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Issues Papers
The Centre provides periodic Issues Papers
focusing on topical economic issues. Issues Papers are provided
to Corporate Members - to subscribe see Membership.
Recent Issues Papers are:
23. A Review of the Literature on Active Labour Market Policies by Michael O'Neil and Dr Penny Neal
There is no single optimal labour market program. This is no better illustrated than the change in objectives in labour market programs from the 1970s and 1980s when unemployment was high due to insufficient aggregate demand for labour, to today's world where the demand for skilled labour continues to outstrip supply. Welfare assistance measures including systems of income support are purposefully designed to support active labour market programs. The paper considers several principles in the design of effective labour market assistance measures and ‘some of the lessons learned' from the more successful individual projects funded by various state governments. One key lesson is that local employers and local industry have a significant role to play in the design (and hence successful outcome) of active labour market policies and programs. June 2008.
22. Self Managed Superannuation Funds: Some Public Policy Issues Regarding their "Decumulation" Phase by Owen Covick
Associate Professor Owen Covick argues that several factors will lead to a substantial growth in the quantum of monies in decumulation phase Self Managed Superannuation Funds (SMSF) in Australia. This raises the question: what if the ageing process, or the death of the "prime mover" member of a more-than-one-member decumulation phase SMSF allows an SMSF to "drift on", past the point at which it would have been in the best interests of the vehicle's members to wind it up and either rollover into an APRA regulated vehicle, or take the remaining funds outside the superannuation system? The author argues that this should be viewed as a public policy issue and not simply as a problem for the indivudal SMSF members directly concerned, and should be tackled now before the number of persons directly affected by the problem swells to significant proportions. Suggestions for ways of addressing this problem are put forward. April 2008
21. Australia's Productivity Growth in the 21st Century by Dean Parham
This Issues Paper presents the visual materials used by Dean Parham of the Productivity Commission in his presentation to the School of Economics (University of Adelaide) and other invited guests on 24th August 2007. In his presentation, Dean discussed the historical comparative performance of Australia's productivity growth including the underlying causes of particular trends. He concluded by considering the outlook for Australia's productivity growth and the touchstones for productivity growth going forwards. September 2007
20. Building a Local Defence Industry: Workforce Requirements 2006 - 2010 by Michael O'Neil, Steve Whetton and Edwin Dewan
This paper presents an overview of recent research undertaken by the Centre in relation to identifying and quantifying current workforce capabilities and workforce requirements for the South Australian Defence Industry. The paper has three components. The first provides a brief snapshot of planned expenditure within the defence sector outlined in the Commonwelath's Defence Capability Plan out to 2016. The plan includes annual expenditure on new projects as well as on-going service and sustainability of defence capability. The second component examines current employment in major defence contracting companies in South Australia, their first and second tier suppliers and growth projections out to 2010. In the final part, the potential labour supply to the defence sector from tertiary education providers is discussed, concluding with a consideration of issues relevant to workforce planning and future challenges for South Australia. March 2007
19. Running on Empty: The Risk of Continuing to Dither While the Empty Light is Flashing by Peter Cullen
In this Issues Paper, Professor Peter Cullen argues that we need to
take urgent action to address growing water shortages. A range of
climatic data indicates that the Australian climate has been drying out
over the past decade, while historical data suggests that the period
from 1960 to the early 1990s may have been unusually wet in South
Eastern Australia. This suggests we may face a future with less
rainfall, which will require adjustment that may be painful and
difficult, particularly for agriculture. Fortunately there is an
agreed national blueprint for dealing with these challenges in the form
of the National Water Initiative. The NWI includes a range of practical
and sensible actions to improve water management and address the
scarcity of water resources. However, Professor Cullen is critical of
the inactivity by governments on impleting the NWI, which can be
attributed to various interest groups successfully resisting the
necessary changes required. January 2007.
