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  • The Stage 3 tax cuts are bad economics combined with terrible politics. They should be dumped.

    The Stage 3 tax cuts are bad economics combined with terrible politics. They should be dumped.

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on April 20, 2023

    The Stage 3 tax cuts were always bad, but with the removal of the low-middle income tax offset, they become a terrible political strategy as well

    During the 2022 election campaign the ALP in a desperate and misguided move to avoid being wedged, agreed to implement the horrendously inequitable Stage 3 tax cuts. But, as Policy Director Greg Jericho writes in his Guardian Australia column agreeing to bad policy in opposition means you own the bad policy in government – except you get no credit for it and all of the blame.

    While the Stage 3 tax cuts have always been wildly expensive and unfair, with around half of the benefit going to the richest 3%, but the removal of the low-middle income tax offset (LMITO) has made them even more unfair and politically foolish for the ALP.

    Because the LMITO was targeted most at those earning between $50,000 and $90,000 and the Stage 3 tax cuts are least targeted towards those people, it means the removal of the $1,500 LMITO for someone on the median income of $65,000 will only be replaced by a $500 tax cut under Stage 3.

    This means the ALP if it continues to implement  Scott Morrison’s tax policy will go to the next election in a position where middle-income earners will be paying more tax than they did in 2022 while people on $200,000 will be $9,075 better off.

    That is a weird strategy for a progressive political party to pursue.

    In reality, the Albanese government will get no credit for implementing the Stage 3 cuts and will get all the blame for leaving around 75% of taxpayers worse compared to the last year of the Morrison government.

    It is time to dump the tax cuts and for the Albanese government to deliver policies that it would be proud to defend. Fairer tax cuts, increase Jobseeker, invest in renewables and other vital infrastructure and improve services.


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  • Wealth inequality across generations will only fuel voter disenchantment

    Wealth inequality across generations will only fuel voter disenchantment

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on April 13, 2023

    Millennials are not becoming more conservative as they age – and the rigged housing market is just one reason why

    While income inequality is an often discussed topic, wealth inequality is just as pernicious though often less discussed issue. Worse still the inequality of wealth across generations has lasting impacts for people into retirement.

    Policy director Greg Jericho writes in his Guardian Australia column how economic policies of the past few decades has served to provide those with wealth more of it, while depriving younger people of gaining a foothold that previous generations had.

    The issue is most acute with housing. Housing affability is often debated with some suggesting that because of lower interest rate than in the past owning a home is not as difficult as in the past. But the reality is that the size of the mortgage relative to incomes is so much greater than in the past that even with lower interest rates payments account for much more income than they used to. Whereas for those entering the housing market in the 1980s one incomes was often more than enough, now two incomes is a necessity.

    But what is often forgotten is that while interest rates were higher at times in the 1980s and 1990s those rates fell and with them did the payments all the while incomes rose. As a result those who bought homes in the 1980s and 1990s saw their repayments as a share of income fall to very low levels – levels unheard of now.

    And while the arguments about whether housing is more or less affordable can turn on definitions of affordability, the fact is that for the first time fewer than half of people aged 30-34 own their own home.  That’s not through choice, but through the reality of a housing market that is locking out younger people.

    This in turn sees younger generations have less wealth at  their age than did their parents and grandparents.

    It is little surprise that Millennials are not becoming more conservative in their voting as they age in the same way that did Baby Boomers and Gen Xers. The wealth inequality will have ongoing repercussions for political parties who have in the past taken it as given that older voters will vote for them.


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

    Australia’s Gas Use On The Slide

    by Ketan Joshi

    The Federal Government has released a new report that includes projections of how much gas Australia is set to use over the coming decades. There is no ambiguity in its message: Australia reached peak gas years ago, and it’s all downhill from here:

  • With the impact of rate rises still to come the RBA is wise to pause

    With the impact of rate rises still to come the RBA is wise to pause

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on April 6, 2023

    Perhaps as much as a third of the rate rises since April have yet to fully hit the economy

    Since April the Reserve Bank has increased the cash rate by 350 basis points from 0.1% to 3.60% – the fastest and largest increase since the late 1980s. But as policy director Greg Jericho notes in his Guardian Australia column, perhaps as much as a third of the rate rises have yet to fully flow through to the economy.

    While the interest rate of new mortgages has risen the full amount, the average rate of all mortgages has only risen around 209 basis points – with many mortgage holders still yet to have their repayments increase due to the rate rates in December, let alone those in February and March.

