US infrastructure: lessons from Australia, with Darren Brady Nelson – Economics Explained EP36

I recently spoke with Darren Brady Nelson about his new Heartland Institute Policy Brief How to fix America’s crumbling infrastructure: lessons from Australia. You can now listen to our conversation which I’ve published as Economics Explained EP36.

Darren is an Austrian school economist who serves as the chief economist at LibertyWorks, an Australian think tank, and as an associate scholar with the US Center for Freedom and Prosperity. He is also a policy advisor to the Heartland Institute. Darren has previously worked for NSW Treasury, various consulting firms, industry associations, a US Presidential campaign, and for an Australian Senator.

You can use these (approximate) timestamps as a guide to my conversation with Darren:

  • 2:20 – Darren gives an overview of the US’s crumbling infrastructure
  • 7:15 – Darren observes “the average US airport…looks like something out of the Soviet Union”
  • 19:00 – Darren notes “the key is to actually open things up to competition as well, not just to privatise things or to recycle an asset”
  • 20:00 – discussion of National Competition Policy in Australia and how the Australian economic reform process slowed down in the 2000s
  • 28:10 – reference to the Productivity Commission’s finding of substantial economic gains from National Competition Policy in Australia (e.g. see the 2005 Inquiry Report – Review of National Competition Policy Arrangements) and Darren argues the US could easily replicate Australia’s very high ROI with a US National Competition Policy

Economics Explained Logo

Posted in Competition policy, Infrastructure, Uncategorized | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

Chat with CCIQ’s Jack Baxter on collapse in business conditions & confidence

I spoke with CCIQ Economic and Policy Advisor Jack Baxter earlier today regarding the corona-crisis-induced collapse in business conditions and confidence reported in the March quarter Suncorp-CCIQ Pulse Survey report. Business conditions and confidence are at their worst levels in the history of the Pulse Survey, which began in 2007, and are much worse than during the global financial crisis (e.g. see the 12-month outlook chart below). You can listen to my conversation with Jack here:

Here are some timestamps so you can find some of the highlights:

  • 1:30 – Jack gives an overview of the Pulse Survey findings for March quarter (NB the Pulse Survey period was from the 1st to the 15th of April; JobKeeper was announced 30 March)
  • 4:00 – discussion of the “severe financial hardship” being felt by many businesses
  • 10:00 – discussion of the huge adverse impacts of coronavirus on hospitality and tourism
  • 13:20 – discussion of regional conditions and confidence, with Jack noting Cairns businesses were “very vocal” about how badly they’ve been impacted
  • 14:45 – beginning of discussion about policy issues, and why tax policy changes (e.g. long-term payroll tax cut and a switch from stamp duty to land tax as NSW and Victoria are investigating) may be desirable
  • 22:00 – discussion about how much depends on how soon our borders re-open, both to other states and the rest of the world, with reference to the importance of domestic tourism in reviving some of our regional economies

Pulse_outlook_Mar20

12-month outlook for the Australian and Queensland economies, Suncorp-CCIQ Pulse Survey estimates, courtesy of CCIQ

Posted in Labour market, Macroeconomy, Uncategorized | Tagged , , , , , , , , , , , , , , , , , | Leave a comment

ABC radio comments re. Virgin: QIC needs to think for itself and resist any gov’t pressure

The current investigation of a potential investment in Virgin Australia will be a defining moment for the Queensland Investment Corporation (QIC). On ABC radio yesterday morning, I told host Bec Levingston that QIC needs to show it can act as a fund manager which only makes commercially-sound investments, and it is not unduly influenced by the desires of the Queensland Government. You can listen to my conversation with Bec while the audio stays on the ABC website here (from the beginning of the audio):

Bec Levingston’s ABC Mornings program, Thursday 14 May 2020

Without being involved in the discussions with potential private sector bidders for Virgin that QIC’s people are, it is difficult to judge whether it might be possible for QIC to make a sound investment in Virgin. I strongly suspect it isn’t, given Virgin’s financial troubles and high debt load (around $7 billion in total liabilities) even before the corona-crisis, but I have an open mind.

I recognise the Government is concerned about what a collapse of Virgin could mean for our regional communities and tourism industry. That said, it would be a poor start to the Queensland Future Fund which QIC is managing, and a bad result for Queensland taxpayers, if one of its major investments, of at least $200 million and very likely more, is in a struggling airline doomed to perpetual second place and continuing to lose money. QIC would need to have a very high level of confidence the airline can be turned around. Virgin Australia would be a very risky investment for QIC.

Finally, as I emphasised in my conversation with Bec yesterday, the debate over an investment in Virgin reinforces the need for the state government to provide a budget update in the near future, within the next month or two ideally, and certainly well before the state election on 31 October.

20110602 Virgin Australia YR801 3664 (VOZ) 737-800 Take off and Taxi

Image courtesy of Virgin Australia media gallery.

Posted in Budget, Uncategorized | Tagged , , , , , , , , , | 1 Comment

Qld jobless rate at 6.8% but effectively over 10%

This afternoon I caught up with Ben Scott, who works as a Research Assistant in my business Adept Economics, to discuss the April Labour Force data published by the ABS today, as well as the possible shape of the eventual economic recovery (e.g. v-shaped, u-shaped, or Nike swoosh). I’ve uploaded our conversation, recorded using Zoom, to YouTube.

