Blog

Address to the 2018 ACTU Congress Panel Discussion: Ending Trickle Down Economics John Kenneth Galbraith once described trickle-down economics as the theory that “if you feed enough oats to the horse, some will pass through to feed the sparrows”. In Australia today, as in so many other developed nations where trickle-down economics has been ascendant for the last three decades, the horses have grown very fat, and the sparrows are starving. Like me, you’ve probably been appalled by recent reports that one in every five Australian children has gone hungry in the past 12 months. A recent survey of 1,000 parents commissioned by Foodbank showed 22 per cent of Australian children under the age of 15 live in a household that has run out of food at some stage over the past year. It’s shocking. And Australia is one of the wealthiest countries on earth. It shouldn’t be happening here. Conventional economic theories tell us that, after...

Please note: this event recap is taken from the proceedings of the Melbourne event. Per Capita also held an event with David Madland in Sydney, where different topics may have been discussed. The latest guest at Per Capita’s Reform Agenda Series was David Madland, in conversation with Tim Lyons. David Madland is a Senior Fellow at the Center for American Progress. He has written extensively about the economy and American politics on a range of topics, including the middle class, economic inequality, retirement policy, labor unions, and workplace standards such as the minimum wage. Madland is also the author of Hollowed Out: Why the Economy Doesn’t Work without a Strong Middle Class. David began the session with a breakdown of the organised labour and workplace regulation context in the United States. While Australian workers have been hit hard by stagnant wage growth over the last decade, American workers have been dealing with stagnant wages...

Per Capita has today announced the appointment of two new directors to its board, and the retirement of two members who have served the think tank for many years. Dee Madigan, Director of Campaign Edge, and Tim Kennedy, National Secretary of the National Union of Workers, will join the Per Capita board. With over 20 years’ experience in the advertising industry, Dee Madigan is a creative director who has developed integrated campaigns for some of the world’s largest brands, including HSBC, Coca-Cola, J&J, Unilever and Nestle. She has been a winner or finalist at almost all major advertising awards, including Cannes. Dee understands the need for creativity as a tool to persuade an audience; she understands that effective messages are always based on brand truths and she knows how to develop and roll out a truly integrated campaign, from TV ads and traditional media, through to digital and social media. Dee is one of...

Treasurer Scott Morrison is working hard to sell his make or break 2018 budget, which is centred around tax cuts. The big picture purpose of these tax cuts is keeping the federal government’s tax to GDP ratio (the proportion of the economy the government takes in tax) at or below 23.9%. His ultimate justification comes down to this claim made in his post budget interview on the ABC program 7:30: “Higher taxes weaken your economy. It actually slows your growth, it costs jobs, it makes you less resilient.” There has been a lot of academic research into this issue and, of course, the story is a lot more complicated than Scott Morrison’s simple assertion. For very low taxing countries, there is indeed a relationship with economic growth — lower taxes mean lower GDP growth. After that, the results are all over the place and depend on many factors, not least of which is the mix of taxes. Amongst the most...

The 2018 federal budget included some welcome initiatives for older Australians such as $105m in increased funding for aged care for indigenous peoples in remote areas, $33m extra for nursing home palliative care and a $23 million fund to support the development of physical activity programs for over 65s. This year’s Budget was said to have specifically targeted the older voter with its ‘more choices in later life’ package, but now the dust has settled, did it really warrant the ‘boomer budget’ label that pundits gave it? The first big win for older people in the budget is the expansion of the little-utilised Pensions Loan Scheme. The scheme works as a sort of reverse mortgage, enabling homeowners to receive a fortnightly payment through a loan from the government against the equity in their home. Currently available only to part-pensioners and self-funded retirees, the expanded scheme increases the amount available through the combined pension...

The Victorian state budget revealed a government flooded with cash. Big spending on infrastructure, health, education and regional development, all while running a budget surplus, has largely been made possible by record revenue from stamp duties on housing. Thanks to record house prices and high population growth in Melbourne, stamp duty revenue is expected to rise to a record $7.1 billion. The Commonwealth Treasury department examined the efficiency of all major Australian taxes and found stamp duties to be the worst with an economic loss of over seventy cents for every dollar taxed. The marginal excess burden is the additional cost to the economy of each tax dollar. Stamp duties cost around 70c in additional burden for every dollar of taxation, while land taxes create a 10c benefit for every dollar of tax. From federal Treasury. One of the worst features of stamp duties is that they discourage the efficient use of our existing housing...

https://vimeo.com/266809009 This speech was given by Per Capita Senior Economist Warwick Smith at an event held by the Victorian Fabians on 18 April 2018. Warwick tweets @RecoEco. Transcript: I’d like to begin by acknowledging the tradition custodians of this land, the Wurrundjuri people of the Kulin nation and pay my respects to their elders; past, present, and future. There can be no meaningful talk of inequality in this country without acknowledging and discussing the profound inequality between indigenous Australians and most of the rest of the population. I’m not only talking about economic inequality. Indigenous child mortality is still double that of the non-indigenous population and there are too many other damning statistics to rehearse them all here today. Despite being an economist myself, I think it’s fair to say that pretty much every important economic question has a political answer. There are, however, a lot of economists out there who would deny this. They believe...

As the Turnbull Government pushes hard to secure the votes needed to pass its company tax cut for large corporations, minor party senators would do well to heed the actions of big business when it comes to local investment and wage increases for workers, rather than listening to their well-crafted words. On Tuesday, Pauline Hanson declared she was considering reversing her opposition to extending the cut to companies with a turnover of more than $50million a year, saying she had visited the Pilbara to talk to mining companies, and been told that they “want to invest in Australia”. And on Wednesday, Steve Martin, who replaced Jacqui Lambie in the Senate last month, was apparently persuaded that supporting the tax cut would achieve his goal of “strengthening Tasmania’s global export markets, bolstering jobs creation, wages growth and building sustainable communities”. So far, it looks like Matthias Cormann’s temporary engagement of former Minerals Council chief executive Brendan Pearson as...

Due to technical difficulties, we were a little late sending out our annual Progressive Summer Reading List, and even later getting it up on the website, but here it is. We've got some terrific suggestions to ease you back into the working year ahead. Our thanks to staff, Research Fellows, Research Committee Members and Board Members for these suggestions.​ Fiction The Last Man in Europe by Dennis Glover April, 1947. In a run-down farmhouse on a remote Scottish island, George Orwell begins his last and greatest work: Nineteen Eighty-Four. Forty-four years old and suffering from the tuberculosis that within three winters will take his life, Orwell comes to see the book as his legacy – the culmination of a career spent fighting to preserve the freedoms which the wars and upheavals of the twentieth century have threatened. Completing the book is an urgent challenge, a race against death. A terrific first novel by Per Capita Research Fellow Dennis Glover,...