    The Reserve Bank noted this in its statement and stressed the need to gather more information before deciding whether to increase rates or keep them steady.

    The most recent GDP figures show the economy overall has slowed and the signs of inflation are that the peak has been reached and much like the USA, it is not heading down. While the path to 3% inflation might take some time there seems little sense of long-term expectations rising and the 350 basis points worth of rises makes it clear the RBA is prepared to act if it believes inflation is accelerating.

    The Centre For Future Work has been calling for a pause in the rates and it welcomes this decision by the RBA.  There is minimal risk from observing the data after 10 successive rate rises. And workers whose wages have not kept pace with inflation will be relieved that the RBA is paying heed to warnings that slowing the economy too fast in an environment where inflation has peaked only increases the risks of sending the economy into a recession


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    Dutton’s nuclear push will cost renewable jobs

    by Charlie Joyce

    Dutton’s nuclear push will cost renewable jobs As Australia’s federal election campaign has finally begun, opposition leader Peter Dutton’s proposal to spend hundreds of billions in public money to build seven nuclear power plants across the country has been carefully scrutinized. The technological unfeasibility, staggering cost, and scant detail of the Coalition’s nuclear proposal have

  • Stop the fear, give workers a fair pay rise

    Stop the fear, give workers a fair pay rise

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on March 30, 2023

    The whole point of public-sector wage caps is to keep all wages down

    It took roughly one day after the New South Wales election for conservative media groups to begin spreading fear about union power and public sector wage blowouts. But as labour market policy director, Greg Jericho writes in his Guardian Australia column these fears are massively overblown and also ignore the reality of how much workers have lost out over the past few years.

    In NSW public-sector wages grew just 2.5% in 2022, well below private-sector wage growth in that state and massively below inflation which rose 7.6% in that state last year.

    Public-sector wage caps were notionally introduced to get the budget back into surplus, but that was just a fib – once the budget returned to surplus the caps remained. The purpose of the wage caps has always been to drive down private-sector wage growth, a point made abundantly clear by former Treasurer Matt Kean when he told an audience at a Business NSW function that removing the public-sector wage cap would see their companies “competing for labour against the public service who were paying huge wage increases.”

    But the reality is the wage cap not only keeps private-sector wages down it has smashed the living standard of public sector workers whose real wages are now more than 5% lower than they were 2 years ago.

    The fear of wage rises must stop.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • The housing market has cooled, but housing unaffordability remains a long way off

    The housing market has cooled, but housing unaffordability remains a long way off

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on March 16, 2023

    House prices are falling but housing unaffordability remains high

    The most recent data on the value of dwelling around Australia reveals the prices in most capital cities have fallen over the past year and are likely to keep doing so for some months. But the data also shows that housing affordability remains a long way from repairing the decades of damage.

    In his Guardian Australia column, policy director, Greg Jericho, notes that the impact of interest rate rises has definitely caused the housing market to come off the boil. In most capital cities median house prices are now below what they were a year ago. Coming as this does off data suggesting wages are not rising as fast as the Reserve Bank feared, and amid the ructions in the USA financial system after the Silicon Valley Bank collapse, the Reserve Bank certainly has enough reason to not raise rates again.

    But while the fall in house prices does help those trying to buy a home, the decrease in affordability is highlighted by the fact that while house prices are mostly below what they were a year ago, they are well above what they were 2 years ago in all capital cities. And those rises have been well above the growth in wages in that time.

    Jericho notes that in Sydney for example, wages and house prices from 2003-2013 largely rose in line but over the past decade house prices have surged above wages. Had prices instead continued to rise in line with wages the median house price in Sydney would now be $863,000 rather than $1,270,000.

    This disconnect is replicated around the country with house prices being some 60% above what they would have been had they risen along with wages. In Hobart the current median house price of $727,000 is some 133% above the price it would have been had they rinse in line with wages in Tasmania of $297,000.

    This disconnect highlights the need for tax reform of the housing market, an increase in supply including increased median density housing, and especially public housing.

    And above all we need wages to no longer be left behind.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Women Earn $1m less than men & $136,000 Less in Super over Working Life

    Women Earn $1m less than men & $136,000 Less in Super over Working Life

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    New research released on International Women’s Day reveals Australian women earn $1.01m less over their working lives than men, based on median income data.

