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Podcast episode

Odd way to fix housing crisis proposed by Aus. Gov’t: invest in stocks first w/ Dr Cameron Murray, Sydney Uni.

The Australian Government has been having trouble getting its proposed Housing Australia Future Fund (HAFF) passed by the Senate. The policy looks odd. With some justification, the Australian Greens have commented: “In its current form the Housing Australia Future Fund (HAFF) legislation will see the housing crisis get worse. We can’t fix the housing crisis by gambling money on the stock market and not guaranteeing a single cent will be spent on housing.” In their dissenting report on the bill, the Greens’ cited the views of this episode’s guest, Dr Cameron Murray. Cameron is a Post-Doctoral Researcher at the Henry Halloran Trust at the University of Sydney. 

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About Dr Cameron Murray

Dr Cameron Murray is Post-Doctoral Researcher at Henry Halloran Trust, The University of Sydney. He is an economist specialising in property and urban development, environmental economics, rent-seeking and corruption.

Book: Rigged: How networks of powerful mates rip off everyday Australians

Website: https://fresheconomicthinking.substack.com/  

Twitter: @drcameronmurray 

What’s covered in this bonus episode

  • Cameron’s submission to the Senate Inquiry into the Housing Australia Future Fund Bill [2:39]
  • What’s going on with the Housing Australia Future Fund [5:02]
  • The only reason you can make a premium is if you take risk [8:57]
  • Why you need to separate the funding and the spending [10:36]
  • Why doesn’t the Future Fund just directly invest in new houses? [14:21]
  • How governments are increasingly doing financially tricky things that don’t make sense [19:23]
  • Cameron’s thoughts on the impact of the bill on the level of investment in housing [23:14]
  • What’s going on behind the scenes at Parliament House [26:18]

Links relevant to the conversation

Cameron’s submission to the inquiry into the Housing Australia Future Fund:

https://fresheconomicthinking.substack.com/p/australias-housing-future-fund-my

Direct link to Senate Committee inquiry report:

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/HousingPackageofBills/Report

HAFF inquiry home page:

https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/HousingPackageofBills

Transcript: Odd way to fix housing crisis proposed by Aus. Gov’t: invest in stocks first w/ Dr Cameron Murray, Sydney Uni.

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:06

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host Gene Tunny. I’m a professional economist and former Australian Treasury official. The aim of this show is to help you better understand the big economic issues affecting all our lives. We do this by considering the theory evidence and by hearing a wide range of views. I’m delighted that you can join me for this episode, please check out the show notes for relevant information. Now on to the show. Hello, welcome to this bonus episode on the housing Australia Future Fund. The H A double f or half. It’s Saturday the 25th of March here in Australia and throughout the week, the Australian government has been having trouble getting the half passed by the Senate. That’s probably unsurprising because the policy looks like a bad one. With some justification the Australian Greens have commented in its current form the housing Australia Future Fund legislation will see the housing prices get worse. We can’t fix the housing crisis by gambling money on the stock market and not guaranteed a single cent will be spent on housing. That paragraphs from the Greens dissenting report on the housing Australia Future Fund bill. In that dissenting report, the greens relied significantly on testimony to the inquiry from my guest this episode, my fellow Brisbane based economist Dr. Cameron Mary Cameron is a postdoctoral researcher at the Henry Halloran trust at the University of Sydney. I recorded this conversation with Ken Friday last week on the 17th of March 2023. I’ll link in the show notes to Cameron’s submission to the inquiry into the half cam submission as a great example of the application of economic logic to an important economic policy issue. Cam sees through the accounting trickery and the financial engineer at behind the fund. He shows how the Australian government has been too clever by half. It’s trying to get credit for doing something about the country’s housing crisis. But what it’s proposing could be next to useless. Right. Let’s get into the episode. Please let me know what you think about what either camera I have to say by emailing me at contact at economics explored.com. I hope you enjoy my conversation with Cam Dr. Cameron Murray, welcome back to the show.

Cameron Murray  02:39

Thanks for having me again, Gene.

Gene Tunny  02:40

Oh, it’s a pleasure, Cameron, I read with much interest your latest post on fresh economic thinking. And it’s about your submission to the Senate inquiry into the housing Australia Future Fund Bill 2023 and other bills. Could you tell us a bit about what that involves? So you’ve written a submission to this inquiry? And you’ve also presented to the inquiry you gave testimony? Did you?

Cameron Murray  03:07

Yeah, that’s right. So this bill was passed their house, the lower house, and now the Senate is reviewing it. And what they’ve done is held this inquiry asked for public submissions, and had people who made submissions come in for a day of expert testimony so that their senators can ask specific people, you know, technical questions, what do you think about this? What about this design element? And so I was part of that on on Wednesday, this week. And yeah, so the bill itself is called the housing Australia future funding bill. And the basic idea is the government has decided to address Australia’s current housing problems. We’ve seen rents rise, we’ve seen rising homelessness, we’ve seen longer queues in public housing waiting lists, they’ve decided the best thing for them to do is take $10 billion from the Treasury and give it to the Future Fund, which is a sort of publicly managed investment fund, and cross their fingers and hope that that fund makes a return that’s higher than their opportunity cost, you know, the cost of the government’s dead and use that margin on the risk to fund something in the future, some unspecified, granting in relation to what in the text of the bill is called supporting housing need. So that’s what it was all about. And, and yeah, I gave some testimony on Wednesday.

Gene Tunny  04:35

So the federal government’s claiming that this is going to help them build I think 30,000 social housing dwellings over the next five years or so. So that’s their that’s the plan. But I think what I like about your submission is it essentially talks about how this is a rather roundabout way of going about it, which doesn’t actually guarantee you’re going to deliver it to you As in,

Cameron Murray  05:00

this is the mad thing. And this is. So let me start by saying, to be clear what they’re doing to build houses is taking $10 billion and buying all sorts of assets in the future funds that are not houses. Right? So that’s what they’re trying to do. And it’s really funny because there’s an actually an episode of Utopia, you know, the comedy show about the bureaucracy in Australia, where Rob switches character, who’s the sane one, amongst the insanity is explaining to a political staffer who says to him, What about an infrastructure? Future Fund? Yeah, don’t you get it, it’s about the future, he says. But spending the money on infrastructure today solves the future, we don’t need a fund. We don’t need a new office, we don’t need these fund managers. And you know, when we watch utopia, we all laugh and think we’re the same guy in the room. But what happened at the Senate inquiry is that I was the only guy and everybody else who laughed at Utopia when they watched it was the crazy guy who thinks that spending money on not houses is the best way to spend money on houses. And so there was this really perverse political slogan that kept creeping in, which was, this is going to secure funding for the future and insulated from future political decisions. And I just sat there going, I don’t, I’ve read this bill, because this funding is riskier, because you’re investing in a risky asset and the current Future Fund loss $2.4 billion last year, and spent half a billion dollars on fund managers to achieve that outcome. So we almost lost $3 billion last year. So it’s possible that we put 10 billion in this fund and have 9 billion next year. And then that’s the way we’re securing the future funding. The legislation is also written such that the future Minister has the discretion of how much from the fund to spend, and on what projects. And it also introduces a cap of 500 million per year that a future minister can withdraw from the fund. So what you’re actually doing is providing a great excuse for a future minister to spend less than 500 million. And in fact, zero if the fund is losing money. So there’s this weird disconnect between the political slogan of securing long term funding insulating it from politics and the reality, which is adding risk to a fund compared to just having 10 billion in the bank or at the Treasury where it is, and not insulating at all, and just still relying on future ministers discretion with no commitments. So that 30,000 dwellings you said, is not enough. There’s no, it’s not written in their rules. It’s written in the guideline as a hypothetical of how much, you know, if all went according to plan, and we would expect this, and I’m like, but there’s like, like many housing strategies and plans that the federal government and state governments have had in the past, there is nothing holding them to account on those promises. So yeah, it’s, it’s a really, really strange one. And I felt like there are about 20 or 30 witnesses or experts at the hearing. Now, only two or three of us actually calling this out the majority of the industry. And the researchers had really, I don’t know, bought the line that this is something that it’s not.

Gene Tunny  08:16

Yeah. So what’s going on, it appears to me is they’re essentially that borrowing, they’re going to be borrowing this money, or it’s going to increase the borrowing requirement by $10 billion, because we’re currently we have been running budget deficits. So it’s going to increase that, that borrowing requirement, we’re going to put that into this the future funds, so we’re essentially borrowing money to then invest in the share market or Enron’s Yeah, well,

Cameron Murray  08:45

if we’ve invested in bonds, we’re borrowing money to buy the bond back off ourselves. If this fund, if this fund is like eight or seven or 8%, government, Australian government treasury, that’s just pure accounting. Yeah, you know, trickery, you know, and that shows it but the whole thing is accounting trickery, right? Because, you know, you’re just recycling the money via the current shareholders of BHP into Telstra and Commonwealth Bank, right, by buying the shares off them and then later selling it back to them. And the only reason you can make a premium with this fund over the over not borrowing it, right, because you still gotta pay interest on the Treasury borrowing. The only reason you can make a premium is if you take risk. Yeah, if you’re taking risk, then it’s not a secure, long term funding thing. You’re just adding risk unnecessarily, and delaying spending money on building houses. And, you know, it took a little bit of explaining to get that through at the hearing. But ultimately, I had, for example, John Corrigan, you know, back me up on that argument, and I think Brendan Coates from the Grattan Institute who is a big supporter, the policy sort of had to concede that Yeah, at the end of the day, you’re adding risk in the hope of increasing the funding. But risk is real, right? We just can’t count on winning In the next few years,

Gene Tunny  10:02

right, so Brennan was buying the government’s line that this is about getting a secure funding source. He, I mean, I know you can’t speak for Brendan, I’m just wondering where he was coming from?

Cameron Murray  10:13

Well, actually, the idea is actually from one of our Grattan Institute report, and they proposed a $20 billion social housing fund. And, and, and, you know, I’m not averse to the government sort of diversifying the capital side, right on its balance sheet. Yeah. And and owning some high risk assets? I don’t, I’m not averse to that, in principle, right. But you’ve got to separate the funding and the spending idea. So the way I try to tell people, if the government’s saying we don’t have the money for it, it means we don’t want to do it. Because look at the submarines look at every other big look at the Olympics, right, no one’s has gotten the Olympic Future Fund, no one’s got a submarine future fun. We spend on what we want. And if someone’s saying where’s the budget, or where’s the funding, you sort of missing the idea, but but even more fundamentally, you know, if you go and raise money in the share market, from new investors for your business, each investor doesn’t say, I’ll give you this money, but you can only spend this money on, you know, cleaning your office and and the other shareholder says, no, no, but I only want you to earmark my money for doing this, right. What we do is we pool that money together and spend it the best way we can on the operations we need to do and it’s the same for the government, you need to separate Well, we’re gonna raise money, the best way we know how, whether that’s different types of taxes or borrowing, and we’re going to spend money the best way we know how and tying two things together is bad. Operationally, it’s just like, it’s bad for my business to promise one shareholder that their money goes to one type of spending, and another shareholder that I’ll only spend yours on new trucks. You know, it doesn’t really make sense it and it’s very hard to break through this kind of weird, I don’t know, budget illusion that we’ve all got that, you know, we must do this. For this, we must raise money in this way for this spending.

