Transport infrastructure investment has been used as a crude tool in response to the economic downturn resulting from the Covid-19 pandemic. More engineering construction work has been loaded into an already crowded market, with larger projects in greater numbers than ever. Even before transport infrastructure was deployed for this task, governments were failing to deal with the most pressing problems in infrastructure delivery: overly politicised project selection, a failure to learn from history and the continual reach for megaprojects as a first resort.
This paper suggests Australia's economic exposure to China creates three distinct risks: a Chinese growth shock that comes with a 'hard landing', a structural shift towards less import and natural resources-intensive Chinese growth, and the Chinese Government disrupting trade ties for coercive purposes. With external demand for Australia's goods and services largely exogenous, the scope to mitigate these risks by reducing exposure to China, without resorting to costly market intervention, is limited. At the same time, the probability and scale of each risk should not be overstated. Further undercutting the case for an intrusive public policy approach is the fact that effective mitigation mechanisms exist for the Australian economy as a whole, as well as for many businesses.
The FeesMustFall confrontation in the South African higher education system between 2015 and 2017 revealed a wide range of shortcomings and failures on the part of all participants including students. Violence proved an effective instrument. The urgency of addressing the cost/revenue imbalances in the higher education system was exposed. The FeesMustFall crisis revealed various tensions and pressures in higher education that may be of considerable relevance globally.
The Reserve Bank of Australia (RBA) has been overly wedded to a New Keynesian conception of the monetary policy transmission mechanism, in which the official cash rate is seen as the main instrument for policy implementation and the main measure of the stance of monetary policy. The 'effective lower bound' on the official cash rate became an artificial, self-imposed constraint on the RBA's initial response to the Covid-19 pandemic. By contrast, a monetarist conception of the monetary transmission mechanism would have encouraged more rapid adoption of alternative operating instruments.
This paper asks whether the suite of unorthodox monetary policies (including quantitative easing, or QE) really make sense in the presence of a global liquidity trap. It finds that QE-type policies are an expedient remedy for short-term crisis management, but their ongoing and expanded use have distorted global markets and will have significant dynamic efficiency costs over the next decade. The alternative is for discretionary fiscal policy to play a bigger role in stabilisation, with monetary policy left to accommodate. Both policies should be operated by a single agency accountable to the electorate.
This paper argues that the best reason for discouraging public debt is that such discouragement acts as a constraint on government spending.
This paper documents the increase in Australian public debt since 2007. In that year, gross public debt had a face value of $55 billion, while net debt was negative. It is not surprising that governments have since resorted to public debt to respond to a series of shocks to the Australian economy. What is surprising is that Australian policymakers have abandoned the `old-time fiscal religion'.
It is widely asserted-and believed-across the Australian political spectrum that small business is the 'engine room' or 'backbone' of the economy. This belief is, however, without any evidentiary foundation whatsoever. In aggregate, Australian small businesses have not created a single job since before the Global Financial Crisis. Small businesses have, on average, been consistently less innovative than medium-sized and large businesses. Small businesses pay lower wages, on average, than medium-sized and large businesses, and they have significantly lower labour productivity. It would be a mistake to perpetuate the preferential treatment of small businesses simply because they are small, and for no other reason, once the pandemic is over. If preferential tax treatment and other forms of assistance are to be afforded to any businesses, it should be to new businesses, rather than small ones.
Future Australian federal governments will face difficult choices when they need to address the massive increase in public debt due to the Covid-19 pandemic and the 2008-09 Global Financial Crisis (GFC). Future governments will need to either increase taxes or make difficult spending cuts to improve budget balances and get the debt-to-GDP ratio under control. The huge challenge facing future governments is illustrated using an Australian government Budget Debt Projections Model and Monte Carlo simulations.
The Reserve Bank of Australia (RBA) recently placed higher priority on stabilising household debt than on its conventional goals of unemployment and inflation.This was bad economics, bad process and resulted in substantial unnecessary hardship.However, it was not unusual.The RBA has a record of poor decisions.That partly reflects poor process and a lack of expertise.More fundamentally, the RBA has a culture that places a low priority on getting the answers right.To address these problems, more monetary policy experts should be appointed to the RBA Board, and board members should be individually accountable for their votes.The RBA should be required to be more transparent-in particular, it needs to provide detailed explanations for its decisions and it needs to show alternative projections for interest rates.Decisions should be explained and defended at regular press conferences.
