Comments on Remy Davison "Is supporting the car industry so expensive, compared to our heavily subsidised lives", 10/04/2013, https://theconversation.com/is-supporting-the-car-industry-so-expensive-compared-to-our-heavily-subsidised-lives-13386
In the article Professor Davison sates that "The Germans are also looking at electric car subsidies. The Germans also subsidize their car industry to the tune of about $US95 per capita. A far cry from Australia’s $AUD18. Not quite the $US260 the Americans pay per head."
While this may be true, what are the different contexts for each of them? For example, the $US260 in America, is it like this every year or just at times of GFC or a particular year of the GFC period?
Furthermore, even these figures were accepted as the general picture and the relative subsidies in these countries, what are the benefits per head in each of the countries?
Only compare the costs and benefits can the whole pictures be understood.
We need fuller and better information to be fully informed.
Showing posts with label economic governance. Show all posts
Showing posts with label economic governance. Show all posts
2013-01-29
Better economic policy means less central bank independence
Comments on Graeme Wells “Stiglitz is wrong to dismiss central bank independence”, 29/01/2013, https://theconversation.edu.au/stiglitz-is-wrong-to-dismiss-central-bank-independence-11745
The independence of central banks from government of the day has its merits, although a central bank should be more ideally subject to the overall coordination of an integrated economic oversight committee so the best combination of monetary and fiscal policies can be more easily achieved, as what is meant in economics.
This view on the independence of cantral banks is different from the conventional view of dependence in relation to government of the day.
Based on this criterion, Stiglizt's idea is not too bad.
The key is how to have a national economic oversight committee that serves the people as opposed to political parties that have their own political interests that can often be in conflict with the people's interests.
Further, how to deal with a government formed by elected political party members by such a committee also needs careful considerations.
But a national debate should be had on these sorts of questions. Without such debates, new and more effective economic governance is unlikely to appear.
The independence of central banks from government of the day has its merits, although a central bank should be more ideally subject to the overall coordination of an integrated economic oversight committee so the best combination of monetary and fiscal policies can be more easily achieved, as what is meant in economics.
This view on the independence of cantral banks is different from the conventional view of dependence in relation to government of the day.
Based on this criterion, Stiglizt's idea is not too bad.
The key is how to have a national economic oversight committee that serves the people as opposed to political parties that have their own political interests that can often be in conflict with the people's interests.
Further, how to deal with a government formed by elected political party members by such a committee also needs careful considerations.
But a national debate should be had on these sorts of questions. Without such debates, new and more effective economic governance is unlikely to appear.
2012-08-02
Understand why and how productivity has slowed in recent years
Comments on John Freebairn "Evolution of the productivity pariahs", 2/08/2012 https://theconversation.edu.au/australias-productivity-problem-why-it-matters-8584 and
http://www.businessspectator.com.au/bs.nsf/Article/productivity-australian-economy-private-sector-pub-pd20120802-WS2RU?OpenDocument
I think governments, businesses and economists probably need to have more realistic expectations and understand where the most important constraints to productivity improvements are and how to go about them to help raise productivity.
It probably means quite a number of new points or more creative thinking.
For example, the improvement in the terms of trade, as a luck gift to many Australians including Australian businesses, may mean they don't want to work that hard to raise productivity in the comparative sense, so they are happy to enjoy the life with better living standards. Alternatively, they need to be given greater incentives to work as hard as they did in the of no improvements in the terms of trade to produce the same improvement in productivity.
So this kind of work/leisure choice must be taken into account in analysing our productivity to really understand the true underlying factors on productivity in Australia.
However, I do share Professor Freebairn's view that government has important roles in raising productivity. Freebairn mentioned two of them: government policies such as taxation and government supply of services, like education, law and order.
Another important area the government has an important role is to ensure consumers get the maximum benefits from adequate competition, including from competition from overseas through trade policy.
It has been reported that Australians are charges much higher prices for many products or services than their overseas counterparts. This is not only detrimental to the welfare of Australians, but also is unconducive to competition and productivity.
The government must examine why that has been the case and develop the most appropriate policies to change it.
It is a mystery why the government hasn't done such work for so long.
2011-09-08
US cannot avoid Japan-style stagnation
Comments on Anatole Kaletsky “Barack Obama can still pull US back from a slide into Japan-style stagnation”, 8/09/2011, http://www.theaustralian.com.au/news/world/barack-obama-can-still-pull-us-back-from-a-slide-into-japan-style-stagnation/story-e6frg6ux-1226131676602
A major weakness of and indeed a serious problem with this analysis and the reforms is that most of European economies are in deep troubles too at the moment.
Secondly, what do some of the proposals mean for the two government owned lenders in terms of their profitability and solvency?
