1997 Annual Report - Melbourne Institute by The Faculty of Business and Economics, The University of Melbourne

MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH

Annual Report 1997 and Outlook 1998â&#x20AC;&#x201C;1999

Melbourne Institute of Applied Economic and Social Research The University of Melbourne Parkville Victoria 3052 Australia Phone: (03) 9344 5330 Fax: (03) 9344 5630 Email: melb.inst@iaesr.unimelb.edu.au WWW: http://www.ecom.unimelb.edu.au/iaesrwww/home.html

CONTENTS Introduction to the Melbourne Institute ................................................................................................................. 4 Mission Statement.............................................................................................................................................. 4 Strategic Objectives............................................................................................................................................ 4 Directorâ&#x20AC;&#x2122;s Report on 1997 ........................................................................................................................................ 6 Research Programs............................................................................................................................................ 6 New Developments on Indicators, Journals and Conferences ............................................................................. 6 Staffing............................................................................................................................................................... 6 Advisory Board in 1997 ..................................................................................................................................... 7 Staff, Associates and Research Students .................................................................................................................. 8 Staff in 1997 ...................................................................................................................................................... 8 New Staff in 1998............................................................................................................................................... 9 Advisory Board .......................................................................................................................................................... 10 Advisory Board in 1997 ................................................................................................................................... 10 Retiring and New Members in 1998................................................................................................................. 10 Economic Performance Division ............................................................................................................................ 12 Business Cycles and Forecasting Research Program......................................................................................... 12 Research Projects ..................................................................................................................................... 12 Indicators ................................................................................................................................................. 12 Innovation, Productivity and Enterprise Performance Research Program......................................................... 12 Research Projects ..................................................................................................................................... 12 Indicators ................................................................................................................................................. 12 Social Economics Division ...................................................................................................................................... 13 Labour Markets Research Program.................................................................................................................. 13 Research Projects ..................................................................................................................................... 13 Indicators ................................................................................................................................................. 13 Social Economics Research Program............................................................................................................... 13 Research Projects ..................................................................................................................................... 13 Indicators ................................................................................................................................................. 14 Melbourne Institute Business Economics Forum ................................................................................................ 15 Members ......................................................................................................................................................... 15 Conferences in 1997 ................................................................................................................................................ 16 Business Cycles: Policy and Analysis................................................................................................................. 16 Unemployment in Australia: In Search of Solutions .......................................................................................... 17

Publications by Subscription .................................................................................................................................. 18 Australian Economic Review ............................................................................................................................ 18 Articles and Submissions........................................................................................................................... 18 Referees in 1997....................................................................................................................................... 19 Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends ............................................................. 19 Melbourne Institute Economic Indicators ........................................................................................................ 19 Melbourne Institute Social Indicators .............................................................................................................. 20 Melbourne Institute Working Paper Series 1997.............................................................................................. 20 Staff Publications, Seminars and Presentations ................................................................................................... 22 Books, Monographs and Published Research Reports ..................................................................................... 22 Contributions to Books .................................................................................................................................... 22 Journal Articles................................................................................................................................................ 23 Conference Papers, Lectures and Seminars...................................................................................................... 24 Working Papers, Indicator Reports and Unpublished Reports.......................................................................... 25 Thesis .............................................................................................................................................................. 27 Finance and Performance Indicators ..................................................................................................................... 28 Income and Expenditure 1993–1997 .............................................................................................................. 28 Performance Indicators ................................................................................................................................... 28 Research Performance Indexes................................................................................................................. 28 Indicators with Respect to Business, Government and Public Policy Debates ............................................ 29 Financial Performance .............................................................................................................................. 29 Contributions to Economic Policy Discussion and Development ............................................................... 29 Outlook for 1998 and 1999 .................................................................................................................................... 31 Some Plans for the Next Year or So.................................................................................................................. 31 New Products................................................................................................................................................... 31 Innovation Scoreboard.............................................................................................................................. 31 Melbourne Institute Wages Report ............................................................................................................ 31 Australian Social Monitor.......................................................................................................................... 31 Conferences..................................................................................................................................................... 32 Research Programs and New Projects.............................................................................................................. 32 The Interface of the Labour Market and the Social Security System ........................................................... 32 Asian Economic Indicators........................................................................................................................ 32 Books .............................................................................................................................................................. 32 

1998 The University of Melbourne, Melbourne Institute of Applied Economic and Social Research

COPYRIGHT: All rights reserved. Apart from fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright Act 1968, no part of this publication may be reproduced, stored or transmitted in any form or by any means without the prior permission in writing of the Publisher. ISSN 1441–1423 Desktop publishing by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne (Nellie Lentini) Printed by Vanderstadt Printers

INTRODUCTION TO THE MELBOURNE INSTITUTE The Melbourne Institute was formed in 1962 under the leadership of Professor Ronald Henderson. It was initially known as the Institute of Applied Economic Research and later became the Institute of Applied Economic and Social Research. It has traditionally been referred to as the “Melbourne Institute” and in 1996 we changed its official name to the Melbourne Institute of Applied Economic and Social Research. It was the first Economics research institute in an Australian university. Henderson built up an organisation with a staff of about 40 persons by the early 1970s, in the “first golden era” of the Melbourne Institute. It engaged in a wide range of research areas including macroeconomic forecasting, financial economics and social economics, and is best remembered for its work on poverty and the development of the Henderson Poverty Line. After the Henderson era, Professor Peter Dixon was appointed Director. After some restructuring, the new Melbourne Institute based its operation around Dixon’s ORANI model of the Australian economy. The ORANI model was a major tool of analysis for the Industry Commission as the Australian government dismantled the protection of Australian industry, and the model was used extensively to assess the general equilibrium effects of these and other policy developments. This formed the basis of the “second golden era” of the Melbourne Institute in the 1980s. In the early 1990s Peter Dixon and a number of his senior colleagues left the Institute to join Monash University’s Centre of Policy Studies. This necessitated a second period of adjustment and restructuring initiated by Professor Richard Blandy who was Director from 1992 to 1994. The current Director, Professor Peter Dawkins, took up his position in January 1996. In 1996 the Director and his senior management team in association with the staff and the advisory board developed a strategic plan with a view to building for the Melbourne Institute’s “third golden era”.

Mission Statement The Melbourne Institute is an Institute of Applied Economic and Social Research, based in the Faculty of Economics and Commerce at the University of Melbourne. It aims to contribute to the economic and social well-being of Australians by being the central focus of high quality, independent and impartial, applied economic and social research on economic performance and social outcomes in Australia. It specialises in areas of research that are of key significance to economic performance and social outcomes. It also seeks to be a leader in the production and analysis of economic and social indicators. As well as achieving a high international reputation for its academic research it seeks to be important for business, government and community groups and to contribute strongly to economic policy debates. While its primary focus is on Australia, it will also apply its distinctive capabilities to research on other countries in the Asia-Pacific region.

Strategic Objectives 1.

To be the central focus of applied economic and social research on economic performance and social outcomes in Australia

To be the best known and most highly regarded supplier of economic and social indicators in Australia

To be a centre of postgraduate training in applied economic and social research

To achieve outstanding academic standards for its research output, and to be a leader in Australia and the AsiaPacific region in the areas of its major research programs

To contribute strongly to economic policy discussion and development in Australia

To be widely regarded as one of the outstanding sources of applied economic and social research to be available under contract to business and government

To produce a range of high quality publications (eg. journal, bulletin, newsletter, working papers, etc.)

To provide information, commentaries and advice to a number of big business and government clients

To build upon the foundations laid in association with the Asian Business Centre, by continuing to conduct research on Asian economies, with a view to developing a plan for some major possible initiatives in this area in three yearsâ&#x20AC;&#x2122; time

DIRECTOR’S REPORT ON 1997 Our strategic plan, Towards the Third Golden Era of the Melbourne Institute, was developed in 1996, my first year as Director. 1997 was the first full year of operation under this plan.

