Reprising Dog Days

Wed 8 May 2019

The Melbourne Economic Forum began in 2014 with discussion of the challenges facing Australia at the end of the mining boom.

In this Forum we again look ahead, and examine the medium-term economic challenges that will confront the winner of the next Federal election. These include continued weak growth in wages and multi-factor productivity, difficult labour market conditions for young Australians, weakening real estate investment, structural budget challenges, and the capacity of Australian industry to contribute to depreciation-led adjustment.

Ross Garnaut “Dog Days Recurring”

Elements of the Dog Days (2013) economic environment after the end of the mining boom are set to continue in the medium-term outlook. There is no sign of a lift in multi-factor productivity. Per capita output and incomes were held up for a while by housing investment and government consumption, neither of which can be sustained. As in 2013, the prospects for employment growth depend on public investment, and from opportunities in trade exposed industries from easing of monetary policy compared with the rest of the world and the associated exchange rate decline—although risks in the international outlook could weaken the investment and export response to further real exchange rate depreciation.

Janine Dixon “Dog Days Modelled”

In a CGE framework, we build a forecast of the medium-term consistent with Garnaut’s view of “Dog Days Recurring”. We quantify the impacts of weak productivity growth and weak investment in commercial and residential real estate on measures of economic welfare including wages, per-capita incomes, and industry output.

Jeff Borland “Is it Dog Days in the labour market for young Australians?”

How should we interpret evidence of worsening labour market outcomes for young Australians since the GFC? Is this the usual phenomenon where young people are more adversely affected by cyclical downturns, or is a more fundamental shift occurring? In this talk I will argue that cyclical factors remain a major driver of how labour market outcomes vary by age - but that there is also evidence of a structural 'crowding out' of young Australians from work.

Julie Toth “A view from the workshop floor”

What do businesses say is happening to them in 2019? What are they seeing? What are they doing? What are their concerns? This presentation provides a shop-floor perspective on Australian industry, examining business conditions, confidence, inhibitors, investment, competitive pressures, and election policy.

Danielle Wood “Medium-term mirage? How the medium-term fiscal projections obscure structural budget challenges”

The medium-term projections in the 2019-20 budget show a decade of surpluses despite significant cuts to personal income tax. Surpluses are reached because spending is projected to fall by 1.5% of GDP by 2029-30. How realistic are the medium term assumptions? And is there a better way to produce these projections?

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