Further, while it is true that investment in aged infrastructure can be profitable and productive, the US government does not have the capacity to do it because of its very high levels of debts. It has to rely on the private sector to invest and that would require privatisation that would take time and whether it is now politically viable or not remains an open question, although in the medium and long run it is inevitably required to do so.
2011-08-12
Scared they've been on the run
Comments on Dennis Shanahan "erils for PM in hanging on to surplus", 12/08/2011, http://www.theaustralian.com.au/national-affairs/commentary/perils-for-pm-in-hanging-on-to-surplus/story-e6frgd0x-1226113362948
Gillard and Swan and their government has been particularly stubbon in promoting the budget surplus line of argument, so much so that they have greatly damaged their images and lost touch with the public. the flood levy, for example, was completely unnecessary, especially in the context that they had also pledged a carbon tax to come and the public were uncertain and concerned about the impact of the carbon tax in the coming years. Consumer confidence as well as business confidence have further eroded by the persistence of the surplus pledge at the expense of prudent economic and budget management.
Of course, Gillard and her coleagues have been aware of their broken promises, particularly the one on carbon tax, and the potential damage of further broken promises. But one has to weigh the benefits and costs of each policy and the totality of all policies and make the best choices and choose the lesser evils.
Unfortunately, Gillard and her colleagues have been scared and have not been able to show they are able to do the best and right things. they have tended to make policy on the run and rush to announcements without fully consider ttheir effects, for the nation and for themselves.
What all these show that Gillard and her colleagues in government have been unable to show true leadership. And that is not good particuarly for Gillard.
PS: see also: Alan Kohler "A surplus of political stupidity", 12/08/2011, http://www.businessspectator.com.au/bs.nsf/Article/Wayne-Swan-budget-Julia-Gillard-economic-crisis-ma-pd20110812-KMSTR?OpenDocument&src=rot.
Gillard and Swan and their government has been particularly stubbon in promoting the budget surplus line of argument, so much so that they have greatly damaged their images and lost touch with the public. the flood levy, for example, was completely unnecessary, especially in the context that they had also pledged a carbon tax to come and the public were uncertain and concerned about the impact of the carbon tax in the coming years. Consumer confidence as well as business confidence have further eroded by the persistence of the surplus pledge at the expense of prudent economic and budget management.
Of course, Gillard and her coleagues have been aware of their broken promises, particularly the one on carbon tax, and the potential damage of further broken promises. But one has to weigh the benefits and costs of each policy and the totality of all policies and make the best choices and choose the lesser evils.
Unfortunately, Gillard and her colleagues have been scared and have not been able to show they are able to do the best and right things. they have tended to make policy on the run and rush to announcements without fully consider ttheir effects, for the nation and for themselves.
What all these show that Gillard and her colleagues in government have been unable to show true leadership. And that is not good particuarly for Gillard.
PS: see also: Alan Kohler "A surplus of political stupidity", 12/08/2011, http://www.businessspectator.com.au/bs.nsf/Article/Wayne-Swan-budget-Julia-Gillard-economic-crisis-ma-pd20110812-KMSTR?OpenDocument&src=rot.
2011-05-30
Bold reforms should start from government governance
Comments on Graham Bradley “We need to have faith in the government's sums”, 30/05/2011, http://www.theaustralian.com.au/national-affairs/we-need-to-have-faith-in-the-governments-sums/story-fn59niix-1226065153933
Bold reforms are needed and leadership to reforms is essential.
If the federal government is serious in reforms, it should start from reforming the governance of the government as the first step, or at least in conjunction with other reforms.
In terms of reforming government governance, maybe a national commission on economic policy should be established. Such a commission should have a component in budget integrity, as well as other economic policies, such as the desirable macroeconomic setting for both fiscal and monetary policies.
In terms of other bold reforms, while the Henry review report could be used as the starting point, its shortcomings should be recognised, such as the exclusion of GST in the review, as well as the lessons learnt from the RSPT/MRRT processes.
The tax forum should also include the carbon tax and related compensation measures, or ETS in its agenda.
Further, there should be a body to make sure the forum produce good outcomes and be implemented, as opposed to the 2020 summit.
To meet the challenges from population aging, there must be enough incentives provided for people to work longer, save more and optimise spending on healthcare and other consumptions.
Bold reforms are needed and leadership to reforms is essential.
If the federal government is serious in reforms, it should start from reforming the governance of the government as the first step, or at least in conjunction with other reforms.
In terms of reforming government governance, maybe a national commission on economic policy should be established. Such a commission should have a component in budget integrity, as well as other economic policies, such as the desirable macroeconomic setting for both fiscal and monetary policies.
