#45 September 2014 - Melbourne Institute News

Melbourne Institute News September 2014

ISSN 1442-9500 (print) ISSN 1442-9519 (online)

Print Post Approved PP381667/01204 Issue 45

Pathways to Growth: The Reform Imperative The hosting of the ninth Economic and Social Outlook Conference by the Melbourne Institute and The Australian placed the Melbourne Institute in the national spotlight and centre of public debate and analysis.

2014 ECONOMIC AND SOCIAL OUTLOOK THURSDAY 3 AND FRIDAY 4 JULYCONFERENCE 2014 THURSDAY 3 AND FRIDAY 4 JULY 2014

Pathways to Growth: The Reform Imperative Page 1

Australia’s SEAM Program Had Little Sustained Effect on Indigenous Education Outcomes Page 4

Changes to Student Loans to Lead to Substantially Longer Repayment Periods Page 5

Australian Economic Review Focuses on Public Policy in the Asian Century Page 6

Medibank Funds Review of New Ways to Pay Hospitals Page 6

Melbourne Institute Public Economic Forum Insight into Australian Competition Laws Page 7

Journeys Home Report Launched Page 8

The conference was held on 3–4 July. It was jointly opened by University of Melbourne Vice-Chancellor Professor Glyn Davis and Paul Kelly, Editor-at-Large for The Australian. They set the scene for the conference discussion on the reform options for Australia.

The speakers in the second session, Professor Warwick McKibbin, Chris Richardson and Professor Deborah Cobb-Clark, highlighted the substantial challenges confronting Australia. In the third session, ‘Sustainable Budgeting: Tailoring What We Want to What We’ll Pay For’, the speakers focused on the nature of Australia’s budget challenge: how pressing is the budget challenge, what are the underlying drivers, and what are the possible solutions?

Addressing the lunch on the first day of the conference, David Uren from The Australian introduced Treasurer Joe Hockey MP as one of the most well-prepared treasurers since the Menzies Government. The Treasurer began his address by noting that 50 years ago the government had an enormous influence on the economy and people took prosperity for granted. He said that Australia now stands at the dawn of another grand age of prosperity, but we must accept the changing and reduced role of government in producing a deregulated and more competitive economy.

Concurrent sessions in the afternoon involved a session on ‘How to Get Early Childhood Education Right’. The

www.melbourneinstitute.com Melbourne Institute of Applied Economic and Social Research - Page 1

Pathways to Growth: The Reform Imperative (continued)

Speakers, from left: Chris Richardson, Professor Deborah Cobb-Clark, Jenny Macklin MP, Kevin Andrews MP and Prime Minister Tony Abbott

Chair of the session remarked on the fact that what might have previously been seen as a social policy issue, early childhood education, was a key part of the economic reform agenda. The concurrent session ‘Can the Commonwealth Drive Infrastructure?’ saw speakers and participants engaged in a stimulating discussion about the role of government in driving infrastructure construction in Australia. The Minister for Communications, Malcolm Turnbull MP, argued forcefully that the private sector is in a better position than the public sector to mitigate and price the risks associated with infrastructure investments.

In the concurrent session ‘Trade and Investment: How to Build Regional Relationships’, Shadow Minister for Trade and Investment Senator Penny Wong began by noting that trade liberalisation has been one of the most important reforms of the modern era. Professor Kerry Brown continued the discussion on trade by highlighting the intimate links between China’s and Australia’s economies, noting that we either sink or swim together.

The current trade/economic relationship is unsustainable due to China’s growth model and Australia’s reliance on resource exports. Finally, Andrew Michelmore offered the perspective of someone closely engaged in building relationships with China. He highlighted three key stages in relationship development.

The fifth session, ‘End of the Age of Entitlement’, saw Patricia Karvelas from The Australian opening the panel discussion and noting that payments to individuals account for about 40 per cent of all Commonwealth outlays. Kevin Andrews MP, Minister for Social Services, and Jenny Macklin MP, Shadow Minister for Families and Payment and Disability Reform, participated in a lively debate. Responding to the audience’s questions, Mr Andrews said that a reform of minimum wages would be difficult and would need the public to be on board.

