Monday 26th September 2016 - 4:56 pm

Will we see “helicopter money” here

by Alan Thornhill

It may take some “helicopter money.”

Or a manipulation of tax rates.

But there is no shortage of of options for monetary authorities wishing to sustain – or even boost – an economy in a low interest rate environment.

That is what Elizabeth Baldwin, a student at the University of Queensland, thinks.

And she has just won a $2,000-first prize in a competition run jointly by the Reserve Bank and the Economic Society of Australia.

That is also a nice little item to add to the CV of anyone looking at a future in economics.

Ms Baldwin recognised the challenge.

“At low interest rates, central banks are unable to stimulate economic growth and inflation with conventional monetary policy because of the zero lower bound,” she said.

But she adds: “…some general policy recommendations emerge.”

“Investment in public infrastructure by governments is likely to be very beneficial.

“This supports aggregate demand with little risk of crowding out, is relatively cheap to finance, has an amplified effect …” she said.

But co-operation might also be required.

“Coordination by fiscal and monetary authorities to encourage business confidence and investment is also likely to be positive,” she added.

“Despite the low interest rates, there is no shortage of options for creative policymakers,” she declared.

But what’s all this talk about “helicopter money.”

Well, Ms Baldwin explains, “…quantitative easing and large scale asset purchase programs, designed to push down long- term interest rates, are another unconventional policy option, used extensively in Japan and the United States.

“These programs raise asset prices, depreciate the domestic currency, and aim to lower the cost of borrowing and encourage riskier investment.”

And she adds: “a ‘last resort’ monetary policy is the helicopter money proposal originally imagined by Friedman (1969) and revived recently in Japan.

This “…involves the central bank financing fiscal stimulus.

It “…has the advantage of transmitting monetary policy much more directly to the real economy but has many political and economic hazards.”

As it happens the real world problems the Reserve Bank now faces are very similar to those Elizabeth Baldwin deals with in her essay.

So the bank’s new Governor, Philip Lowe, and his board will be very interested in what she has had to say.

The second prize, of $1,000, also went to a student at the University of Queensland, Shaun Ji-Thompson, while the $500 prize, for the best essay by a first year student, was taken by Timothy Grey, from the University of Sydney.

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Monday 26th September 2016 - 12:19 pm

Scrap backpacker tax: tourist industry

by Alan Thornhill

Australia’s tourist industry says the calculations behind the Federal government’s proposed backpackers’ tax are “absurd.”

In a statement today, the CEO of the Tourism and Transport Forum Margy Osmond said the government had assumed that the 32.5 per cent tax would have no impact on the number of working holiday makers choosing to visit Australia.

In fact, survey evidence showed that a 60 per cent reduction in the number of working holiday makers visiting Australia is likely.

She said the government is assuming that the new tax would would generate a $540 million windfall over three years.

Ms Osmond said the Forum’s own analysis suggests that, the that the backpacker tax would raise as little as $82.2 million per year or $264.4 million over three years

That is less than half of what the Government’s budget papers claim, Ms Osmond said.

“The problem for the Government is that the backpacker tax is just not adding up.

“It’s going to end up costing more in the lost opportunities as we drive thousands of working holiday makers to spend their money in more tax-friendly countries like New Zealand rather than Australia.”

She urged the government to scrap the proposed tax.

Monday 26th September 2016 - 8:44 am

The news: Monday September 26

by Alan Thornhill

The US ambassador to the UN has accused Russia of “barbarism” over the bombing of the Syrian city of Aleppo.BBC

1,000 residents evacuated from the Northern NSW town of Forbes as the flooded Lachlan river rises ABC

Hillary Clinton and Donald Trump prepare for their first televised debate of the US presidential election campaign ABC

Sunday 25th September 2016 - 3:34 pm

PM’s patience tested

by Alan Thornhill

Analysis

Prime Ministers don’t particularly like meeting State and Territory leaders.

Especially not when they have just spent the previous week telling international leaders that
they have the world’s best refugee policies.

The formality of these occasions, often called meetings of the Council of Australian Governments, or COAG,
can often make the spectre of their imminent arrival seem even worse.

These occasions, which we might well call COAGulations, are usually about the distribution of tax revenues.

The now imminent one is no exception.

Tasmanians in particular, believe that their island State has been getting a raw deal, under present arrangements.

And that Western Australia, under its Liberal Premier, Colin Barnett, is doing rather too well, at their expense.