In terms of other bold reforms, while the Henry review report could be used as the starting point, its shortcomings should be recognised, such as the exclusion of GST in the review, as well as the lessons learnt from the RSPT/MRRT processes.
The tax forum should also include the carbon tax and related compensation measures, or ETS in its agenda.
Further, there should be a body to make sure the forum produce good outcomes and be implemented, as opposed to the 2020 summit.
To meet the challenges from population aging, there must be enough incentives provided for people to work longer, save more and optimise spending on healthcare and other consumptions.
2011-05-17
Reforming macroeconomic institutions
Comments on Michael Stutchbury “Swan hides budget risk”, 17/05/2011, http://www.theaustralian.com.au/national-affairs/budgets/swan-hides-budget-risk/story-fn8gf1nz-1226057027131
There is indeed a need for reforming macroeconomic management institutions, including not only fiscal policies and management, but also the integration of fiscal and monetary policies.
similar to the independence of the Reserve Bank, there should be an independent fiscal authority that sets important parameters within which the government and Treasury should operate and set its actual fiscal policies.
Further, there should be a joint body of that independent fiscal authority and the RBA to coordinate broad fiscal and monetary policies, operating in a similar line as macroeconomics would suggest, to have optimal combination of fiscal and monetary policies to achieve full employment/economic growth and price stability.
There is indeed a need for reforming macroeconomic management institutions, including not only fiscal policies and management, but also the integration of fiscal and monetary policies.
similar to the independence of the Reserve Bank, there should be an independent fiscal authority that sets important parameters within which the government and Treasury should operate and set its actual fiscal policies.
Further, there should be a joint body of that independent fiscal authority and the RBA to coordinate broad fiscal and monetary policies, operating in a similar line as macroeconomics would suggest, to have optimal combination of fiscal and monetary policies to achieve full employment/economic growth and price stability.
2011-05-09
Gillard is "refelcting the power of education for better life"!
Comments on Julia Gillard “Reflecting the power of education for better life”, 9/05/2011, http://www.theaustralian.com.au/national-affairs/reflecting-the-power-of-education-for-better-life/story-fn59niix-1226052142343
Gillard says "TOMORROW Australians will see the first budget of the government I am proud to lead.
It is a budget right for our times and a budget that reflects my beliefs in the transformative power of education, the benefits and dignity of work and the need for us to treat one another with respect."
And “This budget will move us back into the black. It is about getting our economic settings right as Australia moves from the lingering effects of the global financial crisis to the economic expansion we know is coming as the massive mining investment boom comes on stream.”
We've heard many similar statements from Gillard, such as they have got the balance right, this right, that right and so on.
But how many things have gone wrong under Rudd/Gillard and Gillard governments?
Few if any independent minded people in Australia would believe these sorts of statements from creditability seriously damaged prime minister.
Where is the statement "there will be no carbon tax under the government that I lead" a few short days before the last election?
We need a prime minister who is honest, not someone who lusts for personal power and prestige at the expense of the nation and would pursue it by any means.
But let me be more seriously picking some points from her post.
Firstly, Gillard argues that “We will rebuild large parts of our nation following devastating floods across our eastern states and Western Australia and Cyclone Yasi, which followed shortly after.
Finding the money to meet this urgent national priority has added budget pressure at a time of reduced revenue. But in the long term, we face a whole new set of challenges as the mining investment boom is unleashed with all the price pressures that come with it.”
Why does a prime minister of a country blessed with a mining boom talks about it as “face a whole new set of challenges”?
It is beyond belief to talk down such a good fortune, isn’t it? Doesn’t indicate some sort of hopelessness of a leader unable to handle even good fortunes, not to mention any real and true challenges?
Secondly, she talks about: “As the economy gathers strength and moves to full capacity, it is vital we return the budget to surplus and do not add to inflationary pressures. This budget will honour this commitment to return to surplus in 2012-13.
This is the right economic strategy and the right thing to do by families facing cost-of-living pressures. As a government we are determined to make the right choices to restrain spending, deliver a surplus and not exacerbate those inflationary pressures.”
Has her government really tried hard enough in reducing inflationary pressure? For example, why couldn’t the government find more savings instead of imposing a flood levy that will inevitably further increase the pressure of “families facing cost-of-living pressures”? She gracefully ditched some wasteful government programs such as the cash for clunkers program. Surely there are more wasteful government programs that could have been stopped. But she didn’t and the government she proudly leads didn’t.
She was the minister and the deputy prime minister who was responsible for the already reported huge BER wastes.
She has been the prime minister who could make her government mush less wasteful.
The problem is that she is addicted to government largess and she is one of the sources of government wastage.
Gillard talks about: “In government you don't have the luxury of simply opposing everything as we see from the opposition. Governments must sit around the cabinet table and decide which program is more deserving and which services are more worthy than others. Inevitably these choices require us to make tough and unpopular decisions as we place some priorities before others.”