Gene Tunny  12:06

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  12:12

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Gene Tunny  12:41

Now back to the show. I liked how you wrote about this off balance sheet trick or the off balance sheet tricks, the basic idea of the half. So that’s the housing Australia Future Fund is to create an off balance sheet accounting trick whereby the debt associated with the fund and the assets in the fund are considered as a bundle and hence not counted in measures of public debt. So I mean, I haven’t seen exactly how they’ll what the accounting treatment of this will be in the budget, it seems to me what they’re doing is they’re setting this up as a, it’s an SPV, or some sort of public Financial Corporation so they can get it outside of the traditional balance sheet measures. They put in the budget, which is for they have it for general government, but then they also have public non financial corporations, but they don’t have public Financial Corporation. So I’m wondering if that’s what they’re going to categorise it as

Cameron Murray  13:34

I think, yeah, that’s part of the intention. And we actually see those types of budget tricks a lot, I think, New South Wales rail, you know, they tried to shift things off balance sheet, but at the end of the day, you know, we as economists should be looking through that, right. Oh, yeah. And saying, Look, you know, debts debt, but, you know, these are all assets, we can bundle them all together, you know, doesn’t matter where you’ve accounted for them. And the way we’re going to assess whether that debt was, you know, justified or efficient or productive is what, you know, what the investments made in general are, so whether it was on budget or off, you know, it should be the same, right, and you’re borrowing money to buy these assets. Doesn’t matter how you account for it. And that’s the that’s what sort of leads me to my other point is that houses are assets. Yeah. Australia’s property market is the hottest market every property every investor wants to own some. Yeah. So why doesn’t the Future Fund build new houses to expand this pool of property assets in the process, that equity can be on its balance sheet, but instead of, you know, bumping up the prices of BHP shares that you’re going to buy, you actually expand the housing stock in the process, and you can still have your off balance sheet tricks. I actually looked historically and since the Future Fund started in 2006, that’s the current investment fund Australia hands. They’ve made 7.8% average return annually, the average Australian dwelling increased in value by 7.7% per year since 2006. So just the capital value increase of owning a representative sample of Australian property would have got you the same returns as the Future Fund. So it’s not clear to me why we’re recycling this money via other assets, before we build housing assets, we can look at the balance sheets of state, public housing managers. Yeah. And when they value their land and their property portfolios every year, they got to bump it up, you know, 5 million billion. So here 10 billion here, because all this portfolio of properties they own, you know, it’s a valuable asset that rises in value. So So I’ve proposed quietly to a lot of people involved that if you want to have your financial trick and your Future Fund, get the border of the future find to only spend the money, building new dwellings, and then put the equity that you have, yeah, into the fund, you can keep your financial track, but at least you’re you know, keeping the housing construction going. And you’re immediately accumulating a pool of houses that you can allocate to the people who need it at a cheap price.

Gene Tunny  16:13

Yeah. And so is this been driven by the State of the Commonwealth budget, they, they want to make sure that they think they’re gonna get some earnings from this housing Australia Future Fund that can then offset the spending that they’ll have to make on public housing. So they want to get that they’re hoping they can get that. Because if they just go ahead and start building public housing, then they don’t have that revenue to offset that. Is that what they’re thinking?

Cameron Murray  16:39

I think you’re right, I think that’s what the thinking is. But at the end of the day, you know, having those houses supplied to people at a cheap price offsets are the spending on those people already. So the benefit is there, either in the form of the rental, or in the form of the income from the other assets. So, if I was to put on my cynical, political economist hat, I would say the reason this programme has gained so much traction and is probably going to be the law few months, is because it doesn’t change the housing market, it’s going to pass because it doesn’t achieve anything. And that’s what is truly desired. By, you know, the political parties involved is that they want to look like they’re doing something without actually doing it. I’ve had conversations with politicians who’ve told me what’s wrong with the housing market? You know, prices went up, because we dropped the interest rate, that’s good. And rents went up, because incomes went up. That’s good. There’s no market failure here. government shouldn’t do anything. So if that’s what they say to me, how is it then that they passed this bill that’s meant to do something, the only coherent story there is that this bill is to look like you’re doing something, but not doing something because you genuinely think the property market is doing what it’s doing? Well? Yeah, that’s my super cynical. Political Economy hat.

Gene Tunny  18:08

Yeah, you may well be right. I mean, it’s the Sir Humphrey Appleby type of approach where people actually don’t care about whether a problem solved, they just want it look as if something’s being done.

Cameron Murray  18:21

I’ve had a lot of people message me since my testimony to tell me their experiences of this. And I don’t know what I’m going to call this pattern, you know, does it have a name? I’ve tried to call it something like pre compromising. Where you take a good idea, you turn it into a bad idea, but it’s still got the same words in the bill. While so it looks like you’re still doing something. Yeah, you push that. And you’ve totally compromised the content, or the effectiveness, just so you can keep the name because the name is what people will talk about. And it looks like you’re doing something. It’s a what’s it called housing Australia Future Fund? Yeah. Sounds like something important is being done. Right. Yeah. And the more that gets in press headlines, the more we give credibility to the current government, who is trying to, of course tread this line of keeping prices up for people who own property, and pretending they want to keep prices down and rents down to people who don’t own property. And that’s a real interesting political tightrope. That happens a lot in this country.

Gene Tunny  19:23

Yeah, I really liked your submission, Cameron, because I thought it. I mean, it highlights our governments are increasingly doing these sorts of things. And they don’t really make a lot of sense when you think about it, because I remember when I was in Treasury, we had to set up these buildings Australia fund education investment fund, that’s I forget the name of the other one. And it didn’t really make a lot of sense because you’re just taking money and we ended up I think we ended up having to borrow money to put into them, because of the time you know, but the original idea was that there was Yeah, and they were gonna stick them in these funds, but then by the time On had to transfer the money, it was the financial crisis. So the timing wasn’t very good. And then they we see they constrain your ability to get cash. I mean, because you’re saying, Okay, we’re going to lock up all of this money in these funds, even though we don’t need it at the moment. So it can it can constrain your budget flexibility. So I don’t like them for that reason. And the other point that you’re making is your your, if you end up having to borrow to invest in it, well, you’re, you’re borrowing money just invested in the share market. And it’s not necessarily achieving the public policy objectives that you that you want to achieve. So yeah,

Cameron Murray  20:43

that’s exactly the way to put it, you’re gonna borrow 10 million to build houses for people and give it to them below market? Why do you need to recycle that money through the share market? Why don’t you put it through the pokies, there’s also a chance of making more money there, you know, it’s high risk. Why don’t you just take your half million, that half billion that you want to spend each year and spend it for the next 20 years, and just start a construction programme? Like, the really bizarre thing? To me, I read this bill. And in Part Seven H or whatever it is, it says, The Treasury will credit the housing Future Fund with $10 billion. It just doesn’t. And I just think to myself, How does where’s this 10 billion coming from? Aren’t we having this fund to get the money that we don’t have a now you’re saying we have 10 billion? If we have 10 billion? We don’t need the fund? Right? Yeah. And, you know, no one else seems to pick up on that, oh, we just credit with 10 billion. I’m like, why don’t you just build houses, credit them? Credit, the builders is 10 billion. Yeah.

Gene Tunny  21:45

So this is where they’re hoping that by doing it, you know, essentially gambling or well investing with borrowed money, they can get enough of a return on that, to then help fund this additional expenditure. And that’s going to lessen the budgetary impact. So that’s essentially what’s going on. And I just think it’s interesting, because it’s an interesting example of one of these. These things, these clever financial vehicles, the Polly’s and the advisors, I think, in particular, they love it, they think they’re geniuses, but it’s not really solving the problem.

Cameron Murray  22:20

Yeah. And let me just talk you through what I think is the best case scenario. They put money in this fund, sometime in the middle of this year, after we’ve had a big asset market correction, and they they’re near the bottom. In the next 12 months, there’s a real big boom. And in 12 months time, the ministers say, Oh, look, we’ve been making all this money. I’m gonna make this happen. Yeah, that’s the best case. The worst case is, you know, we’ve just seen a bank collapse in the United States, and you know, Swiss government bailout the Credit Suisse bank, the worst case scenario is they put $10 billion into the Future Fund, start accumulating assets in the next six months. And then come September, October, you know, popular time for financial market crashes, the fund loses 10% of its value. And next year, the minister says, oh, we can’t spend anything on public housing, because we just lost a billion dollars on the share market. Yeah, that’s, I don’t know which one’s more probable, but both are potential outcomes. And if the second one happens, you know, I hope the public and the press hold the government to account and say, Hey, this is what you wanted. You were told this is the risk you’re taking. And you still did it anyway. I really hope that opens people’s eyes. If that happens.

Gene Tunny  23:34

Yeah, that’s a good. That’s a good point. So you’re saying that the the level of investment in public housing could end up being dependent upon the returns on this fund

Cameron Murray  23:46

highly likely, implicitly, tells the minister only spend what you make, you know, for funds doing well spend money, if it’s not don’t spend money, the way it sort of described, and it’s got this cap in it as well. I would say there’s a sort of, you know, a built in excuse, yeah. Whereas you kind of want the opposite incentive. You want more public spending on housing during a downturn in the markets, right? You want to smooth out construction cycles. Yeah. Whereas I sort of feel this builds in the opposite political incentive. But the you know, the next 12 months are going to be very interesting if this bill is finally passed. And you know, the markets are very volatile at the moment. And the Future Fund, of course, lost a couple of percent last year, you went down the existing funds. So if that happens again, yeah. Who knows? Yeah.

Gene Tunny  24:40

Just before we wrap up, Cameron, can I ask you what was it like presenting to the committee? I mean, did anyone get it? Did any bells rang? Or what’s the expression? I mean, I imagined some of the Imagine that. There must have been, some of them must be sceptical, or I hope some of the people on this committee worse sceptical. But yeah. What was your impression?

Cameron Murray  25:05

My impression is that this process is a little bit of a charade. So that each political party in the crossbenches can get their sort of own experts on to provide excuses for the political bargain that they want out of this in the Senate. So I think most of the action is happening behind the scenes. And this is just each, each person in the Senate had a chance to call forth their own experts. And so that was done. My impression is that your committee is loaded based on the political party of the day, right. You know, I was cut off from my introduction, when I was saying, you get a few minutes to make introductory remarks. And I was explaining how I can’t believe you’re trying to describe this as a low risk secure, politically insulated funding stream when it seems the exact opposite. Yeah. And they’re like, oh, you know, we only allowed two minutes for these opening remarks get. And, of course, if you if you go and check the footage, everyone bloody rambled for five minutes. So you can sort of see that and, and, you know, I’ve spoken to a variety of Senators offices, as well. And they’ve obviously taken on board what I’ve said, but you don’t see minds being changed. Live during this process. That’s not where it happens. It’s all happening with phone calls and meetings and negotiations amongst each party and independents are

Gene Tunny  26:36

all behind the scenes. Okay. Because I was just wondering, I imagine that the, the greens would probably be pushing the for the government just to build public housing. Right. Yeah. Well, that must be in there. That’s right. So

Cameron Murray  26:50

I think it’s Nick McKim is the green senator from Tassie. And he was, you know, onboard when I started my opening remarks by saying, you realise there’s a scene in the comedy show utopia, right? We started today. That is exactly what you’re doing. But you all laughed with the other side of the joke. And now you’re you are the joke. And so he got a few chuckles But you know, the other the other people didn’t really like it. So yeah, the greens are definitely not keen on these off balance sheet financial tricks at all, which is really puzzling, right? It’s really puzzling to me. I don’t know what the Liberals should be sort of have a similar mind being a bit more honest financially and say, let’s focus on what’s a waste of money and what’s not. Let’s not focus on where you record it in the accounts. So I don’t I don’t know what their views are. But my impression is the Labour Party, you know, they’ve almost got this superannuation brain, or this Future Fund brain like this sort of, yeah, it’s inhibited their ability to go, you know, this is not magic. It’s not a Magic Pudding. It’s just buying different assets.

Gene Tunny  27:57

Yeah, yeah, exactly. So I’ll put a link to your submission in the show notes. I think it’s really good. And you make a good point about how, yeah, I didn’t realise the fees paid by the Future Fund for funds management was so high, but I guess it makes sense, given the amount of funds under

Cameron Murray  28:13

point 2% of the funds under management. That is still half a billion dollars a year, which is of course, again, the maximum that this Future Fund for housing can actually spend on housing subsidies or housing construction. Yeah. So the maximum they can spend is roughly what the average management fee is for the existing Future Fund. Yeah, just to get your orders of magnitude straight of what’s involved.

Gene Tunny  28:40

Okay. And, yes, it has been passed by the lower house, it’s going to it’s being considered by the Senate at the moment, and it’ll probably be passed, I imagine, based on what you were saying,

Cameron Murray  28:51

my understanding is the cross bench has a lot of power in the Senate here to get things changed. My suspicion is that if there are key crossbenchers that take my argument seriously and a couple of other of the submitters as well, they may, for example, put in the legislation a minimum amount of spending out of the fund instead of a maximum to sort of guarantee it. And they may, you know, and that might just be a way of diverting instead of buying bhp shares and Commonwealth Bank, you know, build houses with it and own the equity of those houses with your public housing developer or however you account for that. So that that that may be a realistic change. I don’t think it’s gonna get thrown out or go back to the drawing board.

Gene Tunny  29:38

Right. Okay. Well, again, well done, Cameron. Yeah, excellent submission, lots of very sound, economics and public finance in there. Any final words before we wrap up?

Cameron Murray  29:49

No, I just want to, you know, cross my fingers that the best case scenario turns out if this fun gets passed.

Gene Tunny  29:55

Very good. Okay. Cameron Murray, thanks so much for appearing on the show.

Cameron Murray  29:59

Thanks for having me, Gene.

