As Transfield Services found out last year, governments don’t just outsource service delivery, they outsource political risk. And while Scott Morrison was promoted from immigration minister to Treasurer because of his “success” in “stopping the boats”, he left the Belgiorno-Nettis family, Diane Smith-Gander and Transfield Services shareholders to take the heat and pay the price. Well played, Scott. Politicians

When other people get pay rises, do you feel discouraged from working? If the Australian Taxation Office stopped BHP or Google from using tax havens, would your firm be less likely to invest in its own expansion? In a bizarre twist on behavioural economics, Treasurer Scott Morrison seems to think individuals and companies are motivated

Sunlight, it is said, is the best disinfectant. But despite the fact that markets can only work well when they are well informed, some in the Australian investment community remain convinced that disclosing their exposure to risky investments is a chore they would rather avoid. Take ANZ for example. In 2014 and 2015 motions were

The ruling mantra once was user pays, but now laws requiring mining companies to clean up their mess are derided. Where have all the economic rationalists gone? Back in the 1980s and ’90s most conservative politicians and businesspeople were obsessed with expanding the “user pays principle” to all areas of government service, but these days you

First published by the Australian Financial Review – here Economic modelling is like a meth lab, it can make you rich or blow up in your face. And like cooking meth, economic modelling gets more dangerous when it is done fast by those new to the industry. But despite the dangers, and the fact he

First published in the Australian Financial Review – here.  The only thing that Paul Keating likes about conservative economic policy is implementing it. Last week, with trade mark cut-through, he was back to his favourite trick of visibly attacking the right while strategically undermining the left. For decades Keating has stood tall in the crowd by taking the

First published by the Australian Financial Review – here.  Economic models are like skin care products: the magic is all in the marketing. Just as honest dermatologists regularly remind consumers that expensive face creams are just “hope in a jar”, honest economists regularly remind politicians and journalists that the “results” of macroeconomic modelling are no more reliable than

No tax concession does less to stimulate innovation or employment than the capital gains tax exemption on luxury homes. Indeed, by encouraging the most wealthy Australians to park billions of dollars in spare bedrooms that gather dust and detritus from Christmases past, the exemption simply diverts capital away from productive uses. A government that is

Originally published in the Australian Financial Review – here.  The differences between rugby league and rugby union, like the differences between the disciplines of economics and finance, can seem obscure to those who aren’t fans of either. Subtle though they may be, small differences can have big impacts on the end result. Indeed, those small

In the lead-up to the 2013 election both the Coalition and the ALP pledged to make no changes to the superannuation system in the coming term of government. Stability, we were told, was what the system needed. Less than three years later both major parties are promising to change the superannuation system. Reform, we are

First published in The Australian Financial Review – here. If you think that world demand for coal is going to grow in the coming decades, then it makes sense to build the 50 new coal mines proposed for Australia. And if you think that the world will continue its shift away from coal, then it

As Sweden debates how best to get out of the coal mining business, Australia is debating how best to subsidise the world’s largest export coal mines. Just last week the Australian Federal Government approved the enormous Adani/Carmichael coal mine which, at 40 kilometres long and 10 kilometres wide, is bigger than Gothenburg. The Australian Government

Originally published in the Australian Financial Review – Here. Like politics, economics often throws up some unusual allies. Take, for example, the recent call for a global moratorium on new coal mines by Kiribati’s President Anote Tong. Were such a restriction on the supply of coal to go ahead the biggest winners would be, you

After decades in public life some Australian corporate leaders are figuring out what first-year philosophy students grasp in their first lecture: it’s hard to define “ethical”. But as Transfield Services’ chairman Diane Smith-Gander has discovered, the stakes are a bit higher than undergrad debating prizes. Losing the debate over the ethics of running offshore detention centres

First published in the Australian Financial Review – here It’s bizarre that people blame Tony Abbott’s demise on his inability to communicate. He was a great communicator, and people knew exactly what he stood for. No politician was as relentlessly ‘on message’.  Abbott’s problem wasn’t the clarity of his message; it was the incoherence of

As opposition leader Tony Abbott told us that emissions trading was an expensive fraud. As Prime Minister he is proposing changes to his direct action policy based on the assumption that trading pollution permits is both cheap and reliable. As with so much of the modern policy debate the explanation for this remarkable turnaround has everything

Australia can’t have a grown-up debate about reform until we stop having juvenile debate about economic modelling. A government that thinks its most persuasive argument begins with “but economic modelling shows” should have as much chance of shifting the economic debate as Bronwyn Bishop had of shifting Australians’ attitudes to the role of helicopters in political

Politics Tony Abbott picks his fights, and loves, on the basis of the enemies he will enrage. This time he’s decided to love coal, but he has also enraged key sections of the National Party. First published in the Australian Financial Review – here. As the coal price continues to fall, the financial case for

First published in The Australian Financial Review, 30 June 2015 – Here The Business Council of Australia once defended free markets, but now it and others only support reforms that help its big business friends. If the Business Council of Australia (BCA) was serious about reducing government waste it would have slammed the recent announcement

While Norway’s decision to divest its $900 billion sovereign wealth fund from coal shares sent shock waves around the financial world, it was the way the Norwegian parliament made the decision that is truly radical. Norway has a conservative minority government, but the idea to sell out of coal started with an NGO, was taken

Tax policy Resources companies and lobby groups are lobbying a parliamentary inquiry to strip political climate groups of their charity status. But resources companies can deduct the money they pay to their industry groups from tax. Speech isn’t free in Australia. It isn’t even cheap. Corporate Australia spends billions telling the public, and our politicians,

A little bit of economic theory is a dangerous thing, and many of the people defending what BHP and Rio Tinto have done to the price of iron ore are demonstrating that they have very little economic knowledge indeed. Economists usually don’t like cartels, or other forms of producer protections, as they help producers and

Joe Hockey’s “do nothing” budget is better than his first “do harm” budget, but he still hasn’t tackled the big issues that face Australia in the wake of the mining boom, writes Australia Institute executive director and economist Richard Denniss. This article was produced for, and originally published by Crikey.com.au – Here. The economy described in

The apparent Coalition aim of cutting taxes does not match its public declarations about reducing the deficit. But tensions within the Coalition make any move on taxes difficult. Does Joe Hockey think removing the deficit levy will make the deficit go away? Announced in last year’s budget, the temporary 2 per cent increase in the

The Earth is flat, climate change is a conspiracy and the only way to collect more money for the states is to collect more money via the GST. How did the nonsensical belief that the GST is the one and only source of commonwealth revenue that can be transferred to the states come to be

The iron ore price is well above its long-term average. Indeed, at $US50 per tonne it is well above the $US36 price that Wayne Swan inherited in 2007. Blaming the iron ore price for Western Australia’s budgetary woes is like blaming the sinking of the Titanic on the iceberg. Yes, it’s a factor and yes,