Policy Briefs

The Melbourne Institute Policy Briefs Series presents research undertaken by our academic staff on topics relevant to contemporary economic and social policy.

Labour Economics and Social Policy

What are Best-Practice Programs for Jobseekers Facing High Barriers to Employment?

Jeff Borland | Mark Considine | Guyonne Kalb | David Ribar (June, 2016)

This Policy Brief proposes a new model for employment programs to assist jobseekers with high levels of labour market disadvantage. Current employment programs in Australia are either unsuitable for or have been poorly designed to meet the needs of these jobseekers. Based on evidence from evaluations of employment programs and from practitioners, we argue that an employment program for jobseekers with high levels of disadvantage should substantially address their deficiencies in job readiness an…

Macroeconomics

Budget Deficits and the Dual Roles of Fiscal Policy

Guay Lim | Tim Robinson | Viet Hoang Nguyen (May, 2016)

The federal budget has been in deficit since the Global Financial Crisis. This article draws attention to two key aims of fiscal policy - to smooth the business cycle and to promote a more equitable society. Since budget deficits are natural outcomes of the economic environment as well as reflections of fiscal policies to achieve social and economic goals, we argue that there are times when government deficits can be entirely appropriate. This is especially so when spare capacity in the economy…

Economics of Education and Child Development

Nudges in Education: What Works?

Miles Tidmarsh | Paul H. Jensen (March, 2016)

Many Australian students face psychological hurdles in realising their educational potential and maximizing the value of their education. This Policy Brief explores which behavioural interventions, or nudges, have been used internationally to substantively improve students' educational outcomes, and therefore social and financial prospects, at minimal cost. Rigorous, evidence-based analysis, in the form of randomised controlled trials, is called for to test which nudges would be most effective i…

Macroeconomics

Housing Affordability: How Important is the Lending Rate?

Guay Lim | Sarantis Tsiaplias (January, 2016)

Housing affordability in Australia has been declining for some time, but is it across all states or mainly in Sydney and Melbourne? Are there spill-over effects (i.e., transmission of changes in one state to the rest of Australia)? Has the problem been exacerbated by a long period of low interest rates which have acted to fuel borrowing for housing without stimulating growth in household income? We examine the regional differences in housing affordability and its relationship with economic and d…

Beyond Nudge: The Potential of Behavioural Policy

Reuben Finighan (July, 2015)

Policymakers often mistakenly see behavioural policy as synonymous with "nudging". Yet nudges are only one part of the value of the behavioural revolution—and not even the lion's share. This policy brief looks at the full potential of behavioural policymaking. Using examples in cigarette regulation, retirement savings, and poverty, it makes three arguments:
1. Trade-offs between social welfare and individual freedom of choice affect both nudges and conventional policy tools (like mandates, t…

Macroeconomics

Fiscal Debt Sustainability in Australia: Is it Feasible?

Efrem Castelnuovo (May, 2015)

This Policy Brief proposes projections on the evolution of the Australian debt-to-GDP ratio over the long run. Plausible assumptions about the fiscal policy plans that could be implemented until 2050 suggest that Australian public debt is likely to remain on a sustainable path. This conclusion is supported both by some recent academic literature as well as some popular financial indicators. Further simulations conducted to study the role of credibility and clear communication aiming at reducing…

Macroeconomics

Budget Deficits and Fiscal Policies

Guay Lim | Viet Hoang Nguyen | Sarantis Tsiaplias (April, 2015)

We highlight the strong relationship of taxes and expenditures with the business cycle and draw attention to periods when changes in the budget deficit have been predominantly driven by discretionary and/or unexpected events. Although the task of turning a deficit into a surplus is challenging, we consider it short sighted to view the fiscal policy challenge as simply one of reducing the size of the deficit in the short term — decisions to cut particular types of expenditure or raise particular…

Health Economics

The GP Co-Payment: A Short Postmortem and a New Research Agenda on Medicare

Anthony Scott (March, 2015)

The aim of this Policy Brief is to show what the debate about the GP co-payment has revealed about the state of evidence-based policy in Australia. The co-payment debate has highlighted the central role played by price signals and their impact on health care costs and population health. It has also highlighted how little research existed to inform the co-payment debate, and any future changes to Medicare. A new research agenda around Medicare is required and should be a high priority for the Med…

Economics of Education and Child Development

Impact of the Australian Higher Education Funding Reforms

Chris Ryan (August, 2014)

This brief explores the potential impact on the time students take to repay their tuition loans of changes proposed by the Australian Government in its May 2014 budget to the funding and operations of the Australian higher education sector. The key results of the analysis are:

Result 1: Total loan repayments vary substantially across the graduate income distribution, increasing by more than double the higher tuition charges for about 20% of graduates, since these graduates take a long t…

Industrial Economics

A Proposal for Industry-led Innovation Consortia

Elizabeth Webster (January, 2014)

Australia has strengths in a number of industries and is well served by a number of government-led programs to encourage knowledge diffusion, knowledge absorption and innovation linkages. It would benefit however from more industry-led consortia — similar to the rural R&D corporation program — in the non-agricultural and non-mining industries. These R&D corporations embody the desirable features of stability, additionality, trust and connectedness. Furthermore, they have explicit channels of tra…

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