So a Tasmanian Liberal Senator, Eric Abetz, wrote privately to Mr Turnbull, seeking redress.

He asked that the formula used to distribute GST revenues be revised.

But Mr Turnbull’s reply was blunt.

He said: “This will not arise for some years and so is not an issue that needs to be, or can be, determined in the near future.”

As often happens with such matters in Canberra, both the Senator’s letter and the Prime Minister’s reply were leaked to the media. In this case the ABC.

So the Premiers and Chief Ministers, who might have been hoping for some relief in this area, now have their answer in advance.

Of course squabbles among the States, over money, are to be expected.

They are just part of the job for any Prime Minister.

However Mr Turnbull has also had to cope with an an almost unprecedented level of disloyalty, from members of his own Coalition.

Over his campaign tactics, his superannuation reforms and even his backpacker tax.

These are enough to test the patience of any leader.

Even Mr Turnbull.

Sunday 25th September 2016 - 8:15 am

The news: Sunday September 25

by Alan Thornhill

The SES says the flooding event in the NSW town of Forbes is “unique”, urging residents to leave with the Lachlan River expected to reach 10.6 metres today.
ABC

A lone gunman kills 5 people at a a shopping centre, north of Seattle in Washington State. He is still at large.ABC

Intensified bombing in the Syrian town of Aleppo leaves 2 million people without water BBC

Saturday 24th September 2016 - 8:22 am

The news: Saturday September 24

by Alan Thornhill

Missiles rain down on rebel-held areas of Syria’s Aleppo, killing dozens of people and causing widespread destruction as the Russian-backed Syrian army prepares a ground offensive to retake the city. ABC

US and Russian plans to end Syria’s conflict must be saved as there is no alternative, Russia’s Foreign Minister Sergei Lavrov has told the UN.BBC

The Federal government is still at odds with States and Territories over school funding ABC

Friday 23rd September 2016 - 5:55 pm

The Census debacle:spreading the blame

by Alan Thornhill

As the troubled 2016 Census approached its closure today, it became clear that some 5 per cent of Australian families had not supplied their details,either electronically or
on paper.

The shadow assistant treasurer, Andrew Leigh, said this was a “significantly worse “result than that seen in the 2011 Census, which had a 1.7 per cent
undercount.

Mr Leigh said the new Reserve Bank Governor, Philip Lowe, had acknowledged yesterday that that an ” undercount rate of 5 per cent was concerning. “

“Since 1971, the average Census undercount rate has been 1.9 per cent.”

“ The worst undercount rate in the Censuses has been 2.7 per cent in 1976 and 2006,” he added.

Mr Leigh said the less data a census provides, the less useful it becomes.

It is used in planning bus routes, child care centres, and determining school funding.

“When the Census data is incomplete, Australia suffers,” Mr Leigh said.

He blamed the Federal government for the botched result.

 
“The Abbott-Turnbull Government left the position of Chief Statistician unfilled for nearly a year, attempted to cut the Census, appointed three ministers in a year who ignored the Census – and then were surprised when the Census went wrong,” he said.

 
 
“In the end, the Census debacle is the responsibility of the Prime Minister.

The Census is one of Malcolm Turnbull’s biggest stuff ups,” Mr Leigh said.

The government has ordered an inquiry into what went wrong with the 2016 Census.

Mr Leigh said Canada had just achieved a 98.4 per cent response to a Census that was carried out – primarily – on line.

Friday 23rd September 2016 - 2:07 pm

Australian women “positive” about their health:ABS

by Alan Thornhill

Two thirds of Australian women – aged 25-34 – rate their health as “very good” or “excellent.”

This is shown in the first results of the National Health Survey, which the Australian Bureau of Statistics published today.

The survey was undertaken in 2014-15.

It also showed that 56.2 per cent of all Australians, aged 15 years and above, also rated their health in much the same way.

Younger Australians did better.

The Bureau said 63.4 per cent of Australians in the 15-24 age group considered their health to be either excellent or very good.

However the bureau said, only 34.5 per cent of those aged 75 or more rated their health in the same way.

The bureau also noted that an earlier survey – in 2011-12 – had shown that 4 in every 5 Australian men are non-smokers.

However, the bureau also noted that your address can affect your health.

It noted that – in 2014-15 – two thirds of Australians living in the nation’s richest places, at that time, considered their health to be either very good or excellent.

However only 43.8 er cent of people living in poor areas could make the same claim.

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