Ms Macklin said that she does not think that cutting minimum wages would put young people back into work.

Both speakers were in favour of income management, which especially helps Aboriginal communities, and

said that mutual obligation (of the government and the individual) is important.

Prime Minister Tony Abbott began his dinner address by asking whether a reforming prime minister can succeed any more in this country given the decisive shift in the system and culture against reform. His answer was a decisive yes. In particular, he emphasised the successful reforms the government has implemented since the election, such as stopping the boats, repealing the carbon tax, creating an infrastructure boom unmatched in the last century and getting the budget back under control. The Prime Minister concluded by saying that this government has embarked on a great and necessary task, and as a government and a nation, we will not fail.

The second day of the conference commenced with a panel discussion on ‘Changing Climate on Climate Change’. The panellists described current international efforts and compared different mechanisms used globally to reduce emissions. They agreed that Australia should commit and actively contribute to the global effort, but there was disagreement about the optimal mechanism Australia should adopt.

Three concurrent sessions took place in the morning.

‘The Productive Workplace’ session focused on productivity, with a special emphasis on the relationship between industrial relations regulation and productivity.

There was some spirited debate among the panellists, but the overwhelming consensus was that new changes to industrial relations law would not generate many productivity gains for Australia. Another concurrent session, ‘Putting Incentive Back into Federalism’, saw Professor Stephen Duckett presenting that the reason we have a federalism debate about health service delivery is that the two models (Commonwealth unitary and federation) have strengths and weaknesses. Dr Vince FitzGerald said that vertical fiscal imbalance led to centralisation of power in Canberra. However, micromanagement resulted in tensions between the levels

Page 2 - Melbourne Institute of Applied Economic and Social Research

Speakers, from left: Senator Penny Wong, Paul Kelly, Senator Nick Xenophon, Michael Woods, Terry Moran and Professor Glyn Davis

of government, bloating of bureaucracies, a lack of incentives to pursue efficiency, and blurred accountability.

Focusing then on education, Richard Bolt said that the lack of incentives is not the problem. The problem is the lack of coherence between state and Commonwealth policies and programs. In the ‘Wrong Tax System for the Digital Age’ concurrent session, Rob Heferen focused on the implications of globalisation and digitalisation for the Australian tax system. He noted that these forces impose increasing pressure on the Australian tax system.

Professor Chris Evans argued that the architecture of the Australian tax system is outdated and he explored the possible paths of reform. The current tax mix, with a high reliance on the personal income tax and the corporate income tax, has to change. Alf Capito also noted the over-reliance on corporate and personal income tax. The problem is the size of government and he argued that we should try to limit government excesses.

Opposition Leader Bill Shorten MP began the lunch address by detailing his party’s commitment to informed debate and reform across a range of critical areas such as education, health, labour, retirement and superannuation.

He emphasised the importance of common sense, egalitarianism, and open dialogue in policy-setting, and noted the Labor Party’s introduction of significant historical reforms relating to income tax, Medicare and universal superannuation. Mr Shorten was critical of the government’s proposed budget, particularly in terms of its fairness and social inclusion.

In the afternoon concurrent session, ‘Financing the Future’, two questions were posed: how will Australia finance growth in the future? and can financial stability be maintained? Dr Luci Ellis argued that the Basel III regulatory framework is more protective and allows financial risks to be measured more properly compared to the pre-crisis regulatory framework, whereas Dr Carsten Murawski focused on ensuring that individuals have adequate savings to fund their retirement. He showed

evidence that Australians are not saving enough for their retirement and, more importantly, that they do not have the financial understanding to save for their retirement.

Barry Sterland said that the two big agendas for the G20 are growth and resilience in the global economy. In the concurrent session ‘Bringing the Outsiders In’, the speakers addressed issues surrounding Australia’s welfare system, its structure and payments, the necessity of encouraging welfare participants to join the workforce, and the recently released draft McClure report. The ‘Sources of Comparative Advantage’ concurrent session focused on the outlook for Australia’s resource and agricultural sectors, and the reforms necessary to maintain their comparative advantages.

