Over night the e61 Institute released some work that I’ve been involved in (with a bunch of amazing economists) chatting about the JobSeeker payment in Australia. Let’s have a bit of a yarn about it below.
[Sidenote: If you’re interested in how the payment works, you can play around with this a bit – noting the numbers are out of date, and there are still extra benefit rules to implement]
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The latest speech by the RBA’s Governor Philip Lowe, they have ruled out negative interest rates as an alternative monetary policy option for Australia in the near future.
In the discussion, the RBA outlined the cost side of this tool, namely “They can also encourage people to save more, rather than spend more, so they can be counter-productive from that perspective too.”
I would like to discuss this further as it is contrary to how we often talk about monetary policy, and fleshing it out helps to make some of the assumptions made clearer.
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One of the most fortunate things about being a New Zealander is that we are close to Australia and we have the right to live and work there. This is not just because Australia does many things very well, but simply because Australia is such a wonderful place.
Looking back, I can’t believe I only lived there for twelve months, given how much I enjoyed the experience. One day I shall kick myself, or possibly ask an Australian to do it for me since they will know how to make a good job of that too.
Read moreIn a recent response to questions, The Reserve Bank of Australia has listed six options of unconventional monetary policy that is considered in an event of extreme policy implementation. Westpac economists have also talked about potential unconventional monetary policy tools applicable to the NZ case here – this is worth a read, but is a different list!
In this post I would like to outline the RBA’s options and hopefully make them easy to understand.
Read moreI see that some Australian TV show host said that New Zealand has the “dole bludger army” for support in the cricket. Now something about intimate relationships with sheep or cows, or something about little country syndrome, or something about Lord of the Rings, would have been fine – banter is acceptable. But his statement doesn’t make any sense, and feeds into a stereotype of New Zealanders in Australia that leads to real discrimination.
So why doesn’t the stereotype hold up? Well for one, Kiwis can’t get the unemployment benefit in Australia – they could pre-2000 but then things changed. Just check it here. It is common to see Australian media (and people I run into) complaining both that Kiwi’s are “stealing their jobs” and “stealing their benefits”. In truth Kiwis are heading over there, without a security net, to work hard to make something of themselves in a larger country – they can’t get the benefits, and the idea of a zero sum set of jobs is just straight incorrect.
Secondly, within both countries there are proportionately fewer people on the dole in New Zealand than in Australia. New Zealand produces these numbers directly, but I couldn’t find matching Aussie data. As a result, we can just look at the unemployment rates (given they use matching definitions of what constitutes unemployment):
Sure unemployment went a bit higher recently, due to the deeper recession in NZ – but on average a lower proportion of NZers are unemployed than Aussies are.
And this has occurred with much higher employment rates (% of people over 15 in work) in NZ than in Aussie.
So, out of the population, a larger proportion of NZers are actually working relative to those in Aussie.
So not only was it a stupid, racist, and bigoted call – the data doesn’t even support the TV hosts prejudices.
Note: The term dole bludger is insulting and degrading in the first place – irrespective of the relative unemployment rate. Even if NZers could get benefits, and the UR was higher in NZ, this type of attitude towards benefits is pretty dirty.
Recently I’ve been talking a bundle about inequality in incomes, and fitting it within an idea of “equity”. However, as we’ve chatted about, policy choices often involve conceptualising an equity vs efficiency trade-off. A fundamental part of how we understand where we are in relation to this trade-off, especially with reference to “efficiency”, comes from thinking about productivity.
With this in mind, the Productivity Commission has been thinking about New Zealand’s productivity performance. And given that along many characteristics New Zealand and Australia are similar they have decided that looking into the productivity gap between these countries helps us to understand this issue. This led them to release a working paper titled “Investigating New Zealand-Australia productivity differences: New comparisons at industry level” on their main site (links can be found here).