Gene Tunny  30:02

Righto, thanks for listening to this episode of Economics Explored. If you have any questions, comments or suggestions, please get in touch. I’d love to hear from you. You can send me an email via contact@economicsexplored.com Or a voicemail via SpeakPipe. You can find the link in the show notes. If you’ve enjoyed the show, I’d be grateful if you could tell anyone you think would be interested about it. Word of mouth is one of the main ways that people learn about the show. Finally, if your podcasting app lets you then please write a review and leave a rating. Thanks for listening. I hope you can join me again next week.

Cameron Murray 30:49

Thank you for listening. We hope you enjoyed the episode. For more content like this or to begin your own podcasting journey. Head on over to obsidian-productions.com

Credits

Thanks to Obsidian Productions for mixing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au

Full transcripts are available a few days after the episode is first published at www.economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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US recession, climate change & monetary policy w/ Darren Brady Nelson – EP151

US Treasury Secretary Janet Yellen claims the US economy is not in a recession,  despite two consecutive quarters of declining GDP. Economics Explored EP151 guest Darren Brady Nelson disagrees with the Treasury Secretary and argues she is taking a political position. Whether she’s being political or not, Janet Yellen has certainly taken a big risk, as Darren and Gene discuss. Darren and Gene also talk about the review of the Aussie central bank, the Reserve Bank of Australia, particularly how climate change could figure in that review. Darren argues the review team should have a broader range of views represented, including Monetarist and Austrian perspectives. 

You can listen to the episode via the embedded player below or via podcasting apps including Google PodcastsApple PodcastsSpotify, and Stitcher.

About this episode’s guest – Darren Brady Nelson

Darren is Chief Economist of the Australian think tank Liberty Works and he’s also an Economics Associate at the CO2 Coalition in Washington, DC. For Darren’s bio, check out the regular guests page.

Links relevant to the conversation

While it’s the NBER that declares whether the US economy is in recession, this CNBC report notes: “Since 1948, the economy has never seen consecutive quarterly growth declines without being in a recession.”

But many economists are skeptical about whether the US is in a recession, including recent podcast guests Stephen Kirchner and Michael Knox. 

Stephen Kirchner on the US recession question.

Michael Knox’s Economic Strategy: Fed hikes rates, but Fed says no recession (PDF).

Transcript: US recession, climate change & monetary policy w/ Darren Brady Nelson – EP151

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:01

Coming up on Economics Explored 

Darren Brady Nelson  00:05

like to see seemed to have sold or sold for political purposes as the head of Treasury in the US each year is a political appointee. So, that is, to some extent a political position.

Gene Tunny  00:19

Welcome to the economics explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional Economist based in Brisbane, Australia, and I’m a former Australian Treasury official. 

This is episode 151 on whether the US economy is in a recession. Joining me is returning guest, Darren Brady Nelson. 

Darren is Chief Economist of the Australian Think Tank Liberty Works. And he’s also an Economics Associate at the CO2 coalition in Washington DC. As well as chatting about the US economy. Darren and I discuss climate change and the review of the Reserve Bank of Australia. 

In the show notes, you can find relevant links and details of how you can get in touch. Please let me know your thoughts on what either Darren or I have to say. I’d love to hear from you. 

In the show notes. I’ll include links to some great commentary on whether the US actually is in a recession from two previous guests, Michael Knox and Steven Kirschner. So, make sure you check those links out. 

Right on, for my conversation with Darren. Thanks to my audio engineer, Josh Crotts, for his assistants in producing this episode. I hope you enjoyed it. 

Darren Brady Nelson, Chief Economist at Liberty works. Welcome back unto the program.

Darren Brady Nelson  01:35

Thank you. Good to see you. I guess it’s been a while since we last spoke about Work Capitalism, I think.

Gene Tunny  01:41

Yes, that’s right. That was a few months ago. So yes, it’s good to catch up again. This is a 151st episode, and this is your 11th appearance on the show if I’m counting correctly. So yeah, we get around to another chat every 15 episodes or so. So, it’s about time to catch up with you. So, it’s great to have you on the show again.

Darren Brady Nelson  02:06

Yeah, congratulation, because I’ve been so prolific. 151 That’s great.

Gene Tunny  02:11

Yeah, well, it’s just drip by drip, really. It’s one per week, and they mount up, yes. Thankfully, we’re out of the COVID period, although I had it recently. And I was in isolation, but we’re over all of that craziness which was dominating the conversation for a while, and now we’re getting on to other issues. 

Okay, so I thought we could chat now about the US GDP figures and we had some big news last week, in Australia. You’re still on Saturday there; I think Darren, there in the states in DC. And now we’ve got two consecutive negative quarters of GDP growth. So, GDP grew at an annualized rate or didn’t grow, it fell at an annualized rate of 0.9% in the June quarter, and that followed a decline of, I think it was 1.6% in the March quarter, that’s at an annualized rate. Okay, so there’s a big debate about whether the US is in recession or not. Darren, what do you think? Is the US in a recession at the moment?

Darren Brady Nelson  03:26

Well, yeah, I would say so. I must admit, in this conversation, certainly, you’re going to be more expertise than I. You’re a guru of sort of macro-economic indicators, and all that, particularly from your treasury background, but other things you’ve done, too. So, maybe I’ll be asking you some questions, too, and hoping to get some answers. But yeah, I’m not sure; maybe you know the answer to this, but, the entire time I’ve been, first studying economics and being an economist, putting aside the debates on whether two consecutive quarters is the greatest definition or not, it seems to have been the definition for a long time. And the most interesting thing I’ve seen recently, and I guess this would have been headlines, I imagined in Australia as well, was the Biden administration going. No, no, that’s not really the technical definition of a recession. 

I don’t think I recall an administration, democrat or republican ever; they may come up with excuses and say, it’s not well, it’s not our fault. It’s the previous administration and all that sort of stuff, or you know, external circumstances. But this is really the first time someone’s ever, including, some of the economists that the Biden administration has. On record, obviously, talking about in the past that yes, the recession. You know, the technical definition, if you like, is the two consecutive quarters of negative growth. So, it’s been very interesting times. Again, I guess in the 2020s, including a lot of media organizations and our favorite, sort of Neo Keynesian Economist, Krugman coming out and also defending that the Biden administration on oh, well, it’s not really a recession. So, it certainly fits the technical definition that, if you’d like I grew up with. And, that’s certainly my impression, just actually being in the US. Is it dire just yet? Yes. On the inflation front, yes. But unemployment, still is fairly low. And putting aside the fact that participation rate, that’s a little bit of a worry, but the unemployment rates not so bad at this stage. And usually, obviously, that’s, if you’d like a key secondary indicator, besides GDP itself, that people usually turn to right away, before they maybe dig into, what aspects of GDP have gone down, energy manufacturing, etc, etc.

Gene Tunny  06:02

Yeah. Okay. So, there are a few things you mentioned there, Darren, 

Darren Brady Nelson  06:09

So, yes. Not a strong yes. So, yeah, I’d say yes. Technical definition? Kind of weak, yes in a kind of more judgement point of view.

Gene Tunny  06:16

Yes. So, you referred to what the White House was saying, and what Janet Yellen in the Treasury was saying. So, I might just read that out. And then we can go from there. And I can let you know what I thought about that. 

So, what Janet Yellen said and this is reported by the Financial Times. “The White House has maintained that the US economy is not at present in a recession, with Treasury Secretary Janet Yellen saying earlier this week that she would be amazed if the NB declared it was okay.” So, what she’s talking about there is the National Bureau of Economic Research, which is I think it’s attached to; is it attached to Harvard or MIT or one of those East Coast universities? There’s this elite group.

Darren Brady Nelson  07:01

I think it’s independent. I mean, look, I don’t know, but I think it’s more independent than even being associated with one particular university, I think.

Gene Tunny  07:10

Yeah, I think you’re right. Yeah. But it’s an elite group of macro economists, some of the top people and you’ll have some of the leading lights of economics on it. And they will date the business cycles, they will declare whether the economy’s in recession or not. And generally, what they’re looking for is a sustained downturn that lasts several months, so more than one quarter. And they look at a broad range of indicators. So, it’s not just GDP. But that having said that, it looks like GDP is an important part of it, because it’s that comprehensive measure of economic activity. 

And one thing I noticed when I was preparing for our chat, is there was a report from CNBC, where it noted that I don’t think there’s ever been a recession that the NBR has called, which didn’t have two consecutive quarters of GDP growth, if that makes sense. So, where’s the actual passage? 

Darren Brady Nelson  08:21

I think that’s not correct. I think they call the recession, during the pandemic, and that wasn’t two quarters, I think. So, they do have a bit of leeway. But they tend to usually use the two quarters as part of the definition as a key component.

Gene Tunny  08:38

Okay, look, I’ll have to check that, I thought I read that earlier today. I had that somewhere here in my notes.

Okay. So, we might go back to what Janet Yellen, what she said here. She underscored the message at a press conference on Thursday, emphasizing that the economy remains resilient. Most economists and most Americans have a similar definition of recession, substantial job losses and mass layoffs, businesses shutting down, private sector activities slowing considerably, family budgets under immense strain. In some abroad-based, weakening of our economy. She said, that is not what we’re seeing now. 

Okay. It seems to me that’s a pretty risky call from her because she is running the risk that the NBA does eventually define this as a recession. And that’s going to be incredibly embarrassing for the administration. So, yeah, that would be my sense of it. I think it is a big call from Janet Yellen. And it may be too early to tell. But look, there are a lot of Economists out there who seem positive about the US economy. But that said, it does appear that I mean, is it the interest rates, is it what the Federal Reserve’s been doing that’s causing issues? Is it inflation that’s hitting Consumers? What do you think are the main forces affecting the US economy at the moment, Darren?

Darren Brady Nelson  10:06

Yeah, I think, you’ve definitely touched on two key components. But just to comment on Janet Yellen. But you know, Janet Yellen was totally wrong on inflation. So, that didn’t seem to impact her credibility within her circle that she goes around with, and the people who hire her; that didn’t seem to make any difference. So, probably when she’s proven wrong on recession, which I think she already has been. Yeah, I mean, that inflation is like, one of the key things; it’s the biggest problems in the US, and obviously, even the Federal Reserve, which has been; our Federal Reserve is part of the process of creating inflation. So, they’ve gotten spooked. Biden administration itself has not, which they, at least publicly, they keep on, they don’t seem to be, they acknowledged it a bit, but they don’t really kind of acknowledge it as bad as, even though the official statistics are showing. So, you have, like, I guess we’ve talked about this many times, but, you have kind of two things going on at once, the unprecedented levels of money printing, and the credit that goes with it, which, if you’d like, from a macro point of view, is hitting the demand side. And then on the supply side, they’re doing all sorts of, the Biden administration’s policies are just hurting supply, and hurting productivity and competition. 

So, that can sometimes, make up a lot for that money printing. The supply side can react to it, and really dampen what, it’s for the money to the demand side of things. So, energy is a classic one, they had a complete 180 on their energy policy. So, the US went from the number one energy producer in the world to not that anymore, and, record time, essentially?

Gene Tunny  12:08

And is that the Biden administration’s fault in your view?

Darren Brady Nelson  12:12

Well, exactly. It’s not just their fault, that is literally their policy. You know, they’re going for the green transition, if you like, come hell or hot water, right? So, which includes, not allowing oil companies to extract oil and all sorts of things. Oil, natural gas, coal, etc. And they’ve also hit agriculture with bad policies as well. You know, manufacturing; yeah, literally, if you want to destroy an economy, the Biden’s administration is basically ticking all the boxes with their policies. And, putting aside, you can argue whether that’s intentional or unintentional, but I think there’s not too many, if you like, remotely free, market friendly economists who think the Biden’s policies are particularly good.

Gene Tunny  13:10

Right, okay, I’ll have to have a closer look at some of the policies and come back to that. I just want to go back to that definition of recession; I think I might have missed or may not have communicated properly what that factoid in that CNBC report was. So, what they were saying was that, in fact, every time since 1948, the GDP has fallen for at least two straight quarters. So, they’re not saying that, there could be recessions if you don’t have this, and that’s what you were saying with the pandemic, that was, like you could call a recession, if you don’t have the two negative quarters. But what this point is, is that, in fact, every time since 1948, the GDP has fallen for at least two straight quarters. The NBER ultimately, has declared it a recession. So, you can have a recession, even if you don’t have the two quarters, but every time you’ve seen it in the data, the NBER has ultimately called it a recession. So, what Janet Yellen has done is, yeah, that’s a really big call on her part. And, I mean, Janet Yellen, someone with a distinguished academic reputation, and yep, so really, really big call and potentially, it will backfire on her. We have to wait and see about that. Yeah.

