WA’s economic mismanagement is not a reason to review how the GST is carved up

The questions in the terms of reference, that the Treasurer has given to the Productivity Commission, were answered almost five years ago by a similar inquiry, which found many of the concerns about the current system were overstated. And, contrary to the Treasurer’s insinuation that “the current approach of horizontal fiscal equalisation creates disincentives for reform”, the previous inquiry concluded there was not enough evidence of efficiency losses in the economy. Saul Easlake (University of Tasmania) explains.

Productivity Commission stance has potential for social housing gains

Hal Pawson (University of NSW) argues that the commission report’s soberly couched analysis appears focused on how to make the existing social housing system work more efficiently and effectively to deliver established obligations. Furthermore, diversifying social housing on a larger scale would call for Commonwealth government leadership in strengthening the regulatory framework and making it truly national.

Gonski model was corrupted, but Labor and Coalition are both to blame

The Gonski report was designed to clean up Australia’s opaque and complex system of school funding and address significant inequalities by establishing a new needs-based funding model, but then messy politics got in the way at the point of implementation. Glenn C. Savage (University of Melbourne) Steven Lewis (The University of Queensland) argue that the result was a perversion of the Gonski ideal – an inconsistent patchwork of approaches across the nation that protected the vested interests of non-government schools.

States will ultimately pay for unsustainable federal fiscal promises

Richard Eccleston (University of Tasmania) and Neil Warren (University of NSW) explain that a large part of the federal budget repair will fall on the states, regardless of which party wins on July 2.

Turnbull government continues the traditional erratic approach of the Commonwealth to hospital funding

Stephen Duckett (Grattan Institute) explains in The Conversation the erratic behaviour of the Commonwealth over several decades in funding the state hospital system.

Key policy challenges facing new Ministers in the Turnbull Cabinet

Writing in The Conversation, a panel of leading academics outlines the key policy challenges facing new Ministers in the Turnbull Cabinet.

Reforming federalism in Australia

Cheryl Saunders (Laureate Professor, Melbourne Law School at University of Melbourne) writes in The Conversation that the Australian Constitution sets up the framework for federal democracy surprisingly well, at the level of principle. But when governments pool their authority, horizontally or vertically, as in federations they sometimes need to do, the additional challenge of federal democracy is to find ways of ensuring that co-operation achieves its goals without eroding democratic principle and practice.

A Greek tragedy—The failure of European political economy under crisis

Four excellent articles in The Conversation on the absurd outcome emerging in the European debt crisis. The articles neatly tie together most of the different aspects of eurozone policy and the Greek debt crisis.

• How the hard-line approach taken by the IMF and Germany, against the pluck shown by Greece not to be bullied into oblivion (and, in so doing, courting economic collapse?), is explained by game theory is the subject of an article by Partha Gangopadhyay (University of Western Sydney).

• Barry Eichengreen (University of California, Berkeley) reviews his original prediction that an exit from the eurozone would never occur, and why that turned out to be incorrect—albeit, in an extreme situation characterised by political incompetence and perhaps even a disregard for economic sensibility. 

• André Broome (University of Warwick) explains why the IMF has become the enforcer of controversial structural reforms to a country experiencing severe economic distress, the social consequences of which have been disastrous over the last seven years.

• Wesley Widmaier (Griffith University) explains that the early European ideal was not about free trade or convertible currencies—it was about enhancing the collective welfare as a means to political union. However, the economic dog nevertheless came to wag the collective welfare tail, leading to a shift toward more free market, hard money views.The result would see European economic institutions evolve to such an extent that they place financial rectitude and monetary stability ahead of growth.

There is probably one thread missing in these explanations, and that is the role of fiscal policy—but the role of fiscal policy in the eurozone is a vexed issue in any case. I've added a few editorial notes on this issue, but the topic could do with a much more extensive explanation.

Explaining the GST distribution method

John Freebairn (Professor of Economics at the University of Melbourne) has written a useful short note on how the GST allocation process works and the context for WA’s small share. This article was originally published in The Conversation on 17 April 2015.

Commonwealth inconsistencies in respecting State sovereignty

Alan Fenna (Professor of Politics at Curtin University) notes that the latest bout of federal interference from Commonwealth Ministers in the GST distribution debate is tantamount to bullying WA to accept the federal government’s push for privatisation of state assets―and runs counter to the Commonwealth Government’s stated policy position on respecting the sovereignty of the States. This article was originally published in The Conversation on 14 April 2015.

The Commonwealth can change the GST without the States

This is a concise and clear article by Dale Boccabella and Kathrin Bain (both from the School of Taxation and Business Law at UNSW) on the legal effects of the GST lock-in mechanism (originally published in The Conversation). It explains why the "requirement" for the Commonwealth to gain the agreement of all the States prior to amending the GST legislation is not legally binding. Rather it is a "soft law" which only guides the behaviour of the Executive.