Monday, June 12, 2017

Is Australia's economy really a world-beater?

The claim that Australia has  gone twenty-six years without a recession is true, but only if you accept three assumptions. Unfortunately, none of them has any official or intellectual basis. Tim Colebatch explains in Inside Story that that economics has no accepted definition of a recession. In public debate, the gap has been filled by the silly measure journalists love to use: a recession occurs when seasonally adjusted GDP goes backwards for two quarters.

Fancy government financing could still cost the taxpayer

Project financing should minimise the level of public subsidy needed to deliver the project; and where risk is borne by the private sector, it should be transparently priced and deliver clear value for money for the taxpayer. Marion Terrill (Grattan Institute) explains.

Friday, May 19, 2017

Do Australian banks have double the return on equity of banks in other developed economies?

Jim Minifie (Grattan Institute) checks, and Rodney Maddock (Monash University) reviews the Treasurer's claims that Australian banks have a return on equity about twice that of overseas banks. While they find that claim is true, its not because Australian banks are earning super profits - it's because the banks of the US and Europe were affected badly by the Global Financial Crisis and are still under-performing.

Tuesday, May 9, 2017

Tax on ‘unearned gains’ is the missing piece of the affordable housing puzzle

Extending capital gains taxation to cover annual improvements in land value would improve discourage housing speculation and improve housing affordability. Brian Feeney (University of Queensland) explains.

Government spending from Howard to Turnbull

Alan Duncan and Rebecca Cassells (Curtin University) explain Commonwealth expenditure patterns since 1998. 

Thursday, May 4, 2017

The government is swimming against the tide on Westpac’s Adani decision

No one is going to make even short-term profits out of the Adani coal mine, with its huge upfront capital investment, unless they get a substantial subsidy from the taxpayer. And the long-term prospects look grim. David Peetz and Georgina Murray (Griffith University) explain that those who argue that Westpac’s decision was “illogical” are swimming against both the financial and technological tides.

Why biased budget forecasts make poor politics

Budget outcomes have continued to surprise because of systematic revenue forecast errors by Treasury, which dwarf actual policy changes in explaining changes to the budget bottom line. These are compounded by the wilful blindness of politicians, happy to use these forecasts to justify avoiding difficult decisions. John Daley and Danielle Wood (Grattan Institute) explain.