Darren Brady Nelson  14:38

Janet Yellen in not going to make, you know, like she’s she seemed to have sold or sold for political purposes. Not unusual that; it’s not like this has never been seen before. Most of her sort of, like topics when she gets into public is less focused on inflation and recessions and she’s talking about equity and diversity and inclusivity and all that sort of stuff. Well, I guess as the head of Treasury in the US, each year is a political appointee. So, I guess, that is, to some extent, a political position. Although, usually in the past, it’s been Department of Justice and Treasury have, usually been less partisan, if you like. The people regardless of whether it was democrat or republican in charge, but you know, things have changed quite a bit. Certainly, this century and certainly in the 2020s.

Gene Tunny  15:33

Yeah, exactly. Okay. So, you mentioned the supply side before, well, one thing we’ve had in Australia here is just the ongoing disruption to supply chains. And I mean, the random things just been unavailable in the supermarket’s. Quantas seems to have lost its mojo; can’t seem to run a flight on schedule any time anymore. And partly, that’s because they lost people during the pandemic. And now we’ve got people on isolation leave, like if you get COVID, you have to isolate for seven days, and that’s disruptive. Things just don’t seem to be working as they once did. Is that the same in the States? Have you noticed that in the US?

Darren Brady Nelson  16:21

Yeah. I think some extent, less. Although I understand aviation has been kind of bad here, too. But I haven’t actually been, I’m just going on to sort of news reports and talking to other people that, yeah, they’ve had, things. Well, what happened in the US probably, maybe more than Australia is a lot of pilots, either were, let go or just left because they didn’t want to get the vaccine, right? And the federal government has a bigger say in aviation than they do and other industries, for instance, particularly on employment. And so yeah, that’s all contributed, including also I understand, not just pilots, but other people in the aviation industry, various hubs, the people needed at the airports and the hubs as well, similar sort of circumstances. The supply chain disruption in general, I haven’t noticed it as much in terms of like at the grocery store, there was a period where there was a little bit of that. Not as bad, but certainly, there were issues as well, in the US, perhaps, maybe not as bad in terms of like, grocery stores and whatnot. 

So, the 2020s have been very weird times. And I don’t think it’s some sort of like natural market outcomes as such. Obviously, markets wrecked, and they impact, but I think there’s just the amount of, really over the top interventions and status sort of policies in the 2020s have taken me by surprise. We’ve been prepping backwards, if you like, towards bigger and bigger government, and I think, reaping the rewards. I don’t know why people, even people who; seasoned economists, who should kind of, know better, the more the government does stuff and interferes, the worse things get. It literally, is becoming, more and more like an Atlas Shrugged world. I don’t know if you’ve read Atlas Shrugged; probably familiar with the premise anyway. It’s like that. I’m like Atlas Shrugged there, but, there were places to escape to in that world, the fictional world of as many, as you can see, in this world, when, all the governments are, have uniform sort of policies on COVID and uniform policies of not tackling inflation, and all that. And maybe it will be interesting to see if the elbow government copies the Democrat lead, which I suspect they will, if Australia gets two quarters of negative growth, they’ll go that’s not really a recession, we’ll be interesting to see if they go down that road as well.

Gene Tunny  19:12

Yeah, one thing that we’ve traditionally relied on to keep the economy growing is migration, just the addition of people and that those consumption, and so that’s starting to pick up again. Possibly, that try and redefine it. I mean, I don’t think we’re at risk of that at the moment. Although having said that consumer confidence has dropped with the higher interest rates, so people are freaking out over just the increases in interest rates we’ve seen already, because it looks like they just borrow lots of money when interest rates were really low. The Reserve Bank, Governor, I couldn’t believe it. Last year, he was saying, oh, the interest rates will; our official cash rate will stay at 0.1 until 2024. And arguably, he misled people. And so, I mean, he really has a lot of questions to answer for. And there is the Reserve Bank of Australia review, which I’ve talked about in this program. I don’t know if you’ve had a look at that at all, Darren?

Darren Brady Nelson  20:22

No, no. Give me a synopsis of what drove that. And what’s happening? 

Gene Tunny  20:28

Well, the RBA has been under a lot of criticism in recent years for different reasons. There’s been one group of economists who’ve been critical of it, because they argue that they didn’t; that they had interest rates too high in the lead up to the pandemic. Now, whether that’s true or not, I think it’s debatable. But I’ve had people like Peter Tulip and Steve Kirschner on the show. I mean, they’re very good economists. I think it’s worth considering their view for sure. 

Their argument is that if you’re trying to achieve the inflation target of 2 to 3%; they were arguing that because inflation was actually lower than that, you had scope to have looser monetary policy, lower interest rates, to have more employment growth. And there was some modelling that was done by Andrew Lee, who’s a Labor Party MP and a former and new professor, and Isaac Gross, who’s an economist at University of Melbourne, I think. And they showed that if the RBA had met its inflation target, if it had lower interest rates and let the economy grow faster. You could have had; I think it was like 250 to 300,000 more jobs in the economy. So, there were a group of economists criticizing the RBA from that direction. And they were saying that the RBA was too concerned about households taking on too much debt. So, they didn’t want to put interest rates lower. 

I could see why the bank would be concerned about that. So, that’s why I’m not fully on board with that criticism of the bank. That said, I think it is good to review the Reserve Bank, because it is a bit of a; it’s not exactly transparent what they’re doing. So, I think there could be greater transparency. And since last year, when Phil Lowe was making those sorts of bold calls, that turned out to be wrong within months, right. It was obvious that we’re in the in the new year when we started getting those inflation numbers that the Reserve Bank would have to act. So, I think they lost a lot of credibility over that. 

So, it’s important now to have this review. And they’ve appointed Caroline Wilkins from, she’s a former Deputy Governor of the Canadian Central bank. They’ve got Gordon De Brouwer, who’s a former bureaucrat, I worked for him when he was in the treasury. And he was also at a new at times. He’s good. He’s good value. And Rene Fry McKibbin, who’s a professor of Economics at ANU. 

They’re going to review the board like there are issues to do with board composition, who’s on the board? There are issues to do with the inflation target; but I’m not sure they’ll do much about that. They might tweak some of the language. And then there’s issues to do with the transparency of the board’s decision making; what do they release to the public every month? So that’s essentially what the review is about and I think it’s, it’s a good thing that they’re doing that. So, yeah, that’s it. So, yeah, it’s worth definitely worth keeping an eye on. 

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  24:01

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Gene Tunny  24:30

Now back to the show.

Darren Brady Nelson  24:33

So, are they the reviewers? Are they sort of, left or center, for the most part, like a Keynesian and MMT and, something else or what? What’s the story there?

Gene Tunny  24:47

I’d say the typical mainstream macro economists. So, however you’d like to characterize that, they’re definitely not MMT. If you had to give them a label, maybe you give them a new Keynesian label, possibly. But yeah, they’re not I don’t think they’re radical in any particular direction. They’re nonpolitical appointees, which is a good thing. One of the big questions and something that I think the Prime Minister, Anthony Albanese, Albo, as we call him, one thing he will be, he’ll be getting pressured to put a trade union representative on the board. So, they’ve had one in the past, I think Bob Hawke, our former Prime Minister was on the board in the 70s, when he was the head of the ACTU. 

And then we’ve had various other ACTU secretaries on the Reserve Bank Board. There are some people pushing for a regional rep., but, one thing that Peter Tulip, who’s Chief Economist at Centre for Independent Studies has been pushing for is, he said that the problem is, we don’t have enough people who know about inflation and monetary policy on the board. And so, we need more of those people. We need more, it’d be better to have more economic experts or economists on the board.

Darren Brady Nelson  26:05

Yeah. And maybe, also further, how about a variety of use, and not just the one kind of, you say, mainstream, and but that’s still a worldview, it’s still a way of looking at things. And it’s not the only way of looking at things. The combination of, essentially New Keynesians, for the most part, with maybe a little, like 80-20 Keynesian monetarist; that’s maybe what, most mainstream sort of, macro folks, that’s kind of what they’ve learned and whatnot, be good to have somebody else. Have an Austrian point of view, have maybe a full on monetarist point of view, whatever; just something that’s not just the one point of view, , so it’s not just Tweedledee and Tweedledum, every time either on the board or this review.

I’m not saying these people aren’t smart, or anything like that; the three people you mentioned, but I suspect there’s not going to be a whole lot of push and shove between the three. 

Gene Tunny  27:04

So, I think the review in a way, presumes that there won’t be radical changes. The Reserve bank is going to continue as an institution, we’re still going to have Fiat money. Is that the sort of thing that you think should be up for review, that we should be looking at something more fundamental?

Darren Brady Nelson  27:25

Well, at least you have one person on there who can be the dissenting voice to say, something like that, but I’m saying, even if it was, say, one Keynesian, one monetarist, and one Austrian, I think you might get a pretty decent review out of that, with the monetarist if you like, in between the two, to some extent. 

So, you still have 2 – 1, want to keep a central bank going, but we just, good to kind of be realistic about, what a Central bank does and what inflation is, what monetary policy is, all that sort of stuff. That’s fine, if the board, I’m not saying, the board should be all full of economists, even if it was a mix of those types of economists, I think it’s fine to have some other, you know, depending on how big the board is, you know, there would be room, I guess, for a union and a business representatives and maybe some other stuff as well, that’s fine. 

And then they should also review, also the goals of the Reserve Bank; what’s legislation. There’s a lot of stuff in there besides inflation, maybe, just to look at it, and kind of whether all that needs to be in there, or whether there’s should be a better balance, or you should prioritize and go, inflation is number one, and then something, that type of thing. It’d be great. 

A lot of these reviews aren’t all that genuine, they already have a political goal. I mean, you say they’re not political, but it always is, you know, to some extent, they’re under certainly under pressure anyway, regardless of who they stick in there to review things. Now, in the past, some of these reviews have been a lot less political than others, there’s always a political element, like the competition policy review wasn’t particularly political, but there’s always a little bit of an aspect to it, of course, I’d be surprised if they’re not under, some fairly great political pressure to start going beyond and started looking at, kind of cultural war type stuff, too, that they want to ingrain, sort of, race and gender and all that other stuff. I’ll be I’ll be pleasantly surprised as if that isn’t going to be a part of the review.

Gene Tunny  29:37

So, as far as I’m aware, race and gender won’t be at this stage, I don’t think. But one thing that possibly will be, now whether there’s a culture war issue or not, I don’t know. I think I’m not sure it’s, I guess there are aspects of it that are part of the cultural war but the debate about the climate. So, Warwick McKibbin, who is he’s a Professor of Economics at ANU, and he’s actually the husband of one of the reviewers. But you know, she’s independent of; she’s her own person… Renee Fry McKibbin; she’s Warwick’s wife. 

Darren Brady Nelson  30:22

Actually, by definition, at least the old school definition marriages, you’re not, you’re one flesh. But anyway, I understand what you’re trying to say. 

Gene Tunny  30:29

Okay, yes. So, I don’t think she’ll necessarily go along with Warwick’s view. But Warwick was at the conference of Economists in Hobart two weeks ago, where I caught COVID. And, it was a good conference other than that, it was a great conference.

Darren Brady Nelson  30:46

And super spreader of it.

Gene Tunny  30:49

Yeah, that’s right. And Warwick was on the panel. And now we’re talking about the Reserve Bank review. And one of the points he made is that we may have to amend actually, I think he’s saying we will have to amend our inflation targeting settings or our goals or objectives. We’ll have to amend that to incorporate climate change, because we have to recognize that if we’re going to be responding to climate change, we’re going to introduce a carbon price and one that increases over time. So, that’s what you need to have that sort of lowest cost adjustment path. So, to minimize the cost of adjusting to climate change, you’ll need to have a carbon price that increases and so that’s going to be increasing prices. So, you’ll need to look through the inflation, you’ll have to ignore the inflation that comes from the carbon price. So, I think culture war issues won’t come into it. But I think the climate change will come into the RBA review.

Darren Brady Nelson  32:01

Okay, well, that’s good to know. It’s terrible news. But it’s not surprising though.

Gene Tunny  32:06

But doesn’t it make sense what Warwick is saying? I mean, if a government does introduce a carbon price, and you’re going to have increasing prices because of that, then that’s not really inflation that the Central bank should be concerned about. What do you think of that perspective?