Research Programs The Melbourne Institute now has two research divisions, Economic Performance and Social Economics, and four major research programs. The Economic Performance Division comprises the Business Cycles and Forecasting Research Program and the Innovation, Productivity and Enterprise Performance Research Program. The Social Economics Division comprises the Labour Markets Research Program and the Social Economics Research Program. The unifying theme of the research agenda is Professor Peter Dawkins DIRECTOR AND RONALD HENDERSON PROFESSOR the link between economic performance and social outcomes. Each program had a very active year. Major research projects were: modelling the business cycle; modelling the profitability of large firms in Australia; the efficiency and equity implications of tax reform; the full employment project; and the economic and social impact of electronic gaming machines. These and many other projects are described later in this annual report.

New Developments on Indicators, Journals and Conferences New products launched in 1997 included monthly Westpac – Melbourne Institute Indexes of Economic Activity for the six states of Australia, to complement the ongoing national indexes. The Institute also launched a new journal, sponsored by William M. Mercer, entitled the Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends. The long-standing Australian Economic Review also entered a significant new era in its history, as it is now being published and marketed by Blackwells. In developing closer links with industry and government organisations, the establishment of the Melbourne Institute Business Economics Forum was a major initiative in 1997. The Institute also held two well-attended, high profile, conferences. The first was on Business Cycles: Policy and Analysis. The second was on Unemployment in Australia: In Search of Solutions.

Staffing In the course of the year a number of new staff joined the Institute. These included a Research Fellow, Mark Rogers, who also successfully completed his PhD at the Australian National University; three Research Officers, Rosanna Scutella, a first class honours graduate of the University of Melbourne, Ben Jensen and Glenys Harding; and an Administrative Assistant, Rachel Derham. Two new Research Fellows have also been recruited to start employment in the Institute at the beginning of 1998. They are Hyeon-seung Huh and Rebecca Valenzuela, who have PhDs from the University of New South Wales and the University of New England respectively. Dr Valenzuela joins us from the University of Tasmania where she held a lecturing position. I am also delighted to report that the Deputy Director, David Johnson, has been promoted to the position of Principal Research Fellow, which carries with it the title of Associate Professor.

Meredith Baker, Senior Research Fellow, left the Institute to join the Industry Commission, which has since become the Productivity Commission. We are very sorry to lose Meredith but delighted that she will continue to be involved in one of our ARC research projects in 1998.

Advisory Board in 1997 I would like to thank Dr Peter Jonson and the Advisory Board for their important contribution. New members in 1997 were Mr Tony Blunn who was the Secretary of the Department of Social Security, Mr Bill Scales who was the Chairman of the Industry Commission, and has now become Secretary of the Victorian Department of Premier and Cabinet, and Dr Michael Vertigan, who was the Secretary of the Victorian Department of Treasury and Finance. Thanks to them and all other members. The Board has provided tremendous advice and support in my first two years as Director. A special mention of Mr Tony Cole is warranted for the role he took on in 1997, as Chairman of the Melbourne Institute Business Economics Forum, a new initiative which is reported on below. Many thanks also to the Dean of the Faculty, Professor Ross Williams, for his continued support and encouragement. Dr Michael Vertigan and Mr Tony Blunn will be retiring from the Board in 1998. Dr Vertigan has retired from the Victorian Treasury and returned to Tasmania. Mr Blunn has moved from the Department of Social Security to the Attorney Generalâ&#x20AC;&#x2122;s Department. We thank them both for their contribution and wish them well for the future. New members of the Advisory Board in 1998 are Ms Stella Axarlis (Managing Director of Bilcon Engineering), Mr Bill Evans (General Manager, Economics, Westpac Banking Corporation), and Dr David Rosalki (Secretary of the Department of Social Security).

STAFF, ASSOCIATES AND RESEARCH STUDENTS Staff in 1997 Director and Ronald Henderson Professor Professor Peter Dawkins, BSc Loughborough, MSc (Econ) London, PhD Loughborough Deputy Director and Assistant Director (Social Economics) Dr David Johnson, DipAgrEc New England, BAgrSc, MCom, PhD Melbourne Assistant Director (Economic Performance) Mr Don Harding, BEc, MEc ANU Truby Williams Professor of Economics Professor John Creedy, BSc (Econ) Bristol, BPhil (Econ) Oxford Professorial Associates Dr Ern Boehm, AUA MEc Adelaide, DPhil Oxford, MCom Melbourne Dr Jonathan Kelley, BA Cambridge, MA, PhD California Professor Adrian Pagan, BEc Queensland, PhD ANU Senior Research Fellow Ms Meredith Baker, BEc Adelaide, MA (Econ) Warwick Research Associate Mr John McDonnell, BEc Monash Research Fellows Mr Malcolm Anderson, BA ANU Ms Sally Cowling, BEc Newcastle Dr Mark Harris, BA (Econ) Sussex, GDipEc, PhD Monash Mr Michael Harris, BEc ANU Mr Stuart Kells, BCom Melbourne Mr Woei Tian Liew, BSc, MSc La Trobe, Grad Dip Com Studies Melbourne Dr Mark Rogers, BSc (Econ) London, MSc (Econ) Warwick, PhD ANU Dr Peter Summers, BA (Communic), MA (Urb & Reg Plan), MS (Math), PhD (Econ) Iowa Dr Elizabeth Webster, BEc, MEc Monash, PhD Cambridge Research Officers and Assistants Mrs Glenys Harding, BEc ANU Mr Ben Jensen, BCom Melbourne Mr Stephen Knights, BCom Melbourne Ms Joanne Loundes, BEc Murdoch Ms Rosanna Scutella, BCom Melbourne Publications Manager Ms Nellie Lentini, BA Monash

Computing and Finance Manager Mr Jean-Luc Garlick, BSc, Dip Hum, Dip Eco Com La Trobe Senior Administrative Officer Ms Karen Roe, BA, MA La Trobe, PGDACS Melbourne Administrative Assistants Ms Rachel Derham, BSc Melbourne Ms Maggie Francis, BA La Trobe Ms Karen Harper Ms Rosy Qin PhD Students Mr Malcolm Anderson Ms Siobhan Austen Ms Sally Cowling Mr Stuart Kells Ms Joanne Loundes Mr Kenneth Preiss (thesis submitted in 1997)

New Staff in 1998 Mr Simon Feeny, Research Officer, BA Portsmouth, MSc Reading Dr Hyeon-seung Huh, Research Fellow, BEc Yonsei, GDip (Econ), MEc Sydney, PhD New South Wales Dr Rebecca Valenzuela, Research Fellow, BSc Philippines, GDip (Econ), MEc, PhD New England

Mr Malcolm Anderson

Ms Sally Cowling

Dr Mark Harris

Mr Michael Harris

Dr Hyeon-seung Huh

Mr Woei Tian Liew

Ms Joanne Loundes

Dr Mark Rogers

Dr Peter Summers

Dr Rebecca Valenzuela

Dr Elizabeth Webster

MELBOURNE INSTITUTE RESEARCH FELLOWS IN 1998

ADVISORY BOARD Advisory Board in 1997 Chairperson Dr Peter Jonson, Managing Director, ANZ Funds Management Members Mr A.S. Blunn AO, Department Secretary, Department of Social Security Bishop Michael Challen, Executive Director, Brotherhood of St Laurence Mr Tony Cole, Principal â&#x20AC;&#x201C; National Practice Leader, William M. Mercer Pty Ltd Mr Michael Costa, Assistant Secretary, Labour Council of NSW Dr Peter Jonson CHAIRPERSON, ADVISORY BOARD

Professor Peter Dawkins, Director and Ronald Henderson Professor, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Professor John Freebairn, Head, Department of Economics, The University of Melbourne Mr Don Harding, Assistant Director (Economic Performance), Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Dr David Johnson, Deputy Director and Assistant Director (Social Economics), Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Professor Peter Lloyd, Ritchie Professor of Economics and Director, Asian Business Centre, The University of Melbourne Mr Phil Ruthven, Executive Chairman, IBIS Business Information Mr Bill Scales AO, Chairman, Industry Commission Professor Boris Schedvin, Deputy Vice-Chancellor (Academic), The University of Melbourne Mr Glenn Stevens, Assistant Governor (Economic), Reserve Bank of Australia Dr Michael Vertigan, Secretary, Victorian Department of Treasury and Finance Professor Ross Williams, Dean, Faculty of Economics and Commerce, The University of Melbourne Board Secretary Ms Karen Roe, Senior Administrative Officer, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne

Retiring and New Members in 1998 Retiring Members in 1998 Mr A.S. Blunn AO, Secretary, Attorney Generalâ&#x20AC;&#x2122;s Department Mr Bill Scales AO, Secretary, Victorian Department of Premier and Cabinet Dr Michael Vertigan, retired Secretary, Victorian Department of Treasury and Finance

New Members in 1998 Ms Stella Axarlis, Managing Director, Bilcon Engineering Pty Ltd Mr Bill Evans, General Manager, Economics, Westpac Banking Corporation Mr Ian Little, Secretary, Victorian Department of Treasury and Finance Dr David Rosalki, Secretary, Department of Social Security Advisory Board, May 1998

Back row, from left: Dr David Johnson, Dr David Rosalki, Professor Ross Williams, Professor John Freebairn, Mr Don Harding, Mr Michael Costa, Mr Tony Cole, Ms Karen Roe Front row, from left: Ms Stella Axarlis, Dr Peter Jonson, Professor Peter Dawkins, Mr Ian Little, Professor Boris Schedvin MEMBERS OF THE ADVISORY BOARD

1998 Board members not in the group photograph:

Professor Peter Lloyd

Mr Phil Ruthven

Mr Bill Evans

Bishop Michael Challen

Mr Glenn Stevens

ECONOMIC PERFORMANCE DIVISION Business Cycles and Forecasting Research Program Research Projects

Mr Don Harding ASSISTANT DIRECTOR, ECONOMIC PERFORMANCE

Business cycle research continued to be a major feature of the Institute’s activities in 1997, and a conference was held in September, in which some of our research findings were released. Westpac is the major sponsor of our business cycle research, and further work was undertaken in developing and refining the Westpac – Melbourne Institute Indexes of Economic Activity. A contract research project was also undertaken for the Reserve Bank of New Zealand on modelling the New Zealand business cycle. A large ARC grant was awarded to Dr Peter Summers, Professor Adrian Pagan and Mr Don Harding to assess competing theories of the business cycle in a unified framework. This project will commence in 1998 and run for two years.

Indicators In 1997 we launched indexes of economic activity for each of the six states of Australia to supplement the ongoing national Westpac – Melbourne Institute Indexes of Economic Activity. We also continued to produce monthly reports on the Westpac – Melbourne Institute Survey of Consumer Sentiment which is followed closely in the financial press. The survey of Consumer’s Inflationary Expectations, sponsored by the Reserve Bank, and its associated monthly reports created considerable interest as there was a significant decline in these expectations.

Innovation, Productivity and Enterprise Performance Research Program Research Projects In 1997, staff of the Melbourne Institute and collaborators from elsewhere in the faculty, plus academics from the ANU, the University of Tasmania and the UMIST in the UK, completed first draft chapters for a book on large enterprises in Australia, to be published by Allen and Unwin. These chapters resulted from research under the IBIS Collaborative Research Program on Enterprise Dynamics, which relied primarily on analysis of the IBIS database on large businesses in Australia. A two-year project got underway in 1997, based on an ARC large grant for research on technological change and training in Australian workplaces, using data from the Australian Workplace Industrial Relations Survey.

Indicators The other major project in this program in 1997 was the development of an Innovation Scoreboard for the top 1000 businesses in Australia. This resulted from collaboration with Professor Derek Bosworth, from UMIST in the UK, who has worked on the development of such a scoreboard for the UK. The Scoreboard uses data on R&D expenditure, patents, trademarks and designs, and includes an analysis of the impact of such innovative activity on the market value of companies.

SOCIAL ECONOMICS DIVISION Labour Markets Research Program Research Projects The Full Employment Project, which is a joint activity of the Faculty of Economics and Commerce and the Institute of Public Affairs, continued in 1997, under the leadership of Professor John Freebairn. The three main areas of research were: evaluation of labour market programs; analysis of labour demand and the importance of wages and on-costs; and the interface of the tax and social security system. In the latter area, a paper was produced jointly with NATSEM in Canberra on the feasibility of a negative income tax system. It is proposed to complete the Full Employment Project in 1998 with the writing of a book on the subject, under the Dr David Johnson leadership of Professor Freebairn. DEPUTY DIRECTOR AND A number of papers based upon this research on unemployment were presented ASSISTANT DIRECTOR, SOCIAL ECONOMICS as conferences and seminars of the Industry Commission, the Reserve Bank of Australia and the Department of Social Security, amongst others. The Institute’s Director, Professor Dawkins, also made a presentation to a special Federal Cabinet meeting on unemployment in August. The Institute also held a special conference on unemployment in November. Other projects included the Graduate Destination Survey and Employer Feedback Survey for the University of Melbourne.

Indicators In 1997, the Melbourne Institute included questions in its August and November omnibus telephone survey of Australian households, on wage changes over the last twelve months for employees who had remained in the same job over the twelve-month period. Preliminary results of this research were released at a conference on wages, organised by ACIRRT in Sydney in November, and the Melbourne Institute Wages Report is being launched in 1998.

Social Economics Research Program Research Projects

From left: Ms Sally Cowling, Professor John Freebairn, Ms Rosanna Scutella, Dr David Johnson, Professor John Creedy TAX PROJECT TEAM

In 1997 there were two major areas of research for the Social Economics Program. The first was on the efficiency and equity effects of tax reform. This was the first year of a major two-year collaborative research project with the Brotherhood of St Laurence and CEDA. Several working papers were produced and the first of four major summary reports published, which was concerned with a “Stocktake of Taxation in Australia”.

Three projects were also undertaken on the economic and social impact of electronic gaming machines, two sponsored by the Victorian Casino and Gaming Authority and one by the Victorian Department of Treasury and Finance. The former two were jointly with Deakin Human Services Australia.

Indicators The Melbourne Institute continued to produce the poverty lines for Australia. We also commenced collaborative research with our new Professorial Associate, Dr Jonathan Kelley from the ANU, analysing data from the International Social Science Survey, for which Dr Kelley is responsible. This was with a view to establishing a new publication to be known as the Australian Social Monitor, which will include presentation, analysis and discussion of a range of social indicators on such topics as crime, job security, the family, etc.

MELBOURNE INSTITUTE BUSINESS ECONOMICS FORUM In 1997 the Melbourne Institute Business Economics Forum was launched. The Treasurer of Victoria, Mr Alan Stockdale, was our special guest at the inaugural meeting where he officially launched the Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends. Members of the Forum receive a range of benefits. These include a quarterly economic briefing (at a lunch or breakfast) and the associated Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends which is released at the briefing. Members also receive all the publications of the Institute and invitations to attend the Institute’s conferences at special rates. Ready access to Institute staff including some free consulting time is also available. There are three categories of membership, Gold, Full and Associate, with commensurate levels of benefits. Mr Tony Cole of William M. Mercer (who sponsor the Mercer – Mr Alan Stockdale and Professor Peter Dawkins Melbourne Institute Quarterly Bulletin of Economic Trends) is Chairman LAUNCH OF MERCER – MELBOURNE INSTITUTE QUARTERLY BULLETIN OF ECONOMIC TRENDS of the Forum. Prior to joining William M. Mercer as National Practice Leader, Investment Consulting, Mr Cole held various senior positions in the public service including Secretary of the Commonwealth Treasury. The Melbourne Institute’s economic update is presented at each briefing, which includes our economic forecasts. Dr Peter Summers developed the Melbourne Institute’s forecasting model using modern econometric techniques. A range of business economists commented on the forecasts at the 1997 briefings. These included, Mr Nigel Stapledon of Westpac, Mr Saul Eslake of ANZ, Dr Robin Stewardson of BHP and Mr Paul D’Arcy of Shell. We also often focus on a special topic at the briefings. In 1997 these included: developments in the labour market; problems with indirect taxation in Australia; knowledge, innovation and productivity in Australia; and the Asian economic and financial crisis. Speakers included Professor Peter Dawkins, Professor John Freebairn, Professor Peter Lloyd and Associate Professor Kim Sawyer. We were also pleased to invite members of the Forum to a special lunch with Dr Mari Pangestu from Indonesia, who presented a briefing on the Indonesian economy.