The outcomes of her government and the Rudd/Gillard one have shown that either the government was or has been seriously incompetent in deciding “which program is more deserving and which services are more worthy than others”, or she is talking about nonsense to spin around and around and around!
The cash for clunkers was her announcement in the first place, but later on was ditched as a poor idea (and presumably a non-deserving one). The people’s assembly for consensus on climate change and on carbon price was her announcement (and not to forget that she solemnly declared a few days before the last election there will be no carbon tax under the government she leads), and was replaced with her climate change committee to introduce a carbon tax after all.
Did she get the priority right? More deserving versus less deserving right? Even where to draw the line for cut off of which to fund and which not to fund right? Or anything right at all, one has to doubt?
2011-04-15
Time to consider and reform international exchange rate regime
Comments on Max Corden “Global imbalances and the paradox of thrift”, 15/04/2011, http://www.eastasiaforum.org/2011/04/13/global-imbalances-and-the-paradox-of-thrift/
Yes, I'd agree that this is an excellent piece of analysis over the issues of international balance or imbalance.
On top of the views on the core balance issues, I'd add that the past history and various painful experiences have also shown a more difficult issue in terms of excessive volatilities of floating exchange rate regime.
Just consider the dramatic swings and changes in rate between the US and the euro over the short period since the creation of the euro.
How much the rate has changed, back and forth?
Is it compatible with the macroeconomic goal of price stability?
Or, have those changes in the relative price of imports versus exports really reflected the underlying relative economic conditions?
Were they conducive to businesses involved in external trade?
It seems that while free international exchange rates regime has its merits, it also has considerable downside. It is uncertain whether its advantages outweigh its disadvantages.
It may be time to study what an ideal international exchange rates regime should be, so to balance the positive and negative sides to maximise net benefits for all nations.
Yes, I'd agree that this is an excellent piece of analysis over the issues of international balance or imbalance.
On top of the views on the core balance issues, I'd add that the past history and various painful experiences have also shown a more difficult issue in terms of excessive volatilities of floating exchange rate regime.
Just consider the dramatic swings and changes in rate between the US and the euro over the short period since the creation of the euro.
How much the rate has changed, back and forth?
Is it compatible with the macroeconomic goal of price stability?
Or, have those changes in the relative price of imports versus exports really reflected the underlying relative economic conditions?
Were they conducive to businesses involved in external trade?
It seems that while free international exchange rates regime has its merits, it also has considerable downside. It is uncertain whether its advantages outweigh its disadvantages.
It may be time to study what an ideal international exchange rates regime should be, so to balance the positive and negative sides to maximise net benefits for all nations.
2011-03-04
What exchange rate regime will be better for both flexibility and stability?
Comments on Barry Carin "Prospects for France’s presidency of the G20", 4/03/2011, http://www.eastasiaforum.org/2011/03/04/prospects-for-france%e2%80%99s-presidency-of-the-g20/
It is interesting to note that the original French agenda includes exchange rate instability and commodity price volatility.
What does exchange rate instability mean?
And what does it mean for the US or some other countries push for floating exchange rate for China?
Wouldn’t that suggest that free floating can be as problematic as completely fixed exchange rate regime?
PS: While at the moment there is no universally accepted solutions to exchange rate instability and commodity price volatility, it does not mean that excessive volatility and instability are good for the world economy or businesses.
Economists and government officials and advisors must consider what regime will work better.
It is interesting to note that the original French agenda includes exchange rate instability and commodity price volatility.
What does exchange rate instability mean?
And what does it mean for the US or some other countries push for floating exchange rate for China?
Wouldn’t that suggest that free floating can be as problematic as completely fixed exchange rate regime?
PS: While at the moment there is no universally accepted solutions to exchange rate instability and commodity price volatility, it does not mean that excessive volatility and instability are good for the world economy or businesses.
Economists and government officials and advisors must consider what regime will work better.
2011-02-08
Fahey is good choice - both for politics and business
Comments on Joe Kelly “John Fahey makes 'no carpetbagger' pledge on disaster reconstruction”, 8/02/2011, http://www.theaustralian.com.au/in-depth/queensland-floods/john-fahey-makes-no-carpetbagger-pledge-on-disaster-reconstruction/story-fn7iwx3v-1226002023187
Fahey is a respected figure on the other side of politics.
It is good politics and business by the Gillard government to have him oversee the reconstruction fund from the federal government.
It would be even better politics and business for Gillard and her government if she now allows the Productivity Commission, with the support of the Communication department, to review the NBN policy.
Gillard is bold enough to change the Rudd era health agreement with the states.
She would strengthen her leadership greatly if she does the same for the NBN.
