Ian McAuley

Ian McAuley is a retired lecturer in public finance at the University of Canberra. He can be contacted at “ian" at the domain “ianmcauley.com” .

Ian's recent articles

IAN McAULEY. The more we examine the Coalition's 'plan' to cut corporate taxes, the more is revealed of its economic shortcomings.

The more we examine the Coalitions proposal to cut corporate taxes, the more is revealed of its economic shortcomings. Many have commented on the inequity of cutting corporate taxes while tightening eligibility for disability support, reducing benefits for new welfare recipients, freezing Medicare rebates, and inadequately funding health and education.

Ian McAuley. Are Conservatives better economic managers?

Heres a short quiz. Over the last fifty years Australia has had 17 federal treasurers. Which two have won the coveted Euromoney Finance Minister of the Year award? As a memory jogger, below is a list of treasurers in chronological order. William McMahon (Lib) Leslie Bury (Lib) Billy Snedden (Lib) Frank Crean (Lab) Jim Cairns (Lab) Bill Hayden (Lab) Phillip Lynch (Lib) John Howard (Lib) Paul Keating (Lab) John Kerin (Lab) Ralph Willis (Lab) John Dawkins (Lab) Peter Costello (Lib) Wayne Swan (Lab) Chris Bowen (Lab) Joe Hockey (Lib) Scott Morrison (Lib) Keating won it in...

Ian McAuley. Labor's policies.

Amid all the political chatter about tensions between Turnbull and Morrison, a possible early election, and the laundering of donations to the Liberal Party, Labor has released a substantial policy document Growing together: Labors agenda for tackling inequality. With a gathering of Labor luminaries Jenny Macklin (who has main carriage of the policy), Bill Shorten, Chris Bowen, Andrew Leigh it was hardly surprising that the media had a strong presence at its launch at ANU late last month. But it turns out that the journalists were more interested in a photo shoot than in public policy,...

Ian McAuley. The government says that tax cuts are good for workers!

Arthur Sinodinos suggestion of a cut to the corporate tax rate doesnt seem to be the smartest way to start an election campaign. For a start, its not clear how such generosity would be funded. Earlier this month there was a flurry of excitement when iron ore prices rose. For a few days the idea that higher commodity prices might boost the governments tax revenue was getting kicked around. But that commodity price rise was short-lived. Even conservative economists dont necessarily call for a cut in corporate taxes. They believe that if the government can find any spare...

Ian McAuley. Chris Bowen and 'The Money Men'.

Political disunity comes in two forms. One, which we witnessed in the Rudd-Gillard years, is the subtle attack on the authority of the party leader. The other and more serious form is a conflict about policy. Once Tony Abbott announced his intention to hang around it was clear that the Turnbull Government would suffer the disunity of the first form. Abbotts ridiculous claim last week that he could have won the coming election is a pretty good indication of why he wants to hang around. And its now evident that the Government is being torn apart over economic...

Ian McAuley. The only unifying thread in the Liberal Party is a compulsion to keep Labor out of office.

There is a German saying The less the people know about how laws and sausages are made, the better they sleep at night. In his book Credlin & Co (Black Inc 2016), an expos of the political relationship between Tony Abbott and his loyal Chief of Staff, Peta Credlin, Aaron Patrick of the Financial Review takes us inside Abbotts sausage factory. At one level its a story thats been around for 500 years, which is when Machiavelli warned about the folly of the prince who surrounds himself with a protective guard to flatter him and protect him from...

Ian McAuley Private health insurance does the lady protest too much?

Sussan Ley, the Commonwealth Health Minister, has hit out at private health insurers bid for a six per cent price increase. In view of the strong support the Coalition has always given private health insurers, such public criticism from a Liberal Party minister may surprise us. As one-time Prime Minister Tony Abbott said private health insurance is in our DNA. It would be reassuring to believe that the Sussan Ley has come to recognise private health insurance (PHI) for what it is a high-cost financial intermediary that does nothing to take pressure off public hospitals and that...

Ian McAuley, Jennifer Doggett, John Menadue. Private Health Insurance companies are price takers. Prices are set by doctors and hospitals.

Repost from 22/10/2015 On Tuesday the Australian Competition and Consumer Commission (ACCC) released itsreport on private health insurance. Private health insurance (PHI) was also in the news a day later with the standing down of the CEO of Medibank Pte, the largest PHI company. The ACCC report has been a regular report since 1999, when the Howard Government introduced a swag of subsidies for private health insurance. It covers specific consumer issues, such as possible false or misleading representation of products, anti-competitive behaviour, and the incidence of unexpected out-of-pocket expenses. Because government policy is taken as...

