Category Archives: Economy

Bill Kelty, the former Australian Council of Trade Unions (ACTU) Secretary (and my old boss) recently praised Prime Minister Scott Morrison in The Conversation and his: ‘Go big, Act fast and keep the lights on’ approach to Coronavirus.

Australia’s 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.

After all the forecasts and speculation, now we know the worst. Today’s numbers from the ABS lay out the catastrophic impact of COVID-19 on the Australian labour market.

Having ditched the Holy Grail of a budget surplus, admitting in the process – in deeds if not in words – that unemployment is a bigger problem than government debt, the Morrison government now faces a serious quandary.

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.

Australia is looking to rebuild its industrial base to achieve greater self-sufficiency in manufacturing. But we are seriously under-investing in creating the engineering and technology knowledge and skills that will be required to achieve this outcome.

Australia should have restricted arrivals from the USA on the 11 March, in the same way as it did for Italy. Failure to do so has caused extra immeasurable cost and trauma to the Australian economy and people.

The sight of Centrelink queues snaking around the block past shuttered shopfronts in cities, suburbs, and towns across Australia leaves no doubt that COVID-19 is having a big impact on Australian unemployment. But just how big?

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 … Continue reading →

The coronavirus crisis brings to an end 20 years of high migration to Australia. On current policy settings, net migration in 2020 and 2021 will be close to zero, if not negative. Australia is looking at the biggest turning point … Continue reading →

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.

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 Morrison’s proposed business-friendly policy settings will not help. … Continue reading →

In making and explaining major policies on the run, it is easy to slip into confusing dichotomies and create perverse incentives. Unsurprisingly, the Job Keeper program is one of them.

The Covid crisis is also producing winners and institutional bond investors are winning big. Quantitative easing added to conventional monetary policy is just what they want. And so is forward guidance.

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 4½ per cent of GDP this year and as much as 10 per cent … Continue reading →

The Government’s 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 … Continue reading →

“Australia is a lucky country run mainly by second rate people who share its luck”, author Donald Horne proclaimed in 1964. Horne was being ironic and hated that people took it to mean that our country is somehow special or … Continue reading →