Members Organisations who joined as members of the Forum in 1997 include: ANZ Banking Group; Australian Postal Corporation; Australian Taxation Office; From left: Mr Don Harding, Mr Tony Cole, Professor Peter Dawkins, Dr Peter Summers BHP Co Ltd; Business Council of Australia; PANEL DISCUSSING MELBOURNE INSTITUTE ECONOMIC FORECASTS AT INAUGURAL QUARTERLY BRIEFING CEDA; City of Melbourne; Department of Industry, Science and Tourism; Department of Social Security; Department of State Development; Department of Treasury and Finance; General Motors – Holden’s Automotive Ltd; Industry Commission; Institute of Public Affairs; Norwich Union Life Australia Ltd; Price Waterhouse Centre; Shell Australia Ltd; Urban Land Corporation; and Westpac Banking Corporation.

CONFERENCES IN 1997 Business Cycles: Policy and Analysis On September 5th 1997, we held a one-day conference on Business Cycles: Policy and Analysis. Keynote speakers were Dr Stephen Grenville, Deputy Governor of the Reserve Bank, Professor Adrian Pagan of the ANU (who is also a Professorial Associate of the Melbourne Institute), and Mr Nigel Stapledon, Chief Economist of Westpac. Professor Adrian Paganâ&#x20AC;&#x2122;s lecture was in honour of Dr Ernst Boehm who fostered business cycle research at the Melbourne Institute. Other speakers included our own Mr Don Harding and Dr Peter Summers and also Mr Peter Downes from the Commonwealth Treasury. Dr Ernst Boehm, Professor Alan Layton of Queensland University of Technology, and Dr Steven Kates of the ACCI joined a panel discussion at the end of the conference. The conference was well attended by people from business, government and academia.

Dr Stephen Grenville DEPUTY GOVERNOR OF THE RESERVE BANK, KEYNOTE SPEAKER AT CONFERENCE ON BUSINESS CYCLES

From left: Professor Peter Dawkins, Dr Ernst Boehm, Professor Ross Williams (Dean), Professor Adrian Pagan DR BOEHM BEING PRESENTED WITH COPY OF LECTURE IN HIS HONOUR

Unemployment in Australia: In Search of Solutions On November 5th 1997, we held a one-day conference on Unemployment in Australia: In Search of Solutions. Several of the main papers (plus discussants comments) for this conference were featured in the December issue of the Australian Economic Review as a policy forum. In addition Professor Ross Garnaut gave a lunchtime talk “Time to End Unemployment”, which has subsequently been published in the Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends. The conference was attended by about 190 people and received considerable publicity, especially the idea that the wages safety net should be frozen for a number of years, and low income individuals and families reliant on low wages compensated by a negative income tax or earned income tax credits. This was proposed by Professor Peter Dawkins and Professor John Freebairn and supported by Professor Ross Garnaut who includes this idea in his presentation on a long-term strategy to return to full employment. From left, back row: Dr Lynne Williams, Professor Ross Williams, Dr Jeff Borland, Professor Ian McDonald, Professor Peter Dawkins, Professor Mark Wooden, Mr Tony Cole, Professor Bob Gregory, Professor John Quiggin, Professor Peter Kenyon, Professor Bruce Chapman, Professor Judith Sloan, Professor Helen Hughes, Professor Ross Garnaut SPEAKERS AND CHAIRS AT UNEMPLOYMENT CONFERENCE

PUBLICATIONS BY SUBSCRIPTION Australian Economic Review Articles and Submissions The format of the Review continued that developed over recent years: the “Contributed Articles” section continued to attract a strong rate of submission; “Policy Forums” were published in all four issues in 1997; and each issue contained an article “For the Student” and all but one a “Data Surveys” article. In 1997 the Review published 44 articles, up from 1996 when 39 were published but less than in both 1994 and 1995 when 47 and 48 articles were published respectively. The size of the Review remained much the same as in 1996, 466 pages compared to 472, but down from 552 pages in 1994 and 572 pages in 1995. In Table 1, we show the distribution of articles by type for the four years. In 1997 we received 58 submissions in the Contributed Articles section, considerably higher than in 1996 (36) and back to the level of earlier years; 55 in 1995 and 67 in 1994. The acceptance rate for papers on which a final decision was taken has been 37 per cent over the four years shown (papers published as a percentage of submissions).

Table 1: Published Articles in 1994, 1995, 1996 and 1997 Type of Article Invited Articles

1994

1995

1996

1997

Contributed Articles

Policy Forum

Neighbours

Data Surveys

For the Student

552

572

472

466

Pages

Table 2: Submissions in 1994, 1995, 1996 and 1997 Papers

1994

1995

1996

1997

Brought forward from previous year

Submissions during year

Decisions made Accepted: Published Accepted: In queue

Rejected/withdrawn

Resubmit

In process

Referees in 1997 While time to first decision has increased in recent years it is still believed to be fast by the standards of most academic journals. This is largely due to the punctual reporting by most of our referees. Except where papers were obviously not suitable to the Review and a quick decision was made by the editors, two referees were used on submissions. Not only were the referees usually prompt in sending their reports, the quality of the reports was also high. Most referees provided a large number of comments and were constructive and helpful, both to the authors and to the editors. Our referees in 1997 were: Dave Allen, Meredith Baker, Harry Bloch, Jeff Borland, Vani Borooah, Stephen Bourassa, Bruce Bradbury, Jan Carter, Bruce Chapman, Mick Common, Peter Dixon, Robert Dixon, Simon Domberger, Malcolm Dowling, Jackie Dwyer, John Fender, Peter Forsyth, John Freebairn, Joshua Gans, Ross Garnaut, Ann Harding, Don Harding, Ian Harper, Michael Harris, Mark Harrison, Boyd Hunter, Denis Hussey, Duncan Ironmonger, Raja Junankar, Nanek Kakwani, Jonathan Kelley, Peter Kenyon, Michael Kidd, Stephen King, Sue Lambert, Denis Laurence, Guay Lim, David Llewellyn, Peter Lloyd, Philip Lowe, Sholeh Maani, Ian McDonald, Paul McGavin, Donald MacLaren, Gary Madden, Rodney Maddock, Tony Makin, Ian Manning, Philip Maxwell, Jay Menon, Paul Miller, Chris Milner, Charles Mulvey, David Newbery, Neville Norman, Keith Norris, Nilss Olekalns, Simon Parker, Brian Parmenter, Ray Petridis, John Piggott, Jonathan Pincus, John Pitchford, Richard Pomfret, David Prentice, John Quiggin, Jeff Richardson, David Round, John Salarian, Kim Sawyer, Dick Scotton, Judy Sloan, Richard Snape, Peter Stemp, Peter Summers, Richard Sweet, Rebecca Valenzuela, Peter Whiteford, Keith Whitfield, Lynne Williams, Philip Williams, Ross Williams, Ken Wilson, Gavin Wood, Mark Wooden, Judy Yates. We would like to take this opportunity to thank our referees very much for carrying out so well what is an onerous and time-consuming task. We also acknowledge the sterling performance of our Assistant Editor, Nellie Lentini, in sub-editing the Review so superbly and seeing it through to publication. Publication deadlines have become stricter this year with the printing of the Review by Blackwells of the United Kingdom.

Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends The Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends was launched in April, along with its Victorian Supplement. It is sponsored by William M. Mercer Pty Ltd. Each issue contains our reading of the business cycle, internationally, for Australia, and for the Australian states, as well as our economic forecasts. Typically we also include a section on long-run economic trends focusing on a particular aspect of economic performance. We also feature special articles on topics such as tax reform, and the Asian economic crisis. Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, nos 1–4’97. Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends: Victorian Supplement, nos 1–4’97.

Melbourne Institute Economic Indicators Melbourne Institute Survey of Consumer Inflationary Expectations Monthly Report. Melbourne Institute Survey of Household Saving Intentions: Brief Quarterly Report. Melbourne Institute Survey of Household Saving Intentions: Detailed Quarterly Report. Westpac – Melbourne Institute Indexes of Economic Activity. Westpac – Melbourne Institute Quarterly Prospects for Consumer Demand.

Westpac – Melbourne Institute State Indexes of Economic Activity: New South Wales. Westpac – Melbourne Institute State Indexes of Economic Activity: Queensland. Westpac – Melbourne Institute State Indexes of Economic Activity: South Australia. Westpac – Melbourne Institute State Indexes of Economic Activity: Tasmania. Westpac – Melbourne Institute State Indexes of Economic Activity: Victoria. Westpac – Melbourne Institute State Indexes of Economic Activity: Western Australia. Westpac – Melbourne Institute Survey of Consumer Sentiment: Brief Monthly Report. Westpac – Melbourne Institute Survey of Consumer Sentiment: Detailed Monthly Report.

Melbourne Institute Social Indicators Poverty Lines: Australia.

Melbourne Institute Working Paper Series 1997 1/97 Creedy, J., “Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach”. 2/97 Johnson, D., N. Haralambopoulos and O. Hellwig, “Within Household Sharing Patterns”. 3/97 Freebairn, J., “Taxation Reform: Some Economic Issues”. 4/97 Creedy, J., “Means-Tested versus Universal Transfers: Alternative Models and Value Judgements”. 5/97 Johnson, D. and S. Kells, “Small Business Data Sources in Australia”. 6/97 Harris, M. and S. Kells, “Knowledge Spillovers, Location and Growth: Theory and Evidence”. 7/97 McKay, D., “The Natural Rate of Unemployment in Australia”. 8/97 Hyde, C.E., “An Empirical Analysis of the Causes and Consequences of Mergers in the Australian Petroleum Industry”. 9/97 Summers, P., “Trade and Growth in Settler Economies: Australian and Canadian Comparisons”. 10/97 Summers, P., “Analysis of Structural Change Using the Gibbs Sampler: The Case of the Mexican Debt Crisis”. 11/97 Creedy, J., “Marginal Indirect Tax Reform in Australia”. 12/97 Creedy, J. and C. Martin, “Estimates of the Linear Expenditure System Using the 1993 Household Expenditure Survey”. 13/97 Meagher, K. and M. Rogers, “Innovation Spillovers: A Cellular Automata Model”. 14/97 Borland, J., “Employment Dynamics in Australia: Validation of the IBIS Database against Alternative Data Sources”. 15/97 Webster, E., “Householder Attitudes towards Retirement Incomes, Australia, 1997”. 16/97 Dixon, R., “Estimates of the Cost of Monopoly Using the IBIS Database”. 17/97 McDonald, J.T., “The Determinants of Firm Profitability in Australian Manufacturing”. 18/97 Scutella, R., “Calculating the Final Incidence of Australian Indirect Taxes”. 19/97 Sood, R. and R. Scutella, “Description of the Current Australian Indirect Tax System”.

20/97 Creedy, J., “Are Consumption Taxes Regressive?”. 21/97 Creedy, J., “Evaluating Income Tax Changes Using Cross-sectional and Lifetime Income Measures”. 22/97 Kells, S. and M. Rogers, “Executive Remuneration, Board Structure, Corporate Strategy and Firm Performance: A Taste of the Literature”. 23/97 Webster, E., “Labour Market Programs: A Review of the Literature”. 24/97 Loundes, J., “A Brief Overview of Unemployment in Australia”. 25/97 Webster, E., “Labour Market Programs and the Australian Beveridge Curve: 1978 to 1996”. 26/97 Kells, S. and C. Worswick, “An Introduction to the IBIS Database”. 27/97 McDonald, J.T. and H. Bloch, “The Spillover Effects of Industrial Action on Firm Profitability”. 28/97 Bosworth, D., P. Dawkins, M. Harris and S. Kells, “Diversification and the Performance of Australian Enterprises”.

STAFF PUBLICATIONS, SEMINARS AND PRESENTATIONS Books, Monographs and Published Research Reports Creedy, J. (1997). The Statics and Dynamics of Income Distribution in New Zealand. Wellington: Institute of Policy Studies. Creedy, J. and A. Cornwell (1997). Environmental Taxes and Economic Welfare: Reducing Carbon Dioxide Emissions. Aldershot: Edward Elgar. Dawkins, P., G. Beer, A. Harding, D. Johnson and R. Scutella (1997). Towards a Negative Income Tax System, Report to the Full Employment Project. Melbourne: Melbourne Institute of Applied Economic and Social Research. Johnson, D., J. Freebairn, J. Creedy, R. Scutella and S. Cowling (1997). A Stocktake of Taxation in Australia. Tax Reform: Equity and Efficiency Report No. 1, Report of the Collaborative Project with the Brotherhood of St Laurence and CEDA. Melbourne: Melbourne Institute of Applied Economic and Social Research. Melbourne Institute of Applied Economic and Social Research and Deakin Human Services Australia (1997). The Impact of Gaming Venues on Inner City Municipalities. Victorian Casino and Gaming Authority. Melbourne Institute of Applied Economic and Social Research and Deakin Human Services Australia (1997). Social and Economic Effects of Electronic Gaming Machines on Non-Metropolitan Communities. Victorian Casino and Gaming Authority. Scutella, R., J.-L. Garlick and W. T. Liew (1997). Life After Graduation: Our 95 Graduates in 96. Melbourne: Melbourne Institute of Applied Economic and Social Research.

Contributions to Books Creedy, J. (1997). Poverty and inequality comparisons of alternative tax structures. In Research on Economic Inequality, Vol. 7. – Inequality and Taxation (ed. by S. Zandvakili), pp. 61–85. New York: JAI Press. Creedy, J., M.E. Atkinson and D. Knox (1997). Simplifying superannuation taxation: The implications for lifetime equity. In Taxation Towards 2000 (ed. by J. Head and R. Krever), pp. 323–348. Sydney: Australian Tax Research Foundation. Creedy, J. and A. Bakker (1997). Age and the distribution of earnings. In Nonlinear Models in Economics: CrossSectional, Time Series and Neural Network Applications (ed. by J. Creedy and V.L. Martin), pp. 111–128. Aldershot: Edward Elgar. Creedy, J. and V.L. Martin (1997). Nonlinear modelling: An introduction. In Nonlinear Models in Economics: CrossSectional, Time Series and Neural Network Applications (ed. by J. Creedy and V.L. Martin), pp. 1–28. Aldershot: Edward Elgar. Creedy, J., V.L. Martin and J. Lye (1997). A model of income distribution. In Nonlinear Models in Economics: CrossSectional, Time Series and Neural Network Applications (ed. by J. Creedy and V.L. Martin), pp. 29–46. Aldershot: Edward Elgar. Creedy, J., V.L. Martin and J. Lye (1997). A model of the real exchange rate. In Nonlinear Models in Economics: CrossSectional, Time Series and Neural Network Applications (ed. by J. Creedy and V. L. Martin), pp. 143–160. Aldershot: Edward Elgar.

Evans, M. and J. Kelley (1997). Subjective social class: International and individual level differences in 21 nations: 1987– 1997. In Social Stratification and Social Mobility (ed. by S. Tsai), pp. 239–281. Taiwan: Academia Sinica and the Institute of Sociology. Evans, M. and J. Kelley (1997). The transition from command to market economies lowered class self images, especially among the least educated: Poland, Hungary and Bulgaria, 1987–1997. In Social Stratification and Social Mobility (ed. by S. Tsai), pp. 203–237. Taiwan: Academia Sinica and the Institute of Sociology.

