits, face greater affordability pressures due to lower incomes and encounter greater administrative burden. These disparities undermine progress towards Australia's commitments to equitable and accessible healthcare set out in national and international policy agreements. Addressing them requires understanding the structural barriers that shape specialist access. Methods: This article synthesises evidence on inequities in specialist access and fees for people with disability and identifies policy settings that shape these outcomes. It draws on existing literature, policy documents, and emerging evidence from linked administrative data, including the Person Level Integrated Data Asset (PLIDA). Results: Key barriers include the geographic distribution of specialists, wide variation in out-of-pocket fees, fragmented referral pathways and limited care coordination, which may contribute to delayed or foregone care. These inequities are exacerbated by gaps in monitoring healthcare system performance. Australia has no system for tracking specialist wait times, limiting policymakers' ability to identify disparities. Advances in linked administrative data, particularly PLIDA, provide a foundation for improved monitoring. Conclusion: Improved wait time monitoring, greater fee transparency, targeted incentives for equitable care and strengthened navigation support are needed to improve access to specialist care for people with disability.
Background Setting Medicare Schedule Fees for specialist services in Australia is a pressing challenge. As specialist charges increasingly exceed government rebates, rising out-of-pocket costs threaten the core objective of universal health care. Objective To define a fair fee structure that balances equitable compensation for highly trained professionals with affordable access for patients. To ensure that this balance is guided by three principles: sustainability (reflecting training and resource costs), quality (incentivizing high-quality care) and accessibility (remains affordable and accessible for all patients). Methods This analysis evaluates the current system against three guiding principles: sustainability, quality and accessibility. We present criteria for assessing how well each principle is satisfied and discuss what specialist fees might look like if Australia followed each principle. Findings Australia's current system fails to meet all three principles. Recommendations: We propose a three-pillar reform strategy: 1. Regulated pricing: Set fair Medicare Schedule Fees and limit rebates to specialists who adhere to these fee standards. 2. Transparency: Mandate public reporting of specialists' fees, quality indicators and waiting times. 3. Increase public capacity: Expand public sector capacity and general practitioner support to reduce reliance on private specialist care.
Australia's healthcare system relies heavily on patient co-payments, which account for around 16% of national health expenditure. Although this percentage is in line with the OECD average, the design of co-payments is a major source of inequity and inefficiency. Current arrangements contribute to pro-rich utilisation of specialist care, regressivity in household financing, geographic variation in access and distorted incentives that discourage efficient care. These problems will be amplified by demographic ageing and rising inequality. This opinion piece synthesises the empirical evidence on the consequences of Australia's current co-payment structure and proposes reforms to improve consistency and predictability of financial signals across programmes as well as incorporate notions of capacity to pay. These reforms aim to reduce the harm imposed by current co-payments and deliver a more equitable and efficient health system.
