Lessons from Australia's experiment with carbon pricing

Hugh Saddler (Australian National University), writing in The Conversation, analyses detailed National Electricity Market (NEM) operational data from the Australian Energy Market Operator and finds that emissions and emissions intensity, which were increasing until shortly before June 2012, fell continuously for most of the two years to June 2014 (during which carbon pricing was in place).

How the Greek crisis unfolded

The economics team at NAB has put together a great slide pack explaining the evolution of the Greek debt crisis (link). My view is that the ultimate role of Governments is to improve the well-being of the people. However, the action of Euro-zone Governments in the Greek crisis has been the complete antithesis of this, highlighting the political immaturity of the Euro-zone experiment. And despite all of the pain inflicted on Greece, their position is worse and very unlikely to recover. Looking forward, Greece's only options would seem to be withdraw from the Euro-zone or wait for a miracle.

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.

Boats secrecy leads to bad policy without democratic accountability

Alex Reilly (Director of the Public Law and Policy Research Unit, University of Adelaide) writes in The Conversation that there is confusion about the role of government, and the role of information in holding the government to account. The agencies of the bureaucracy are a central part of government. They carry out the will of the executive and as such need to be open to the same scrutiny as ministers themselves.

Why pensioners are cruising their way around budget changes

David Ingles and Miranda Stewart (both from the Crawford School of Public Policy at ANU) write in The Conversation that anecdotal evidence of pensioners significantly changing their lifestyle behaviour is a rational response to the recent Budget changes to the income and assets tests for the part pension. In contrast to the Budget changes, the Henry Tax Review and the Shepherd National Committee of Audit both recommended that the separate age pension asset test should be replaced by a comprehensive means test.

FactCheck: Is BHP Billiton Australia’s largest taxpayer, averaging $8-10b in tax a year?

Finally—an independent analysis, setting the record straight on corporate taxes paid. Roman Lanis and Ross McClure (both of UTS and reviewed by Rick Krever from Monash University) write in The Conversation that the claims of BHP Billiton in respect of its taxes paid in Australia are somewhat true—it is Australia's largest taxpayer; it pays an average of around $6 billion annually in corporate tax, but it has exceeded $8 billion in 2012 and 2013 (and it pays$8-10 billion only if royalties and rent taxes are counted as taxation); its effective tax rate was 45% in 2009 but is more usually in the range of 25-35% (the statutory rate is 30%).

How will a 40% cut in Australian aid affect Indonesia?

Don K. Marut (Lecturer in International Relations at Bina Nusantara University) writes in The Conversation that a huge cut in Australian development assistance to Indonesia will not be a big issue for most ministries, since aid accounts for a small proportion of the budget and the funds are mostly only for expanding the reach of the government projects.

• Indonesia limits aid to be no more than 3% of the national annual budget. This is to ensure that Indonesia’s development does not depend on foreign aid and, most importantly, that the country’s development policies are not dictated by foreign donors. 
• Indeed, Australian aid cuts will affect two main actors: the companies (mainly from Australia) that implement the projects in Indonesia; and the consultants who have long been acting as “aid rent seekers” in Indonesia. Both actors in fact significantly reduce the flow of aid funds to the beneficiaries.