Darren Brady Nelson  32:25

It still should be concerned about it, even if, you know; this is all about thinking about the costs and benefits. It sounds like, just assuming, okay, well look, we’re just not going to worry about the downside of our carbon tax and our climate policies, because it’s such a, unquestionable good to pursue this. That’s ideology, that’s not economics, that’s really bad economics. And it’s also bad constitutional law, like, to what enshrine you know, certainly a very long-standing fad, of the climate sort of industry. But, the concept of inflation is something that stands the test of time. You can disagree on various aspects of it, but it’s always going to be, to the extent you’re going to have monetary policy, inflation is going to be an important thing to be thinking about, right. Climate change, may not be. 

I’ve been following this debate since the mid-90s. And, I can tell you; well, just look at the polling, I can’t speak for Australia, but in the US, it’s something along the lines of; it’s well outside the top 10 of topics that people are concerned about in the US, for instance, then you want to start because, elites like him, are in a position to influence these things. They want to shove in the things that they care most about. And I think it’s just atrocious to think you can stick that into the Reserve Bank act. I assure you another government can come along and potentially change that if they want, if the electorate says, alright, you’ve been trying to convince us that the end of the world has been coming for 30 years, it hasn’t arrived, we no longer trust you. Sure, that might happen. And then, government could change things, but you know, so it’s a bit hard to change stuff in legislation, a lot of damage can be done in the meantime.

Gene Tunny  34:20

Okay. So, on where is where they’d make the change? It probably wouldn’t be in the act, they would have it in the agreement between the treasurer and the Reserve Bank. If I remember correctly, I think the general view on the Reserve Bank act from the late 50s was that, look, some of the language is a bit outdated. But you know, maybe leave that alone, you can do all you need you want to do within the agreement between the treasurer and the Reserve Bank. So, I think that’s where they would adopt something like that. 

Just on that Reserve Bank Act, I think what they talk about in that is that the Reserve Bank is supposed to set monetary policy to have a stable currency to achieve full employment and to promote the prosperity of Australians or something. Something broad like that. Yeah. So, they’ll probably leave that and they’ll do whatever they want to do with if they did want to put some wording in about climate change, it’ll probably be very vague, because it is all very vague. We don’t really, I mean, I’ve got no idea what’s going to happen here in Australia. Politically, it’s, it’s such a vexed issue. And you’re saying is not in the top 10 issues in the US, it’s certainly in the top 10. It’s top five; top 3 here in Australia. 

I mean, the previous government lost Blue Ribbon seats, seats that it’s held for decades, seats in affluent areas of Sydney and Melbourne. And it lost them because of climate change, because people in those seats are extremely concerned about it.

Darren Brady Nelson  36:07

Yeah, there’s a different point of view. Certainly, they did, but I wouldn’t extrapolate to say that means Australia as a whole has the same views as these inner-city suburbs, they’ve just changed the demographics and the ideological viewpoints of these people. That’s why they lost. Just like we’ve seen around the world, it’s the rich and upper-class professionals who gravitate towards status policies and status causes, like climate change. The working class, and in the middle, and lower middle classes do not. And electoral politics, isn’t just a straight representation of what the entire nation views necessarily. And putting aside the fact that the polling is often biased and bad and misleading and all that sort of stuff, but that decide. 

I’ve seen some other people who; intelligent Australian commentators, James Allen, and people like that. We’ve been having a bit of look at that, to see whether, that mainstream narrative is actually true. They certainly lost obviously, those seats, they were blue ribbon, but they’ve been changing and moving left for a while now. So, particularly in the US, how climate change is almost really a non-issue from a broad electorate point of view, not any specific electorates. 

Yet, that doesn’t stop the policies from carrying on and then you have all these perverse outcomes of like, I imagined Albanese will get more copy a lot of what the Biden administration so, the push for electric vehicles. Well, electric vehicles are still being produced by coal and natural gas, you know. So, you’re really in many ways, you actually might even be increasing carbon dioxide emissions through transitioning to electric vehicles from petrol vehicles. And the fact is, most of the world is actually increasing the use of coal, mostly India, China, Brazil, etc. And there’s even been a coal like I said, there’s been a coal comeback, even in Western countries as electric vehicle usage gets ramped up. So, these people don’t go, oh, no, we; the same people who say there’s an existential problem, keep on producing, keep on pushing electric vehicles, for instance. So, that their actions speak louder than their words that it isn’t really an existential crisis. Putting aside the fact obviously, all these elites tend to keep on buying beach side homes and all these sorts of stuff. I think just look at their actions, speak much louder than their words. 

So, we’re getting this system where we get a worse electrical system because they keep on showing throwing more and more unreliable and expensive renewable energies on top of it, yet, they’re not actually starting to take much of the load of electricity production, they’re just sitting there costing more money and hurting the rest of the system. Yet, we’re still relying, and we’re going to keep on relying on coal and natural gas and the only renewable energy we’re going to lie and it’s going to be, water – hydro. Putting aside the fact you know, allow many new hydro to be built, but it’s bloody reliable. In the US, if it wasn’t for Quebec, all the hipsters in New York would be having more blackouts because they’re running on water; hydro from Quebec coming down into the US.

Gene Tunny  39:55

Where is that is that near Niagara Falls, or is it is that up in that Region.,

Darren Brady Nelson  40:00

Yeah. Quebec is like, the king of hydro in that part of the world, not just for Canada. In fact, Quebec is mainly supplying electricity to the US, part of the population that’s bigger. And that sort of the northeast of the US. So, that’s kind of insulating on, they can shove on some more solar panels and wind, but that’s not really generating a lot of electricity. And we also have the perverse effect from the main thing that, besides all the kind of pollutants, actually the toxic sort of, chemicals, and all the stuff that it’s needed for electric vehicles, needed for solar panels, needed for wind turbines, which obviously have detrimental environmental effects. They need coal, natural gas, and hydro to make those things in the first place. Not just to be the ones that really, supplemented when the wind’s up blowing, and the sun’s not shining. But if it wasn’t for all the fossil fuels, it couldn’t even build this stuff in the first place. So, all you’re doing is shoving all this stuff, people making a lot of money. A lot of people are virtue signaling, sort of, they keep on crying wolf for what, like 30 years now. There’s, nothing; there’s no significant evidence that we have a problem. 

Gene Tunny  41:15

Well, I’ll push back and say we just had a 40-degree Celsius day in England that they’ve never had in their whole history. 

Darren Brady Nelson  41:23

That’s not true. You go back, and we look at the Paleo challenge. You look at the evidence. For instance, in the US, this damn out in the Colorado River is having; it’s because of climate changes is at its lowest level, lo behold, a study, two weeks prior to them making such statements show that they’ve had more levels on the Colorado River 2000 years ago. 

We’ve had warmer periods, we’ve had more carbon dioxide in the atmosphere in times. No, none of this is accurate. It’s all cherry picked to scare the poop out of people to accept these policies they want anyway. And you watch it when we’re old men, we’re going to be the people will go yeah, we’ll look okay, this thing didn’t happen. But I think it was the right thing to do anyway. 

You hear that a lot, even now. They go like it will even for wrong, it’s the right thing to do. How’s it the right thing to do to make people poor? And have people in Africa starve? How’s that the right thing to do?

Gene Tunny  42:22

Okay, so in a future episode, we’ll have to come back to this, Darren, and we’ll see where we are with the with the data.

Darren Brady Nelson  42:28

You want to see the green policies and action? Look at Sri Lanka.

Gene Tunny  42:31

Yeah. Look, I’m not advocating for these policies, necessarily. Yeah. But I do recognize;

Darren Brady Nelson  42:42

That’s not about you, that’s just kind of aim at whoever’s watching this. It’s like, you want to see the future? The potential future? That’s Sri Lanka. That’s the way Australia could look, if they’re not careful.

Gene Tunny  42:55

And what did they do? They actually required organic produce, did they? Did they ban the importation of some fertilizers or something?

Darren Brady Nelson  43:07

Yes, fertilizers. Fertilizer was the main thing using green organic things instead of actual fertilizer. This is what’s happened in countries like Sri Lanka and African countries is to get their aid money. They do the green agenda, essentially. And it’s just a disaster.

I’ll tell you the countries that won’t be, it won’t be China, it won’t be India; the bigger countries that don’t need the foreign aid. And there’s also strategic implications, obviously. Who controls the green energy market, ultimately? China – communist China.

Gene Tunny  43:51

They are producers of a lot of the solar panels. That’s correct. Yeah.

Darren Brady Nelson  43:54

They are almost a monopoly on this, and increasingly, all the support technology for it as well. So, in China, this is not a coincidence. It’s not like, oh, the market chose China, they were just the best people to do it. This is like, this is a plan. It’s a strategy by the Chinese government, and you can see it’s written down. There are books written on this by them to say, oh, this is what we’re going to be trying to do. That basically, it’s their mind calm. So, don’t be surprised, when some of this stuff comes true. 

They have a plan that the Chinese economy is not a free market economy by any stretch of the imagination. You know, it’s a government controlled run for the purposes of, for the benefit of the Communist Party and the strategic interests of China. It’s not like you’re dealing with the Netherlands, that sort of thing. So, that’s also a huge thing. Because they’re an aggressive military power. 

When the time’s right, they’re going to take action. Taiwan and whoever else, eventually over time gets in their way. So, to aid and abet this through these green policies that are aimed at a problem that doesn’t really exist or certainly not in the scale. And certainly, even if the problem doesn’t exist, too deep, to essentially decarbonize the economy is just like literally the worst solution for it. And to decarbonize it in a way that, benefits China immensely. These’re just terrible policies the whole way through and people hopefully one day will be held accountable for this.

Gene Tunny  45:46

Right, okay. We might go back to GDP just before we wrap up, and yeah, I think I agree. There’s a big debate to be had about those policies for sure. I mean, from Australia’s perspective, given that we’re such a small part of the world, doesn’t make sense for us at this stage to adopt those policies on a large scale. My view is we should try to cooperate internationally. But we need to ensure that other countries are following through with their commitments. And I’m not sure that that has always been the case, or it is the case. So, that my perspective on that. 

On GDP, I guess the view is that; my sort of thought is that, Janet Yellen certainly went too far. The US possibly could be in a recession, despite the fact that jobs growth has been strong, despite the fact that you’ve got unemployment at 3.6%, you could be going into; you could be in a downturn. The GDP figures, if you look at the composition of them, you had inventories falling, that was a big part of it. So, businesses were selling goods, but they weren’t replacing their inventories. So, that could be a signal that they’re not expecting; they’re worried about the future, about future sales. We had a drop in residential construction. That was one and that’s probably driven by the increase in interest rates. At the same time consumption spending was up. So, that’s why the summer economists are thinking it’s a bit of a mixed report. And we’re not entirely sure, but my take on it would be the GDP numbers are definitely something be concerned about and Yellen probably went too far when she said, we’re not in a recession. I think that certainly could come back and bite her. 

Darren, do you have any final thoughts on the GDP numbers? Or where the US economy is that?

Darren Brady Nelson  47:55

Pretty much agree with what you just said. And obviously, time is going to tell. I think the bad ministration policies are very bad. And that’s going to come home to roost. So, I think, it’s not going to be good times, economically for the US and if it’s not good times, economically, for the US, it’s not worth it. China is obviously a major player, but it’s not the engine of growth for the world just yet. The US still pretty much is. When the US sneezes, everybody catches a cold.

Gene Tunny  48:39

Yeah, that’s right. I remember that. That was a popular saying in Australia, at the Reserve Bank and Treasury. So, yeah, absolutely. 

Okay. Darren Brady Nelson. Thanks so much for your time. It’s great to catch up, yes. And I look forward to chatting with you again in the future.

Darren Brady Nelson  48:58

Always great to be on your show and see you, Gene, thank you.

Gene Tunny  49:02

Thank you. 

Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact@economicsexplored.com and we’ll aim to address them in a future episode. Thanks for listening. Until next week, goodbye.

Credits

Thanks to this episode’s guest Darren for the great conversations, and to the show’s audio engineer Josh Crotts for his assistance in producing the episode and to the show’s sponsor, Gene’s consultancy business www.adepteconomics.com.au

Please consider signing up to receive our email updates and to access our e-book Top Ten Insights from Economics at www.economicsexplored.com. Also, please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. Economics Explored is available via Apple Podcasts, Google Podcast, and other podcasting platforms.

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How I became an economist + advice for aspiring economists – EP141 transcript

Show host Gene Tunny (Left) having morning tea with Indonesian Ministry of Finance officials in October 2015, during a break from a short course on public policy processes.