And the savings would be also tremendous and long standing.
PS: Increasingly more and more communication experts have voiced their opposition to the government's NBN project. Today's article by Ian Martin on the Australian online, entitled "Tied to cable yet future is wireless", follows yesterday's piece on the Businessspectators online.
Gillard should wake up and act decisively and quickly on this hugely and extremely important matter, with billions of dollars at stake. More importantly, at stake is Labor’s credibility of economic and business management skills, and Gillard’s leadership.
Now is a perfect opportunity for her.
Fahey is a respected figure on the other side of politics.
It is good politics and business by the Gillard government to have him oversee the reconstruction fund from the federal government.
It would be even better politics and business for Gillard and her government if she now allows the Productivity Commission, with the support of the Communication department, to review the NBN policy.
Gillard is bold enough to change the Rudd era health agreement with the states.
She would strengthen her leadership greatly if she does the same for the NBN.
And the savings would be also tremendous and long standing.
PS: Increasingly more and more communication experts have voiced their opposition to the government's NBN project. Today's article by Ian Martin on the Australian online, entitled "Tied to cable yet future is wireless", follows yesterday's piece on the Businessspectators online.
Gillard should wake up and act decisively and quickly on this hugely and extremely important matter, with billions of dollars at stake. More importantly, at stake is Labor’s credibility of economic and business management skills, and Gillard’s leadership.
Now is a perfect opportunity for her.
2011-01-25
Why Swan needs to warn about price hike?
Comments on James Massola "Inflation figures are good news for rates, but Wayne Swan warns of looming food price spike", 25/01/2011, http://www.theaustralian.com.au/national-affairs/treasury/inflation-figures-are-good-news-for-rates-but-wayne-swan-warns-of-looming-food-price-spike/story-fn59nsif-1225994289457
Wayne Swan said the impact of the floods, in economic terms, was the worst the nation had seen.
That is unlikely to be true.
We have very large scale droughts running for years that affected agriculture in Australia and affected other industries as well, such as the gardening industry with water restrictions in many places. Some people even didn't have water to shower.
So what was Swan talking about!
Some politicians are used to scare people and conceal their own deficiencies.
This is a good example.
From his role in the RSPT fiasco, it is not too difficult to know how good his economic management skills are!
We shouldn't expect too much from him. Otherwise we would be bitterly disappointed.
AS the Treasurer, his warning of price spike next quarter is neither warranted, nor helpful to expectations, see the following from the report.
TREASURER Wayne Swan has warned of a looming spike in inflation as the impact of the floods is felt in food prices at the checkout.
He welcomed soft inflation figures released today, which make an interest rate rise less likely next week.
But the March quarter consumer price index won't hold such good news.
“Despite the fact that these figures are lower than anticipated, we do know the next quarter figure - the March quarter - will see a spike, particularly on vegetable and fruit prices and that will have an impact on the March quarter,” Mr Swan said in Canberra.
Wayne Swan said the impact of the floods, in economic terms, was the worst the nation had seen.
That is unlikely to be true.
We have very large scale droughts running for years that affected agriculture in Australia and affected other industries as well, such as the gardening industry with water restrictions in many places. Some people even didn't have water to shower.
So what was Swan talking about!
Some politicians are used to scare people and conceal their own deficiencies.
This is a good example.
From his role in the RSPT fiasco, it is not too difficult to know how good his economic management skills are!
We shouldn't expect too much from him. Otherwise we would be bitterly disappointed.
AS the Treasurer, his warning of price spike next quarter is neither warranted, nor helpful to expectations, see the following from the report.
TREASURER Wayne Swan has warned of a looming spike in inflation as the impact of the floods is felt in food prices at the checkout.
He welcomed soft inflation figures released today, which make an interest rate rise less likely next week.
But the March quarter consumer price index won't hold such good news.
“Despite the fact that these figures are lower than anticipated, we do know the next quarter figure - the March quarter - will see a spike, particularly on vegetable and fruit prices and that will have an impact on the March quarter,” Mr Swan said in Canberra.
Tasmania will be just fine
Comments on Tony McCall “Old enmities cloud Apple Isle's future”, 25/01/2011, http://www.theaustralian.com.au/news/opinion/old-enmities-cloud-apple-isles-future/story-e6frg6zo-1225993845801
The following statement is half correct at best"
"Tasmania faces significant employment losses in the forestry sector and in GST revenue at a juncture when the federal government, squeezed by flood reconstruction priorities, will be reluctant to hand out yet more funds to compensate forestry companies, employers and employees exiting the sector."
Tasmania's GST revenue will not decrease. How could it decrease?
Tasmania now has a very strong leverage on the Gillard minority federal government because of the Independent MP from Tasmania. So how will it not use that advantage is beyond belief and common sense, just as it did during Senator Harradine’s time.
