The discussion of necessary reforms is dominated by special pleading by vested interests. Photo: Gabriele Charotte
ROSS GARNAUT AND PETER DAWKINS
Australia needs rigorous, independent economic policy debate and analysis to inform economic policy. The Melbourne Economic Forum seeks to contribute to meeting that need by bringing to account the considerable analytic capacity in economics based in the city.
A joint endeavour of the University of Melbourne and Victoria University, this new forum will bring together 40 leading economists, from or with institutional connections to Melbourne to discuss the great economic policy issues confronting Australia and the world.
The forum is independent of vested interests and partisan political connections. It will not support the position of any political party or campaign of any group. It will focus on analysis of policy in the public interest. Almost any policy proposal has implications for the distribution of incomes and wealth and income amongst Australians. Our objective will be to make these implications explicit and to point out their implications for wider conceptions of the public interest.
It would be surprising if high quality analysis of policy choice for Australia does not, from time to time, earn the criticism of participants from all corners of the political contest and from many groups with vested interests in particular uses of public resources and government power. The test of the forum’s value will be its success in illuminating the consequences of policy choice and not its immediate and direct influence on government decisions.
Through the final four decades of last century, dispassionate economic analysis and debate played a major role in illuminating government decisions on economic policy. Rational economic analysis became more important in underpinning serious discussion of policy choice. It emerged from interaction of economists in some of the universities with the predecessor to the Productivity Commission, the national media and later the public service and some parts of the political community. This interaction gradually built support for an open, competitive economy. The ideas preceded their influence, but eventually were of large importance in guiding the reform era under the Hawke, Keating and Howard governments. The resulting reform era laid the foundations for 23 years of economic growth without recession.
CHANGE IS A NECESSITY
Business organisations and the trade union movement joined the consensus and joined the discussion in constructive ways. The Business Council of Australia was formed to develop policy positions that were in the national economic interest, though not necessarily in the commercial interests of every one of its members.
Both rational economic analysis in the public interest and Australia’s high standard of living have been weakened by developments in the early twenty first century and are now under threat.
As mineral prices fall, productivity growth languishes and our population ages, Australia needs a new program of economic reform. Yet the discussion of necessary reforms is dominated by special pleading by vested interests.
Of course there is room for disagreement about the size of the challenge Australia faces if it is to maintain high levels of employment and prosperity. And different policy prescriptions will have different consequences for the distribution of the burden of adjustment to a more sombre economic outlook. A lazy policy response would shift the burden onto the shoulders of those Australians who lose their jobs or cannot find one.
Yet a budget that is viewed by the community as unfair is inimical to the task of building a consensus for reform.
The Melbourne Economic Forum will contribute to these debates, starting with a session on the economic outlook for Australia and the impacts of alternative policy responses. In September we will take on the international policy challenges most pertinent to the G20 meeting in Australia later in the year.
In November, we will venture into the hazardous territory of tax system reform and federal-state financial relations.
Bi-monthly forums in 2015 will tackle issues such as infrastructure, investment, foreign investment and trade policy.
Reviving the tradition of rigorous, independent policy thinking is not a hankering for the past but an essential precondition for a new wave of economic reform to secure employment growth and rising prosperity for all Australians in a far more challenging global economic environment.
Professor Ross Garnaut is professor of economics at the University of Melbourne. Professor Peter Dawkins is vice-chancellor at Victoria University. For more details on the Melbourne Economic Forum see melbourneeconomicforum.com.au.
The Australian Financial Review