Journal Articles Brooks, R., T. Fry and M. Harris (1997). The Size and Power Properties of Combining Choice Set Partition Tests for the IIA Property in the Logit Model. Journal of Quantitative Economics, 13(2): pp. 45–61. Creedy, J. and J. van de Ven (1997). The Distributional Effects of Inflation in Australia 1980–1995. The Australian Economic Review, 30(2): pp. 125–143. Damania, D. and P. Summers (1997). The Impact of Macro-Policies in an Oligopolistic Economy with Entry. Reserches Economiques de Louvain, 63: pp. 225–244. Dawkins, P. (1997). The Minimum Wages Debate and Policy Developments in Australia, the UK and the US: An Introductory Overview. The Australian Economic Review, 30(2): pp. 187–193. Dawkins, P. (1997). The Tortoise Makes a Forward Move: The Economic Effects of the ‘Workplace Relations Act’. Australian Bulletin of Labour, 23: pp. 59–68. Dawkins, P. and J. Freebairn (1997). Towards Full Employment. The Australian Economic Review, 30(4): pp. 405– 417. Dawkins, P. and D. Harding (1997). Developments in the Australian Labour Market: What Chance 5% Unemployment Now? Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, 1’97: pp. 36–50. Johnson, D. (1997). Taxation in Australia. The Australian Economic Review, 30(4): pp. 448–466. Johnson, D. and O. Hellwig (1997). The Distributional Impact of the 1996–97 Budget on Australian Households. National Economic Review, 38: pp. 38–49. Johnson, D. and S. Kells (1997). Small Business Data Sources in Australia. The Australian Economic Review, 30(2): pp. 215–224. Loundes, J. and D. Harding (1997). Clouds in the Sunshine State. CEDA Bulletin, July: pp. 37–38. Pagan, A. (1997). Policy, Theory and the Cycle. Oxford Review of Economic Policy, 13: pp. 19–33. Pagan, A. (1997). Towards an Understanding of Some Business Cycle Characteristics. The Australian Economic Review, 30(1): pp. 1–15. Rogers, M. (1997). Knowledge, Technology and Productivity in Australia: Lessons from Overseas. Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, 3’97: pp. 38–67. Simpson, M., P. Dawkins and G. Madden (1997). Casual Employment in Australia: Incidence and Determinants. Australian Economic Papers, 36: pp. 194–204. Summers, P. and J. Loundes (1997). You’ll Love (Almost) Every Piece of Victoria. CEDA Bulletin, October: pp. 42–43.

Conference Papers, Lectures and Seminars Creedy, J. (1997). “Inequality and the Accounting Period”, presented at Policy Studies Institute, Wellington, New Zealand, February. Creedy, J. (1997). “Tax Progressivity in Lifetime and Cross-sectional Context”, presented at New Zealand Treasury, Wellington, New Zealand, February. Dawkins, P. (1997). “Labour Market Reform in Australia and New Zealand”, presented at Australia–Japan Comparative Economic and Public Sector Restructuring Conference, Centre for Public Policy, University of Melbourne, 6–7 February. Dawkins, P. (1997). “The Distribution of Work in Australia”, presented at Changing Labour Markets—Prospects for Productivity Growth Workshop, Industry Commission, 20 February. Dawkins, P. (1997). “The Distribution of Work in Australia”, Department of Social Security Seminar Series, 28 February. Dawkins, P. (1997). “What Chance 5 per cent Unemployment Now?”, Melbourne Institute Business Economics Forum, Grand Hyatt, 22 April. Dawkins, P. (1997). “Labour Market Developments”, presented at Forecasting Conference, Economic Society of Victoria, 31 July. Dawkins, P. (1997). “Unemployment”, presentation to Federal Cabinet, Sydney, 5 August. Dawkins, P. (1997). “Towards a Negative Income Tax System”, presented to Commonwealth Treasury, Canberra, 25 August. Dawkins, P. (1997). “Unemployment Benefit, Social Security and Unemployment in Australia”, Social Policy Research Centre, University of New South Wales, 2 September. Dawkins, P. (1997). “Wages”, ’98 Conference, ACIRRT, University of Sydney, 14 November. Dawkins, P. (1997). “The Economic Effects of Deregulation and Decentralisation of Wage Determination”, presented at Economics and Industrial Relations: Re-appraising the Relationship, Australian National University, 4–5 December. Dawkins, P. and J. Freebairn (1997). “Can We Substantially Reduce Unemployment in Australia”, Reserve Bank Seminar, Sydney, 26 June. Dawkins, P. and J. Freebairn (1997). “Can We Substantially Reduce Unemployment in Australia?”, presentation to First Pacific Stockbrokers, Melbourne, 28 August. Dawkins, P. and J. Freebairn (1997). “Towards Full Employment”, presented at Unemployment in Australia: In Search of Solutions Conference, Melbourne Institute of Applied Economic and Social Research, 5 November. Harding, D. (1997). “Non Parametric Detrending and the Business Cycle”, presented at Econometric Society’s Australasian Meeting, University of Melbourne, 2–4 July. Harding, D. (1997). “The Definition and Dating of Cycles”, presented at Business Cycles: Policy and Analysis Conference, Melbourne Institute of Applied Economic and Social Research, 5 September. Harris, M. (1997). “Sustainable Income from Natural Resources in Open Economies”, presented at Economics Department PhD Workshop, University of Melbourne, October. Jensen, B. (1997). “Neighbourhood and Family Effects in Educational Progress”, Australian Labour Market Research Workshop, Melbourne, 19–20 February. Johnson, D. (1997). “Discussants Comments on ‘Poverty, Education and Training’”, Workshop in relation to Poverty Then and Now, CEDA, Melbourne, 24–25 February.

Johnson, D. (1997). “Non-Cash Income and Non-Income Indicators of Inequality and Poverty”, presented at Measuring National Progress, CSIRO Conference, Canberra, 3–4 July. Johnson, D. (1997). “Tax Reform, Equity and Efficiency Report No 1: A Stocktake of Taxation in Australia”, presentation to Workshop at CEDA Boardroom, Melbourne, 8 August. Johnson, D. (1997). Facilitator, “Tax and the Agri-Food Industry”, Focus Workshop, Prime Minister’s Supermarket to Asia Council, IC Hearing Room, Melbourne, 16 September. Johnson, D. (1997). “Discussants Comments on ‘Income Distribution, Redistribution and Incentives by Patricia Apps’”, presented at Wealth, Work and Well-being, the Academy of the Social Sciences in Australia Symposium, Australian National University, 10 November. Johnson, D. (1997). “Discussants Comments on ‘Who Gets Minimum Wages, by Sue Richardson’”, presented at Economics and Industrial Relations: Reappraising the Relationship, Australian National University, 4–5 December. Meagher, K. and M. Rogers (1997). “Innovation Spillovers: A Cellular Automata Model”, presented at Econometric Society’s Australasian Meeting, University of Melbourne, 2–4 July. Summers, P. (1997). “Some Time-Series Evidence on the Long-Run Impact of Trade Reform”, presented at Econometric Society’s Australasian Meeting, University of Melbourne, 2–4 July. Summers, P. (1997). “Global and Domestic Factors in New Zealand’s Business Cycle”, presented at Reserve Bank of New Zealand, Wellington, New Zealand, September. Summers, P. (1997). “The Probability of Recessions”, presented at Business Cycles: Policy and Analysis Conference, Melbourne Institute of Applied Economic and Social Research, 5 September. Summers, P. (1997). “The Probability of Recessions: Evidence from Alternative Economic Indicators”, presented at Monash University, 31 October. Webster, E. (1997). “Householder Attitudes towards Retirement Incomes, Australia, 1997”, Superannuation Colloquium, University of Melbourne, July.