18. South Australia's Recent Productivity Performance by Jim Hancock and Wing Hsieh
It is well known that the South Australian economy has not grown
as rapidly as the Australian economy as a whole over the last
decade. It is also known that differences in labour productivity trends
do not explain much of the differential in growth rates. This
study investigates the contribution to output growth from changes in
labour quality, the capital intensity of the economy, and multifactor
productivity. The analysis strongly reinforces the argument that
differences between South Australian and national output growth over
the last decade lie entirely in a more rapid expansion of the scale of
the national economy. April 2006.
17. Mining the Labour Market: The Estimated Demand for Labour in the SA Mining Sector 2006-2014 by Michael O'Neil and Paul Huntley
This paper presents a summary of commissioned research undertaken
by the Centre on behalf of the State Government, for the purpose of
estimating the additional labour requriements due to the planned
expansion of mining in this State. The paper outlines the size of
the mining industry in economic terms, describes the survey and
estimation methodology used to quantify the labour requirements, and
reports the estimated demand in the mining sector by occupational
group. The significance of estimated labour requirements in the
context of current labour market conditions is also considered. April 2006.
16. Australia's New Trade Agreements: Beneficial Liberalisation or Harmful Policy? by Andrew Symon
This Issues Paper canvasses bilateral and regional trade negotiations
which are now at the centre of Australian trade policy. The
recent US-Australia trade agreement and the prospect of an
Australia-China agreement are briefly examined. Consideration is
given to the relative merits of pursuing freer trade through regional
trade agreements rather than through a multilateral approach under the
World Trade Organisation. Given that regional trade agreements
increasingly cover a broader range of policy areas that cut across the
jurisdictions of different levels of government, such as government
procurement, investment, competition policy, standards, intellectual
property, and services trade, it is concluded that national parliament
and state governments should arguably play a greater role in the
initiating, negotiation and approval of Australia’s trade
agreements. November 2005.
15. Wind Generation and the South Australian Economy by Stephen Nelson
With the Federal Government having implemented the Mandatory Renewable
Energy Target (MRET) to reduce greenhouse emissions, there has been
rapid growth of wind farm capacity in South Australia over recent
years. This paper presents a discussion of issues arising in
connection with wind farms, with particular reference to the South
Australian economy. The author finds that while wind farms will
bring about a reduction in carbon emissions, this needs to be balanced
off against other, potentially less beneficial consequences such as the
impact on our existing electricity infrastructure, the effect on future
investment levels, and the potential impact of higher energy prices on
our industrial sector. April 2005.
14. South Australia's Overseas Exports by Paul Huntley
This paper discusses South Australia's recent export performance.
The State has become significantly more export-oriented over the last
decade and a half. In 2003-04, 17 per cent of Gross State Product
was derived from overseas exports of goods and services - a
historically above average level. In recent years, our export
destinations have diversified, with a rising share going to the United
States and Europe, meaning the State economy is arguably better placed
to ride out an economic downturn in any one region. However,
while the overall picture is encouraging, the author cautions that
State exports are concentrated in two industries - wine and motor
vehicles - and any slumps in global demand for their products would
have a severe impact on the State economy. March 2005.
13. The 2004-05 South Australian Budget by Jim Hancock
This Paper presents an analysis of the 2004-05 South Australian
Budget. It looks at how changes in the economic environment have
affected the Budget, how the government has changed its revenue and
expenditure policies, and medium term directions in fiscal
policy. The author cautions that recent positive surprises on the
revenue side need to be seen as something of a lucky break, and that
funds for new spending initiatives or unanticipated cost pressures will
be harder to find over the next two years. July 2004.
12. The Relative Decline of Manufacturing Employment in South Australia by Anthony Kosturjak and Joshua Wilson-Smith
This Issues Paper considers employment outcomes for the South
Australian manufacturing sector since 1986. In brief, the paper
finds that while employment in the South Australian manufacturing
sector has fallen sharply since 1986, its performance is not atypical
among the traditional manufacturing States. While the 1990
recession clearly had a significant negative impact on the
manufacturing sector, the authors believe that other longer-term
factors are more significant in driving the fall in employment.
