Tuesday, July 29, 2014

An economic & political miscellany

A lot of Australian economic and political news around at the moment. Just a snapshot.

It appears that the income share of Australia’s top 1 per cent tax payers has not increased in recent years and is lower than in many comparable countries. 

The Business Council of Australia (BCA) has called for a more targeted approach to industrial development and economic reform. This is the entry point to the various papers. Sour grapes perhaps, but why weren’t you around when we tried to do something very similar back in the 1980s only to run up against the entrenched status quo in the Canberra coordinating agencies? I find it sad, actually, that the Australian economy has thinned out so much if the commissioned report is to be believed.

The Abbott Government has announced new work for the dole arrangements as part of a broader package. They are just proposals at this point, released for discussion.

As part of its response, the BCA believes that workers need to go where the jobs are, criticising the Fly-in/Fly-out syndrome as something strangely Australian. Again, I wish that they had done something about this before by encouraging mining companies to adopt longer term local development planning before the boom.

I struggle to understand either the economic or policy rationale behind the Government’s proposed approach. The broad principles would make more sense if the dole was higher. A higher Newstart Allowance would increase the incentive to stay on the benefit, hence increase the need for rules to encourage people to look for work, but also give people the actual cash they need to look for work.

It’s hard to believe that just two years ago business and welfare groups combined to argue for an increase in the Newstart Allowance on the grounds that the level had become manifestly wrong. 

The detailed system design is also flawed. I was just trying to imagine how someone in in say, Uralla population about 2,500, could meaningfully apply for 40 jobs a month. There aren’t that many real new jobs in total. Even the Government admits that they are setting up a rule to be broken.

Assuming that you have access to the internet, log onto Seek and submit pro-forma applications for any apparently suitable job anywhere to meet the rules, then get on with actually looking for a real job. You might even find one through Seek!

On Business Spectator, Daniel Palmer reports that confidence in the Australian mining industry is at a five year low.  Hardly surprising at this stage in the business cycle. Of more importance, Australian consumer confidence has apparently rebounded quite strongly from its post budget low. That’s good news.


Evan said...

"I struggle to understand either the economic or policy rationale behind the Government’s proposed approach."

Jim, you will struggle forever; there isn't one. Unless kicking the poor to score populist points is a policy - one pursued by both the majors (it was Hawke-Keating who started greater 'targeting' of welfare).

Which is part of the 'politics as perception management' discussion I think.

Evan said...

It was Fraser who introduced the term 'dole bludger' into Australian language. But it was Hawke-Keating who made the bureaucratic changes.

Jim Belshaw said...

Hi Evan. I'm not opposed to targeting of welfare, just wrong targeting!

Evan said...

Me too!