Jennifer Doggett, Ian McAuley, John Menadue. Four Corners: No wonder were wasting money in health care we got the incentives wrong

Repost from 06/10/2015. A recently-aired ABC Four Corners program aptly titled Wasted exposed three areas of unnecessary, ineffective and outright dangerous health interventions, in knee, spinal and heart surgery. The shows host, Norman Swan, presumably extrapolating from the findings in those three areas, claimed that waste could be as high as 30 percent of all health care expenditure. Perhaps thats an overstatement, but the point made by Swan and by most of the ten other clinical experts who appeared on the program is that we just dont know how much waste there is in health care because...

Ian McAuley. Economic Management, Lobbyists and the Coalition Government.

On Abbotts political departure David Marr wrote in The Guardian Within days of his fall hes looking like a prime minister Australia once had a long time ago. Most people and organisations who have given him unwavering support ever since his narrow win as Opposition Leader in 2009 were remarkably quick in endorsing Turnbulls judgement that he has not been capable of providing the economic leadership our nation needs. Of course many independent economists had been saying that and more about Abbotts economic management it was indeed disastrous. But the surprising phenomenon was the sudden turnaround by...

Ian McAuley. Refugees and German redemption.

Imagine if Australia were to open its doors to 240 000 refugees. Thats twenty times our offer to take 12 000 Syrians, or around the same number as our total annual immigration in all categories. Its what Angela Merkels offer of 800 000 places would come to if scaled to Australias population. Although some may call Merkels offer a brave decision (a shorthand for suicidal political stupidity in the TV show Yes-Minister), it makes excellent sense on many criteria. One way to see it is in terms of hard-nosed economic self-interest. Germany, like most European countries,...

Ian McAuley. The ABC and a second chance.

Current Affairs Most reasonable people would be fully behind Mark Scotts spirited defence of the ABC as a public broadcaster, not a state broadcaster, reminding us that at times, free speech principles mean giving platforms to those with whom we fundamentally disagree. Tony Abbotts reaction to Zaky Mallahs remarks on Q&A is comparable to the religious fundamentalists hysterical reaction to the Charlie Hebdo cartoons. When Abbott said heads should roll, he was undoubtedly speaking metaphorically, but such language spurs hotheads to extreme violence. Its a chilling reminder that journalists have been beheaded for upsetting the delicate sensitivities of religious...

Ian McAuley. Inequality matters

Policy Series Australia has a reputation for egalitarianism, as a country where, in comparison with Old World countries, wages were good and, to quote Lawson, where people call no reason to call no biped lord or sir. Up to around 1980, Australias distribution of income was becoming more equal, but since then inequality has been on the rise: our income distribution is now back to where it was 80 years ago, in the years before the Pacific War.We still do better than the UK and the USA our usual points of comparison but in comparison with other...

Ian McAuley and Miriam Lyons - Governomics.

Current Affairs Governomics Melbourne University Press have just publishedGovernomics. The book is about the role of government and the importance of the public sector. The day afterGovernomicswas launched Geraldine Doogue interviewedMiriam Lyons and Ian McAuley on the ABC Radio National programSaturday Extra. The case for government In a fightback against the small government obsession, Ian McAuley and Miriam Lyons have written Governomics: Can we afford small government? It was published on May 1 by Melbourne University Press, and, and was covered in an extensive interview on Geraldine Doogues Saturday Extra on the following day. In...

Ian McAuley. Role of government

Fairness, Opportunity and Security Policy series edited by Michael Keating and John Menadue. Australia to the 1980s Government at the commanding heights For almost 200 years, from 1788 to the early 1980s, governments held the commanding heights of the Australian landscape. The Australia in which I came of age, the Australia of the 1950s and 1960s, would now be described as a command economy, notwithstanding the anti-communist rhetoric of the postwar era, championing the liberties of the free world. The journalist Paul Kelly commented that while we didnt live under totalitarian rule, we did live under...

Ian McAuley. If the government wants price signals, it should stop supporting health insurance.

Prime Minister Tony Abbott has declared the Medicare co-payment proposals dead, buried and cremated, but two related ideas behind it live on: Medicare is becoming unaffordable and our universal health system should morph into a program reserved for the poor. The governments original justification for the co-payment was to bring more price signals into Medicare. In itself the idea has merit, but the government has been going about it in a ham-fisted way. Whether by design or accident, the government seems to be undermining the principle of Medicare as a universal tax-funded program, paving the way for private...

Ian McAuley. The speech that Tony Abbott almost delivered to the National Press Club.

Was this a spoof? There are 'claims' that the following speech appeared on the websites of the Liberal Party and the Department of Prime Minister and Cabinet on the day that Tony Abbott gave his speech to the National Press Club, but it was taken down as soon as it was found that the Prime Minister was delivering a different speech - presumably one prepared entirely in his own office. For delivery National Press Club 2 February 2015 Let me start with a thank you to the people of Queensland. My gratitude may surprise some....