In the final session, ‘The Political Economy of Achieving Reform’, the panel discussed the impact of political institutions on Australia’s ability to deliver the policies that are needed. Putting good policies in place is much more difficult than it used to be. What aspects of the political process contribute to this situation and what changes in the political process do we need to solve this?

Terry Moran argued that Australia went through a very successful reform process in the 1980s because good policy proposals were brought forward and discussed indepth by the community, and as a result found powerful advocates as well as bipartisan support. Senator Nick Xenophon talked about the challenges of making policy with the incoming Senate, in which neither of the main parties has a majority. Then Michael Woods stressed that the problem needs to be articulated clearly, before the public can accept a policy solution. He argued that a lack of foresight that results in the need for immediate action, vested interest groups and ideology often get in the way of establishing a transparent process that involves the whole community.

The recordings and presentations from the 2014 Economic and Social Outlook Conference are available at <www. melbourneinstitute.com/miaesr/events/conferences/ Outlook_2014/program.html>.

Melbourne Institute of Applied Economic and Social Research - Page 3

Australia’s SEAM Program Had Little Sustained Effect on Indigenous Education Outcomes Making sure children attend school regularly is a key element in breaking the intergenerational chain of poverty, yet enforcement of compulsory schooling laws often proves to be difficult.

Removing truant children from their families is an extreme measure that cannot be implemented except in special cases; and positive inducements, such as the conditional cash transfers now offered in some developing countries, are expensive and unpopular. One policy approach implemented in the United States in a number of settings links welfare payments to school attendance. However, such programs are often ineffective.

Welfare administrators appreciate that withholding payments will harm the children they are trying to help and resist following through; and when targeted families realise this they discount the threat.

Australia’s School Enrolment and Attendance through Welfare Reform Measure (SEAM) threatened to withhold welfare payments from Indigenous parents in the Northern Territory whose children failed to meet school attendance requirements. It was implemented against the backdrop of the Northern Territory Emergency Response (NTER), an intervention directed at the Northern Territory’s Indigenous population in response to allegations of child sex abuse in their communities, involving a military presence and temporary suspension of Australia’s Racial Discrimination Act. While formally separate from the NTER, SEAM gained credibility from the heightened anxiety it generated, which was further reinforced by the living memory of yet severer measures to which Indigenous Australians had been subjected by Australian governments in the past.

Although it was initially implemented on a trial basis in selected communities, widespread misinformation about how it worked led the Indigenous population to believe it was applicable to all Indigenous persons in the Northern Territory.

The authors of this recent Melbourne Institute study estimated SEAM’s actual impact on the education of Indigenous children in the Northern Territory from National Assessment Program—Language Arts and Numeracy (NAPLAN) data on participation rates and test score averages in reading and numeracy in grades 3, 5, 7 and 9. The impact was estimated by using a ‘differencein-difference’ analysis that compares the difference between Indigenous participation and performance in the Northern Territory in 2008, the year before SEAM was

implemented, and subsequent years, to corresponding differences in other Indigenous populations in Australia.

In 2009, the first year in which SEAM was implemented, test participation among Indigenous children in the Northern Territory increased by 16 to 20 percentage points over pre-SEAM levels of about 70 per cent, where no similar increase was witnessed among Australia’s other Indigenous populations. Surprisingly, this sharp rise in participation rates did not lower test means, leading to an increase of 5 to 10 percentage points in the share of each cohort achieving the minimum standard on these tests in 2009, over the 2008 level of about 30 per cent, where again no similar increase was witnessed among other Indigenous populations.

However, these achievements could not be sustained. The threat of withholding welfare payments from Indigenous parents whose children did not attend school regularly was not carried out except in a handful of cases, and as this became widely known, participation rates declined.

In 2010 about half the gains disappeared, and subsequent years saw further deterioration. While 2012 participation levels remained significantly above the baseline levels of 2008, nearly all the gains in the share of the cohort achieving the minimum standard evaporated.