The Federation in 1901 of six colonies into a Commonwealth of Australia is the most researched episode in Australian political history. But for all its bulk and sophistication, this research remains underdeveloped. The root of the trouble is the `affirmative' premise of almost every page of this history regarding its subject matter, Federation. This article identifies some unexcavated sites in the intensely worked field of Federation history that may supply useful matter for a revisionist history.
Has income tax become voluntary in Australia? It appears that for some, nil or very low tax bills are a real prospect. Those with flexibility over how income is earned and motivation to achieve tax savings can structure their financial affairs to channel income through a mix of companies, trusts, assets, superannuation and family members over time. This article presents some of the simpler strategies available within the Australian tax system and shows how these are available to people across the income distribution. However, a tax system designed to encourage tax planning runs counter to core principles of good tax design of fairness, efficiency and simplicity. It also raises questions about the sustainability of Australia's tax system. Addressing the structural incentives to engage in tax planning requires a wholesale rethink about the design and role of income in Australia's tax system.
By the twenty-first century there can be few federal nations as centralised as Australia.The Canadian provinces have been much more successful than Australian states in retaining their power of taxation and their autonomy in areas such as education or health.Why has this happened when the Canadian constitution was explicitly aimed at limiting states' rights and the Australian constitution was intended to avoid the centralisation of the Canadian Constitution?There is no fully convincing explanation of the divergence.
The most egregious myth about Federation is that it was all about domestic issues, particularly economic issues, and that defence and foreign policy played little or no part in the impetus towards Federation.The argument runs that because little time was spent debating issues of defence and foreign affairs in the constitutional conventions, and much more time was spent on economic and fiscal matters, the latter must have been the most important drivers of Federation.The argument is unjustified in the face of the evidence.Defence and external affairs are the key to understanding the push for Federation.
While most colonies delivered overwhelming 'Yes' majorities in the referendums of 1898-1900, New South Wales twice delivered sizeable 'No' minorities.On both occasions the 'No' vote centred around the free trade stronghold of Sydney, which determined that she did not want to sacrifice her independence.Up until now this remarkable rejection has received little academic attention This article argues the main reason why Sydney voted against Federation was because it cut against the main political development of the preceding years-namely Reid's successful electoral program, which championed free trade, democracy and domestic reform.
This article examines the theoretical bases for the existence of community service obligations (CSOs) in postal services in Australia.It assesses the forces that can be expected to affect both their form as well as the capacity of Australia Post to deliver CSOs into the future.It concludes by considering the implications of this assessment for Australia Post's ownership structure, strategic direction and its relationship with other communications, logistic and financial service providers, as well as with both the federal and state and territory governments.
Liberal nationalism's culminating moment, the European revolutions of 1848, ended in utter failure. A movement of intellectuals entirely lacking a popular base, the principle of nationality experienced a far-reaching illiberal turn. By the 1890s the world was awash in deeply illiberal, and often positively repellent, nationalisms. Britain itself, however, seemed an exception. But an almost endless list of new fears had emerged and moved to the centre of her politics. Britain was, in Joseph Chamberlain's evocative phrase, a `weary titan', staggering `under the too vast orb of its fate'. The time predicted by Herman Merivale seemed to have come. As Under-Secretary of State at the Colonial Office from 1847 to 1860, he had foreseen the day when the Empire would have to prove flexible enough to absorb the `great Australian Republic which probably is to be'.
Australia is a federation that does not really believe in federalism. Whenever matters pertaining to the workings of federalism appear, comments made in the press or online advocate the abolition of the states and the creation of a central national government. It is assumed that state governments are venal, incompetent and inherently inferior to the Commonwealth Government. How do we explain this peculiar phenomenon?
Considerable attention is now paid to establishing the extent of inequality in New Zealand and whether it has risen in recent years. This paper offers some insights into the inequality measures and interpretations that commonly feature in those debates. These typically relate annual Gini coefficients for various income definitions, or comparisons of income growth rates across income deciles. But cross-sectional data fail to take into account the longitudinal dimension of inequality, and this can lead to misinterpretations of inequality data. The paper shows that examining longitudinal income data for the same individuals over time strongly contradicts some apparent messages of cross-sectional evidence. For example, some recent cross-sectional inequality measures suggest that the incomes of initially low-income households grew at slower rates than those with initially higher incomes. This has been interpreted as the poorest earners being 'left behind'. But recent longitudinal data, at least for individuals, reveals evidence of much faster-than-average growth among initially lower, compared to higher, income earners. Thus, 'regression to the mean' is a dominant feature of the longitudinal data.
