In an article in today’s Australian (available here,), I argue that governments can learn valuable lessons from the current battle between the taxi industry and Uber, as well as from past battles over government protection of market power (such as the tariff wall and AWB’s export wheat single desk). I draw 5 key lessons – the most important one being: don’t create market power in the first place!
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Posted on January 4, 2016 by Paul Kerin
Posted in Economic reform, Economic regulation, Paul Kerin, Public policy
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Posted on December 31, 2015 by Paul Kerin
In a speech 3 days ago, former Prime Minister Bob Hawke recommended that Australia should abolish its state governments.The speech was widely reported – see, for example, The Australian’s coverage here.
Hawke argued that state borders were “bloody absurd” and that Australia would be governed more effectively with only two levels of government (federal and local).
The case for abolition of states has been made many times before, including by Hawke 36 years ago. In a column in The Australian in 2007 (available here), I pointed out that Australia has more politicians per voter than almost any other nation on earth and argued that the abolition of state governments would save taxpayers $30 billion per annum and slash red tape. Of course, such a reform would need to be implemented carefully. It wouldn’t necessarily mean more centralisation at the federal level. Services are best delivered locally where possible; combing existing councils into larger regional councils would enable them to take over various state government functions cost-effectively. Given the potential gains, Hawke’s proposal is worthy of serious consideration.
Posted in Economic reform, Paul Kerin, Public policy
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Posted on December 9, 2015 by Paul Kerin
In a speech yesterday at the McKell Institute, Martin Parkinson – the incoming head of the Department of Prime Minister and Cabinet (and former head of Treasury, as well as a distinguished graduate of the University of Adelaide’s School of Economics) – noted the importance of tax reform and, in particular, the need for careful consideration of potential reforms. Dr Parkinson’s speech has attracted much media attention, including in today’s Australian (available here). His comments echoed a key theme that Christopher Findlay and I emphasised in our December 1 article in The Australian and in my November 2 post (both are available here). In particular, Dr Parkinson stated that:
“…every time somebody says to you changes in the GST, increases in the GST, are regressive, and they say we just leave a personal income tax system unchanged, you should point out that changes in the personal income tax system if they are not implemented are also as regressive. So there is no way here you get something for nothing.”
As we said in our recent article in The Australian:
“Some scare us through misleading “partial analysis” – for example, by focusing on only one effect of a tax change, or by considering a change in (or introduction of) a particular tax in isolation. It is illogical to oppose a GST increase solely on the assertion that it isn’t progressive with income. That may be a fair point, but opponents should also recognise a GST rate rise is effectively a wealth tax – a 5 per cent GST increase would reduce the purchasing power of all existing
wealth by about 4.5 per cent. And, unlike other taxes, it is difficult for high-income earners to avoid. In any case, any single tax change will inevitably make some worse off.
If we apply partial thinking to each potential change one at a time, we’ll reject every one of them. Yet the whole point of tax reform is to achieve a more efficient mix of taxes. Therefore, rather than take a piecemeal approach to possible individual tax changes, we should focus on evaluating potential tax reform packages.
A package consisting of the same tax changes we would reject one by one in a partial analysis may together deliver substantial net benefits while protecting/helping disadvantaged members of our community.”
Tax reform is vitally important. We hope that piecemeal commentary will not damage the prospects of reforms that can significantly improve the economic welfare of all Australians.
Posted in Economic reform, Paul Kerin, Public policy, Taxation
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Posted on December 2, 2015 by Litsa Morris
Paul Kerin and Christopher Findlay published an article in The Australian yesterday which expands on Paul’s recent blog on tax reform. Read the article here.
Posted on November 25, 2015 by Litsa Morris
Research forthcoming at the Economic Journal has uncovered what is the first longitudinal and multi-country evidence for a midlife low in human happiness and well-being. There really is a kind of midlife ‘crisis’ in feelings of satisfaction with one’s life. The new study by University of Adelaide economist Dr Terence Cheng, and his collaborators Nick […]
Posted in Economic growth, Economic research, Terence Cheng
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Posted on November 2, 2015 by Paul Kerin
There is considerable media speculation that the Federal government is considering raising the GST rate to 15% and possibly broadening its base in return for personal tax cuts for low- and middle-income earners. An example of this speculation can be found here. It is claimed that this scenario is one of the options under consideration […]
Posted in Economic regulation, Paul Kerin, Public policy, Taxation
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Posted on November 2, 2015 by Litsa Morris
Last Thursday night, the School of Economics’ Nic Sim gave a fascinating public lecture titled: “Does international trade lead to greater economic development? Evidence from less developed countries”. The lecture was part of the Faculty of the Professions’ Research 21 Public Lecture series. The short answer to Nic’s question is: YES. Based on empirical estimates, […]
Posted on October 26, 2015 by Paul Kerin
Commsec’s latest State of the States report (released today and available at State of the States) marks SA 7th (behind only Tasmania) on economic performance. On the dimensions taken into account in Commsec’s rankings, SA ranks best (3rd) on population growth and equipment investment, but ranks 7th on economic growth and retail trade.
Posted in Paul Kerin, South Australian economy
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Posted on October 8, 2015 by Paul Kerin
In my recent article in the ACCC’s Network magazine (“What would an efficient regulatory contract look like?”, available here), I argue that Australia’s current regulatory system for natural monopolies (such as electricity, gas and water networks) is in need of fundamental reform, because it does not serve the long-term interests of consumers very well at […]
Posted on October 8, 2015 by Paul Kerin
In my most recent Company Director column (“How long should a CEO stay?, available here), I reported that economists’ research shows that, in general, CEOs should not stay in their roles for more than 8-12 years. This finding reflects the trade-off between the incremental benefits and incremental costs to shareholders of longer CEO tenures. Of […]
Posted in Business economics, Economic research, Paul Kerin
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