Michael Keating

Michael Keating is a former Secretary of the Departments of Prime Minister and Cabinet, Finance and Employment, and Industrial Relations. He is presently a visiting fellow at the Australian National University.

Michael's recent articles

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 contingent on accompanying policies to remove the present impediments to using retirement savings efficiently.

Morrison's faulty logic in opposing a net zero carbon emissions target.

Contrary to Scott Morrisons 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.

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.

Why Labor should scrap the Stage 3 tax cuts

The Governments 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 the money, such as Labors recently announced policy of increased subsidies for childcare.

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.

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.

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. Todays article discusses what extra stimulus should be incorporated in the Budget in two weeks, and what form that stimulus should take.

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 the possible new measures to accelerate economic recovery will then be discussed in a subsequent article tomorrow.

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 offsetting increase in the minimum wage.

The economic outlook and taxation. Part 2

Yesterday Part 1 of this article argued that bringing forward the second and third stages of the Governments legislated tax cuts would achieve very little economic stimulus and would damage the longer-term fiscal position. Part 2 today considers the future demands for government spending, and therefore how much revenue will be necessary after economic recovery.

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 Governments legislated tax cuts. Part 2, tomorrow, will discuss the key requirements for revenue raising.

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.

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.

The Government's economic response to Covid-19.

The Governments 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.

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 in the workplace.

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.

Universities and jobs - the Government's changes are neither fair nor sensible

The Governments proposed changes to the fee structures for university degrees are not fair, and contrary to the Governments assertion, nor do these changes respond to the needs of the labour market.

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, and what are the chances of these new arrangement being any more successful than the previous Council of Australian Governments (COAG).

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.

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 money.

MICHAEL KEATING. Why the coronavirus shouldnt stand in the way of the next wage increase (The Conversation 26.5.20)

Wage increases are widely believed to pose a threat to employment. But this ignores their role in supporting demand growth. Instead, wage increases consistent with maintaining an equilibrium distribution of income are necessary to sustain economic growth and employment.

MICHAEL KEATING. When should the budget deficit be unwound?

Australias present budget deficit is unprecedented, but it represents an appropriate response to the recession. The resulting debt does not present a future problem, and the deficit should only be unwound as private demand recovers.

MICHAEL KEATING. Covid-19: What we need to know.

An international inquiry into the origins of the Covid-19 virus misses the main point: what the world really needs is an inquiry into the effectiveness of the response.

Update on the economic outlook

The government and its advisers expect this recession to be relatively short-lived, but the recovery may well be less complete than they anticipate and are planning for.

MICHAEL KEATING. Covid-19 and inter-generational equity

The increase in public debt in response to Covid-19 will not result in an unacceptable debt burden on young people. Instead, anyone seriously concerned about inter-generational equity would support action to reduce climate change and to improve the availability of housing.

MICHAEL KEATING. Economic Policy post Covid-19. Part 2.

Today I address (i) how best to support aggregate demand, and (ii) how quickly to restore budget balance. In Part 1 of this article yesterday I concluded that these are the two key issues for future economic policy.

MICHAEL KEATING. Economic Policy post Covid-19. Part 1.

This article considers economic strategy post Covid-19. In Part 1, today, it is argued that the principal requirement will be to generate a faster rate of increase in aggregate demand, and that Morrisons proposed business-friendly policy settings will not help. Part 2, tomorrow, will consider how best to increase aggregate demand and what that implies for the budget balance.

MICHAEL KEATING supports Pearls and Irritations.

Pearls & Irritations is the best blog I know to find articles that keep me up to date with the findings of policy-relevant research and expert independent evidence-based assessment and comment on a wide variety of critical policy issues.

MICHAEL KEATING. Covid-19 and Future Fiscal Policy

Covid-19 will have a big impact on fiscal policy over the next few years. The Budget balance is estimated here to show a deficit equivalent to 4 per cent of GDP this year and as much as 10 per cent next year. But overall the size of the Governments fiscal response seems appropriate, and it should be manageable in the future.

MICHAEL KEATING. Covid-19 and the Economic Outlook

The Governments unprecedented cash splash to shore up the economy will save us from what could have been a much worse recession. This makes it doubly strange that the Government is so uncommunicative about the future economic and fiscal outlook and what it hopes to achieve.