    Women earn $136,000 less in superannuation over their working lives than men, based on median income data. Women earning the median wage will accumulate approximately $393,676 in super, $151,000 below what is considered a ‘comfortable retirement’. The average super balance in Australia in 2023 is $150k.

    Experts say if the gender pay gap was eliminated women would be $3 billion per week better off.

    Despite the gender pay gap narrowing slowly, based on data from the past decade it will only be eradicated by the year 2053 when more than 60% of the current workforce will be retired.

    Key Points:

    • Australian women on a median income will earn $1.01m less over their working lives on average than their male counterparts.
    • Australian women on a median income will earn $136,000 less in superannuation over their working lives than their male counterparts.
      • Women earning the median wage will accumulate approximately $393,676 in super, $151,000 below what is considered a ‘comfortable retirement.
      • The average super balance in Australia in 2023 is $150k.
    • Experts say if the gender pay gap was eliminated women would be $3 billion per week better off.
    • The gender pay gap is narrowing so slowly that it will not fully close for another 30 years until 2053. At that stage 60% of people currently working will have retired.
    • The Gender wage gap in Australia (15.3%) is more than double what it is in New Zealand (6.7%)
    • The gender gap occurs across all occupations and industries:
      • Men have higher average salaries than women in 95% of all occupations, including those where women dominate the workforce. For example, women account for 99% of all midwives, and yet are paid on average 19% less.
        • 80 occupations in which men make up 80% or more of the workforce have an average salary above $100,000.
        • By contrast zero occupations in which women make up 80% or more of the workforce have an average salary above $100,000.

    “For the average woman in Australia, the gender pay gap will be more than $1.01m over her working life, based on conservative estimates,” said Senior Economist Eliza Littleton from the Australia Institute’s Centre for Future Work.

    “There’s been a noisy political debate about super in Australia for the past week, but this data shows that based on median income data Australian women will earn $136,000 less than their male counter parts over their working life. When you consider that the average super balance in Australia right now is approximately $150,000, that’s a huge disparity.

    “Australian women continue to be paid less than men on average across all industries and occupations, costing us more than $3b across the economy each week.

    “We know that older women are one of the most vulnerable groups when it comes to poverty and homelessness in Australia.

    “Australian women shouldn’t have to wait until the year 2053 for substantive equality. We deserve equity today and our research makes several sensible policy recommendations for the Labor Government to action.”

    Policy recommendations:

    • Greater access to free or more affordable earlier childhood education & care: Australia Institute research shows if Australia had the same labour force participation rates as Nordic countries do, then the economy would be $60 billion, or 3.2% of GDP, larger (Grudnoff and Denniss, 2020).
    • More paid parental leave for both parents: Australia’s PPL scheme is well behind international standards. The OECD average PPL scheme is 60 weeks in total, with 24.6 weeks reserved for mothers, 10.4 weeks for fathers and 25.4 weeks that can be flexibly distributed (OECD, 2022). With a 20-week scheme, Australia unsurprisingly ranks low – 30th out of 38 countries for the duration of paid leave entitlements. Extending leave entitlements and encouraging a more even distribution of childcare would help reduce the career and financial penalty of having children both for all parents, but especially women. Additionally, making it mandatory for superannuation to be paid while a person is taking paid parental leave would help to reduce the gendered super gap.
    • Greater family-friendly work practices: Some workplaces and workers have managed to maintain flexible working arrangements, but this should be standardised, expanded and embedded in employment relations frameworks to make balancing work and care more achievable across the workforce. Breaking down rigid job design in male-dominated jobs could also help with reducing entrenched gendered segregation by industry and occupation.
    • Deliberate policy to lift the wages for industries dominated by women — most urgently in the care sector: Women dominated sectors, especially in the care industry are among the lowest paid work. The 2021 Royal Commission into Aged Care Quality and Safety recommended that gig work, independent contracting and other ‘indirect’ employment arrangements be restricted in the publicly-funded aged care sector. This needs to be agreed to.
    • Address insecure work: Further reforms should include rights to family-friendly working time arrangements and stable work as minimum standards for all employees in the National Employment Standards.
    • Full recommendations in attached report

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    The Times They Aren’t A-Changin (enough)



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  • Australian Inflation Reflects a Historic Redistribution from Workers to Bosses

    Australian Inflation Reflects a Historic Redistribution from Workers to Bosses

    by Jim Stanford in The Conversation

    Jim Stanford

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    Originally published in The Conversation on April 7, 2023

    The upsurge of inflation since the COVID-19 lockdowns has not had equal impacts on all Australians. Workers and low-income people have experienced the worst losses: both because their incomes, in most cases, have not kept up with prices, and because they are more dependent on essential goods and services (like shelter, food, and energy) than higher-income households.