Ian McAuley. Pyne on education funding.

A good friend is someone who, when youve had too much to drink at a Christmas party, ignores your protests and takes your car keys to prevent you driving home sozzled. Youre surely grateful the next morning. When he gets back to the Adelaides leafy eastern suburbs and has regained his composure, Christopher Pyne might realize that Senators Lambie, Lazurus, Wang and Xenophon, in rejecting his university reforms, have saved him and his government from something almost as bad as a DUI conviction. In a country where almost everyone aspires to a tertiary education for themselves or their children,...

Is capitalism redeemable? Part 9: Restoring a moral voice

It is easy to allocate blame for our apparent entrapment in bad public policy. Tony Abbotts truculence, disregard for reason, inflexibility and broken promises all come to mind. As does the blatant partisan stance of the Murdoch media. Those who look for more general causes draw attention to dysfunctional party structures, an adversarial parliamentary system and sloppy journalism. It is useful to go a little deeper than these specific manifestations, and ask why so many of us are indifferent to such problems. Why have we turned our back on Enlightenment values those values which a century ago...

Ian McAuley. Is capitalism redeemable? Part 8: Inequalitys downward economic spiral

Lets start with what looks like a self-evident proposition. Countries with right-wing or neoliberal governments spend less on social security than countries with more left-inclined governments. Its a proposition university lecturers put to students of public economics, and the smarter students usually recognize that theres a trick in it. Harvard economists Dani Rodrik and Alberto Alesina studied the impact of neoliberal policies such as those pursued by Britains Thatcher Government, and found that those policies, because they resulted in widening inequality, actually increased the demand for social security payments. Whatever images they may project, its worth remembering...

Ian McAuley. Is capitalism redeemable? Part 7: Inequality a shameful waste

Australias program to increase world growth seems to be to cut social security benefits from the poor. When Geraldine Doogue asked Malcolm Fraser to comment on Abbotts G20 agenda, that was his summary of the present Governments economic policy Unfortunately, ministers such as Hockey and Cormann may not understand the sarcasm in his comment, because there is an economic philosophy supporting their very line: redistribute income towards the rich while disciplining the poor with hardship. Of course that doesnt get stated so bluntly; its padded in spin about a budget emergency, Labors waste and so on. But...

Ian McAuley. Is capitalism redeemable? Part 5: When finance goes its own way

One of the worlds most useful social institutions is money, but its hard to think of it in its social context. To understand the social value of money, think of a world without money, or a country where, through recklessness the currency has been debased, as happened in the hyperinflation in the Weimar Republic in the 1920s. Barter served us well when few articles were traded grinding stones, pituri and ochre in the Australian outback but not in Germany in the 1920s and certainly not now. Complex trades require some agreed currency, not necessarily having any...

Ian McAuley. Is capitalism redeemable? Part 4: Moral conflicts

Luxembourg (more properly the Grand Duchy of Luxembourg) is one of Europes smallest sovereign nations, both in population (about the same as Tasmanias) and area (about one thirtieth of Tasmanias). Many Australians might have driven right through it, not realizing that in a half hour or so they had crossed a whole nation. If corporate accounts are to be believed, however, it is a major centre of economic activity. Ikea, Fedex and Amazon all firms with global distribution functions realize a large proportion of their profits in Luxembourg, even though it is landlocked. But if you...

Ian McAuley. Is capitalism redeemable? Part 3: Why tax avoidance is bad for business

One article of faith in the corporate sector is that low taxes are good for the economy not only low corporate taxes but also low taxes in general. Echoing this sentiment, Treasurer Hockey and other spokespeople for the Government repeatedly promise to cut taxes. Even suggestions that the GST should be increased are set in the context of a tradeoff against income taxes, rather than any net increase in tax. For a start, lets get one myth out of the way. Although repeated surveys reveal that most people believe Australia is a high-tax country, the reality is...

Ian McAuley. Is capitalism redeemable? Part 2: Karl Marxs and Henry Fords shared understanding

Karl Marx was the intellectual father of communism, grandson of a rabbi. Henry Ford was the quintessential American industrialist, anti-union and anti-Semitic. They shared one insight, however. They both knew that capitalism could destroy its own markets. A plentiful supply of workers would keep wages low, to the benefit of industrialists. But those same industrialists needed markets for their products, and an underpaid workforce wasnt going to be able to afford the products coming off the industrialists assembly lines. Marx saw this as the root of capitalisms undoing. Ford saw it as a challenge. In 1914 Ford...