Pete Faulkner has a great summary of today’s data in his latest Conus blog post in which he notes:

…the real surprise came was in the unemployment rate. This had been forecast anywhere from about 8-9% (with some outliers even suggesting as high as 10%). The reality was a rather more pedestrian, and very surprising, lift to just 6.2%. The culprit for the wide miss was the fact that the Participation rate (the proportion of the working age population who are either in work or looking for work) fell a record 2.5 ppts to just 63.5. Had the PR remained at its previous level of 66 then the unemployment rate would have risen to 9.7%.

So, as I mentioned in my chat with Ben, the Australian unemployment rate is effectively nearly at 10%, if we count the people who gave up looking for work as effectively unemployed. Performing the same calculation Pete made for Australia using the Queensland data, the Queensland unemployment rate would be 10.6% instead of 6.8%, if we hadn’t had huge numbers of people give up the search for work and drop out of the labour force.

Posted in Labour market, Macroeconomy, Uncategorized | Tagged , , , , , , , , | 4 Comments

Working from home during & after the pandemic with Alison Pennington – podcast interview

Earlier this week I interviewed Alison Pennington, Senior Economist at the Centre for Future Work at the Australia Institute, about the opportunities and risks of working from home during this time of COVID-19. Alison has been getting a lot of media coverage lately about a briefing paper she co-authored with Jim Stanford Working from Home: Opportunities and Risks. I’ve now published my conversation with Alison as EP35 of my Economics Explained podcast.

Use these (approximate) timestamps to jump right to the highlights:

  • 5:40 – productivity impacts discussion
  • 8:30 – how social isolation can impair cognitive ability
  • 12:00 – discussion of the view expressed in the paper that “working from home will likely become more common in coming years. For millions of workers, indeed, it will become the ‘new normal.’”
  • 16:30 – how workplaces can adapt – an end to hot-desking, a return to pods, and staggered start times
  • 28:05 – discussion of employee surveillance by employers – 70% of employees subject to at least one type of digital surveillance and there is a risk this can extend into people’s homes if working from home becomes the new normal
  • 32:20 – reference to how the Australian Taxation Office (ATO) has tried to make working from home easier (check out the ATO page Working from home during COVID-19)

Economics Explained Logo

Posted in Productivity, Uncategorized | Tagged , , , , , , , , , , , , , , | 2 Comments

Economic impact of COVID-19 – upcoming QUT/QAAS webinar

I’m a panellist on an upcoming webinar on Friday 22 May on The economic impact of COVID-19 and the likely short and long run economic impacts of the policy responses to it. The webinar is free and is part of a series of webinars on Data Science in the News organised by QUT’s Centre for Data Science and the Queensland Academy of Arts and Sciences. The webinar will be moderated by USQ Emeritus Professor Allan Layton, a world-renowned economist who co-authored a celebrated study which demonstrated the effectiveness of Queensland’s compulsory seat belt law in the 1970s. My fellow panellists will be Griffith Professor Tony Makin, QUT Professor Pascalis Raimondos, and incoming Grattan Institute CEO Danielle Wood. I’ll be covering the impact of COVID-19 on Queensland’s regional economies, and you can read summaries of what all the panellists will be covering at the link above.

Webinar_image

Incidentally, I’ve previously interviewed Danielle and Pascalis for my Economics Explained podcast:

Antitrust & “Hipster Trustbusters” with Danielle Wood from Grattan – Economics Explained EP22

Panama papers & multinational tax avoidance Economics Explained episode with QUT’s Prof. Raimondos

Posted in Macroeconomy, Uncategorized | Tagged , , , , , , , , , , , | Leave a comment

Premier’s 2016 Lodge dinner remark to Turnbull highlighted Vertical Fiscal Imbalance problem

I started reading Malcolm Turnbull’s autobiography A Bigger Picture on the weekend, and it’s much better than I expected, with lots of interesting revelations and insights into the last couple of decades of Australian politics. One of my favourites is the revelation of a remark made by Queensland Premier Annastacia Palaszczuk to then PM Turnbull at a 2016 dinner at the Lodge regarding Turnbull’s idea to partly hand over income tax to the states. In my view, this was Turnbull’s best idea of his reign as PM, and I recall speaking in favour of it on Brisbane ABC radio at the time. It would help reduce the vertical fiscal imbalance (VFI) in our federation which encourages the blame game between levels of government, as I discussed in my 2018 book Beautiful One Day, Broke the Next.

Here is former PM Turnbull describing the Queensland Premier’s reaction to the proposal on p. 324 of the book:

When I pursued the proposal with the premiers directly and collectively at a dinner at The Lodge on 31 March, the Labor premiers were all outright opposed. Annastacia Palaszczuk said that coming to Canberra for money was too good to pass up. ‘It suits us perfectly. We get all the credit for spending the money, and you get all the blame for raising it. And when we can’t spend enough, we blame you!’

Well said, Premier. Palaszczuk perfectly described the problem of VFI and displayed her political deftness. It’s the type of thing Sir Joh would have said, and probably did say at one time. Regrettably, the political interests of state governments result in a poor outcome for the federation, as VFI encourages politicians to dodge accountability and play the blame game. You can read more about VFI and Turnbull’s part-solution in Chapter 28, “Tax reform and other indiscretions”, of his autobiography.

MT

Overall, A Bigger Picture is much better than you’d expect based on all the negative media coverage it has received. Sure, Turnbull tells tales out of school, but they make for very interesting reading.

Posted in Tax, Uncategorized | Tagged , , , , , , , , | 2 Comments