Economic Society of Australia

We can and should keep unemployment below 4%, says our survey of top economists

Retrieved on: 
Sunday, August 13, 2023
Unemployment, Employment, Royal Economic Society, University, Social security in Australia, Area studies, NAIRU, Policy, Reserve Bank of Australia, Julia Gillard, OECD, Center, Economic Society of Australia, Government, Scardinius, Treasury, Labour, Dependent and independent variables, Climate change, Reserve Bank, Uranium mining, Employment agency, Ridesharing, Renewable energy, Cryptocurrency, Tutoring, Industry

The median (middle) response was higher, but still below official estimates – an unemployment rate of 4%.

Key Points: 
  • The median (middle) response was higher, but still below official estimates – an unemployment rate of 4%.
  • Significantly, only two of the economists surveyed picked an unemployment rate of 5% or higher, which is where Australia’s unemployment rate has been for most of the past five decades.
  • Australia’s unemployment rate dived to 3.5% in mid-2022 and has remained close to that long-term low since.
  • Geopolitical events and climate change have probably pushed up the rate of inflation to be expected from any given domestic unemployment rate.

3.5% unemployment, yet falling inflation

    • Craig Emerson, a former minister in the Rudd and Gillard governments, said NAIRU was best described as the lowest unemployment rate consistent with inflation not taking off.
    • Given Australia’s inflation rate is now coming down, NAIRU is clearly below the present unemployment rate of 3.5%, he argued.
    • This is the case at present, suggesting “full employment” means an unemployment rate of 3.5%.

Fix education, job-matching and childcare

    • There was very little support for cutting immigration or the JobSeeker payment.
    • The unemployed who would benefit the most would be those further down the queue who were the least successful in finding jobs.
    • Another, Brian Dollery from the University of New England, said much of Australia’s unemployment had been generated by unemployment benefits that were too high.

Meet Michele Bullock, the RBA insider tasked with making the Reserve Bank more outward-looking as its next governor

Retrieved on: 
Friday, July 14, 2023
Review, Unemployment, University, Culture, COVID-19, Policy, Bullock, Reserve Bank of Australia, Chalmers, Reserve, Economic Society of Australia, COVID, Government, Lowe, Reserve Bank, ANZ, Bible Society Australia, Economics, RBA, Cryptocurrency, Life insurance, Property insurance

She is already the deputy governor, having been appointed to that post by the previous treasurer Josh Frydneberg in April last year.

Key Points: 
  • She is already the deputy governor, having been appointed to that post by the previous treasurer Josh Frydneberg in April last year.
  • Yet, as a 38-year veteran of the bank, having joined in 1985, she could be seen as perhaps another insider.
  • Michele Bullock was raised in regional New South Wales and studied economics at high school and the University of New England, graduating with honours.

Why was Phil Lowe passed over?

    • for more than four decades of dedication and commitment and service, not just to the Reserve Bank and not just to the economy, but to our country as well; Phil Lowe goes with our respect, he goes with our gratitude, and he goes with dignity.
    • Under Lowe, the bank adopted a deliberate policy of keeping interest rates higher than were needed to restrain inflation, leading to higher-than-needed unemployment.
    • Lowe rejected several of these findings, which is why changing the culture at the top of the bank would have been difficult had he remained.

What’s next?

    • Bullock and her replacement as deputy (to be announced by Chalmers shortly) take office in September.
    • By then it is unlikely there will be much to do differently.
    • Whether or not Bullock faces fewer challenges than Lowe did, she is well placed to lead one of Australia’s most important institutions into the 21st century.