In Economics Explored episode 141, host Gene Tunny discusses his career path as an economist and offers advice for aspiring economists in an interview with Francisco Garcia, host of the University of Queensland Economics Society (UQES) podcast Worldonomics.

You can listen to the episode using the embedded player below or via Google PodcastsApple PodcastsSpotify, and Stitcher, among other podcast apps. A transcript and relevant links are also available below.

Links relevant to the conversation

University of Queensland Economics Society

https://podcasts.apple.com/au/podcast/worldonomics/id1513275367

Transcript of EP141 – How I became an economist + advice for aspiring economists w/ show host Gene Tunny

N.B. This is a lightly edited version of a transcript originally created using the AI application otter.ai. It may not be 100 percent accurate, but should be pretty close. If you’d like to quote from it, please check the quoted segment in the recording.

Gene Tunny  00:01

Coming up on Economics Explored. And that was great because I got to spend a bit of time in Perth and Perth is a great spot. I love Cottesloe Beach, for example. And, yeah, there’s a great couple of great pubs there and there’s the Indiana tea house and it’s just magic walking along the beach in the morning.

Welcome to the Economics Explored podcast, a frank and fearless exploration of important economic issues. I’m your host, Gene Tunny. I’m a professional economist based in Brisbane, Australia, and I’m a former Australian Treasury official. This is episode 141 on how I became an economist, with some advice for aspiring economists.

This episode is based on a longer conversation that I had with Francisco Garcia from the University of Queensland Economics society. The conversation was for the society’s podcast; World and omics. So, if you enjoy Economics Explored, you might like to check out the UQES podcast too, after you listen to this episode of this podcast, of course.

I really enjoyed my conversation with Francisco. And it made me realize just how important certain skills and traits have been in my career so far, these are things I’ve had to work on, and that I’m still working on. One of those traits is being helpful to others. Because A, it’s a good thing to do and B, you never know just who will help you out in your career journey. It may not be who you expect at the time.

In the show notes, you can find relevant links and details of how you can get in touch with any comments or suggestions. And if you sign up as an email subscriber on our Economicsexplored.com website, you can download a copy of my eBook, Top 10 Insights from Economics.

Now for my conversation with Francisco Garcia of the UQ Economic Society. Thanks to Francisco for a great conversation and for letting me borrow the audio for this show. Thanks also to my audio engineer, Josh Krotz for his assistance in producing this episode. I hope you enjoy it.

Francisco Garcia  02:14

Hi, everyone. Welcome to another episode of our career pathway series. Today we’re joined by Gene Tunny, Director of Adept Economics. Gene, could you introduce yourself?

Gene Tunny  02:28

Hi, Francisco and if you’re in the audience, glad to have you with us. My name is Gene Tunny. I’m the director of Adept Economics. That’s a consultancy firm. We specialize in economic modelling, economic analysis, lots of cost benefit analysis, economic impact studies. And we’re based in Brisbane, Australia, although we work across Australia, we’ve done some work internationally too.

Francisco Garcia  02:55

Amazing. Thank you so much, Gene. We usually in our podcasts, we start with a fun question. So, Gene, if you were an animal, what animal would you be?

Gene Tunny  03:07

I think I’d be a tiger. Yeah, for sure. Just because, yeah, I guess I like the masculinity and the aggressiveness of the tiger. So, either a tiger or a lion. Yes, for sure.

Francisco Garcia  03:24

Oh, that’s amazing. That’s really good. Yeah. Fantastic. So, Jane, let’s start about your experience at UQ. So, what motivated you to study Economics?

Gene Tunny  03:41

Well, we have to go back a fair way. When I think about that, what motivated me to study Economics? So growing up in the 1980s, I don’t know if you’re familiar with Australia’s economic history, but we had a lot of economic challenges in the 80s. And we had a treasurer of Paul Keating, who was probably the most prominent treasurer we’ve had in the last several decades and in terms of getting out in the media and talking about economic issues. And I suppose, because there were all these economic challenges. So, it was obvious, perhaps, that we’re going to hear more from the treasurer, but Economics was always in the news in the 80s.

First, there was the flooding of the dollar in 1983. And then, there were, well, we had all these issues; with well, there was still some inflation, high unemployment as a legacy of the recession in 1983, we had what was seen at the time as a balance of payments crisis, we started having these big current account deficits, and then we had the dollar depreciated. And there were just all of this news about the economy and all of this discussion about what has to be done and there was talk about Australia becoming the Banana Republic, there was an infamous interview that the treasurer of the Australian treasurer, Paul Keating gave with John Laws, probably about 85 or 86. When he says if we don’t sort this out, we’ll end up as a Banana Republic by which he meant that we wouldn’t be a nation with a higher standard of living, we would end up at a lower level of economic development with perpetual political crises, unstable governments, and all the things you associated with that high budget deficits, high inflation, that sort of thing. And it really, captivated people; there was a lot of interest in economic issues, a lot of concern about the economy, and that motivated, well, that led to support for a lot of change. And so, there were things that the government of the day did cutting tariffs, and also, there was private there was privatizations of, of a government owned bank, the Commonwealth Bank; Commonwealth Bank used to be owned by the government, eventually, well, I think it was the next government how government had sold off Telstra; various micro economic reforms.

And this stuff was always in the news. When I was younger, this is going to sound a bit dorky. But I remember I used to watch business Sunday, when I was at school, and people like Terry McCrann, and who else was on it, some other prominent commentators at the time. And so, I just grew up absorbing this stuff and being interested in economic issues.

And so, I did study Economics in high school, but, it wasn’t really a major, I didn’t think of as a career path. I just did it because I was interested in the issues. What I did want to do, I did want to study law, I wanted to become a lawyer. Just because law was seen as an occupation, or something you did, if you were an academic high achiever. It was seen as a high-status profession. And so, I wanted to do law, so, I enrolled in law at UQ, and had to choose another degree because the double degrees were very popular at the time. And I had thought about either commerce or; I think I was initially thinking about commerce, that’s right. And nothing against accounting, I think accounting is important. I just thought based on what I was interested, I’d probably enjoy Economics more.

I wasn’t thinking of being an economist or having a career as an economist at the time, I was probably more interested in studying law; in becoming a lawyer, but I thought I Economics would be a good thing to pair it with.

So, that’s sort of how I ended up studying Economics that had to do with growing up with this stuff. Australia, having had that experience in the 1980s, all of those economic challenges, it’d been talked about within the community; it’s on the news, it’s on the radio, even, you know, ordinary people in the community are talking about this stuff more so than they are today, I think. So, it’s just generally fascinated by it. And I’ve been fascinated with Economics ever since. And so that’s why, it probably makes sense that I have gone down this route.

Francisco Garcia  08:28

Well, that’s amazing. Yeah, that’s really interesting. And so, I think you started then, law and Economics. So how was your experience at UQ?

Gene Tunny  08:42

I think it was excellent. Despite the fact that in the 90s, when I went UQ, it was a bit rundown. Now you go to UQ, it’s just beautiful. And you’ve got all these beautiful new buildings, and everything’s well maintained.

When I went in the 90s, In the early 90s, it was this period after there’ve been some reforms to the system, there was this dark analyzation; there was an expansion of the number of universities in Australia, and I think that meant less money for existing unis such as UQ.

UQ just didn’t seem to have the money to maintain the facilities. I remember that old physiology lecture theatre was just so rundown. So was engineering. But despite that, I shouldn’t be saying that. I’m just remembering what it was like back then. The facilities weren’t great. But what was great was just the environment and coming from high school where you just, I mean, you have to learn all of these formulae and you’re just getting drilled all the time, just having tests all the time and you have to turn up at this time for this class; it was just all very, what’s the word, regimental or authoritarian and uni was less so. I mean, you still had, you really did need to go to lectures, but no one was really forcing you to go. You went because you needed to go to be able to do well on the course. You go to uni; you’d know what it’s like. I mean, you meet a diverse range of people. You don’t just meet the people that you went to school with, you meet people from a wide range of backgrounds, and in even different parts of the world. You’ve got lecturers who, some of whom are great researchers who are well renowned in their field and really challenged you. And I thought it was fabulous, you know, learning and obviously you learn new things. And, you actually learn things more quickly than at school.

So, yeah, I thought it was fantastic. I really enjoyed University. And UQ I think is a great uni. Despite the built environment at the time being pretty rundown. It’s such a beautiful campus and the Great Court is, I mean, that’s got to be one of the best. quadrangles courts of any university within Australia. It’s just such a beautiful place. And when you have the jacarandas blooming in October to signify the exam period coming on. It just looks beautiful.

Francisco Garcia  11:31

That’s so true. The Great Court, it’s amazing, surrounded by sandstone buildings. Like I haven’t seen anything like that. But I think you just ruined the Jacaranda moment for me. I never associated it with the exams period.

Gene Tunny 

Oh, haven’t you? Ah, yeah.

Francisco Garcia 

Maybe it was my first semester too. But no, I’m kidding. It’s so beautiful. Like not only at UQ but close by in St. Lucia. Right. Like, I’m impressed with how good it looks.

And Jean, you also did an honorshonors. I understand it’s in the field of Economics, not the honorshonors from law, right? Yeah. Would you mind sharing how was that year for you?

Gene Tunny  12:21

Oh, that was great. I mean, that was probably after I’d studied a few years, I’d done both law and Economics. And I think at that stage, I was leaning toward perhaps, pursuing a career in Economics, or it was an option. I thought of it as an option. And hence, I thought, well, it would be good to do honorshonors in Economics for a couple of reasons. One, because I thought I’d learn new skills. And you have to do a thesis as part of that, and so that you get good experience writing reports, doing Economic Research; I thought that was important.

Possibly what tipped me into doing it was I did have some great lectures that I think, you know; one of the things you look back on, maybe you don’t realize at the time, but you look back, and there are some lecturers who do stand out and really, challenged you, and really made Economics enjoyable, and just made you see where it could go, what the big questions were, what good economic research and analysis looks like. And in the final year, when I did third year, there were two in particular; I don’t mean to sort of denigrate any of the others I had who were excellent, but the two are, I remember, were Harry Campbell, who was a professor of Economics there. And he did micro Economics, he did a really good class in Advanced Micro Economics. And that was fabulous. And Phil Boardman who did advanced macro Economics. And they’re both exceptional. And, both Phil and Harry and other lectures I had made me think, well, maybe I should think more about Economics.

The other thing I had in the back of my mind as well, it’s another year, I can always do law, I can finish the law degree afterwards. And it would be good to have; because at the time, maybe it’s less so now. But, in the 90s, it was very competitive to get into positions inside the Reserve Bank or the Treasury or the Productivity Commission. So, the top employers of economists at the time in Australia, I mean, they’re still good places to work, but there are more avenues now. More places to apply. You really needed an honors degree to work at those organizations and ideally, a first class honors degree. So that was in the back of my mind, too. Yeah, so that’s essentially why I applied, I thought it would be a good way to expand my skills. I was inspired by some of the people who were teaching me and also I thought, well, if I did want to get a job at somewhere like Treasury or reserve bank, then it would be good to have.

Francisco Garcia  15:17

Yeah, amazing. Yeah, that definitely explains it. It’s quite a good motivation. From what I heard, I think people planning to work at least at the RBA, I think it’s kind of recommended to have at least the honors. So yeah, no, I don’t think things changed too much from that. So, after finishing your honors degree. You worked for the public sector for quite a few years, right?

Gene Tunny  15:51

Eventually. So, I started doing a PhD at UQ. I never finished it. I mean, one of my great disappointments; I never really finished that. But after that, toward the end of it, I thought I wouldn’t mind getting some applied experience. So, I applied for a job in a research unit that was run by John Mangan. I don’t know if you know, John Mangan. He was a professor at UQ. And then he ended up running the Institute of Business Economic; very good liberal economist, very practical, great person.

John was the Research Director at this labor market research unit that was set up by the BT government, which was a Queensland State government here, back in the 90s; late 90s, early 2000s. And it was dedicated to doing research into the labor market, because we still had relatively high unemployment at that time. It might have been 8 to 9%; I can’t remember the exact number. But it was higher than it really is desirable. I mean, now we’re down to around 4%, right? So you think of that it was twice what it is now.

So, they set up this research unit. And I saw that and I thought, well, that would be a good place to work. So, I applied there and ended up working there. And just yeah, really found in working in that environment. Yeah, I enjoyed it. I enjoyed being involved in a job where you could do both Economics, you could do economic analysis, and research. And also, you could have some involvement in the policy process. And so yeah, that was essentially why I went that way. I thought, well, I really do want to do applied work. And yeah, there was that opportunity. So, I took that up at the time.