There is little immediate and excessive budgetary pressure for Tasmania now. No point now to frighten the first time female and new premier.
As for the intermediate and longer terms, Tasmania needs to take advantages of its natural environment and natural resources, and relatively lower costs of living.
It needs to deepen value-adding to resource uses. it should increase the efficiency of transport within the island. It needs to lower travel costs between it and the mainland Australia to attract more and younger people, including international immigration, to Tasmania.
The following statement is half correct at best"
"Tasmania faces significant employment losses in the forestry sector and in GST revenue at a juncture when the federal government, squeezed by flood reconstruction priorities, will be reluctant to hand out yet more funds to compensate forestry companies, employers and employees exiting the sector."
Tasmania's GST revenue will not decrease. How could it decrease?
Tasmania now has a very strong leverage on the Gillard minority federal government because of the Independent MP from Tasmania. So how will it not use that advantage is beyond belief and common sense, just as it did during Senator Harradine’s time.
There is little immediate and excessive budgetary pressure for Tasmania now. No point now to frighten the first time female and new premier.
As for the intermediate and longer terms, Tasmania needs to take advantages of its natural environment and natural resources, and relatively lower costs of living.
It needs to deepen value-adding to resource uses. it should increase the efficiency of transport within the island. It needs to lower travel costs between it and the mainland Australia to attract more and younger people, including international immigration, to Tasmania.
2011-01-22
A chance itself is not enough
Comments on Tom Dusevic “Chance to rebuild a reputation”, 22/01/2011, http://www.theaustralian.com.au/news/opinion/chance-to-rebuild-a-reputation/story-e6frg6zo-1225992591673
Although there is a chance for Gillard and her government to redeem themselves, they are likely to run the risks of making a repeat of the BER disaster on topic of the natural disasters in Queensland and Victoria and of imposing an unnecessary levy at the taxpayers' expenses that funds their mismanagement.
If either the former or both materialise, then it will almost certainly be the political end of this government.
The government has not shown its competency so far. When under greater pressure, it is even less likely that it will perform better.
PS: To redeem itself, the government needs to break with outdated thinking that any infrastructure building will be good no matter how it is managed and how wasteful it is. It needs to improve its big project management skills, to say the least.
Although there is a chance for Gillard and her government to redeem themselves, they are likely to run the risks of making a repeat of the BER disaster on topic of the natural disasters in Queensland and Victoria and of imposing an unnecessary levy at the taxpayers' expenses that funds their mismanagement.
If either the former or both materialise, then it will almost certainly be the political end of this government.
The government has not shown its competency so far. When under greater pressure, it is even less likely that it will perform better.
PS: To redeem itself, the government needs to break with outdated thinking that any infrastructure building will be good no matter how it is managed and how wasteful it is. It needs to improve its big project management skills, to say the least.
2010-11-24
Managing prosperity requires new thinking and a new approach
Comments on Paul Kelly “Mission is to manage politics of prosperity”, 24/11/2010, http://www.theaustralian.com.au/news/opinion/mission-is-to-manage-politics-of-prosperity/story-e6frg6zo-1225959731099
How should the government of any political persuasions manage the resources boom?
Well, it is both hard and easy.
It will be hard if government and bureaucrats continue to engage in conventional thinking and approaches.
It will be easy if the sources of the resources boom benefits more, but the rest also share some of the benefits in an acceptable way to both the booming states and the rest along the way.
This will have to involve a new approach to federation and to taxation reforms that is not necessarily benefiting every state uniformly.
It also means having the most appropriate monetary and fiscal policy settings that aim at neutralising the differential impacts of the resources boom on different sectors as much as possible without undue distortions in the long run or from the long term perspective for the nation and the economy.
The key is appropriate balance between the booming states and the rest, as well as long term design of policies and optimisation of the nation's wellbeing.
By this standard, Henry's approach and recommendations might be half right at best! He also needs to reconsider what will be best policies.
How should the government of any political persuasions manage the resources boom?
Well, it is both hard and easy.
It will be hard if government and bureaucrats continue to engage in conventional thinking and approaches.
It will be easy if the sources of the resources boom benefits more, but the rest also share some of the benefits in an acceptable way to both the booming states and the rest along the way.
This will have to involve a new approach to federation and to taxation reforms that is not necessarily benefiting every state uniformly.
It also means having the most appropriate monetary and fiscal policy settings that aim at neutralising the differential impacts of the resources boom on different sectors as much as possible without undue distortions in the long run or from the long term perspective for the nation and the economy.
The key is appropriate balance between the booming states and the rest, as well as long term design of policies and optimisation of the nation's wellbeing.
