Business Plan to help boost the economy: How to build a plan to boost the Australian economy

Posted Thursday, April 05, 2020 19:36:11For most people, the first question to ask is whether a particular plan is working.

And most people are likely to want to know whether the plan has the right elements.

But a new study by the think-tank The Australian Centre for Economic Performance  has found that the answer is often no.

In a report published by the Centre for Policy Alternatives (CPAP), the research team examined how policies and interventions can work in tandem to boost growth in Australia, as well as to create jobs.

In the context of the global economy, the findings are likely not surprising.

The study’s authors point out that in the past decade, the Australian financial sector has lost over 2 million jobs and that a similar trend has been observed across other OECD economies.

In Australia, however, the study suggests that there is little evidence that a new focus on growth and job creation is a viable option for the Australian economic future.

Rather, the report’s authors argue that the focus on boosting the economy in the short term and focusing on the economy as a whole is likely to have a “substantial negative impact” on the long-term sustainability of the Australian system.

“The economic benefits of a large-scale expansion are less likely to be realized in the longer term, as a number of factors are more likely to weigh on the Australian and global economies,” the report said.

“In short, the current emphasis on growth is not an effective way to increase productivity or to increase employment over the longer run.

It is unlikely to achieve the long term goals of higher productivity and higher living standards.”

It’s also clear that the longer-term impacts of these policies, including a shift away from tax incentives and incentives for the self-employed, are likely “to be more limited”, the report says.

For the study’s lead author, Associate Professor Peter Kavanagh, this is a very significant finding.

“I think this paper is the first to look at the impact of these policy changes on Australia’s long-run economic performance,” Professor Kavanah said.

The study suggests the economic benefits from a large expansion of the economy are not likely to reach a large enough share of the workforce. 

“The long-range impacts of a massive expansion of Australia’s economy are still unknown and therefore are not fully captured in our analysis,” Professor Dutton said.

Professor Kavanahan said that in terms of the long run, the long range effects were “not quite so important” as “a positive shock of any sort to the economy”, which would “create a new negative equilibrium”.

“The new positive shock could result in a temporary negative equilibrium, where Australia’s productivity growth is lower than expected.

In that case, we would need to re-evaluate the long‐run sustainability of our system and the way we can finance and invest in our economy.”

Professor Dutton agreed.

“For now, it seems that Australia’s short-run performance is not as strong as we thought,” he said. 

The report found that a plan that focuses on job creation and growth has the potential to boost both productivity and employment. 

However, the researchers noted that in order to create a new long-lasting positive equilibrium in the economy, a larger expansion of employment and productivity is needed.

“Our analysis suggests that the long–run impact of a larger government intervention is likely not to be significant in the long running, especially given that the impact on productivity is expected to be small,” Professor Cottesloe said.

“As a result, a policy approach that focuses more on job growth and productivity can have a much more positive long- run impact.”

The researchers say the report “does not suggest that the policy approach is an ideal policy choice”.

“It is important to note that the main focus of the policy is not on the labour market as a consequence of the changes we have proposed,” Professor Hogg said.

“The main focus is on the economic growth and the labour force.”


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