Working Papers, Indicator Reports and Unpublished Reports Alexander, G., T. Nix and P. Summers (1997). Retail Probe. Retail Probe, Sydney. Baker, M. and P. Dawkins (1997). The Socio-Economic Impact of the University of Melbourne. Bosworth, D., P. Dawkins, M. Harris and S. Kells (1997). “Diversification and the Performance of Australian Enterprises”. Melbourne Institute Working Paper 28/97. Creedy, J. (1997). “Are Consumption Taxes Regressive?”. Melbourne Institute Working Paper 20/97. Creedy, J. (1997). “Evaluating Income Tax Changes Using Cross-sectional and Lifetime Income Measures”. Melbourne Institute Working Paper 21/97. Creedy, J. (1997). “Marginal Indirect Tax Reform in Australia”. Melbourne Institute Working Paper 11/97. Creedy, J. (1997). “Means-Tested versus Universal Transfers: Alternative Models and Value Judgements”. Melbourne Institute Working Paper 4/97. Creedy, J. (1997). “Measuring the Welfare Effects of Price Changes: A Convenient Parametric Approach”. Melbourne Institute Working Paper 1/97. Creedy, J. and C. Martin (1997). “Estimates of the Linear Expenditure System, Using the 1993 Household Expenditure Survey”. Melbourne Institute Working Paper 12/97.

Dawkins, P., M. Harris, J. Johnson and J. Freebairn (1997). Limits to the Number of Electronic Gaming Machines, Victorian Department of Treasury and Finance. Dowling, M. and P. Summers (1997). “Total Factor Productivity and Economic Growth—Issues for Asia”. Department of Economics Research Paper Series. Harding, D. and J. Loundes (1997). Westpac – Melbourne Institute Indexes of Economic Activity. Harding, D. and J. Loundes (1997). Westpac – Melbourne Institute State Indexes of Economic Activity: New South Wales. Harding, D. and J. Loundes (1997). Westpac – Melbourne Institute State Indexes of Economic Activity: Queensland. Harding, D. and J. Loundes (1997). Westpac – Melbourne Institute State Indexes of Economic Activity: South Australia. Harding, D. and J. Loundes (1997). Westpac – Melbourne Institute State Indexes of Economic Activity: Tasmania. Harding, D. and J. Loundes (1997). Westpac – Melbourne Institute State Indexes of Economic Activity: Victoria. Harding, D. and J. Loundes (1997). Westpac – Melbourne Institute State Indexes of Economic Activity: Western Australia. Harris, M. and D. Harding (1997). Melbourne Institute Survey of Consumer Inflationary Expectations: Monthly Report. Harris, M. and S. Kells (1997). “Knowledge Spillovers, Location and Growth: Theory and Evidence”. Melbourne Institute Working Paper 6/97. Harris, M., S. Kells, P. Dawkins, L. Firth and M. Rogers (1997). The Victorian Innovation Survey. Johnson, D.T. (1997). Poverty Lines: Australia. Johnson, D.T., N. Haralambopoulos and O. Hellwig (1997). “Within Household Sharing Patterns”. Melbourne Institute Working Paper 2/97. Johnson, D.T. and O. Hellwig (1997). “Evaluation of the Distributional Impact of the 1996–7 Budget on Australian Households”. ACOSS Papers, Australian Council of Social Service and the Australian Council of Trade Unions. Johnson, D.T. and S. Kells (1997). “Small Business Data Sources in Australia”. Melbourne Institute Working Paper 5/97. Kells, S. and M. Rogers (1997). “Executive Remuneration, Board Structure, Corporate Strategy and Firm Performance: A Taste of the Literature”. Melbourne Institute Working Paper 22/97. Kells, S. and C. Worswick (1997). “An Introduction to the IBIS Database”. Melbourne Institute Working Paper 26/97. Loundes, J. (1997). “A Brief Overview of Unemployment in Australia”. Melbourne Institute Working Paper 24/97. Matyas, L., L. Konya and M. Harris (1997). “Modelling Export Activity in a Multi-Country Economic Area: The APEC Case”. Monash University Working Paper. Meagher, K. and M. Rogers (1997). “Innovation Spillovers: A Cellular Automata Model”. Melbourne Institute Working Paper 13/97. Rogers, M. and S. Dowrick (1997). “Convergence and Technology in the Solow-Swan Growth Model: An Empirical Analysis”. CEPR Working Paper No. 335, ANU. Scutella, R. (1997). “Calculating the Final Incidence of Australian Indirect Taxes”. Melbourne Institute Working Paper 18/97. Sood, R. and R. Scutella (1997). “Description of the Current Australian Indirect Tax System”. Melbourne Institute Working Paper 19/97.

Summers, P. (1997). “Analysis of Structural Change Using the Gibbs Sampler: The Case of the Mexican Debt Crisis”. Melbourne Institute Working Paper 10/97. Summers, P. (1997). “Trade and Growth in Settler Economies: Australian and Canadian Comparisons”. Melbourne Institute Working Paper 9/97. Webster, E. (1997). “Householder Attitudes towards Retirement Incomes, Australia, 1997”. Melbourne Institute Working Paper 15/97. Webster, E. (1997). “Labour Market Programs and the Australian Beveridge Curve: 1978 to 1996”. Melbourne Institute Working Paper 25/97. Webster, E. (1997). “Labour Market Programs: A Review of the Literature”. Melbourne Institute Working Paper 23/97. Webster, E. (1997). Melbourne Institute Survey of Household Saving Intentions: Brief Quarterly Report. Webster, E. (1997). Melbourne Institute Survey of Household Saving Intentions: Detailed Quarterly Report. Webster, E. (1997). Norwich – Melbourne Institute Survey of Household Saving Intentions: Brief Quarterly Report. Webster, E. (1997). Norwich – Melbourne Institute Survey of Household Savings Intentions: Detailed Quarterly Report. Webster, E. and R. Scutella (1997). Westpac – Melbourne Institute Quarterly Prospects for Consumer Demand. Webster, E. and R. Scutella (1997). Westpac – Melbourne Institute Survey of Consumer Sentiment: Brief Monthly Report. Webster, E. and R. Scutella (1997). Westpac – Melbourne Institute Survey of Consumer Sentiment: Detailed Monthly Report.

Thesis Rogers, M. (1997). “The Diffusion of Knowledge and Economic Growth”. PhD Thesis, Canberra: Economics Program, RSSS, Australian National University.

FINANCE AND PERFORMANCE INDICATORS Income and Expenditure 1993â&#x20AC;&#x201C;1997 Income and Expenditure 1993â&#x20AC;&#x201C;1997 1993

1994

1995

1996

1997

Income Non-University funds made up of

$623,684

$1,175,061

$1,364,043

$1,183,515

$1,366,062

Subscription services

$179,950

$372,315

$336,776

$211,828

$277,838

Consultancies

$370,540

$362,687

$601,872

$631,587

$736,501

$73,194

$440,059

$425,395

$340,100

$351,723

$224,000

$287,910

$282,397

$342,672

$304,500

$30,000

$131,500

$85,000

Grants Faculty of Economics Other University funds Total income

$847,684

$1,462,971

$1,676,440

$1,657,687

$1,755,562

Salaries

$806,867

$1,138,101

$1,086,280

$1,180,716

$1,179,267

Other expenditure

$312,231

$352,178

$480,450

$422,035

$571,472

Expenditure

Debt repayment

$25,308

Total expenditure

$1,144,406

$1,490,279

$1,566,730

$1,602,751

$1,750,739

Surplus

($296,722)

($27,308)

$109,710

$54,936

$4,823

Performance Indicators1 1996

1997

$207,400

$234,128 11% $199,316 61% $503,475 40% $936,920 37%

A. Research Performance Indexes 1.

Research Income National Competitive Research Grants Other Public Research Grants

Industry and Other Research Funds

$304,317

Total External Research Income

$589,217

Publications Refereed Journal Articles Total Publications

$77,500

11 47

Figures in italics represent the percentage increase/decrease from 1996 to 1997. The figures for 1996 exclude the Asian Business Centre which has since been transferred to the Department of Economics. These figures are provisional. In particular the measures of research output need to be confirmed.