These include a shift in consumer spending patterns towards services
(associated with rising incomes), labour displacing technological
change, and reductions in protection and subsidies combined with
greater competition from imports. The policy implications of
recent trends in manufacturing employment are also briefly
considered. July 2004.
11. An Ageing Australia: Small Beer or Big Bucks? by Gary Banks
In this Issues Paper Gary Banks argues that ageing does not represent a
crisis for Australia. That most of the population live to be old
is one of the great successes of modern economies. But an ageing
population will have profound consequences for the economy that will
require careful policy responses. This article examines two of
these consequences: impacts on labour supply, including its
implications for future economic growth, and on health spending, the
most important age-sensitive component of government expenditure.
May 2004.
10. Enhancing Trust in Australia’s Tax System by Owen Covick
In this Issues Paper the Author argues that Australia is divided into
two nations as far as personal income taxation is concerned.
Members of families in which most incomes comes from supplying labour
services as employees to arms-length employers are subject to a much
tighter “attribution” regime than are members of families in which
income from family-controlled entities is the major income
source. The former are less able to allocate income across
members of their family unit in a way which minimises the tax payable
by the family unit as a whole. This division has consequences
which are typically regarded as undesirable: it is horizontally
inequitable, vertically inequitable, and allocatively
inefficient. In considering possible remedies, the author argues
that the best alternative would be to extend to arms length
wage-and-salary-earner households a capacity to establish
“quasi-trusts” enabling them to allocate income across the family unit
in a manner equivalent to that used by families deriving their income
via family businesses. April 2004.
9. Inquiry into the Management of Electronic Gaming Machine Numbers by Michael O’Neil and Steve Whetton
In 2002-03 the South Australian Independent Gambling Authority
conducted an inquiry into the management of gaming machine
numbers. This Issues Paper summarises a supplementary submission
to the inquiry that was prepared by the Centre at the request of the
Provincial Cities Association of South Australia. The principal
aims of the submission were to canvass options for the management of
EGMs, identify potential harm minimisation measures, and put forward
the case for a reduction in gaming machine numbers in non-metropolitan
South Australia to ensure greater equality in the spatial allocation of
machines. Comments on other written submissions and the history
of the management of gaming machine numbers were also provided.
April 2004.
8. Review of the South Australian Economy, 1990-2003 by Michael O’Neil, Penny Neal and Anh Thu Nguyen.
This Issues Paper presents a review of the performance of the South
Australian economy since 1990. While noting that South
Australia's economic performance has been more subdued in comparison
with the national economy since 1990 it reports on the solid
performance of several sectors of the local economy. Economic
policies over the medium term to support the faster growing services
sector and to increase exports are the most likely to contribute to
economic growth, accompanied by policies to sustain stronger population
growth. March 2004.
7. Darwin: A Gateway to Asia? by Andrew Symon
This Issues Paper considers the implications of the Adelaide-Darwin
Railway and Port of Darwin developments for Australian international
and interstate transport patterns. While the author concludes
that developing an international trade route via the railway and port
will present a significant challenge, the prospects for domestic
freight are found to be more promising. Immediate cost and time
benefits over truck haulage and expected strong growth in domestic
demand in the Northern Territory, taken together, suggest that the
extended railway will help to further integrate the Territory and South
Australian economies. March 2004.
6. Innovation Activity and Income Levels: A Summary of Indicators by Jim Hancock, Marianne Herbert and Steve Whetton
This report presents simple indicators of innovation activity and
incomes in the Australian States and Territories, and in the regions of
the United States, Canada and Germany. The objective is to
explore whether there is a within-country correlation between
innovation and income levels. It is concluded that there is a
significant positive correlation between innovation activity and
average earnings in the United States. While the Australian data
is tentatively suggestive of such a correlation, no strong conclusions
are possible because the number of States with which to form a cross
section is so small. April 2003.
