Critiques of orthodox economics have proliferated in recent times, but often these critiques are not translated into alternative principles for policy-making. The Centre for Policy Development’s ‘Real World Economics’ program provides a platform for our fellows and others to explore approaches which move beyond the ‘small government vs big government’ debate and provide the basis for consistent policy-making across portfolios.

Much of the thinking that informs government policy is based on outdated or oversimplified economic theory — recent applied research (for example in behavioural economics) is often not taken into account. We need to incorporate a broader, more balanced understanding of human nature into the economic principles that underpin policy development.

Is Coalition Economic Policy A Nauru Solution?

How did a gathering of professional economists rate the policies of the two major parties? And how does the Coalition’s rhetoric about economic management sit against its record? Ian McAuley reports from the Australian Economic Forum At about the mid-point of the election campaign I was at the Australian Economic Forum – a gathering of professional economists from corporations, government departments and universities. We heard Nobel Laureate Joseph Stiglitz, former chief economist of the World … more

What About Doing Something About Equal Pay?

Women voters are a hot topic this election campaign – so why isn’t there more talk about equal pay, asks Kath McDermott The Coalition is unfortunately correct in the assumption in its parental leave policy that women’s earnings will be lower than men’s. It should not be comfortable with that assumption, having had, after all, 11 years in Government to do something about it. Trend data on the gap between women’s and men’s earnings shows … more

 

What Will The CPI Tell Us About Interest Rates?

The CPI will be released this week but Ian McAuley isn’t confident that the announcement will be accompanied by rational debate on interest rates Next week there will be release of the CPI which will as usual stir up debate on interest rates. Already Tony Abbott is claiming that interest rates will always be higher under a Labor government – a superbly non-refutable statement. In fact, real interest rates are sitting right about where they … more

Superannuation Changes Fail Fairness Test

The government’s announced reforms to the tax concession further undermines the potential of superannuation to significantly contribute to either the assets available to workers when they retire or the fiscal sustainability of the Budget as the population ages. Currently, the super tax concessions reduce tax revenue by 2 percent of GDP ($24 billion) per year, but superannuation is only projected to reduce public spending on the aged pension by 0.2 percent of GDP in 2050. … more

What we failed to learn from the GFC

Over the twelve months to March 2009 another 13,600 BMWs and another 700 Porsches appeared on Australia’s roads. By the end of 2009 the Australian stock market had risen 45 percent off its low point, house prices were rising, and the unemployment rate was starting to fall. Australia missed out on much of the GFC fun enjoyed in other, bigger countries. But for the $900 checks from the Tax Office, and the new construction at … more

 

Flat tax champions dodge the hard issues

The Liberal Party report into tax reform, commissioned from economist Henry Ergas, has been sitting with the Shadow Cabinet for about a year. Perhaps they doubt the electoral appeal of the ‘flat tax’ plan it outlines for personal income tax. Australia’s current system of personal income tax is highly progressive. That means that the rate of tax increases as a person’s income increases. It is based on capacity to pay – those with more not … more

Risk and the financial system – time for a People’s Bank? At least it’s time for review

The recent letter by six economists, of whom I was one, calling for a new inquiry into the financial system, raised a number of issues. Many of them turn on the question of how, if at all, the government should guarantee the viability of financial institutions. Until October 2008, the system was carefully ambiguous. Governments and the Reserve Bank implicitly assured both the general public and wholesale lenders that our major banks are completely safe, … more

Welfare for the rich? How tax breaks are transforming Australia’s Welfare State

CPD Fellow, Ben Spies-Butcher considers how tax breaks are transforming Australia’s welfare. Are these new forms of social security promoting self-reliance or more welfare for the rich? Over the past 30 years Australian Governments have increasingly moved away from creating new social security payments, but have instead funded new forms of social security through the tax system. These benefits are said to increase self-reliance and choice, but they are far less equitable, transparent or accountable … more