After 50 years, we're back to the glory days of full employment

I promise I’ll stop talking about the surprising election result if you let me make one last point. There was a hidden factor that helps explain why Labor did so well despite all our grumbling about the cost-of-living crisis.It’s a factor for which the Morrison government, the Albanese government and even the Reserve Bank deserve more thanks than they’ve received. A factor without which it’s highly likely Labor would have been...

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Want greater productivity? Set wages to rise by 3.5 pc every year

Stand by for yet more talk about productivity. With the election over and Labor more comfortably ensconced on the Treasury benches, Treasurer Jim Chalmers has pronounced that top priority can turn from fixing the cost of living to fixing our poor productivity performance.We’ll get the first of the Productivity Commission’s reports today on things we can do to improve our ... productivity. Well, let’s hope something comes of it....

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The RBA is spooked by pay rises. It should relax

By MILLIE MUROI, Economics WriterWhen the Reserve Bank meets next week, it will probably cut interest rates. But it will be some time before it is comfortable enough to lower them to a level that isn’t grinding down economic growth.Already, some economists have slammed the bank for being slow to cut rates, saying it’s causing more cost-of-living pain than necessary for people with home loans.Now that the bank’s preferred measure...

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Whatever happened to the cost living we were so worried about?

Talk about the dog that didn’t bark. Cast your mind back to the distant days of the election campaign, and you’ll dimly remember how often we were told how polling revealed that the only subject hard-pressed voters were interested in discussing was the cost of living.Treasurer Jim Chalmers stuck to this rule relentlessly, repeatedly assuring us the economy had “turned the corner” (a focus-group-tested line if ever there was one),...

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Ross Garnaut: Prophet with a sunny view of our better future

Economist Paul Krugman’s endlessly repeated maxim that “productivity isn’t everything but, in the long run, it’s almost everything” has deluded far too many of the economics profession’s conventional thinkers.It’s a throwaway line that should be thrown away.It implies that any economic objective other than improved productivity is hardly worth worrying about. Such as? Distributional fairness aka “intergenerational inequity”....

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Game theory explains why the Liberals lost - and how they can win

By MILLIE MUROI, Economics WriterElections are one of the biggest – and real-life – displays of strategic thinking. There are winners and losers, set choices and strategies galore.They’re a dynamic affair with a million moving parts, but Labor’s thumping victory in the latest federal election can be explained by a relatively new branch in economics called “game theory”, which focuses on the strategic actions of two or more players...

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The Liberals won't win without more women and fewer oldies

If the Liberals have any sense, they won’t waste too much time blaming their shocking election result on Peter Dutton, Donald Trump, Cyclone Alfred, the party secretariat, an unready shadow ministry or any other “proximate cause”, as economists say. Why not? Because none of these go to the heart of their party’s problem.The Liberals’ problem is that Australia has changed but their party hasn’t. They’re like someone still driving...

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Dutton's election campaign rout lets RBA off the hook

Reserve Bank governor Michele Bullock must be breathing a quiet sigh of relief now the Albanese government has been triumphantly returned to office. If you can’t think why she should be relieved, you’re helping make my point.There was something strange in all the accusations hurled at the Labor government for doing little or nothing to ease the great cost-of-living pain so many voters had suffered over the three years of its...

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Young people will decide who's the next PM

By MILLIE MUROI, Economics WriterBy now, it’s no secret that young people are the biggest voting group. While no demographic fits neatly into either the Labor or Coalition camp – or completely agrees on any given issue – it will be a relief for many young Australians to know they are more than an afterthought this election.Neither party has been exceedingly visionary, but as Prime Minister Anthony Albanese and Opposition Leader...

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Be warned: Ever-higher defence spending means ever-higher taxes

By tacit agreement of both sides, election campaigns exist in a highly contrived fantasy world where the future holds nothing unpleasant. Government spending only ever goes up to meet our growing needs, while those nasty taxes only ever go down. Debt and deficit have been banished to the never-never land of Don’t You Worry About That.But last week Peter Dutton ripped a great big hole in the circus tent, through which you could...

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Question for voters: Which party do I want deciding wages policy?

The craziest thing about this election is that we’re into the last week of the campaign without anyone much bothering to mention the word “wages”. Really? We’re too obsessed by the cost-of-living crisis to have any interest is what has happened, and will happen, to our wages?Is it possible our voters could be so detached from reality that they don’t see the link between prices and wages? It reminds me of the person who voted...

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Dutton almost promised to fix bracket creep. Here's why he didn't

By MILLIE MUROI, Economics WriterTaxes are a necessary evil – which is why neither side of politics is willing to sign themselves up to the best way to keep them in check.While most of us acknowledge the merits, you’ll be hard-pressed to find anyone jumping for joy when they find out their tax bill is growing.The one you’re probably most familiar with is personal income tax – a chunk of your income scooped out from your salary...

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Our democracy's not working well. Here are some ideas to fix it

This limp, uninspiring election campaign is a sign our democracy isn’t working as well as it should. The voters’ preoccupation with the cost of living has been a gift to both major parties, allowing them to wave around a few small tax cuts and other sweeties while avoiding controversial measures to tackle harder problems.The big two are claiming to want to get us “back on track” and “building Australia’s future” while saying...

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My Easter sermon: How we can Trump-proof our society

Since it’s Easter, and we’ve got the day off – and politicians have gone to ground – it’s a good time for, if not religious observance, then at least a little moral reflection.According to The Economist magazine, Christianity is struggling across the developed world. The Americans seem more devout than other English-speaking countries, but since the turn of the century, church attendance there has fallen from 70 per cent of people...

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Whether you eat alone is a good predictor of happiness

By MILLIE MUROI, Economics WriterIf you’re sharing a meal with someone this Easter, chances are you’re happier.In fact, it’s as strong an indicator of how happy you are as the amount of money you’re raking in and whether you’re holding down a job.That’s according to this year’s World Happiness Report, which examined data from a survey across 142 countries and 150,000 people, finding the link between meal-sharing and happiness...

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Home truths: housing policies are mainly for show

If you think this sounds twisted, it is. The best thing about the two sides’ various promises to help young people afford to buy their first home is the way it has provoked the nation’s economists to rise in condemnation of those schemes’ wrongheadedness. They look like they’ll help, but most of them are more likely to end up making homes less affordable rather than more.And the parties know it. They know it because their economic...

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