For someone who piously bemoans an “us versus them” mentality in political culture, Treasurer Scott Morrison certainly drove a deep wedge into the social fabric with one of the centrepieces of his budget. There are four thresholds in the personal income tax system; Morrison chose to increase one of them, supposedly to offset the insidious effects of “bracket creep.” The third threshold will be raised from $80,000 to $87,000.

As Transfield Services found out last year, governments don’t just outsource service delivery, they outsource political risk. And while Scott Morrison was promoted from immigration minister to Treasurer because of his “success” in “stopping the boats”, he left the Belgiorno-Nettis family, Diane Smith-Gander and Transfield Services shareholders to take the heat and pay the price. Well played, Scott. Politicians

In the lead-up to tomorrow’s pre-election Commonwealth budget, much has been written about the need to quickly eliminate the government’s deficit, and reduce its accumulated debt.  The standard shibboleths are being liberally invoked: government must face hard truths and learn to live within its means; government must balance its budget (just like households do); debt-raters will punish us for our profligacy; and more.  Pumping up fear of government debt is always an essential step in preparing the public to accept cutbacks in essential public services.   And with Australians heading to the polls, the tough-love imagery serves another function: instilling fear that a change in government, at such a fragile time, would threaten the “stability” of Australia’s economy.

When other people get pay rises, do you feel discouraged from working? If the Australian Taxation Office stopped BHP or Google from using tax havens, would your firm be less likely to invest in its own expansion? In a bizarre twist on behavioural economics, Treasurer Scott Morrison seems to think individuals and companies are motivated

Sunlight, it is said, is the best disinfectant. But despite the fact that markets can only work well when they are well informed, some in the Australian investment community remain convinced that disclosing their exposure to risky investments is a chore they would rather avoid. Take ANZ for example. In 2014 and 2015 motions were

The latest “big idea” on tax policy from the Coalition government is to grant independent income tax powers to the states.  This would be accompanied by a devolution of funding responsibility for big-ticket services like health care, hospitals, and schools.  Prime Minister Turnbull argues that forcing state governments to raise the money they spend will

The ruling mantra once was user pays, but now laws requiring mining companies to clean up their mess are derided. Where have all the economic rationalists gone? Back in the 1980s and ’90s most conservative politicians and businesspeople were obsessed with expanding the “user pays principle” to all areas of government service, but these days you

Dan Cass and Christopher Wright (Sydney Business School) Published on RenewEconomy (17 March 2016)  Following the enthusiasm generated by the Paris climate agreement, the focus for climate action now shifts back to nation states, which is where the hard work begins. Most nations have failed to make much progress on deep emissions cuts. Carbon prices lack

First published by the Australian Financial Review – here Economic modelling is like a meth lab, it can make you rich or blow up in your face. And like cooking meth, economic modelling gets more dangerous when it is done fast by those new to the industry. But despite the dangers, and the fact he

Was it really the Treasury’s economic modeling that convinced Prime Minister Turnbull to abandon his plan to raise the GST and cut income taxes? Treasury simulations indicated the trade-off would have no significant impact on growth. Or perhaps it was another kind of calculation – electoral – that convinced the Coalition to drop the idea, and the economic numbers just provided political cover.

Published by RenewEconomy and Sydney Environment Institute. The US government has announced a US$36 million program to develop technologies that turn solar PV and storage batteries into a new kind of decentralised, virtual power source which some are calling ‘the internet of energy’. This is just the kind of technological shift that excites our new

First published in the Australian Financial Review – here.  The only thing that Paul Keating likes about conservative economic policy is implementing it. Last week, with trade mark cut-through, he was back to his favourite trick of visibly attacking the right while strategically undermining the left. For decades Keating has stood tall in the crowd by taking the

First published by the Australian Financial Review – here.  Economic models are like skin care products: the magic is all in the marketing. Just as honest dermatologists regularly remind consumers that expensive face creams are just “hope in a jar”, honest economists regularly remind politicians and journalists that the “results” of macroeconomic modelling are no more reliable than

No tax concession does less to stimulate innovation or employment than the capital gains tax exemption on luxury homes. Indeed, by encouraging the most wealthy Australians to park billions of dollars in spare bedrooms that gather dust and detritus from Christmases past, the exemption simply diverts capital away from productive uses. A government that is