5. The SA Labour Market Through the 1990s by Anthony Kosturjak
This Issues Paper summarises major trends in the South Australian
labour market over the 1990s in order to assess the performance of the
labour market in light of the 1990 recession and the collapse of the
State Bank – two events which had a substantial impact on the labour
market during the early part of the decade. The defining
characteristics of the labour force over this period have been a poor
record of generating new jobs and a persistently higher level of
unemployment which are due largely to the weakness of the South
Australian economy. Other interesting trends include the
concentration of employment growth among females and part-time
employment; decline in aggregate male and full-time employment; a fall
in the participation of males in the work force; a rise in the relative
and aggregate number of long-term unemployed and the average duration
of unemployment; and ageing of the labour force. February 2003.
4. The 2002-03 Commonwealth Budget by Owen Covick
This paper presents an an alysis of the 2002-03 Com monwealth
Budget. It finds that the stance of Commonwealth government
fiscal policy has shifted away from the expansionary stimulus of the
second term of the Howard-Costello Government and that "Mr Costello has
taken his foot off the accelerator and pressed it onto the footbrake -
as far as overall Budgetary policy is concerned". The study
argues that a shift towards fiscal consolidation is sensible and
appropriate in Australia's current overall economic
circumstances. Nevertheless, the author raises concern that the
partial embrace of an accruals accounting framework has produced a
decline in the transparency of the budget. A shift away from
clarity and navigability of the budget has been compounded by the
Treasurer's continued denial that the GST is a Commonwealth tax.
This outcome makes it difficult to determine whether the introduction
of A New Tax System has produced no increase in the overall tax burden
as was promised by the Federal Government.August 2002.
3. An Assessment of the Impact of Gaming Machines on Small Regional Economies by Michael O'Neil and Steve Whetton
This Issues Paper summarises results of a study designed to identify
the economic and social impacts of electronic gaming machines (EGMs) in
the council areas that are members of the Provincial Cities Association
of South Australia. The study finds that per adult EGM
expenditures are above average in the Provincial Cities. The
Centre also estimates that there is a higher prevalence of problem
gamblers in the Provincial Cities than for the State as a whole, and
that the aggregate net economic and social impact of gaming machines
for the Provincial Cities is negative. The higher EGM spending in
the Provincial Cities, and differences between the individual Cities,
appear to be largely explained by both a higher prevalence of EGMs in
the Provincial Cities and by socio-demographic factors, especially the
regional unemployment rate, the proportion of persons identifying as
Aboriginal and the proportion of dwellings rented from the SA Housing
Trust. The higher prevalence of problem gamblers cannot be so
confidently explained, but it is likely to be significantly influenced
by these same 'risk factors', amongst others. May 2002.
2. Timor Sea Natural Gas Development: Still in Embryo by Andrew Symon
This paper provides a description of the extent of gas reserves in the
Timor Sea and of the various projects currently planned or
proposed. Development of the Timor Sea gas reserves is, however,
at an embryonic stage. Plans are ambitious and their progress to
reality is likely to take several years at least. Nevertheless,
world demand for natural gas over the long term is expected to be
strong and sustained, so that the prospect of major investment in the
Timor Sea proceeding is high. The scale of the possible
development is such that it is likely to have a major impact on the
economy of the Northern Territory, while also contributing
significantly to the growth of the Australian economy. August
2001.
1.The 2001-02 South Australian Budget by Jim Hancock
This paper presents an analysis of the 2001-02 South Australian
Budget. It finds that the Budget is in approximate cash balance
but on an accrual basis has fallen well short of the Government's
intended outcomes as set out in its Financial Plan of 1998-99.
The bottom line is that South Australia's budgetary position remains
fragile and under considerable stress. This is evident in a
relatively weak balance sheet position relative to other States.
South Australia has a per capita net financial worth which is well
below average. August 2001.
Other articles addressing special topics from earlier Breifing Reports are also available for download:
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