By this standard, Henry's approach and recommendations might be half right at best! He also needs to reconsider what will be best policies.
2010-11-20
NBN will bury Labor at the next election - sooner or later
Comments on Paul Kelly “NBN heat is on and it'll keep rising”, 20/11/2010, http://www.theaustralian.com.au/news/opinion/nbn-heat-is-on-and-itll-keep-rising/story-e6frg6zo-1225956812030
The NBN is likely to sink Labor at the next election, no matter when it will be, early or late.
The opposition underestimated Labor's ability to use the NBN to its advantage in the last election and was ill prepared to attack it most effectively both during the election and post election negotiations with the independents.
That was the best Labor could get and from now on the flaws of the NBN will be increasingly exposed. On the other hand, the coalition has probably learned the lesson and will be much more focused on and sharpen its attacks on the NBN.
There may also be the likelihood of legal challenges to the forced decommission of copper network and forced closure of choices to consumers in the future. If that occurs, the government is likely to lose the legal case.
In all likelihood, the NBN will be stopped by a change of government in Canberra.
It will be a half completed project, unfortunately for Labor or fortunately for taxpayers to get the best among the worst from Labor.
The NBN is likely to sink Labor at the next election, no matter when it will be, early or late.
The opposition underestimated Labor's ability to use the NBN to its advantage in the last election and was ill prepared to attack it most effectively both during the election and post election negotiations with the independents.
That was the best Labor could get and from now on the flaws of the NBN will be increasingly exposed. On the other hand, the coalition has probably learned the lesson and will be much more focused on and sharpen its attacks on the NBN.
There may also be the likelihood of legal challenges to the forced decommission of copper network and forced closure of choices to consumers in the future. If that occurs, the government is likely to lose the legal case.
In all likelihood, the NBN will be stopped by a change of government in Canberra.
It will be a half completed project, unfortunately for Labor or fortunately for taxpayers to get the best among the worst from Labor.
2010-11-19
NBN and Labor's claim of economic responsibility - such a joke!
Comments on Katie Lahey “Lack of policy won't stop NBN”, 19/11/2010, http://www.theaustralian.com.au/news/opinion/lack-of-policy-wont-stop-nbn/story-e6frg6zo-1225955937158
Only the most irresponsible or dumbest government does not want a cost benefit analysis of such a large project for the nation.
The government claims it is economically responsible. Is this what it means?
From the initial plan of a few billion to a sudden announcement of the $43 billion to the continuing insistence of no cost benefit study and reluctance in releasing related information for the project, every step has showed how responsible Labor is!
It is a pity that there is no other way for the taxpayers to stop this insane action by the government.
There should be federal anti corruption watch dog to scrutinise the federal government.
Only the most irresponsible or dumbest government does not want a cost benefit analysis of such a large project for the nation.
The government claims it is economically responsible. Is this what it means?
From the initial plan of a few billion to a sudden announcement of the $43 billion to the continuing insistence of no cost benefit study and reluctance in releasing related information for the project, every step has showed how responsible Labor is!
It is a pity that there is no other way for the taxpayers to stop this insane action by the government.
There should be federal anti corruption watch dog to scrutinise the federal government.
2010-10-13
An independent national fiscal institution needed
Comments on Peter van Onselen “Political debate ignores role of debt in development”, 13/10/2010, http://www.theaustralian.com.au/business/political-debate-ignores-role-of-debt-in-development/story-e6frg8zx-1225937860456
The current political and institutional arrangements are the main source of the problem you have identified in this post.
It seems there should be a rebalance between political government and more independent institutions that have adequate resources and the capacities to look into longer term and policies, as well as the evaluation of current and past policies for their alignment with longer terms issues.
What that means is we should consider and establish an independent institution similar to RBA in terms of independence from the day of the government to look after fiscal policy matters and policy options and effects.
It is a new thinking but has been long overdue.
PS: politics in western countries including Australia are mostly focused on shorter terms due to the political processes and the election cycles. That is a fundamental weakness with the current state of democracy.
To balance that and to take account the importance of both democracy and longer term national interest, there should be some institutions which look after long term issues and policies and which are independent of the government and politics which are of short term in nature.
The independent judicial system in western countries is a good example. A number of independent central banks in terms of monetary policies are another.
The current political and institutional arrangements are the main source of the problem you have identified in this post.
It seems there should be a rebalance between political government and more independent institutions that have adequate resources and the capacities to look into longer term and policies, as well as the evaluation of current and past policies for their alignment with longer terms issues.
What that means is we should consider and establish an independent institution similar to RBA in terms of independence from the day of the government to look after fiscal policy matters and policy options and effects.
It is a new thinking but has been long overdue.