Originally published in the Australian Financial Review – here.  The differences between rugby league and rugby union, like the differences between the disciplines of economics and finance, can seem obscure to those who aren’t fans of either. Subtle though they may be, small differences can have big impacts on the end result. Indeed, those small

First published by The Australian Financial Review – here. The mining boom tax cuts have left the Australian budget unable to collect the revenue needed to fund the services that Australians expect from their government. The Treasurer’s insistence that there is no revenue problem, combined with the received political wisdom that the family home is

In the lead-up to the 2013 election both the Coalition and the ALP pledged to make no changes to the superannuation system in the coming term of government. Stability, we were told, was what the system needed. Less than three years later both major parties are promising to change the superannuation system. Reform, we are

First published in The Australian Financial Review – here. If you think that world demand for coal is going to grow in the coming decades, then it makes sense to build the 50 new coal mines proposed for Australia. And if you think that the world will continue its shift away from coal, then it

As Sweden debates how best to get out of the coal mining business, Australia is debating how best to subsidise the world’s largest export coal mines. Just last week the Australian Federal Government approved the enormous Adani/Carmichael coal mine which, at 40 kilometres long and 10 kilometres wide, is bigger than Gothenburg. The Australian Government

Originally published in the Australian Financial Review – Here. Like politics, economics often throws up some unusual allies. Take, for example, the recent call for a global moratorium on new coal mines by Kiribati’s President Anote Tong. Were such a restriction on the supply of coal to go ahead the biggest winners would be, you

After decades in public life some Australian corporate leaders are figuring out what first-year philosophy students grasp in their first lecture: it’s hard to define “ethical”. But as Transfield Services’ chairman Diane Smith-Gander has discovered, the stakes are a bit higher than undergrad debating prizes. Losing the debate over the ethics of running offshore detention centres

First published in the Australian Financial Review – here It’s bizarre that people blame Tony Abbott’s demise on his inability to communicate. He was a great communicator, and people knew exactly what he stood for. No politician was as relentlessly ‘on message’.  Abbott’s problem wasn’t the clarity of his message; it was the incoherence of

As opposition leader Tony Abbott told us that emissions trading was an expensive fraud. As Prime Minister he is proposing changes to his direct action policy based on the assumption that trading pollution permits is both cheap and reliable. As with so much of the modern policy debate the explanation for this remarkable turnaround has everything

Australia can’t have a grown-up debate about reform until we stop having juvenile debate about economic modelling. A government that thinks its most persuasive argument begins with “but economic modelling shows” should have as much chance of shifting the economic debate as Bronwyn Bishop had of shifting Australians’ attitudes to the role of helicopters in political

Politics Tony Abbott picks his fights, and loves, on the basis of the enemies he will enrage. This time he’s decided to love coal, but he has also enraged key sections of the National Party. First published in the Australian Financial Review – here. As the coal price continues to fall, the financial case for

First published in The Australian Financial Review, 30 June 2015 – Here The Business Council of Australia once defended free markets, but now it and others only support reforms that help its big business friends. If the Business Council of Australia (BCA) was serious about reducing government waste it would have slammed the recent announcement

While Norway’s decision to divest its $900 billion sovereign wealth fund from coal shares sent shock waves around the financial world, it was the way the Norwegian parliament made the decision that is truly radical. Norway has a conservative minority government, but the idea to sell out of coal started with an NGO, was taken

The mining industry is furious that if you make a donation to an environment group, your donation is tax deductible. You know the drill. You give someone in a koala suit anything over $2, they give you a receipt and go off to save an owl, hug a tree or, more likely, make a submission

While the public are rightly outraged at the callous tone of the Treasurers ‘get a good job’ remarks in response to housing affordability, economists should be equally disturbed about the bizarre logic behind the government’s approach to the issue. Joe Hockey seems to be increasingly confused about what housing affordability is. Hockey and Abbott believe

Tax policy Resources companies and lobby groups are lobbying a parliamentary inquiry to strip political climate groups of their charity status. But resources companies can deduct the money they pay to their industry groups from tax. Speech isn’t free in Australia. It isn’t even cheap. Corporate Australia spends billions telling the public, and our politicians,