These findings demonstrate that a credible threat to link welfare payments to school attendance can substantially raise participation rates and learning achievement. Yet this increase could not be sustained even in the unique circumstances of the NTER, as the threat of withholding welfare payments proved hollow. Of the parents induced

by SEAM to send their children to school in 2009, the many who did not continue to do so in subsequent years, when they no longer felt threatened, presumably did not see conventional schooling as valuable in itself.

Programs such as SEAM offer, at best, an opportunity to demonstrate to parents that sending their children to school is worthwhile on its own merits. In the longer term, they cannot be fully effective unless parents and children are persuaded of the value of the schooling they are offered.

Melbourne Institute Working Paper No. 19/14, ‘Enforcing Compulsory Schooling by Linking Welfare Payments to School Attendance: Lessons from Australia’s Northern Territory’, by Professor Moshe Justman and Kyle Peyton, can be downloaded from our website.

Page 4 - Melbourne Institute of Applied Economic and Social Research

Changes to Student Loans to Lead to Substantially Longer Repayment Periods Proposed reforms to higher education funding in Australia will lead to substantial increases in the time that graduates take to repay their tuition debts.

offset reduced Commonwealth funding, and increased course charges of a further 50 per cent of the adjusted charges, such that fees rise to $19,500 per annum.

A recent Melbourne Institute Policy Brief, ‘Impact of the Australian Higher Education Funding Reforms’, investigates the impact on student loans of changes to the funding and operation of the higher education sector proposed by the Australian Government in its 2014 budget. The government’s proposals include changes to the repayment regime for the student tuition loans (the HECS-HELP scheme) that involve a lowering of the first repayment threshold and the introduction of a real rate of interest on outstanding debt. A third change, affecting only new students, involves the reduction of the Commonwealth’s contribution to universities, replaced by higher private student contributions. Further, the government will allow universities to set their own student tuition fees, up to the amounts charged for international students. The Policy Brief focuses on the consequences of these changes on the time that domestic students take to repay their loans, seeking to identify where in the graduate income distribution the effects of these various changes will be greatest.

The results for one fee regime are presented in detail.

This regime involves graduates completing a threeyear degree, with annual tuition charges of $10,000 per annum (approximately the annual payment for current HECS-HELP Band 3 fields). The time to repay the debt under current repayment parameters is contrasted with the time taken under the proposed new arrangements.

These involve repayments commencing at a lower first threshold, debt subject to a 3 per cent real rate of interest, increased student contributions of $3,000 per annum to

Students will face increases in total loan repayments that vary substantially across the graduate income distribution.

The additional time taken to repay tuition loans will also vary substantially, increasing most at incomes a little above the first repayment threshold (around $50,000).

Across the distribution, repayment periods are typically about double under the new arrangements studied compared with the existing arrangements. At median incomes, the time that males take to repay their debt will increase from eight to 15 years, while for females it will increase from 12 to 26 years. The estimated repayment periods are shown in the figure below.

Loan default will also increase. An increased proportion of individuals will never repay their tuition loans. The proportion who never repays anything will not change much, but the proportion making only partial payments will increase, especially among female graduates. As shown in the figure, with current repayment parameters, females between the 25th and 40th income percentiles never repay their debts over their working lives.

The Policy Brief uses income profiles over graduates’ careers, estimated from data taken from the first 12 waves of the Household, Income and Labour Dynamics in Australia survey, in conjunction with the assumption that graduates do not move too much around the income distribution, to assess the impact of the reforms. The results are robust to departures from this assumption, to estimation over important sub-populations, such as low socio-economic status groups, variations in course length and across fields of study.

Melbourne Institute Policy Brief No. 2/14 by Associate Professor Chris Ryan can be downloaded from our website.