Covid-19 and the role of expert advice

The response to Covid-19 has raised an important question about the role of expert advice in the formulation of public policy, and whether it can and should be independent advice.

MICHAEL KEATING.- The Third Economic Response to the Coronavirus

The latest economic response to the coronavirus is the third economic package announced in less than three weeks. Clearly more should have been done earlier, but the structure and scale of the Governments overall economic response now seems more commensurate with the size and impact of the economic shock.

MICHAEL KEATING.- Good health policy is good for the economy

The Government seems to think that it must balance the needs of the economy against the actions needed to stop the spread of the coronavirus. In fact this is not true, and Australias future economic capacity will fall if the virus is not defeated as quickly as possible.

MICHAEL KEATING.- The latest economic response to the coronavirus

These are very uncertain times, but the Government seems to be playing catch-up, both with our health and the economy. In addition, there are continuing questions about the structure of the Governments economic response and the effectiveness of some of the measures.

MICHAEL KEATING. The Government's Economic Response to the Coronavirus.

The Governments economic stimulus package has generally been welcomed. But how good is it, and what are the implications for the longer-term economic outlook?

MICHAEL KEATING. Continuing economic stagnation

Wednesdays release of the national accounts for the December quarter reported better economic growth than many of the pundits feared. But there is no cause for celebration.

MICHAEL KEATING. How good is the labour market?

The Australian economy has been stagnating for the last five years, with annual GDP growth averaging only 2 per cent, and only 1 per cent for the last four quarters ending last September.

MICHAEL KEATING. The Gaetjens Report: a footnote

The Government has refused to release the Gaetjens report which purportedly exonerates the former Minister, Bridget McKenzie, and thereby the Government from charges of political bias in the distribution of the Community Sport Infrastructure grants. But why this refusal to release the report the only obvious answer is because the report cannot stand-up to public scrutiny.

Scomo and the Public Service: How Bad Can It Get?

The Report by the Secretary of the Department of Prime Minister and Cabinet, Phil Gaetjens, into Bridget McKenzie's handling of the Community Sport Infrastructure grants fails to address key questions and raises serious concerns about the relationship between the Government and the Public Service.

MICHAEL KEATING. Scott Morrisons Policy Agenda

As is frequently observed, Scott Morrisons Government has a remarkably thin policy agenda. This article explores why this lack of ambition indeed resistance to change makes perfect sense from Morrisons point of view.

Dwelling construction is still falling despite record low interest rates

Monetary policy has lifted the prices of the most expensive dwellings, but this impact is yet to flow through to the rest of the housing market. This experience reinforces doubts about the effectiveness of monetary policy when inflation and therefore interest rates are very low.

MICHAEL KEATING.-Trumps fantasies and trade realities.

Trumps trade war with China cannot and has not succeeded. But Trump risks doing major damage to the rules-based global trading system and the future of the world economy.

MICHAEL KEATING. Policy Advice: The Thodey Review of the APS and the Governments Response

This article discusses the key role that the Australian Public Service (APS) should play in the development of government policy and the recommendations that the Thodey Review of APS makes to restore that role. Unfortunately, the Government is not interested, and has rejected all these recommendations.

The Budget surplus: is it believable and at what cost?

The Government is triumphing its prospective Budget surplus, but are the economic forecasts for economic recovery realistic, and can the surplus really be achieved while guaranteeing the essential services on which Australians rely.

MICHAEL KEATING. Economic stagnation continues

Last Wednesdays release of the national accounts for the September quarter confirmed what we already knew economic stagnation continues. Most importantly, it is hard to see why the economy will ever improve under present policies. Instead we need a new and different economic strategy.

MICHAEL KEATING. Retirement Incomes Review: Part 2

The Governments independent Review of the retirement incomes system has identified four criteria against which that system should be judged: adequacy, equity, sustainability and cohesion. Yesterday I reviewed the performance of the Australian retirement income system against the criteria of adequacy. This article completes the review against the other three criteria.

MICHAEL KEATING. Retirement Incomes Review: Part 1

The Mercer Global Pension Index rates the Australian retirement income system as number three in the world. Nevertheless, the Government has commissioned an independent Review, and this article and another tomorrow discuss whether and how our retirement income system might be improved.

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