Peter Dutton’s budget reply Speech is full of distortions and many of the key polices are flawed or we cannot be sure they will work as intended. The Labor Party might be criticised as too cautious, but the Coalition is clearly not ready for government. (more…)
Author: Michael Keating
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A cautious responsible budget
Labor’s pre-election budget provides well-targeted cost of living relief within the bounds of responsibility, but the restoration of living standards is some way off.
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Minority government: what will it look like?
After the election Australia is likely to have a minority government with the independents, who will hold the balance of power, negotiating each issue on its merits. But democracy is best served if each independent states before the election which party they will support to form a government by guaranteeing supply. (more…)
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Trump’s tariffs will not restore American manufacturing
The decline in manufacturing jobs is common to most developed economies and is not unique to the US. Further, Donald Trump is nothing if not delusional, and his tariffs will only damage both the US economy and others as well. (more…)
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Dutton’s war on waste
Contrary to what Peter Dutton would like the electorate to believe, reducing administrative waste will save very little money. If Dutton is serious, he would review major capital projects which lack proper evaluation, starting with his uneconomic nuclear energy proposal. (more…)
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Interest rates should start falling now
Australian inflation is almost back in the target range of 2-3%. The Reserve Bank should begin to cut interest rates now. This will help avoid a recession as well as substantially reducing cost-of-living pressures on the one third of households with a mortgage. (more…)
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Reforms are needed to ensure an adequate retirement income
Australians now have access to significant superannuation balances, but if superannuation is going to meet its purpose of ensuring an adequate income in retirement, reforms are needed to provide better access to a superannuation pension. (more…)
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President Trump and Australia’s National Security
Australia needs to try and persuade the Trump Administration that no country can expect to dominate our region and the benefits of cooperation. But if, as is likely, Trump refuses to accept a multipolar region then Australia must be prepared to act on its own and seek its security within Asia. (more…)
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Which party is the more competent economic manager – Labor or Liberal?
Judgments about economic management will be critical in the next election. Examination of their respective records and policies suggests that contrary to popular opinion, Labor is better than the Coalition. (more…)
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Dutton’s Economic Cons: household electricity bills to rise by $665 a year under Coalition
Like Trump, Dutton likes to portray himself as a strong man. But appearances are not everything, and Dutton is pretty much an economic policy vacuum. (more…)
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Trump’s economic delusions
Trump’s economic strategy is based on a series of delusions that will result in higher inflation, a bigger trade deficit and a loss in the value of the American dollar. How can that Make America Great Again? (more…)
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To avoid recession, cut interest rates next week
Interest rates settings depend on forecasts of price inflation, wages and unemployment. There is now sufficient evidence to suggest that the Reserve Bank should begin to cut interest rates soon and arguably at its December Board Meeting. The balance of risks if it stays there much longer is that the economy will fall into a full recession.
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Are you better off? If not, why not? Productivity, income distribution and the cost of living crisis
While lifting the rate of productivity growth is the obvious solution to the cost of living crisis, judging by the experience of most developed economies, it is not obvious how to restore productivity growth. (more…)
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A ceasefire in Lebanon – Gaza next?
Third party intervention led by the US and France has achieved a ceasefire in Lebanon. The US now needs to push for a settlement in Gaza where the combatants withdraw, and an external force is charged with maintaining the peace. (more…)
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Trump’s impact on the rest of the world, and Australia in particular
Somewhat surprisingly, careful analysis and modelling show that Trump’s crude attempt to Make America Great Again, mainly damages the American economy. The rest of the world, and Australia in particular, should proceed with their own business as usual. (more…)
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The US election campaign: Lessons for Australia
Just like in the US , the next Australian election will be decided by the cost of living. Both the US and Australian economies have performed quite well, in difficult circumstances. However, the lesson from the US election is that both Governments need to tell their story better. (more…)
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Changes to tertiary education funding fail to remedy “stupid inequity” of Morrison era
The changes to Tertiary Education funding announced by the Prime Minister last weekend, mostly benefit former students. Arguably there are other higher priorities to restore the funding of higher education and remove anomalies in the fees charged. (more…)
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Peace in Gaza: Part 2
A sustainable peace settlement in Gaza needs to meet the legitimate demands of the key parties, but given their inability to negotiate such an agreement themselves it will need to be proposed and implemented by the US and the major Arab nations under UN auspices. (more…)
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Peace in Gaza: Part 1
The death and destruction in Gaza continue, and now in Lebanon as well. There have been peace negotiations for a year, but so far unsuccessful. Today, Part 1 of this article examines why. Tomorrow Part 2 will discuss a possible way forward out of this disaster. (more…)
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Productivity growth has slowed: will it recover?
Restoring the rate of productivity growth is critical to future living standards, but unless technological change accelerates living standards may not increase as fast as we are used to in future. (more…)
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International comparisons of monetary policy
Much of the expert commentary on Australia’s monetary policy settings is guided by what is happening in other countries. However, monetary tightening can have a markedly different impact in different countries, and while Australia appears to have been more cautious, so far it seems to have managed well. (more…)
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Does the Reserve Bank need to change?
Shortly after he became Treasurer, in July 2022, Jim Chalmers announced a review of the Reserve Bank – the first since the current monetary policy arrangements were instituted in the 1990s. (more…)
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How to ensure a Gaza ceasefire
We are all appalled by the scale of the deaths and destruction in Gaza. Every day brings more terrible news. (more…)
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When should we expect interest rates to fall?
The Reserve Bank has explicitly warned against any expectation that interest rates will start to fall soon. On the other hand, the Treasurer recently claimed that the Reserve Bank is smashing the economy, implying that interest rates should fall soon. Who is right? (more…)
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The cost of living crisis is really a housing crisis
The evidence shows that the only households whose living costs have risen faster than their incomes are those homeowners with a mortgage. For the other two thirds of households, their incomes have risen faster than their living costs. Policy should therefore focus on why mortgage costs have risen so dramatically. (more…)
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Policy responses to the cost-of-living crisis
Improving housing affordability is the key to resolving the cost-of-living crisis, but the policy options are limited and will inevitably take time to have their desired effect. (more…)
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The cost of living and housing affordability
The cost-of-living crisis mainly reflects a decline in housing affordability. A consequence is that this crisis is much worse for middle-income people, who are typically middle-aged, and who are most likely to have a substantial mortgage. (more…)
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Clutching at straws: America will not maintain its economic dominance
Although rarely acknowledged, China is the world’s biggest economy, and it will most probably continue to grow faster than the US, its main competitor. (more…)
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Dutton’s ignorant, incompetent policies contradicted by evidence
Dutton has finally started to show his hand and build his campaign for the next election around energy policy and housing affordability. The problem is that his ignorance of the evidence demonstrates his incompetence. (more…)
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Labor’s 2024-25 Budget: competent but not outstanding
After considering Opposition criticisms, this article concludes that this Budget reflects Labor’s competent economic management. However, a more ambitious tax reform agenda is needed to adequately provide all the services that Australians expect. (more…)