Estimated Repayment Periods across the Income Distribution Females

35

Current

35

30

New arrangements

30

25

Never repay

20

Repay some

Years to repay

Years to repay

Males

15

25 20

10

10

5

5

0

0 0

10

20

30 40 50 60 70 80 Percentile of income distribution

90

100

Current

15

New arrangements Never repay Repay some 0

10

20

30 40 50 60 70 80 Percentile of income distribution

90

100

Melbourne Institute of Applied Economic and Social Research - Page 5

Australian Economic Review Focuses on Public Policy in the Asian Century The September issue of the Australian Economic Review includes four articles arising from presentations at a conference on ‘Public Policy in the Asian Century’ organised by the Melbourne School of Government, The University of Melbourne.

for pure fee-for-service based on asset size in actively managed funds and plans is weak. The amount of money exposed to risk by an active manager should be less than the entire investible wealth of the client, especially in the case of investors on the cusp of retirement.

In a major empirical exercise, researchers from Energex Limited and Ergon Energy Corporation Limited conducted a 27-month trial of the effect of using time of use, dynamic peak pricing and load capacity tariffs for Queensland households. The pricing mechanisms are shown to reduce peak load electricity consumption by around 19 per cent.

Professor Paul Simshauser examines the effects of statebased retail price caps on electricity prices. He argues that asymmetric information and the complexity of energy markets means that a regulator can never be expected to produce reliable estimates of competitive prices. In his view, the caps are least damaging to the flow of capital and pricing if they rely on long-run concepts.

Nicholas Reece’s article provides a review of engagement with Asia two years after the federal government’s White Paper on ‘Australia in the Asian Century’. The article covers the political and performance status of key Asiarelated initiatives following the change in government in September 2013. Professor Andrew Walter casts a critical eye over the very essence of the concept of an ‘Asian Century’. Rather, he concludes, what we might be witnessing is the continuing diffusion of power and the gradual emergence of a more multipolar, pluralistic global order. Dr Guanghu Wan and Chen Wang examine the outcome for the environment of rapid urbanisation in Asia. In the fourth article in the Policy Forum, Dr Lauren Palmer looks at research links between Australia and Asia and the role of science, technology and innovation policy in facilitating collaboration and driving economic growth.

In the contributed articles section, Professor Geoffrey Kingston and Haijie Weng look at financial planning practice, using agency theory. They conclude that the case

Dr Ruhul Salim, Dr Nasser Al Mawali and Amirul Islam examine the effects of intellectual property rights and threat of imitation from importers on Australian export flows. To do this they use an augmented gravity model.

In an article directed to tertiary students, Professor Richard Burkhauser looks at the economics of minimum wage legislation. He describes the US Congressional Budget Office estimates of the effects of proposed minimum wage increases on employment and poverty reduction, the controversy over their key assumptions and the implications for Australia.

In the Data Survey section, Dr Gaétan de Rassenfosse, Hélène Dernis and Geert Boedt provide an introduction to the European Patent Office’s Worldwide Patent Statistical Database known as Patstat. The database holds bibliographic patent data for more than 100 patent offices.

To access this latest issue of the Australian Economic Review, visit the Wiley website at <wileyonlinelibrary.com/journal/aere>.

Medibank Funds Review of New Ways to Pay Hospitals Professor Tony Scott and Associate Professor Jongsay Yong, of the Health Economics Research Program at the Melbourne Institute, were awarded a research grant from the Medibank Health Research Fund, which was launched in August by Medibank as part of the organisation’s growing commitment to better health outcomes.

The research project, ‘Value-Based Purchasing in Australia: Moving Forward’, aims to investigate how to improve the cost efficiency of hospitals while at the same time maintaining or improving the quality of hospital care. New funding models that attempt to realign hospital funding to drive health system objectives have already been introduced and evaluated in the United States and the United Kingdom.

Professor Scott and Associate Professor Yong will conduct a review of the existing literature to examine whether a Value-Based Purchasing program that provides financial incentives for hospitals to deliver Page 6 - Melbourne Institute of Applied Economic and Social Research high value care, as opposed to high volume care, would improve hospital performance in Australia.

Melbourne Institute Public Economic Forum Insight into Australian Competition Laws Expert speakers at the Melbourne Institute Public Economic Forum in Canberra on 21 August discussed the topic ‘Constraining Cartel Conduct: Are Our Competition Laws Too Weak?’.