Francisco Garcia  17:57

Now that’s very interesting. Yeah, I didn’t know about the beginning of the PhD. But that’s super interesting. Well, I think then, after you work there, then you work a few years in the public sector, right? I would like to know, how was it? And how did you end up at Australian Treasury?

Gene Tunny  18:21

Oh, yes. So that research unit, I should have mentioned was in a public sector agency, it was in the Department of Employment and Training. And, yeah, I worked in that department for a few years. And then what happened? It was a big department and they got broken into two and I went from the one department to the breakaway department, which was industrial relations toward the end of my time in Queens and Public Service.

I went to work for a unit called the Workers Compensation Policy unit. And that was really good. There was a lot of really good applied work there, a lot of good policy work, whereby we were making changes to the funding; the way workers compensation was funded in Queensland. I had a really good boss there, Paul Goldsborough, someone who was a mentor to me, and I mean, very good policy operator; I learned a lot from him and he was very generous to me and very important in my career progression. So, incredibly grateful to him.

I got to know Paul; this is how funny things are right? I mean, so much, is influenced by things that you think are quite random. Okay?

One thing important that happened to me was when we had the labor market research unit, we were on the sixth floor of the Neville Bonner building on William Street in Brisbane. It was by the river. Jim saw it was a Lord Mayor thought it was the ugliest building in Brisbane, I think that was a terrible thing to say. He just didn’t like the modern architecture; I quite liked it. And being by the river, it was great, because you could easily get out onto the bike path. And I used to ride in from Auchenflower at the time, and it was easy to get out to go for a run along the river; I thought it was fantastic.

But anyway, we’re on the sixth floor of this building, Neville Bonner on the same floor as the director general. And across the hall, from me; across the corridor was the Workers Compensation Policy unit at the time ran by Paul. And I just got to know Paul, just because you know, you’d run into each other. And we have a laugh together. And occasionally, I’d help because I had good analytical skills. And so, I’d often help people in his team and with their briefings when they had to calculate different numbers they needed for their briefings. Because with workers comp, there’s a lot of analysis of how claim rates have changed, and that sort of thing.

So, as a percent of the total workforce, are there fewer injuries today than there were, you know, whenever in the past, and you’d analyze it by different occupations and different regions and things like that. So, there was a bit of number crunching, I’d help them out with that from time to time. And so, I got to know Paul. And then when he needed someone to help out on this cabinet submission on the funding of Workers Compensation in Queensland, whereby we introduced an explicit levy to fund workplace health and safety. So, I ended up going over to Paul’s team Workers Compensation Policy unit, which was part of the Workplace Health and Safety Division within the Department of Industrial Relations. So, I went over there; I moved out of the labor market research unit, and for a year or so, maybe a bit longer than a year, I was doing really practical policy work with Paul and you know. I really enjoyed that and we would be briefing the minister’s office or the minister would get into Parliament House and, you know, provide briefings to the minister, it was just really stimulating; really enjoyed it; I learned a lot about practical policy-making.

Francisco Garcia  22:36

Well, that’s super interesting, and how, how interesting it is how careers play out, right? It’s just someone that you were working and, and Matt in the same floor.

Gene Tunny  22:50

Yeah. And I think those opportunities are there all the time. And I guess the lesson is, I suppose you know, be friendly, be as open as possible. And yeah, because you never know, where those opportunities can come from. And when I look back, I mean, having been opposite, Paul, was so incredibly important, because if I was on a different floor, I wouldn’t have got to know him. And then I may not have ended up working for him for that time. And then, you know, getting that experience.

Paul’s been important in other regards too. There was also a great Director General, we had Peter Henneken, who was also influential to me. Paul and Peter were good mates. And Peter was a former Commonwealth public servant. So, I learned a lot from Peter too.

But how Paul is important in my story, too, is that it was Paul who took me to the breakfast that was; it was a function of the, I think it was the Australian Institute of Public Administration, the Queensland branch, and they held a breakfast sometime in 2004. Maybe it was June or so. And the speaker was Ken Henry, who was then Secretary to the Treasury. So, this is how I ended up at Treasury.

Although I’d always had in the back of my mind; always had the idea, it would be good to work in the Treasury one day, or I’d like to sort of, work on national economic policy issues. So, when I was really young, not always look at the bank notes, or the currency notes, and you’d see on the notes that there’s the signature of the Secretary to the Treasury, along with the Governor of the Reserve Bank, and when I was young, they were all signed by either Frederic Wheeler, or John Stone who followed Fred Wheeler. And I always wondered, well, who are they and they must be important people if they get to sign the bank notes. I always had this idea that the Treasurer was an important institution and could be a good place to work.

So, Paul took me along to this breakfast in June 2004. And Ken Henry spoke, and it was the time that Treasury was doing all this work on the intergenerational report on the ageing of the population and what that meant for future GDP growth and what that meant for the future budget.

Ken Henry was incredibly analytical, but he could explain what he was doing very simply. And, you know, he just went through it all and told us what the facts were and what they meant for the budget. And he had some great charts as well. You know who I’m talking about with Ken Henry? Very impressive operator. He worked for Paul Keating, at one stage; he was one of Keating’s advisers; very polished, very well presented, very calm; Ken was great. And I remember coming out of that thinking, I want to work for that guy. So, I wanted to work for Ken Henry.

So the next time that there was a Treasury, bulk round advertise; Treasury, every six months, has a recruitment round, where they just advertise for policy officers. And, I thought, Oh, this is great. I may as well apply; throw my hat in the ring. I applied for a mid-level position in the Treasury, which was sort of equivalent to what I had in the Queensland public service. And yeah, I don’t know. I think I was competitive for various reasons. I think I had a good CV at the time, I think I was confident, because I had some successes within the Queensland public service. And probably what got me over the line, though, was because I had been to that talk of Kens. I was able to say how much I respected what Treasury was doing, how much I was excited about it, how I really want to work with Ken. And, and I think that probably got me over the line just because it gave me that extra enthusiasm.

Possibly, because I’ve done work in labor Economics, one of the members of the recruitment panel, Steven Kennedy, who’s the current Treasury Secretary; maybe that impressed Steve, and I’m not sure. So. Yeah, that’s sort of how I ended up in Australian Treasury. Having gone to that breakfast that Paul took me to, was, I think that’s part of the story for sure.

Francisco Garcia  27:58

Wow, that’s true. Again, it’s incredible how things play out. And I’m sure that being that you’ve been in the same breakfast as him and saying that you really wanted to work for him helped you to join the Treasury. And how was your experience of working at the Treasury?

Gene Tunny  28:24

Oh, fantastic. I mean, I think lots of great experience and lots of high points. There were some low points, I mean, I did eventually leave. But mostly, it was very educational, a lot of hard work as well. And very important. I mean, you just realize that you can have an influence on economic policy at a national level, but you do need to do the work and you need to be well prepared. You’ve got to think about all of the issues and just what the impacts of policy can be.

I found it very rewarding. I mean, I worked on various different things; G20 matters, budget matters, industry policy matters, such as car industry assistance. And also, well, budget policy toward the end, the response to the financial crisis, debt policy issues, all of that sort of thing. So, a wide range of experiences within Treasury that I found rewarding.

Just toward the end, there was a very difficult period. And I think for a lot of people in Treasury, to around the time of the financial crisis; very long hours and very challenging issues. And at that time, probably around sort of mid-2009, I thought, well, now could be the time to take up a different opportunity and so I came back to Brisbane from Canberra to work with a good friend of mine Tony Hand, who I met at UQ when I was studying there and he was now running the Brisbane office of Marsden Jacob, which was a consultancy firm. And so, I decided to come back and I thought, well, Tony be good to work for again, and he’s someone who I was inspired by and very impressed with because he was incredibly analytical. He thought about things, very rigorous, nice person, great person too. I thought it would be a good time to come back. So I came back to work for Marsden Jacob.

Francisco Garcia  30:47

Ah, wow. Yeah. That what I believe during the crisis, it might be definitely not the easiest time to work in a Treasury or anything related to economy of finance, and many other places. I was working for, P&G at the time. And I remember, I was an intern, almost of none of the interns were hired as a full time at Procter and Gamble, especially the ones in Sales; I was lucky to be the one in IT. So, I got the job, but a lot of people didn’t. So, not that easy.

About Marsden Jacob, would you mind sharing a little bit what you guys did over there?

Gene Tunny  31:34

Okay. Well, it’s a consultancy firm. So, it does work for clients. And it had a bit of a specialization in Natural Resources and Water and agriculture – agribusiness. Projects I did there included things like analyses of irrigation, investments, that sort of thing. Investments in, there are things called lateral move machines and center pivot machines for irrigation, or they could be building a larger dams for example; those sorts of projects.

So, we did some analysis of that for a department, which was subsidizing some of those investments. There was some money that was set aside for improving water use efficiency on farms for as part of the Murray Darling Basin Plan. That was a sort of thing we’d do.

We were contracted by the Natural Resources Department here in Queensland to do that sort of analysis to help them assess different proposals for that scheme. That was one example. There are examples of, you know, evaluation of different policies, such as the TravelSmart programme in WA; so one of the most enjoyable projects I did when I was at Marsden Jacob was a review of this programme to encourage public transport and also active transport, so cycling and walking in Perth. And so, we looked at a whole range of data to look at, was this actually having an impact? What’s the return on investment there?

And that was great because I got to spend a bit of time in Perth and Perth is a great spot. I love Cottesloe Beach, for example. And, yeah, there’s a couple of great pubs there, and there’s the Indiana tea house and just magic walking along the beach in the morning.

So, I really enjoyed that; it was probably the highlight of Marsden Jacob. Think about a lot; there’s a lot of travel. One thing with consulting, because you often have clients all around the country, occasionally internationally, you do a bit of travel and Marsden Jacob; because it was a national firm meant that I was travelling quite a bit.

So, a wide variety of projects, some private sector projects. Some helping a manufacturing business; look at the Economics of their product, like what cost savings does their product, what could it deliver to customers such as a council for example. One client that I did work for initially at Marsden Jacob and then later I’ve done work for them at through Adept Economics was a company called Urban Turf Solutions, UTS which produces synthetic turf. The artificial grass and I did some work showing just the cost effectiveness of that product just how much you save by not having a mullet, and not having to weed, not having to use pesticides etcetera.

So, they’re all the savings from having that product. And so, I was able to demonstrate that. I did work for the education department here in Queensland, looking at the Economics of a new school that they were looking to set up in Townsville at James Cook University. It didn’t go ahead at the time. The Economics of it weren’t great, because there were already a lot of high schools in Townsville with spare capacity. I don’t know what the situation is now. But at the time, it just wasn’t the right time for it. Yeah,  various different projects.

So, it was very enjoyable. And yeah, I really did enjoy the travel now that I think about it. I got to go to lots of interesting places, you know, travelled across the country, I really enjoyed that.

Okay, we’ll take a short break here for a word from our sponsor.

Female speaker  35:56

If you need to crunch the numbers, then get in touch with Adept Economics. We offer you frank and fearless economic analysis and advice. We can help you with funding submissions, cost benefit analysis studies, and economic modelling of all sorts. Our head office is in Brisbane, Australia, but we work all over the world. You can get in touch via our website, http://www.adepteconomics.com.au. We’d love to hear from you.

Gene Tunny  36:25

Now back to the show.

Francisco Garcia  36:29

So now finally, we are at Adept Economics. Gene, can you tell us how it was to start Adept Economics and what you guys have been working with?

Gene Tunny  36:44

Okay, it was actually easier than I expected to start the firm, at least in terms of the mechanics of it. It’s just incredibly easy to set up a business nowadays with modern technology and software services. So that sort of thing was quite straightforward. I mean, I had to just have to get an Australian business number. So, you will register for GST. You’ll need a website that you can find; there are cost effective ways to get a website. I knew someone who was able to give me a good deal on developing a website, you could also use something like I think it’s Squarespace or Wix, you could probably do it yourself. There are so many good templates out there.

The challenging part is, of course, getting the business, getting the revenue, getting the clients; I guess I was lucky in that I already had a really good network. And there are people I’ve done work for, as a consultant already through Marsden Jacob and I didn’t steal any clients or break any agreement I had with the company. I think that sort of thing is, is not cool. So, I didn’t do anything like that. But I didn’t steal any exclusive clients or clients that I got through Marsden Jacob.

