19 June 2015

Everyone's favourite economist

It's odd to say that anyone is a favourite economist, but I think it's fair to say that Ross Gittins is just about the favourite economist of virtually everyone I know. But then I'm in Canberra and Ross writes for the Sydney Morning Herald and often the Canberra Times and he's done it for yonks and he's got a heart. The first budget he reported on was 1975 and he's seen 16 elections and 13 governments and 8 PMs since and one budget each year (and various intervening mini-budgets, I guess). We attended his book launch earlier this week. It was preceded by a panel discussion welcomed by Bruce Chapman (ANU), chaired by Marcia Keegan (ACT Economics Society) with Bob Gregory and Sharon Bessel (both ANU). Ross is not an academic, but there's respect here. His family background is Salvation Army, so there's concern for the poor in his blood, but he trained as an accountant, so there's some steel in his discussions. Ross started by denying the similarity of household and national budgets (households don't balance budgets - read mortgages; unlike governments, households don't last forever; households don't have tax or bond powers). So pollies who argue the similarity either don't understand public finances or are telling porkies. Debt is a scary word but sells papers and some can be useful (eg, to deal with a financial crisis). Budgets are not the economy. Bob Gregory argues there is no crisis but it's wise to talk of reducing debt, although he's not expecting a budget surplus within a decade. Why? Libs are committed to tax reduction, won't consider reduced deductions but the public won't come to it and no Australian government has ever reduced taxes (just used bracket creep to hide increases) but inflation is and creep is now low. The Intergenerational Review (IGR) could have been useful but was politicised so lost potency. Sharon Bessell is a political scientist, not economist, so spoke of debt-narratives, poor policy development due to these narratives, narratives as "form[s] fundamentalism[s]" leading to a harsher society, narrowed scope for good policy and lost visions for the future. This is despite institutions like the Parliamentary Budget Office with its independent advice on super and pensions and tax expenditures and the like. There was talk in questions and otherwise of hysteria from IPA and others; predictable thinktank and lobbyist agendas; case-by-case justification for private ownership, eg, of infrastructure; threats to credit ratings and its cost (and the inability of these very credit ratings agencies to properly rate many products before the GFC); the possibility of crisis leading to good policy outcomes (eg, Keating's banana republic [and for that matter, Rudd/Swan's GFC response); definitions for capital investment (in response to a suggestion of health and education as just that); US Republicans and Democrats as a guide to Australian politics (I shudder at this thought although I've thought the very same thing and dreaded it); that the last budget was "nothing to do with debt and deficit", "these guys are so unimaginative..."; who sets the debate and the arguments of self-interest; the $80b removed by Libs from state budgets for education and health. There was more. Nothing at all unexpected if you know your current affairs, but a tragedy none-the-less.

Ross Gittins spoke with Bob Gregory, Sharon Bessel and Marcia Keegan at the Crawford School of Public Policy, ANU. Bruce Chapman provided the welcome.

BTW, I include a pic of Real Big Tony entertaining the waiting, madding crowd lining up for Gillian Triggs' talk on the 800th anniversary of the signing of the Magna Carta. Outside Old Parliament House. We didn't get in but a transcript is available online.

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