This Forum provided a fascinating insight into the law and economics of Australian competition laws. The two speakers, Professor Stephen King from the Monash Business Policy Forum and Professor Caron BeatonWells from the Melbourne Law School, provided highly complementary insights into the rationale underpinning competition laws and the effectiveness of our current laws. Both parties agreed that the law lagged behind technology in this instance and that the Harper Review of Competition Policy provides a unique opportunity to address some of the current shortcomings in the law.

Professor King started off the event by asking whether our competition laws were too weak? There has been a lot of domestic and international action in this space in recent times and much of it suggested that it was a good time to rethink our prevailing laws. Like most matters economic, the economic rationale for competition laws dates back to Adam Smith’s Wealth of Nations, in which he talked about meetings amongst competitors which invariably related to ‘contrivances to raise prices’. Of course, competitors meet for all manner of reasons, both legal and illegal, and the idea that they should be banned from meeting seems inappropriate. So, the question becomes how we regulate their interactions to ensure that competition is alive and well.

There is a long history of such regulation starting in the United States with the Sherman Act 1890 which was designed to break up the collusive behaviour promoted by the creation of ‘trusts’ by John D. Rockefeller and others.

The Sherman Act then led, perhaps not surprisingly, to a range of merger activity and a subsequent raft of new anti-merger laws. Professor King reminded us that it is important to think of competition law and merger laws as interconnected. In Australia we have the Trade Practices Act 1974 which was followed by the Competition and Consumer Act 2010 (which is far more complex than its predecessor — a point that the Harper Review will hopefully fix).

The hardest part of competition law relates to the prohibition of tacit collusion, which is much more difficult to detect and police than direct collusion.

Professor King explained some of the conditions under which tacit collusion can flourish, including factors such as when there are few competitors in the market,

when there are barriers to entry, and when prices are transparent. Although we have made considerable progress on detecting tacit collusion in the last 20 years, there is still more that can be done. The law definitely lags behind technology, but there are new innovative approaches being tried which provide hope for the future.

Professor Beaton-Wells provided a critical assessment of Australia’s anti-cartel law: a scorecard if you like on the effectiveness of our laws in minimising the damage caused by firms’ anti-competitive behaviour.

The news was very mixed: on some fronts we perform excellently, but on others we are very weak. So, Professor Beaton-Wells reiterated the point that the time is ripe for Australia to take stock of its competition policy laws. The criteria she used to assess our prevailing laws were comprehensiveness of the statutory framework, transparency, rationale of the system, workability and effectiveness.

In sum, Australia’s competition law scoreboard was a very mixed bag. We scored five stars (out of five) for our comprehensiveness because the system has both civil and criminal liability built into it, plus it has liability for both individuals and companies. On the transparency front, we scored four stars. However, on the rationale front, which assesses whether the rules reflect the underlying economic rationale for the existence of the laws, we scored a paltry two stars. In particular, our definition of ‘collusion’ is under-reaching and needs to be expanded (to include concerted practices, for example). On the workability front, we scored one star because our rules are unduly complex and excessively prescriptive. Finally, the effectiveness of sanctions and remedies scored three stars. Although we have both monetary and nonmonetary sanctions, the Australian Competition and Consumer Commission (and the courts) have failed to realise the potential of non-monetary sanctions. In fact, these measures (including ‘naming and shaming’ offenders) are rarely (if ever) used.

Melbourne Institute of Applied Economic and Social Research - Page 7

Recent Melbourne Institute Working Papers

15/14 ‘Harmonising and Matching IPR Holders at IP Australia’ T’Mir D. Julius and Gaétan de Rassenfosse 16/14 ‘Estimating the Expected Duration of the Zero Lower Bound in DSGE Models with Forward Guidance’ Mariano Kulish, James Morley and Tim Robinson 17/14 ‘Quantifying Informational Linkages in a Global Model of Currency Spot Markets’ Matthew Greenwood-Nimmo, Viet Hoang Nguyen and Yongcheol Shin 18/14 ‘Monetary Policy Indeterminacy and Identification Failures in the U.S.: Results from a Robust Test’ Efrem Castelnuovo and Luca Fanelli 19/14 ‘Enforcing Compulsory Schooling by Linking Welfare Payments to School Attendance: Lessons from Australia’s Northern Territory’ Moshe Justman and Kyle Peyton

Recent Melbourne Institute Policy Brief

2/14 ‘Impact of the Australian Higher Education Funding Reforms’ Chris Ryan Working Papers and Policy Briefs can be downloaded for free from <www.melbourneinstitute.com/miaesr/publications/default.html>. If you would like to receive an email notification when new issues become available, contact the Melbourne Institute at <melb-inst@unimelb.edu.au>.

