Economic insights from the Melbourne Institute’s 2011 Economic and Social Outlook Conference

Last week I attended the Melbourne Institute’s 2011 Economic and Social Outlook Conference.  The theme of the conference was, ‘Growth Challenge – Riding the Resources Boom to Lasting Prosperity’.  The conference was one of the best all-round economic events I have attended with a number of absolute top notch speakers involved.  Overall, it was very thought provoking and a good chance to get some insight into the ideas floating around Government, business and academia.

In this week’s blog I’d like to highlight some of the most thought provoking comments of the conference (in my opinion).  Note these aren’t direct quotes however, I have included the names of the presenter’s that made these points:

  • We don’t need to maximize the returns of the mining boom, we need to minimize the risk – Warwick McKibbin
  • The current loose monetary policy globally (outside of Australia) is a major global economic risk – Warwick McKibbin
  • OECD countries have large and unsustainable levels of debt, they shouldn’t have levels greater than 60% (although many do).  Although these levels may be sustainable at 0% interest rates, they aren’t at 5% – Warwick McKibbin
  • Australia’s terms of trade are likely to fall due to: global supply responses, withdrawals of global loose monetary policy, a rise in non commodity prices and the global climate response will tax on Australia’s competitive advantage (resources) – Warwick McKibbin
  • The current boom (which has been ongoing since the early part of last decade) is Australia’s first ever boom with a floating exchange rate.  In previous booms inflation had to rise because the currency couldn’t as did wages – Gary Banks
  • Although employment in the manufacturing and agricultural sector continues to fall, output continues to increase – Gary Banks
  • 3 billion people (China and India) are effectively undergoing an industrial revolution as we speak – Chris Richardson
  • China’s growth is not a population growth story (1 child policy), it is a story of productivity improvement – Chris Richardson
  • Reform is now much tougher, you can only float the dollar once and can only introduce a GST once – the relatively easy reforms have been done – Chris Richardson
  • We shouldn’t be running a population policy to meet a plan in 40 yrs time.  Some sectors would do well under this scenario (housing and infrastructure) however, most others wouldn’t – Tony Burke
  • We need to determine what is a sustainable rate of population growth that supports business needs but doesn’t undermine the quality of life – Scott Morrison
  • Recent migration wasn’t driven by skilled migration, only 25% was skilled, it is imperative to drive migration toward skilled migration – Scott Morrison
  • The argument about population growth for ageing population is overdone, it defers the challenge rather than addressing it. Labour needs to be more productive and improve the capacity to save for retirement – Tony Burke
  • Payroll tax is basically the only growing source of revenue for State Governments – Joe Hockey
  • Australian’s will embrace tax reform if they believe they will be better off down-the-track, reform needs to be equitable and fair – Joe Hockey
  • The individual states have to be able to raise new revenue and the people that raise revenue (tax) need to be accountable for spending that money – Joe Hockey
  • Finance regulation was wound back in 1980’s, it is now coming back and banks are heading back to a period of rationing credit, being more choosy who they lend to – Ian Harper
  • Foreign investment in Australia will be the key to increasing quality of life and GDP, funds will have to flow through Foreign Direct Investment – Ian Harper
  • In business you sit down and speak about what is your competitive advantage, I have never done that in Government or in opposition.  Australia’s competitive advantage is in: resources, education and agricultural.  The Government wants to take away our competitive advantages through a carbon tax (resources) and the banning of live cattle exports (agricultural) – Andrew Robb (I realize this is a little political but I couldn’t believe that Minister’s aren’t discussing the nation’s competitive advantage)

Outside of this it is important to also read the major speeches made by Treasury Secretary Martin Parkinson, Tony Abbott and Wayne Swan.  In particular, Martin Parkinson’s was a very good speech.

Martin Parkinson http://www.treasury.gov.au/documents/2077/PDF/Sustaining_growth_in_living_standards.pdf,

Tony Abbott http://www.tonyabbott.com.au/LatestNews/Speeches/tabid/88/articleType/ArticleView/articleId/8162/Address-to-the-2011-Economic-and-Social-Outlook-Conference-Melbourne.aspx

Wayne Swan http://www.treasurer.gov.au/DisplayDocs.aspx?doc=speeches/2011/021.htm&pageID=005&min=wms&Year=&DocType

About Cameron Kusher

Cameron Kusher is Head of Research at CoreLogic, specialising in primary and secondary data analysis, property market commentary and consultancy. Cameron has a thorough understanding of the fundamentals such as demographics, trends, economics and spacial analysis and is a regular keynote speaker for property-related groups, regulated industry bodies, corporations and the government sectors. Follow Cameron on Twitter @cmkusher

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