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The economics behind the politics of the federal budget

The Federal Budget is fundamentally – perhaps with a bit of accounting incorporated – an economic conception, right? Wrong. While in an ideal world the political implications of fiscal budgetary processes would be disregarded, the reality is that politics ultimately determines the economics of all government budgets – albeit to various extents. Perhaps paradoxically, however, economics still trumps out in the end. How so? Because the use of economics is often the best way to explain the politics behind the economics.

While last year the use of accounting manipulations was the most demonstrable element of the Federal Budget assailable for extensive analysis, this year there are myriad of components. These will now be explored – largely within the context of the economic concept of private interest theory. This theory is essentially that politicians, including Wayne Swan when preparing the budget, will make rational choices based on their own objectives when in a decision-making position. The primary objective pertaining to the budget for Swan, and by extension the Gillard Government, would ostensibly have been to deliver a well-received budget that will maximise their chances of being re-elected (or at least minimise the number of seats they lose) on September 14.

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Why we sometimes have to rob Peter to pay Paul

Critics have called it “incoherent” and “schizophrenic” [1].

It sounds alarming on its own, but the Federal Government’s $2.3bn proposed cuts to funding for tertiary education is not the be-all and end-all to signing off David Gonski’s school funding deal. And while less spending money is never a good thing, opponents of the funding cuts are sounding the alarmist gong too soon.

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Will the Gonski reforms mean higher teacher salaries?

Great teachers inspire their students profoundly and provide a foundation from which learning is optimally facilitated. They often do not just teach the required material; rather, they show students the process of learning and thus enable them to achieve academically without as much direct teacher instruction and support. Perhaps the greatest problem facing Australia’s education system is that we simply do not have enough of these great teachers.

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A ‘rational’ analysis of the ALP leadership debacle

What was Kevin Rudd thinking? Seriously. Why would anyone with an ostensibly insatiable desire for reclaiming the prime ministership let the precarious ambience of uncertainty develop to the extent that it did only to then decline an opportunity to challenge? Well, it turns out that Rudd was simply making the ‘optimal’ strategic choice given the circumstances he found himself in.

The leadership saga, for the most part, pertained to two closely related variables: firstly, whether Rudd would challenge Gillard by standing for the leadership in a caucus vote and, secondly, whether a majority of the 100 members eligible to vote in the Labor caucus would back Rudd in a ballot. The relationship between these is that, as was later confirmed, Rudd would only be comfortable challenging if he had a caucus majority and, additionally, the caucus members would only risk switching allegiances if they thought that Rudd would actually run for the leadership (due to the repercussions of supporting the loser in a ballot).

However, despite these two variables being inextricably linked, it’s important to note that other sources of influence further complicated the respective decision-making processes for both Rudd and caucus members.

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Australian Economic Prosperity a Double-Edged Sword

The Australian economy continues to defy economic gravity, with the latest round of economic statistics released last week showing an economy growing above trend over the last 12 months, full-time job creation ticking up in May, and a higher participation rate as people become more confident in finding a job.

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‘Black hole’ in the system threatens good public policy, Moran Says: Deakin Policy Forum 2012

By Joan Wu, ESSA Events Director 2012

Terry Moran, former Labour secretaryDuring a speech at the Deakin Policy Forum this week, Terry Moran called for more accountability and transparency in our troubled system of government. Moran, former secretary to Prime Ministers Kevin Rudd and Julia Gillard, was quick to emphasise that it is not the quality of civil service, which is exemplary, but rather the nature of parliamentary democracy in the current system that is to blame.

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Wayne Swan’s Ironic Attack on Billionaire Miners for his Own Self-Interest

Source: Timeshift9

Wayne Swan’s essay in The Monthly titled ‘The 0.01 Per Cent: The Rising Influence of Vested Interests in Australia’ has caused quite a stir in the last few weeks. Swan laments the rising influence of wealthy vested interests in Australia’s public policy debate, and warns of it undermining our equality and democracy. These are strong, politically-potent words from Australia’s Treasurer, and have brought interesting reactions from the opposition, the media, the mining industry magnates he attacked, and the general public.

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