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Much of the thinking that informs government policy is based on outdated or oversimplified economic theory — recent applied research (for example in behavioural economics) is often not taken into account.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.

Freeing public policy from the fiscal straightjacket

When Australians are asked whether they would prefer tax cuts or more spending on health and education, the message is clear: invest in services. When economists and business people are asked about the challenges facing our economy, the answer is consistent: lack of investment in skills and infrastructure. But in last week’s debate, Peter Costello and Wayne Swan shared a different set of priorities: what voters want and what the economy needs is lower tax … more

Unsustainable debt: Australia’s own subprime crisis

Australians are addicted to debt but we can’t afford to keep borrowing at current levels forever. A new report by a leading economist has found that in just 18 months time we may be spending as much of the national income on interest payments as we were in 1990 – when interest rates were at 17 per cent. The report also finds that Australian households are now poorer after interest payments than they were in … more

The risk society

It’s October 2007, and Newcastle has just been hit by another massive storm. As the flood waters recede, politicians from all sides line up to give their condolences – but in a break from tradition, they fail to announce any financial assistance for the flood victims. “Natural disasters are a part of life” says Prime Minister Howard, “we expect responsible families to plan ahead for this kind of thing”. Premier Iemma echoes the sentiment: “the … more

 

Reality Check | 1-2pm Friday 27th April | Sydney

Is Australia’s economy as healthy as it seems? The Centre for Policy Development invites three experts to examine the risk factors: carbon addiction, chronic overwork and a decade-long debt binge. Join Ian Dunlop, Dr John Buchanan and Dr Steve Keen as they don their stethoscopes, diagnose the diseases and scribble out some prescriptions for lasting economic health. But will Australia’s political parties take their medicine? Date: Friday April 27th Time: 1-2pm Venue: UTS Haymarket Campus, … more

Debt Freedom Day Report 2007

February 25th was Debt Freedom Day for 2007: the day Australia had earned enough income to fund the annual interest on its loans. The good news is that the day has finally arrived. The bad news is that it has been so long in coming. Except for a brief fall in 2000, when official interest rates were cut as the GST was introduced, the date of debt freedom has been steadily receding since 1997. Then, … more

REAL WORLD ECONOMICS: Competition and Cohesion

Introduction Economic policy is likely to remain the central policy concern, notwithstanding terrorism, climate change and family values. Some commentators, who are already comfortably off, may argue that further economic growth will not result in a commensurate increase in well-being, but even they must acknowledge that it is difficult to maintain well-being and a fair distribution of incomes in a depressed economy. Judging by their behaviour, most people want further material gains, while the capacity … more