Journeys Home Report Launched On 11 September at the National Homelessness Conference on the Gold Coast, Minister for Social Services Kevin Andrews launched Journeys Home Research Report Number 5.

For two years the Journeys Home study has been tracking a national sample of individuals exposed to high levels of housing insecurity. Commissioned by the Australian Government Department of Social Services and conducted by the Melbourne Institute, the study employs much more rigorous sampling methods than ever used before.

The latest research report, the fifth in the project series, provides findings from waves 1 to 5 of the survey, with data collection conducted between September 2011 and November 2013.

Re-interview rates in wave 5 continued to be quite high, with attrition uncharacteristically low for such a disadvantaged population. By wave 5 we were still interviewing more than 84 per cent of our initial responding sample.

From wave 1 to wave 5, the proportion of people who were homeless declined from 27 per cent to 19 per cent, while

the proportion of people in stable housing rose from 47 per cent to 57.9 per cent.

The report explores five key issues affecting the homeless and people at risk of homelessness: employment opportunities, health, social networks, substance abuse and food security.

• While the overall relationship between changes in housing and changes in employment status is weak, there is stronger evidence that changes in homelessness lead to changes in employment, but only among men.

• There is little evidence to suggest that poor physical health is a direct cause of homelessness. The findings are consistent with the view that poor health is more likely to be a consequence of homelessness.

• There is evidence suggesting that family breakdown and bad peers are key causes of homelessness and that improvements in relationships with family and friends help people exit homelessness. There is only weak support of the hypothesis that homelessness leads to a deterioration

on average in the size and quality of social networks.

• Respondents who experienced conflicts with their parents, parents’ death or separation, abuse and violence, caregivers’ substance abuse, mental health issues and unemployment have higher rates of homelessness and substance use experiences. These experiences, especially conflicts with parents, also tend to be related with experiencing homelessness and substance use at a younger age.

• Access to nutritious food options seems to be an issue for respondents; they eat fewer fruits and vegetables and they are much more at risk of food insecurity than the general population. Males tend to have poorer diets than females, as do the homeless compared to the housed. However these differences are quite small.

For more information, contact Dr Rosanna Scutella at <r.scutella@unimelb.edu.au>.

Melbourne Institute News

Views expressed by the contributors to Melbourne Institute News are not necessarily endorsed or approved by the Melbourne Institute. Neither the Melbourne Institute nor the Editor of Melbourne Institute News accepts any responsibility for the content or accuracy of information contained in this publication. Editor: Rachel Derham, tel: (03) 8344 2158, email: r.derham@unimelb.edu.au. Sub-Editor: Nellie Lentini.

Contributors: Dr Barbara Broadway, Melisa Bubonya, Dr Hielke Buddelmeyer, Abraham Chigavazira, Professor Deborah Cobb-Clark, Markus Hahn, Dr Nicolas Herault, Professor Paul Jensen, Professor Moshe Justman, Dr Jinhu Li, Dr Gary Marks, Kyle Peyton, Dr Tim Robinson, Associate Professor Chris Ryan, Professor Tony Scott, Dr Rosanna Scutella, Dr Sam Tsiaplias, Professor Ross Williams.

Photos: pages 2–3 ©Les O’Rourke Photography; page 4 ©www.istockphoto.com/padnpen; page 6 ©www.istockphoto.com/kgtoh; ©www.istockphoto.com/4774344sean; page 7 ©www.istockphoto.com/travellinglight.

Level 5, Faculty of Business and Economics Building, The University of Melbourne T: +61 3 8344 2100 F: +61 3 8344 2111 www.melbourneinstitute.com