    Meanwhile, business profits have expanded strongly through this inflationary episode. Companies haven’t just passed along higher input costs to their customers. Rather, they have taken advantage of the conjuncture of factors related to the pandemic (supply shortages and disruptions, consumer desperation and pent-up demand, and oligopolistic pricing power) to push up prices far higher than needed to cover their own costs.

    The result has been a process of ‘profit-price inflation’: higher profit margins are both a cause and consequence of rapid inflation. Centre for Future Work Director Jim Stanford discusses the distributional impacts of recent inflation in this new commentary for The Conversation: Underlying Australia’s inflation problem is a historic shift of income from workers to corporate profits


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  • Profit-Price Spiral: Excess Profits Fuelling Inflation & Interest Rates, not Wages

    Profit-Price Spiral: Excess Profits Fuelling Inflation & Interest Rates, not Wages

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    New empirical research reveals the main driver for inflation in Australia is excess corporate profits, not wages, and that inflation would have stayed within the RBA target band if corporates had not squeezed consumers through the pandemic via excess price hikes.

    The dramatic expansion of business profits has gone mostly ignored by the RBA and other macroeconomic policy-makers, who have focused instead on a supposed ‘wage-price’ spiral which does not exist. This suggests the focus of the RBA on wage restraint is misplaced and unfair, and that interest rates would be far lower today if companies had not gouged customers at the checkout.

    The report Profit-Price Spiral: The Truth Behind Australia’s Inflation (attached) comes in the same week supermarket giants Woolworths and Coles posted soaring profits, with banks, gas and petrol companies posting similarly soaring returns.

    Key Findings:

    • A Profit-Price spiral is the main driver of inflation in Australia, rather than a supposed “Wage-Price” spiral, which does not exist
    • As of the September quarter of 2022 (most recent data available), Australian businesses increased prices by a total of $160 billion per year over and above their higher expenses for labour, taxes, and other inputs, and over and above profits generated by growth in real economic output
    • Without the inclusion of those excess profits in final prices for Australian-made goods and services, inflation since the pandemic would have been much slower: an annual average of 2.7% per year, barely half of the 5.2% annual average actually recorded since end-2019.
    • That pace of inflation would have fallen within the RBA’s target inflation band (equal to its 2.5% target, plus-or-minus 0.5%)
    • Excess corporate profits account for 69% of additional inflation beyond the RBA’s target. Rising unit labour costs account for just 18% of that inflation
    • The RBAs 9 back-to-back interest rate rises would have been unlikely without excess profits and prices based on the RBA’s own policy framework
    • Real wages in Australia fell 4.5% in 2022, the largest fall on record

    “This empirical evidence shows excess corporate profits are the main culprit driving inflation, not workers’ wages,” said Dr. Jim Stanford from the Australia Institute’s Centre for Future Work.

    “For Australians doing it tough this data would be aggravating.

    “We’ve been told a story that workers need to restrict wage growth and accept a permanent reduction in living standards in order to fix inflation. This evidence shows that’s an economic fairytale.

    “ABS data shows that without excess price hikes through the pandemic, inflation would likely be within the RBA target band, and hence there would be no need for the nine extreme, back-to-back interest rate rises that are crushing households and mortgage holders, fuelling the cost-of-living crisis.

    “The pain experienced by workers through current inflation contrasts sharply with unprecedented increases in business profitability at the same time.

    “Through this episode of post-COVID inflation, real wages have declined rapidly, labour’s share of GDP has declined, and corporate profits have set records. That is completely opposite from the experience of the 1970s, when real wages rose, labour’s share of GDP increased, and corporate profit margins fell.

    “History confirms that fears of a 1970s-style ‘wage price spiral’ are simply not justified or grounded in reality. Instead, inflation in Australia since the pandemic clearly reflects a profit-price dynamic.”

    The new report ‘Profit-Price Spiral: The Truth Behind Australia’s Inflation’ is attached and comes from the Australia Institute’s Centre for Future Work, by Dr. Jim Stanford.

