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Author Archives: Michael Keating
Despite appearances, this government isn’t really Keynesian, as its budget update shows
It is tempting to think the Australian government’s decision to spend big – an unprecedented 33% of GDP this financial year according to the budget update – marks an embrace of Keynesian economics after decades in which authorities have looked … Continue reading
Posted in Economy
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Why inequality increased and what to do about it
The evidence clearly shows that the rise in inequality has been principally driven by technological change. But governments can make a difference. Education and training policies to assist the adjustment to new technologies can help preserve the distribution of income … Continue reading
Posted in Economy
11 Comments
What real reform looks like: increase wages and tackle inequality, climate change
The economy has been stagnating for years under successive Coalition governments. It badly needs fixing, but it can be done. This is how.
Posted in Economy, Top 5
19 Comments
Don’t scare the horses: Morrison’s business-friendly reforms change little
While the Prime Minister has acknowledged Australia needs to reconsider its policy framework to restore full employment, the areas identified for reform are poorly chosen, and little of substance is likely to emerge. An alternative will be discussed tomorrow.
The medium-term budget outlook and its policy implications. Part 2
Yesterday Part 1 considered the medium-term outlook for the budget deficit and government debt. Today Part 2 discusses the Parliamentary Budget Office projections of revenue and expenditures, how realistic they are, and why policies will need to change if we … Continue reading
Posted in Economy
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The medium-term budget outlook and its policy implications. Part 1
Instead of being “back in the black” this financial year, the budget outlook is for deficits continuing for the foreseeable future. The critical issue for policy is how should the budget deficit be wound back, how far and how quickly.
Posted in Economy
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From here on our recovery will need more than fiscal policy, it’ll need redistribution
From the 1980s right through to the global financial crisis, the standard response in Australia and elsewhere to too weak or too strong an economy has been monetary policy — the manipulation of interest rates by a central bank, in our case … Continue reading
Can macroeconomic policy ensure the inflation target?
If Australian wages do not increase sufficiently in line with economic capacity, it risks a shortfall in aggregate demand that will make the achievement of an inflation target very difficult, or even impossible.
How can we best ensure that retirement incomes are adequate?
The present superannuation contribution (SG) rate of 9.5 percent can finance an adequate retirement income for most middle-income people, provided they fully draw down their savings. Logically, therefore, any action to stop further increases in the SG rate should be … Continue reading
Morrison’s faulty logic in opposing a net zero carbon emissions target.
Contrary to Scott Morrison’s contention, we can usefully set a target date to achieve net zero carbon emissions without exact knowledge of the cost and how the target will be delivered.
Posted in Climate, Politics
6 Comments
Interest rates: why a further cut is not a good idea
Interest rates are already at record lows. Any further cut will not help the economy but will add to the inequality of wealth in this country.
Posted in Economy
2 Comments
Why Labor should scrap the Stage 3 tax cuts
The Government’s stage 3 tax cuts due to come into operation in 2024-25 should be scrapped. They are too costly and too biased in favour of the highest incomes. Instead, there are other better ways to support economic growth using … Continue reading
Posted in Economy
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How does the 2020-21 Budget stack up?
The budget deserves a “pass”, but the government is favouring tax cuts which may not all be spent. Also much of the assistance appears to be poorly targeted to the areas which have most suffered a loss of jobs.
Posted in Economy, Politics
4 Comments
Scotty from marketing: A fact check
Trump is notorious for his lies, but it is time that a fact check was applied to Scotty from Marketing, too. Without it I doubt we can elevate the political debate from its present populism.
Deregulation or better regulation?
Too often the public debate is around whether there should be less regulation, but typically regulation exists for a reason, and the issue should be how to regulate more effectively.
Posted in Economy
2 Comments
The Budget – possible additional measures
Yesterday I considered the economic outlook and concluded that on present policies the pace of the recovery post-Covid is likely to be too slow. Today’s article discusses what extra stimulus should be incorporated in the Budget in two weeks, and … Continue reading
Posted in Economy, Politics
2 Comments
The economic outlook and the Budget
In two weeks the Government will bring down its delayed 2020 Budget. This article discusses the economic outlook and concludes that further stimulus measures will be necessary in the forthcoming Budget. The desirable size of that additional fiscal stimulus and … Continue reading
Posted in Economy, Politics
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Infrastructure Stimulus: there are smart projects out there, if we care to look
Infrastructure spending is touted as the path to economic recovery, but our leaders can no longer afford to throw billions at programs with little economic merit or policy logic.
Superannuation: how much do we need to save?
A hot political issue is whether to proceed with the legislated increase in superannuation contributions from 9.5 to 10 per cent next July. There are pros and cons but if the superannuation increase is further postponed, there should be an … Continue reading
Posted in Economy, Politics, Top 5
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The economic outlook and taxation. Part 2
Yesterday Part 1 of this article argued that bringing forward the second and third stages of the Government’s legislated tax cuts would achieve very little economic stimulus and would damage the longer-term fiscal position. Part 2 today considers the future … Continue reading
Posted in Economy, Politics
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The economic outlook and taxation Part 1
The Covid-induced recession has turned out to be worse than we initially hoped writes Michael Keating. Part 1 of this article discusses the additional fiscal stimulus that will be necessary and why it should not include bringing forward the Government’s … Continue reading
Posted in Economy, Politics
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We still need to provide adequate retirement income.
The current early drawdowns of superannuation balances will reduce those workers’ retirement incomes. It would therefore be desirable to allow and encourage them to restore their superannuation balances as and when they can.
Posted in Politics
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The Reagan and Thatcher legacies: sorting truth from fantasy.
Neo-Conservatives want to believe that Reagan and Thatcher achieved smaller government, lower taxes, and a booming economy. The reality, however, is very different.
Posted in Economy, Politics, Top 5
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The Government’s economic response to Covid-19.
The Government’s long-awaited update of the fiscal and economic outlook contains no real surprises. But what we still need to know is what the Government intends to do next when the present economic support measures run out.
Posted in Economy, Politics
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The Prime Minister’s reform agenda for skills
Although it is good that the Prime Minister has recognised the importance of skills, missing from his reform agenda are two of the most important issues: the nature of skills and how they are taught, and the use of skills … Continue reading
Posted in Economy, Politics
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The Grattan Institute’s Fiscal Recovery Plan
The economy is presently receiving an unprecedented, but time-limited, level of fiscal support. The report just released by the Grattan Institute provides a very good analysis of what is now needed to sustain the economic recovery.
Posted in Economy, Politics
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Universities and jobs – the Government’s changes are neither fair nor sensible
The Government’s proposed changes to the fee structures for university degrees are not fair, and contrary to the Government’s assertion, nor do these changes respond to the needs of the labour market.
Posted in Education
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National Cabinet to replace COAG: Part 2 of 2.
Part 1 of this article yesterday discussed the reasons why National Cabinet has been successful so far. Today, Part 2 will discuss how replacing COAG seek to define the future mandate of the National Cabinet and its revamped ministerial committees, … Continue reading
Posted in Politics
3 Comments
MICHAEL KEATING. National Cabinet to replace COAG: Part 1 of 2.
Scott Morrison has decreed that “COAG is no more” and will be replaced by his new National Cabinet. Part 1 of this article below, discusses the reasons for the initial success of both the National Cabinet and COAG.
Posted in Politics
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MICHAEL KEATING.. What should we do with the $60 bn left over from JobKeeper?
The discovery of an error of $60 bn in the costing of JobKeeper raises the issue of what should be done with this money? However, as JobKeeper was always incomplete these deficiencies should be the first call on this extra … Continue reading
Posted in Economy, Politics
5 Comments