Offered a menu of issues to choose from as the most important in the May 21 election, Australia’s top economists have overwhelmingly zeroed in on one.
The Conversation and The Conversation surveyed nearly three quarters the top 50 economists. Economic Society of Australia have nominated “climate and the environment” as the most important issue for the incoming government and the most important in the election.
The 74% of those nominating climate and the environment were more than twice that of the 4 substantial runners up: housing affordability and affordability, tax reform, education, and health.
None of the 50 surveyed nominated “lower taxes” as important for the election or the incoming government, and only 8% nominated support for business.
The survey selected economists are leaders in areas such as economic modelling and public policies. They include former officials from the IMF, Treasury, and OECD, as well as a former member on the Reserve Bank board.
Many people noted that their priorities were not aligned with those of the major parties.
Guyonne Kalb of The University of Melbourne noted that Australia was particularly vulnerable in climate disasters. The population seemed to be more aware of this than the government. Being the last nation to use outdated technologies was “never wise if it can be avoided”.
Young Economist Award Stefanie Schurer said Australia had fallen so far behind the richer countries on measures to reach net zero it ranked “dead last” according to the Climate Council. It was not only embarrassing, but “incredibly shortsighted” given Australia’s exposure to extreme weather events.
Flavio Menezes, from The University of Queensland, said that the transition needed was huge. Australia needs to increase its large-scale solar, wind, and hydro generation by 800%. This is a goal that both sides of politics accept.
The current government’s motto of Technology, not taxes was “an empty slogan”. Many of the necessary spending would need to be paid for by taxes.
A carbon tax could be an option
The University of Queensland’s John Quiggin described the campaign as the most depressing he had seen in more than 50 years of paying attention. Neither major party offered anything of substance.
Participants noted that a carbon-pricing (Tax) of the kind Australia had between 2012 and 2014. would provide a permanent incentive for every sector of the economy to find new ways to cut emissions, but was “not on the table”.
Rana Roy, a consultant economist, stated that Australia actually had NumerousThere are several types of carbon price, but they vary widely. Emissions in some sectors were not taxed while those in other sectors (such a petrol sector) were heavily taxed.
The third economist surveyed, who identified tax reform as an important issue, said that it would be necessary to address the other important issues: housing affordability, health and education.
Saul Eslake stated in an ideal world that both sides of politics should have an intelligent conversation about the best ways to raise the extra one- to two percentage point of GDP in tax revenues to fund priorities such as aged care and national disability insurance.
A tax reform would be a great help
The University of Melbourne’s Kevin Davis said next year’s planned Stage threeTax cuts directed at higher income earners (and costed at the Parliamentary Budget Office $76.2 billionOver four years) should be scrapped solely on equity grounds.
Superannuation tax needs to be changed, and capital gains taxes concessions should be reduced. The “massive” tax concessions offered to home buyers and buyers of investment properties were among the chief reasons for high prices.
Curtin University’s Rachel Ong ViforJ said changes that moved away rewarding the ownership of non-productive assets toward rewarding work would be needed to address the intergenerational transmission of debt.
Increasing productivity would be a benefit
The University of Sydney’s Nigel Stapledon said neither side of politics seemed focused on the emerging risk of 1970s and 1980s-style inflation.
The idea that government could drive real wage growth without productivity improvement and not feed inflation is a risky policy and economics.
Melbourne University’s John Freebairn said productivity growth had been below world’s best practice for a decade, making it hard to lift incomes and collect tax.
Reduce emissions, not petrol taxes. What economists want in the budget
Tax reform could increase tax revenue by increasing productivity and cutting inequality. Better regulations and less wasteful government spending could also help.
Former OECD official Adrian Blundell-Wignall said Australia didn’t have a plan that offered less dependence on digging holes. For sustainable growth to be possible, research and development are key.
But there’s little optimism
None of the 50 panel members expressed optimism about either side of politics providing what was needed, at the very least during the campaign.
Eslake (a Tasmanian) said he was more likely to “tread in thylacine-poo on my front lawn of a morning” than to see the intelligent conversations that were needed between now and voting day.