PS: politics in western countries including Australia are mostly focused on shorter terms due to the political processes and the election cycles. That is a fundamental weakness with the current state of democracy.
To balance that and to take account the importance of both democracy and longer term national interest, there should be some institutions which look after long term issues and policies and which are independent of the government and politics which are of short term in nature.
The independent judicial system in western countries is a good example. A number of independent central banks in terms of monetary policies are another.
2010-09-10
Innovation and intellectual property rights
Comments on Justin Li “China scores silver ahead of Japan in GDP Olympiad”, 5/09/2010, http://www.eastasiaforum.org/2010/09/05/china-scores-silver-ahead-of-japan-in-gdp-olympiad/
Innovation is obviously important for advancing the economy to catch up with international frontiers and China needs to adopt international best practices in economic and intellectual property rights policies.
To start with, intellectual property rights, both international and domestic, have to be protected according to international practices and balanced with economies of scale to promote innovation and remove unnecessary barriers to adopt new products, methods, technologies and techniques. Without proper protection of intellectual property rights, it is difficult to have indigenous innovations.
Secondly, China should use market mechanism and price to promote efficient resource allocations and correct most market failures such as externalities, as opposed to resorting to administrative orders to do so.
Thirdly it is important to balance symbolism with real benefits in meaningful way. For example, it is reported that many local governments in China ordered some factories to stop or limit production and stopped power supply in order to achieve the symbolic indicator of emission intensity for the end of this year (2010) set earlier, apparently to show China’s resolve to achieve its announced target for 2020 to the international community.
That kind of practice probably can only be adopted by China and a handful of countries in the world now. But that is silly and harmful.
Innovation is obviously important for advancing the economy to catch up with international frontiers and China needs to adopt international best practices in economic and intellectual property rights policies.
To start with, intellectual property rights, both international and domestic, have to be protected according to international practices and balanced with economies of scale to promote innovation and remove unnecessary barriers to adopt new products, methods, technologies and techniques. Without proper protection of intellectual property rights, it is difficult to have indigenous innovations.
Secondly, China should use market mechanism and price to promote efficient resource allocations and correct most market failures such as externalities, as opposed to resorting to administrative orders to do so.
Thirdly it is important to balance symbolism with real benefits in meaningful way. For example, it is reported that many local governments in China ordered some factories to stop or limit production and stopped power supply in order to achieve the symbolic indicator of emission intensity for the end of this year (2010) set earlier, apparently to show China’s resolve to achieve its announced target for 2020 to the international community.
That kind of practice probably can only be adopted by China and a handful of countries in the world now. But that is silly and harmful.
2010-08-27
China's challenges on road to prosperity
Comments on Wing Thye Woo “Avoiding economic crashes on China’s road to prosperity”, 26/07/2010, http://www.eastasiaforum.org/2010/08/26/avoiding-economic-crashes-on-chinas-road-to-prosperity/
The analogue of hardware, software and fuel/power is nice.
I agree that the "software" is likely to be the most important one among the three.
For softwares, China has both severe challenges and blessings, due to its size, speed of growth and its political system.
Challenges come from influences both within the country and abroad.
Blessings is likely in the form of rapidly rising living standards that would allow the government to mitigate domestic political challenges and smooth the political transition processes. How to successfully democratise and what the most optimal path for it is the greatest challenge of all.
That political transition will inevitably be associated and influenced by the state of play in the management of economic growth. In a sense, the interactions between economic management and political transition are likely to be most challenging to China's political leaders.
International challenges are also multi-folds, with the most likely potential challenges coming from hostilities in one form or another to its rapid growth, although from power supply point of view the challenges are not along for China as long as China does its share of responsibilities and obligations in dealing with global challenges like climate change (in which China has probably done more than its share of responsibilities, but it has lacked behind in tactics so a poor impression has been created out of Copenhagen).
The analogue of hardware, software and fuel/power is nice.
I agree that the "software" is likely to be the most important one among the three.
For softwares, China has both severe challenges and blessings, due to its size, speed of growth and its political system.
Challenges come from influences both within the country and abroad.
Blessings is likely in the form of rapidly rising living standards that would allow the government to mitigate domestic political challenges and smooth the political transition processes. How to successfully democratise and what the most optimal path for it is the greatest challenge of all.
That political transition will inevitably be associated and influenced by the state of play in the management of economic growth. In a sense, the interactions between economic management and political transition are likely to be most challenging to China's political leaders.
International challenges are also multi-folds, with the most likely potential challenges coming from hostilities in one form or another to its rapid growth, although from power supply point of view the challenges are not along for China as long as China does its share of responsibilities and obligations in dealing with global challenges like climate change (in which China has probably done more than its share of responsibilities, but it has lacked behind in tactics so a poor impression has been created out of Copenhagen).
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