There were clients that only came to me when I was at Marsden Jacob because I was there. So, they’re effectively my clients. So, I knew that because I was able to bring in work when I was at Marsden Jacob that I could probably do it on my own. It was one thing I found when I was working for Marsden Jacob which is a very good firm, I don’t want to run them down at all. But when you work as a consultant, you often; and a lot of firms are like this, you eat what you kill, if you know what I mean. You often have to bring in the business. Some other firms are set up a bit differently. So, if you’re in a big four firm, there’s the finder, minder, grinder model, whereby if you’re the grinder, you’re the junior person, you just do all the sort of data analysis, I was going to say data entry, but no one does that anymore till you just get everything online or just read things in from the PDF. Then, do the charts – the grinding work, reading the papers, summarizing information into tables, that sort of thing.

Then, there the mind, is the manager who oversees the work. And then there are the finders. They’re the partners; they’re the ones who have all the connections and they’re the ones who bring in the big contracts.

In boutique firms, in smaller firms, you often end up having to bring the work in yourself, you’re the one who’s sort of, needs to bring in the clients and then you work on those projects. You can team up with others in the firm to help you win projects. But it does help a lot if you’ve got your own network and you can bring them in. And so, from my experience in Marsden Jacob, I realized I could probably do that; it wouldn’t be as easy as it was in Marsden Jacob because I was working with others there in the firm on to get different projects and the company did have a, it had an established presence in the market. So that was helpful. But I thought I am doing a lot of things on my own already. And I can probably, it probably made sense for both me and for Marsden Jacob as well for me to leave the organization. And so, I went out and set up on my own. Yeah, seems to have worked out, I have managed to keep going, to stay in business. And you know, the goal now is to try and grow that business to expand.

Francisco Garcia  40:53

That is that is very interesting. And if you would summarize a little bit, what type of work do you guys do in Adept Economics, what would they be?

Gene Tunny  41:09

It’s all sorts of things. It’s business cases. So, for example, I’ve looked at the Economics of an algae farm for a company Woods group out at Gunde-Windy. So, they’re developing an algae farm, they’re looking at producing some products, using that algae, some food supplements, potentially an omega 3 rich oil from the algae. And so, I’ve helped them out with some economic analysis.

More recently, I helped out a managed fund or a fund manager here in Australia – Coolabah Capital. I did some work for them, forecasting state budgets. I’ve done work – well, I do a lot of work with Nicholas Gruen, who’s an economist in Melbourne, quite prominent economist. He’s got a business called Lateral Economics. So, I often work with Nicholas on projects for various clients. We did something earlier this year. And the year before for Services Australia, which is the agency which oversees Centrelink, basically. And we did some analysis of the potential benefits of a programme of work; they’d been undertaking called the welfare programme infrastructure transformation. So, Services Australia has been putting a lot of effort into upgrading their systems to make them all run more smoothly and make it easier for Australians to access their services via myGov. So, making that experience better, which is potentially going to save users a lot of time and deliver value to the community. So, Nicholas and I did some analysis for them of that.

Also, we’ve done economic impact studies, looked at various policy issues, negative gearing, for example, for a financial planning firm, I’ve helped; I helped Toowoomba Council get some funding, I think it was about 5 million, they got some funding to upgrade a railway goods shed that they had in Toowoomba. So, I helped them with their funding application for that. Because whenever businesses or councils are making applications for funding for grants, they’ll often need some sort of economic study, or if they want to get a development approval or some sort of tick, they’ll often need an economic impact study, or a cost benefit analysis to show that this project will deliver these benefits to the community or create these jobs.

So, there’s a bit of work doing that sort of thing. I’ve also been involved with the whole process around Paradise dam, and looking at the Economics of that dam and what the costs of the community would be if they didn’t repair the dam properly, which would mean that you might not have as much investment in macadamias, and high value crops as otherwise, and then that would be a loss to the community. So, I was involved in that process.

The State Government has decided that it will repair that dam, which is good news. So, it was a dam that was damaged when there was a big flood back in 2014. And they lowered the dam wall temporarily because they were worried about dam safety. There is a risk because if a dam was damaged, then if you get enough water behind it, the dam could crack, the dam wall could fail. It could break open water, lots of water rushes down into the valley, and obviously bad results. You don’t want that. So, government’s right to probably right to lower the dam, then they were thinking, well, maybe we don’t put it back where it was because, well, they were arguing that that additional water wasn’t necessary because it wasn’t purchased. But what the community argued was, well, we will purchase it in the future, because we’re investing in all of these high value crops. So, there was a bit of an economic analysis there that I did of what the future looked like. So, and that arguably did help that contributed to the state government’s decision to repair that dam.

So, wide range of things and can be, stuff can be influential in decision making, and government decision making. I’ve also done teaching, as part of my work through Adept, because I have that flexibility, effectively self-employed, I mean, I’ve got a research assistant who works for me. But I’m effectively, self-employed. I can choose my own sort of jobs; I can do what I want to do. And one of the things I like doing is I like doing some teaching, from time to time, I’ve done a bit of work with UQ International Development with the University of Queensland economic development. Then the economic development arm of UQ. And they do a lot of capability, building courses for foreign officials, particularly in our region.

So, I’ve done several courses with Indonesian officials from their finance ministry or Ministry of Economic Development, bapandass; things, courses on just general public policy, processes and cost benefit analysis, natural resource Economics. What else have we done stuff on? Infrastructure financing, a range of courses. And that’s been a great opportunity, because that’s meant that I’ve had an interaction with officials in Indonesia and learned a lot about the issues affecting their economy. And I’ve also travelled over there and delivered courses in Bandung, in Java; And that’s generally where we’ve held them. There’s a great hotel on a gorge there. The, I think, it’s the Padma Bandung; it’s a great hotel, a beautiful location. Indonesia is a beautiful place, very lush. And I mean, you’ve got old Java, you know, fascinating place, Jakarta is a huge mega city. And there’s also Bali, I mean, Bali is an amazing Island, just one of the most beautiful places in the world. So always love working with, doing work for UQ International Development and doing those courses for Indonesian officials. It’s such a great opportunity and privilege.

Francisco Garcia  47:56

Gene, at this point of the podcast, we might start wrapping up, right? I think, like we explored your whole career. And so back to Adept Economics, if our listeners are interested in working with you, what advice would you have for them,

Gene Tunny  48:16

I would say that they really should work on developing their skills; just be as good as you can be in your field. I mean, that is just so invaluable. Just become the best economist or the best financial analyst or, or whatever it is you’re doing. Just become the best you can be or the best Economics or finance student at UQ or whatever university you are.

Really develop those skills and be able to demonstrate that you can apply those skills; and that’s not necessarily with work experience that could be through articles, or it could be through a sub stack or it could be through recording your own videos or doing your own podcasts. I mean, what’s amazing nowadays is that, with technology, everyone has access to the means of production, okay? Like 30 years ago, when I was at uni, I mean, the idea that you could record yourself with reasonable quality and broadcasted to the whole world was just ridiculous. You couldn’t do that, you’d need to have your own radio studio to do that right? I mean, we couldn’t do this sort of thing.

Likewise with video, I mean, maybe you could you get a camcorder and record yourself on on a videocassette, on a VHS tape, but you can’t broadcast, you’d have to you know, you’d have to send it to Channel Nine and they’re not going to do anything. They’re not going to broadcast your amateur video recording. But now, that everyone’s got access to the means of production, and as a uni student, if you’re asking on behalf of uni students, you can create content. You can write papers; you can write articles. So, I’d be trying to develop those skills. I mean, some work experience could be good if you can. I’m limited in what I can offer, because I’m just a small operation. And I can’t I don’t take on interns generally, because I just don’t have the capacity. But some other organizations do take on interns. So, if you get an internship, or a part time job, but it’s not essential, because there are other ways of demonstrating those skills.

Really work on your craft. A couple of books I can recommend, well, a few books, actually, there’s one book by Seth Godin Linchpin; “Be Remarkable”. So, one thing that Seth Godin says is remarkable people don’t have CVs. Now, this sounds a bit crazy. What are you talking about? What he’s saying is that if you’re truly remarkable, then it’s your work that speaks for you, you’ve got products or content out there. And it could be papers, it could be articles on websites, it could be podcasts, it could be videos; that’s what is important nowadays, in the modern economy. And in, in this new world that we’ve been living in, that started off in the mid-90s, with the arrival of the World Wide Web and in which has just transformed the way we live and the way we work. It’s just so profound. And yeah, that means that there’s an opportunity for everyone, if you can work on developing your skills and producing good content, you can reach an incredible number of people.

I wouldn’t think about well, what do I need to do to work for a particular firm? I’d think about how do I make myself as remarkable as possible in this field? In the field that I’m interested in? Look at what the people who are at the top of the field; well maybe a few years ahead of where you are? What are they doing? What have they done? What are they producing? Can I do something similar? Can I engage with them? Can I comment on their blog? Or could I, you know, provide? Is there some way I can add value to them? Can you email them? Can you say, Hey, I listen to your recent episode, do you know about this book, or this article; you might be interested in this, that sort of thing?

I don’t know, there are a whole range of things you can do. But it’s about being remarkable. Just trying to learn as much as you can and also interact with the people ahead of you in the field, I think that can help. So that’s one thing, try and be a linchpin that Seth Godin spoke linchpin. I read that; I think that’s what encouraged me to start blogging back in 2010. Because I read Seth’s book. And Seth is very strong on this point about well, remarkable people don’t have CVs, their work, speaks for them. And that made me think, okay, if it’s not for where I’m working, like, is there anything about me that’s remarkable, right? Like what do I have to show that I’m a good economist, that I’m someone people should pay attention to. And that encouraged me to start doing more work, to start trying to write more, do blogging, write articles for publication, that sort of thing.

So, I know that sounds hard, but that’s what you’ve got to do, unfortunately, in this modern world. Well, not unfortunately because if you produce good work that that’s good for you that that makes you feel good. And you’re participating in this great thing we’re all involved in; this great conversation. So, I think that’s one bit of advice.

Also, I’d be reading books by Cal Newport; or following Cal Newport, his stuff, his Deep Questions podcast is excellent. His book, Deep Work, which encourages you well, I think is a good guide on how to be incredibly productive, how to be focused. The type of work you should be doing is the deep work really, really delving into a topic. Making sure you understand it, really do the focused work and try and produce a product that you can present to the world and get feedback on; something that is remarkable. He’s trying to get you to that position where you’re so good, they can’t ignore you. That’s another one of Cal Newport’s books I’d also recommend.

So yeah, that’s what I would say. Just really focus on being as good as you can and figure out how you can demonstrate that. So, you try and try and produce work that will impress people that people will; maybe impress is the wrong word, that others would be interested in reading and can give you feedback on and then that will help you progress that will help you improve over time.

Francisco Garcia  55:20

What a fantastic advice like a range of advice here. Gene Tunny, thank you so much for joining our podcast. It was a pleasure talking to you.

Gene Tunny  55:34

Okay, that’s the end of this episode of Economics Explored. I hope you enjoyed it. If so, please tell your family and friends and leave a comment or give us a rating on your podcast app. If you have any comments, questions, suggestions, you can feel free to send them to contact@economicsexplored.com and we’ll aim to address them in a future episode. Thanks for listening. Till next week, goodbye.

Credits

Big thanks to Francisco Garcia from UQES for interviewing me and for letting me borrow the audio, and to the show’s audio engineer Josh Crotts for his assistance in producing the episode and to Peter Oke for editing the transcript. 

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com or sending a voice message via https://www.speakpipe.com/economicsexplored. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.

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Podcast episode

EP96 – Managing Government Budgets

Rachel Nolan, a former Queensland Government finance minister, speaks with Economics Explored host Gene Tunny about how government budgets are developed and just how much flexibility governments actually have.

Rachel Nolan is Executive Director of the McKell Institute and is an honorary Senior Lecturer in Philosophy at the University of Queensland. Rachel was a member of the Queensland Parliament for eleven years from 2001, when she was elected as the youngest woman ever. She is a former Minister for Finance, Transport, and Natural Resources and the Arts. Rachel was a member of the Queensland Government’s central budgetary decision making body, the Cabinet Budget Review Committee.

Links relevant to this episode include:

Budget of the U.S. Government

The Federal Budget in Fiscal Year 2020: An Infographic

Economics Explored EP31 Paying for the Coronavirus rescue measures with Joe Branigan (Note we’ve changed the name of the show since we recorded this episode so it doesn’t clash with a popular YouTube channel)

Please get in touch with any questions, comments and suggestions by emailing us at contact@economicsexplored.com. Economics Explored is available via Apple PodcastsGoogle Podcast, and other podcasting platforms.