    Supermarkets, banks and petrol companies have recently posted huge profits:


    Related research



    Profit-Price Spiral: The Truth Behind Australia’s Inflation



    Full report

  • Superannuation needs an objective and needs to be reviewed

    Superannuation needs an objective and needs to be reviewed

    by Greg Jericho in The Guardian

    Greg Jericho

    Chief Economist

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    Originally published in The Guardian on February 23, 2023

    Superannuation is too important for retirement to be allowed to be a tax dodge scheme for the wealthy. It is time to review the scheme and stop the abuses

    This week the government announced a review to legislate the objective of superannuation. Surprisingly, there is no official objective of superannuation and this has allowed it to be used for purposes that are decidedly not about ensuring a comfortable retirement.

    The review has sparked criticism from the opposition who are using it to suggest the government is coming after your money. But as policy director, Greg Jericho, writes in his Guardian Australia column, for the very rich, superannuation has become less about retirement and more about dodging tax.

    Because super contributions are taxed at 15% the biggest benefit goes to those who are on the highest marginal income tax rate. As a result, those with the highest incomes contribute much more of their own money to superannuation than do those on lower incomes. Those earning over $150,000 make up 7% of individuals, 27% of total income, but 32% of total personal superannuation contributions. Also because there is no limit on the size of superannuation balances that can access this tax concession it means those with the very largest superannuation balances continue to get the advantage of a tax concession that has long past any sense of assisting a comfortable retirement.

    These tax concessions are now extremely costly – costing the government almost as much as the aged pension – and moreover so slanted are the benefits to the wealthy that the richest 20 per cent cost the government more tax concessions than it would pay them the full aged pension.

    Clearly, the system is not working as it should. It is not about self-funding retirement but funding retirement by avoiding tax.

    The Treasurer has suggested putting a cap on the size of superannuation balances – somewhere around $3m. Such a size would only affect less than 1.5% of all individuals aged 55-69. But clearly needs to be done because those 1.5% hold 14% of all superannuation balances of people in that age.

    Superannuation is important and vital for the retirement of many Australians. But it should not be used just to avoid paying tax – the cost of that lost revenue is denying assistance to those who actually need help once they stop work.


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    Centre For Future Work to evolve into standalone entity

    The Centre for Future Work was established by the Australia Institute in 2016 to conduct and publish progressive economic research on work, employment, and labour markets. Supported by the Australian Union movement, the centre produced cutting edge research and led the national conversation on economic issues facing working people: including the future of jobs, wages

  • Carmichael Centre Announces Appointment of Prof. David Peetz as Laurie Carmichael Distinguished Research Fellow

    Carmichael Centre Announces Appointment of Prof. David Peetz as Laurie Carmichael Distinguished Research Fellow

    by Jim Stanford

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    The Carmichael Centre at the Australia Institute’s Centre for Future Work is proud to announce the appointment of Prof. David Peetz, one of Australia’s most outstanding labour policy experts, as the new Laurie Carmichael Distinguished Research Fellow.

    Prof. Emeritus Peetz has recently retired from a long career at Griffith University, where he served as Professor of Employment Relations at the Centre for Work, Organisation and Wellbeing.

    He is also a Fellow of the Academy of Social Sciences in Australia, and author of several important books on labour policy, including: Unions in a Contrary World (1998), Brave New Workplace (2006), and The Realities and Futures of Work (2019).

    Prof. Peetz has provided expert opinion in numerous labour policy forums at the state and Commonwealth level, including providing research and expert input to the Fair Work Commission, and heading an independent review of the Queensland workers compensation system.

    “David Peetz has been a powerful and influential voice for a more balanced and fair approach to labour policy and employment relations for many years,” said Jim Stanford, Director of the Centre for Future Work, host of the Carmichael Centre.

    “His appointment as Distinguished Research Fellow will greatly enhance the capacity and influence of the Carmichael Centre, at a pivotal moment in Australia’s economic and political history,” concluded Dr. Jim Stanford.

    Remarks from Professor David Peetz:

    “The choices we make about labour policy now will shape society for decades, maybe permanently. So it’s an outstanding opportunity to be able to contribute to the formation of those choices through the work of the Carmichael Centre,” Professor Peetz concluded.

    Prof. Peetz will serve a three-year term as Distinguished Research Fellow. The Carmichael Centre was established in 2021 to undertake research and education activities related to the legacy of Laurie Carmichael, the long-time Australian union leader who passed away in 2018.