Ian McAuley. Is capitalism redeemable? Part 1: From markets to market societies

Republican victories in the US midterm elections have given conservatives a psychological boost, just days before the twenty-fifth anniversary of the fall of the Berlin Wall. (For the record, the 1989 collapse of European communism was a victory for those Germans, Hungarians and others who risked all to stand up against tyranny, but it has been appropriated by American conservatives as a triumph of unfettered markets over government.) Those celebrating the midterm results may be overlooking other recent developments, such as the resounding defeat of the Swedish centre-right coalition which had tried to privatize health and education. Even the...

Ian McAuley. A Year Of Tony Abbott.

The Abbott Government was elected one year and one day ago. Ian McAuley celebrates the countless successes that have slipped under the radar. A year into the Abbott Governments term we can reflect on its impressive economic achievements. The highlight is the repeal of the carbon tax. Its easy to stand up against tree huggers and leftwing romantics who prat on about global warming, but it takes political courage to stand up against scientists and economists. A close second has to be repeal of the mining tax. Some people refuse to understand how Australia works. For 200...

Ian McAuley. Ignored Budget issues.

Lobby groups and community organizations have provided their take on the Budget some with a whats in it for me approach, others with a more analytical line. My contribution from the stands is to draw attention to a few aspects which arent getting a great deal of attention. 1. Pension indexation. Im surprised that this hasnt been the subject to outrage. Perhaps people dont appreciate the difference between indexation to average earnings and indexation to consumer prices. As a rule of thumb, earnings rise about one percent faster than inflation. Thats why, over the last 50...

Ian McAuley. Pay for a GP visit.

The Commission of Audits proposal to charge a $5 or $6 fee for bulk-billed GP services has little to commend it. But that doesnt justify knee-jerk outrage from medical and consumer groups, or from the Labor Opposition, for there is no reason why Medicare should not incorporate fixed and limited co-payments. As it stands the proposal is poor public policy. It bears resemblance to the ideas in a discussion paper prepared by the Australian Centre for Health Research in October, proposing a $6 charge in order to bring price discipline into service use, but which contradicted itself by suggesting...

Ian McAuley- Picketty and the gap between rich and poor. Inequality of wealth is the problem rather than the inequality of income.

The Observer/Guardian carried a recent story/review about Thomas Pickettys address to the Institute of New Economic Thinking in Toronto. The story was headed Capitalism simply isnt working and here are the reasons why The story draws also on a recently published book by the French economist Picketty Capital in the 21st Century The newspaper story asserted You have to go back to the 1970s and Milton Friedman for a single economist to have such an impact (as Picketty) The Financial Times labelled Picketty a rock star economist. Paul Krugman in the New York Review of Books described Pickettys book...

Ian McAuley. Inequality in Australia.

AFinancial Reviewarticle on March 24 claimed Inequality in Australia has not deteriorated over the last 25 years, according to Reserve Bank of Australia research that undermines claims the gap between rich and poor has worsened The essence of the argument is that while, between 1993-94 and 2009-10, the distribution of income has become more unequal, we have all increased our consumption what we spend on food, transport, housing health care, recreation etc by the same amount. Therefore we arent becoming more unequal. The argument is superficially credible, but its a sloppy piece of journalism. For...

Ian McAuley, Jennifer Doggett and John Menadue. The case for government funding of healthcare.

In our joint submission to the Senate Inquiry into the Abbott Governments Commission of Audit, we drew attention to the fact that by international comparison, Australia is a low-taxed country. Furthermore, the trend in Commonwealth expenditures has been downwards since the mid-1980s. Our full submission can be found on my website (click above). In that submission we made the case for government funding of healthcare as a superior option. Extracts from this submission on healthcare follow. The flaw in the unaffordable argument (made by the Abbott Government in respect of health care) is that even if the government...

Ian McAuley. Cutting waste and costs in health.

There are three areas of saving to be made in health care real savings rather than movement of costs from public budgets to consumers. There can be savings in technical efficiency -- savings any engineer or cost-conscious manager seeks in a workplace. A strong example is making better use of information technology. There can be savings in purchasing. Australia used to negotiate some of the worlds lowest pharmaceutical prices. We now pay high prices. My concern is the third area improvements in allocative efficiency. That is, ensuring scarce resources are allocated where they will result...

Repost: Health care and the budget deficit in the US. Joint blog John Menadue and Ian McAuley

Repost for holiday reading. The political obstacles to these two major problems for President Obama are real and confusing. But the arithmetic is quite clear. If the US had a health service like those in countries without heavy reliance on private insurance, such as Australia, it could solve its budget deficit problem. Let us explain the arithmetic. US health care expenditure is already 18% of GDP and on present trends will reach over 20% of GDP by 2020. It is by far the highest in the world: most developed countries contain their health care expenditure...

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