12 8% 95 51%

Higher Degree Students Research Higher Degree Students (Full Time Equivalent)

2.5

Research Higher Degree Completions

–

4.5 44% –

B. Indicators with Respect to Business, Government and Public Policy Debates 1. 2.

Subscriptions to Institute Products (excluding the Australian Economic Review) Value of Subscriptions and Sponsorship

References to the Institute in the Media

135 $379,828 116

175 23% $448,338 15% 193 40%

C. Financial Performance 1.

Total Income

Multiplier Effect for the University (ratio of total income to the Faculty’s base-line funding)

$1,530,075 10.20

$1,755,562 13% 11.70 13%

D. Contributions to Economic Policy Discussion and Development 1.

David Johnson produced a report (with Hellwig and Manning) for ACOSS and the ACTU on the effects of the 1996 budget on the distribution of income.

Peter Dawkins and John Freebairn presented papers to the Industry Commission Conference on Labour Markets in February.

Peter Dawkins presented a seminar at the Department of Social Security in February on the interface between the labour market and tax and welfare system.

David Johnson and John Freebairn contributed articles in the Age and the Australian respectively on taxation reform.

Peter Dawkins and Don Harding (Australian Financial Review) and John Freebairn (Age) contributed newspaper articles on labour market reform and unemployment respectively.

Peter Dawkins contributed newspaper articles (Australian Financial Review and Age) on negative income taxation and the interface of taxation and social security.

Peter Dawkins contributed an invited article to the March issue of the Australian Bulletin of Labour which was devoted to an assessment of the Workplace Relations Act.

Peter Dawkins and John Freebairn made a presentation to the Reserve Bank of Australia, on June 26th, on the topic of “Can We Substantially Reduce the Unemployment Rate in Australia?”.

The August Conference on Business Cycles was a significant discussion of an important issue relating to both monetary and fiscal policy, with Reserve Bank and Treasury involvement.

10. David Johnson addressed an important conference in July on “Measures of National Progress”. 11. The July meeting of the Melbourne Institute Business Economics Forum included a presentation by Professor John Freebairn, “Towards a Broadly Based Consumption Tax”.

12. Peter Dawkins made a presentation to the special Federal Cabinet meeting on unemployment on August 5th. 13. The first report on the Taxation Reform: Equity and Efficiency Project in association with the Brotherhood of St Laurence and CEDA, was launched at a function on August 8th at which Robert Fitzgerald (ACOSS) and Mark Paterson (ACCI) also commented on the report. The report received a significant amount of coverage in the media. 14. David Johnson acted as the Facilitator for a Workshop on Tax and the Agri-Food Industry on September 17th, relating to a Federal Government initiative known as the Prime Minister’s Supermarket to Asia Council. 15. A number of policy-related research contracts were undertaken or submitted: • A contract with the Reserve Bank of New Zealand on the New Zealand Business Cycle (report submitted) • Three research contracts concerned with economic and/or social impacts of electronic gaming machines (reports submitted) • A contract with the Department of State Development on Compliance Costs of Regulation • A contract with the State Department of Natural Resources and the Environment on Natural Resource Accounting • A contract with the Business Council of Australia for research on Business Taxation. 16. The October 7th Business Economics Forum Breakfast included a panel discussion on Productivity and Growth in Australia, and associated policy issues. The panel included Mr Bill Scales, Chairman of the Productivity Commission, and Mr Rik Hart, Secretary of the Department of State Development. 17. Our paper in association with NATSEM, “Towards a Negative Income Tax” was released on November 3rd and has received considerable attention in the media. The idea of integrating tax and social security is being taken increasingly seriously in policy discussions and the case for reducing effective marginal tax rates for low and middle income families gaining widespread support. 18. Our conference on “Unemployment in Australia: In Search of Solutions” had a significant public impact.

OUTLOOK FOR 1998 AND 1999 Some Plans for the Next Year or So Our strategic plan for the period 1997â&#x20AC;&#x201C;2001 includes a target of doubling our research output, being a leader in the production, analysis and commentary on economic and social indicators, and being an increasingly influential source of ideas and analysis for government, business and community groups. Some of our planned activities in 1998â&#x20AC;&#x201C;1999 include some new products, a number of conferences, some major new projects and books.

New Products Innovation Scoreboard In association with Professor Derek Bosworth of UMIST in the UK and IBIS Business Information, we have been developing an Innovation Scoreboard for large enterprises in Australia. This project has been led by Research Fellow, Dr Mark Rogers. The Scoreboard uses information on R&D expenditure, patents, trademarks and designs and also involves an analysis of the association between the development of intellectual property and the market value of companies. Sponsorship has been obtained from the IR&D Board, and the information is being used in three publications in 1998. Firstly Business Review Weekly are publishing a special report on the top 50 innovators on June 8th. Secondly the IR&D Board are incorporating much of the information in their re-fashioned R&D Scoreboard. Thirdly the Melbourne Institute is releasing a large detailed report containing extensive data for organisations to undertake a more detailed interrogation of their comparative innovativeness.

Melbourne Institute Wages Report In 1997 we trialled new questions on wages in our omnibus survey of households. We are asking questions of employed persons who have remained in the same job for the last twelve months what has happened to their earnings. This overcomes the problem of compositional change in the labour force which tends to make other surveys deficient in measuring wage inflation. The tests have been sufficiently successful and feedback from experts in the area sufficiently positive for us to launch a new quarterly Wages Report in 1998.

Australian Social Monitor The Australian Social Monitor is to be a regular periodical aimed at business, government and community groups with analyses and snapshots of such issues as: job security, crime, the family, immigration, gambling, education, voting intentions, and executive pay. It is a joint venture with the International Social Science Survey Program at the Australian National University, and will use data from the International Social Science Survey, amongst other sources.

Conferences We plan to hold at least five conferences in the two-year period 1998 and 1999. Four of these will be on: the Asian Crisis; Tax Reform; Big Business in Australia: Private Performance and Public Policy; and Economic Indicators.

Research Programs and New Projects We plan to further consolidate our expertise and productivity in our four research program areas: Business Cycles and Forecasting; Innovation, Productivity and Enterprise Performance; Labour Markets; and Social Economics. We have a number of major projects funded by the ARC and other organisations which have been referred to in our report on 1997 which will continue or be extended in 1998. These include studies of the Australian Business Cycle, of Technological Change and Training in Australian Workplaces, and on the Efficiency and Equity Effects of Tax Reform. We are also commencing a major new project on Innovation, Productivity and Profitability in Australian Enterprises. This is supported by the ARC in partnership with IBIS, the Industry Commission, the Victorian Department of State Development, the Office of Small Business (Commonwealth Department of Small Business and Workplace Relations) and the Australian Taxation Office. One very interesting new project to be completed in 1998 is on Downsizing in Australian Enterprises. This will involve analysis of existing data on Australian enterprises, plus new survey and case study work. The aim is to examine the effect of downsizing on the businesses themselves, their employees and the community at large. A number of new research initiatives are planned. The following two are at an advanced stage on that planning process.

The Interface of the Labour Market and the Social Security System We are planing a number of projects in this area, to help understand the influence that the social security system has on the labour market and the likely effects of policy changes. The Department of Social Security has expressed a keen interest in this research.

Asian Economic Indicators We are exploring the feasibility of developing economic and financial indicators for a number of Asian countries. In the first instance Indonesia is a special focus.

Books We have negotiated a contract with Allen and Unwin for the publication of a book, expected to be released in December 1998, on Big Business in Australia: Private Performance and Public Policy. This will draw together a great deal of the empirical work conducted on the IBIS data set on large Australian enterprises about the determinants of enterprise performance, and include a consideration of associated policy issues such as privatisation and competition policy. The book is being edited by Peter Dawkins, Michael Harris and Stephen King, the newly appointed Professor of Economics in the University of Melbourneâ&#x20AC;&#x2122;s Department of Economics. Another book that John Freebairn will be drawing together with assistance from Beth Webster, Peter Dawkins and others will be on unemployment, with a special focus on how to return to full employment. This will seek to present the major findings of the Full Employment Project.