Category: Economics

Plain packaging: a failed policy export

We all know plain packaging is incredibly unappealing to look at, but statistics are consistently showing that it is also completely useless – and may even have effects that go against its intended outcome of reducing smoking. 

First, some background. Since December 2012, all companies selling tobacco products in Australia have been required to remove any branding or logos on packaging under the Tobacco Plain Packaging Act 2011. This has meant that all products from all brands have same appearance – drab dark brown (or Pantone 448 C, “the ugliest colour in the world”). The drab packaging compliments enlarged pictures of a child dying from cancer, somebody’s rotten teeth, a gangrenous foot, or some other visceral and confronting medical image designed to scare people into giving up the habit.

Australia was the first country to implement standardised tobacco packaging laws, and has inspired at least 15 other countries … Read the rest

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Want more women at the top? Don’t overtax the ones already there

Lowering the 32.5 percent marginal tax rate to 30 percent and abolishing the 37 percent tax bracket for people earning $125,000 to $200,000 helps women. Australian Taxpayers Alliance Policy Director, Satya Marar, published an op-ed this week in the Daily Telegraph pointing out that this tax cut would not only provide Australia’s economy with a much-needed productivity boost. It would also promote women’s workforce participation and would bring more highly educated and qualified women back into the workforce, and reward them with higher paying jobs.

The government is punishing the very women who are doing the most to eradicate the gender wage gap.

It is women who have the power to take control of the gender wage gap. Not radical social engineers who think that imposing constraints on companies, or pushing unmeritocratic affirmative action policies are the answer. Women who are keen to work hard and get ahead in … Read the rest

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The train to Geelong

Prime Minister Scott Morrison’s ambitious $4 billion plan to improve the efficiency of a train to Geelong from Melbourne is a recipe for disaster. The new line is part of a $19 billion high-speed rail plan to improve the efficiency of regional trains in Australia announced ahead of the 2018-19 budget. The nation-wide project is aimed to reduce commute times, congestion and provide greater accessibility for people living outside large cities like Melbourne.

While the Prime Minister’s goals are no doubt admirable, taxpayers should be concerned as such projects have a poor track record, are highly susceptible to cost blowouts, and indefinite timelines. Consider how since the 1980s, every Federal Government has conducted a feasibility study of constructing high-speed rail, but no high-speed rails have ever been constructed.

The Federal Government’s rail proposal for Geelong and Melbourne is expected to nearly halve commute times from 62 minutes to 32 minutes, … Read the rest

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Federalism, Australian style: federal-state financial socialism

There has been a lot of public debate this year in Australia about the federal system of government, in general, and, in particular, the system of payments between the national level of government and the sub-national level. Australia has a federal system of government similar to countries like the USA and Canada. Like the U.S., there is a national government and sub-national governments called the states and territories. Like Canada, these sub-national governments are a relatively small in number and population compared to the U.S. and include territories. Australia has six states and two territories compared to Canada’s ten provinces and three territories remembering of course that the U.S. has fifty states plus sixteen territories. The Australian national government is called the “Commonwealth”.

Three Aussie states are strongly complaining that it is largely unfair and unreasonable that they respectively and collectively do not get nearly enough revenue back from the … Read the rest

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WA lobster nationalisation leaves industry on the rocks

The West Australian fishing industry that has long exemplified successful export orientated local enterprises, now faces the threat of annihilation from Premier McGowan’s pugnacious policies. The proposed law tries to create more rock lobster stocks for a barely existent local market through enforced expropriation. If this bill passes the upper house, fishermen stand to lose their livelihoods.

The laws only set WA’s fishing industry back to the 1970s where it was uncompetitive and unprofitable as the government will seize over 17 percent of the fish stock. This will deter private investment and discourage new entrants while wrecking the industry. The prospect of such government overreach is unwarranted and exploitative based off the anaemic justification that rock lobsters are a ‘local rarity’.

Rock lobster fishermen rely heavily on the prices our exports attract due to high demand in Asian markets. The shockwaves of McGowan’s law are already being felt in the … Read the rest

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Quantitative easing, Aussie style

Most everybody in Australia who has watched, listened or read the news over the past decade has heard of Quantitative Easing, also known as QE for short. And perhaps some of these same people might recall that QE is associated with the American central bank of The Federal Reserve, or The Fed for short.

But did you know that Australia’s central bank of the Reserve Bank, or RBA, has also been doing QE?

QE is an approach to monetary policy that involves trying to stimulate economic growth when interest rates are already quite low. It does this through increasing the money supply with financial institutions by purchasing government bonds and other securities from them.

This is supposedly new and unconventional. Perhaps it is, perhaps it isn’t. That is largely unimportant, in an economic sense.

What is important is that QE is about flooding the economy with more money. Money largely … Read the rest

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Government killed the video star

One of the great products of capitalism is technological advancement and innovation, as enterprise and business when left free are able to unleash their creativity through their products and services. Such technological advancements have grown rapidly since the turn of the century, especially in media which has seen ground-breaking innovations like social media platforms and video streaming that have revolutionised industry practices.

These innovations have been disruptive for traditional media companies. We have seen the effects first-hand through the collapse of the Fairfax empire, and are witnessing the slow extinction of traditional free-to-air TV. While breakneck technological disruption is a major factor behind TV’s struggle, with an exodus of customers to online streaming giants such as Netflix and Stan, government regulation is also to blame as it has left companies less competitive and unresponsive to consumer tastes.

Most principally, it is local content rules applied to free-to-air television that mandate … Read the rest

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A robot tax punishes people

Life is much better today than it ever has been in history. Since the Industrial Revolution, in particular, new technologies and labour-saving devices have benefited the average worker a great deal. Unfortunately, it seems that some people haven’t got the memo yet.

In modern history, humans have demonstrated a fear of technological progress and its consequences. The Luddites took it upon themselves to destroy looms and knitting frames, which they feared would take their jobs, and it appears as though a Labor government would like to revive the primitive practice.

The Labor Party are tipped to back a new ‘robot tax’ which flies in the face of human progress and promises to constrain the ever-rising living standards the past few hundred years have brought us.

The new tax would be aimed at funding the retraining of workers displaced by technology so they can move into jobs of equivalent conditions and … Read the rest

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Jobs Guarantee: a guaranteed failure?

US economist Stephanie Kelton, a former adviser to Bernie Sanders, has just embarked on a tour of Australia. Kelton is promoting her vision  of government funded jobs to deal with unemployment and underemployment in Australia: a government Job Guarantee. While the idea sounds nice, a government guarantee is nothing but a guaranteed failure.

The economic rationale for this proposal is the idea known as Modern Monetary Theory (MMT), which  began gaining popularity in the early 90s, evolving from existing theories developed by economist Georg Friedrich Knapp in the early 20th century. The theory proposes that taxation does not fund government spending and is merely a policy tool to control inflation and unemployment. The same thinking applies to government spending being a policy tool. Further, MMT proposes that when a sovereign nation establishes its currency as fiat money and is the sole supplier, the government commands an unlimited ability to Read the rest

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