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MELBOURNE INSTITUTE OF APPLIED ECONOMIC AND SOCIAL RESEARCH

Annual Report 2003 and Outlook 2004–2005

Melbourne Institute of Applied Economic and Social Research Level 7, Alan Gilbert Building 161 Barry Street The University of Melbourne Victoria 3010 Australia Phone: +61 3 8344 2100 Fax: +61 3 8344 2111 Email: melb-inst@unimelb.edu.au WWW: http://www.melbourneinstitute.com


Š 2004 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 (Print) ISSN 1447-8080 (Online) Various photos by the University of Melbourne, Les O’Rourke Photography, The Australian and others. Printed and bound by Impact Printing.


CONTENTS Some Highlights

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Introduction to the Melbourne Institute

6

Director’s Report

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Outlook for 2004 and 2005

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Staff, Associates and Research Students

12

Advisory Board

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Research Areas

20

Contributions to Policy Analysis and Debates

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Melbourne Institute Business Economics Forum in Melbourne

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Melbourne Institute Public Economics Forum in Canberra

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Pursuing Opportunity and Prosperity Conference

34

Publications by Subscription

37

Staff Publications, Presentations, Seminars, Workshops and Media Coverage, 2003

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Finance and Performance Indicators

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SOME HIGHLIGHTS • The Melbourne Institute celebrated its 40th anniversary with a dinner held at Ormond College on 7 February 2003. It was attended by over 200 people including staff, former staff and friends of the Melbourne Institute. • The book Hard Heads, Soft Hearts: A New Reform Agenda for Australia, based on the 2002 Towards Opportunity and Prosperity Conference, was released in early 2003. Professor Peter Dawkins, the Governor General and Ms Fay Marles

• The second major economic and social (the University’s Chancellor) at the Pursuing Opportunity and outlook conference, ‘Pursuing Opportunity Prosperity Conference and Prosperity’ (jointly organised with The Australian), took place in November 2003. • Collection of the third wave of data in the longitudinal survey (the HILDA Survey) about living in Australia commenced and a major conference was held on HILDA. • The Melbourne Institute continued to inform social policy through research activities as part of its Social Policy Research Services Agreement with the Department of Family and Community Services. • The Melbourne Institute’s economic indicators, especially the Survey of Consumer Sentiment, continued to receive attention in the media.

Professor Mark Wooden speaking at the HILDA Conference

• Three new professors were appointed: Guay Lim (applied macroeconomics), Derek Bosworth (applied microeconomics) and Tony Scott (health economics). • A major bid for National Health and Medical Research Council funding was developed. • Total revenue of the Melbourne Institute grew from $5.8 million in 2002 to $8.1 million in 2003. • The Director, Peter Dawkins, was appointed to the Prime Minister’s Science, Engineering and Innovation Council.

Professor Tony Scott and Professor Guay Lim

• Relationships were maintained and extended with relevant private and public organisations and community groups such as Westpac, Mercer Investment Consulting, IBISWorld, ING, TD Securities, IdeaWorks, the Reserve Bank of Australia, the Department of Family and Community Services, the Department of Employment and Workplace Relations, the Productivity Commission, the New Zealand Treasury, IP Australia and the Victorian Department of Treasury and Finance. 4

Professor Derek Bosworth


Performance Indicators Melbourne Institute performance indicators registered increases in: • Public research grants • Total external research income • References to the Melbourne Institute in the media (recorded at 1235) Melbourne Institute staff published 21 articles in refereed journals including Australian Economic Papers, Economic Record, Australian Journal of Labour Economics, Applied Economic Letters, Australian Economic Review, Agenda: A Journal of Policy Analysis and Reform, Australian Social Monitor, Labour and Industry, Schmollers Jahrbuch, Medical Journal of Australia and Social Indicators Research.

External Research Income ($million)

Figure 1: Growth of External Research Income

9 8 7 6 5 4 3 2 1 0

8.14 7.37

1.23

1.37

1998

1999

4.60

4.73

2001

2002

1.98

2000

Year

2003

2004

projected

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INTRODUCTION TO THE MELBOURNE INSTITUTE Vision, Mission, Focus, History and Strategic Objectives Vision The Melbourne Institute aims to be a major institute of applied economic and social research that is nationally and internationally renowned in academia, government, business and community groups, and which: • promotes a deeper understanding and discussion of economic and social issues of national significance; • fosters effective responses to these issues through research that identifies alternative policy responses and quantifies their likely effects; and • combines rigorous economic and social analysis with a genuine attachment to the Australian community’s concern for the less well off. Accordingly our vision is to be ‘hard-headed but soft-hearted’.

Mission In seeking to achieve this vision the Melbourne Institute’s central mission is: • to undertake world-class independent and impartial applied economic and social research and policy analysis, on major issues relevant to Australia; provide highly valued products and services for business, government and community groups; and provide research training for emerging economic and social researchers. • to use our research to foster informed discussion and debate amongst academics, policy makers, business and community groups, through publications, conferences, forums and the media. In pursuing this mission the Melbourne Institute will also undertake internationally collaborative research and will seek to develop intellectual property that may be transferred to other parts of the world.

Focus Unifying Theme The unifying theme of the Melbourne Institute’s research agenda is to examine the determinants of both economic performance and social outcomes, and to explore the mutual relationship between the two. Expertise and Intellectual Property The Melbourne Institute’s expertise and intellectual property lie in: • economic and social modelling; • economic and social surveys and indicators; and • economic and social policy analysis. Research Programs Our current research programs are in the following areas: • labour economics and social policy; • applied macroeconomics; and • applied microeconomics (including industrial economics, economics of education and health economics). While our core discipline is, and will remain, economics, we plan to engage with other disciplines including sociology, statistics, management, accounting, finance, demography and others.

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History The Melbourne Institute was formed in 1962 under the leadership of Professor Ronald Henderson. It was the first economics research institute in an Australian university. Ronald Henderson built up an organisation with over 40 staff by the early 1970s. 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 and after some restructuring, the new Institute based its operation around Dixon’s ORANI model of the Australian economy. In the early 1990s, Peter Dixon and a number of his senior colleagues left the Institute to join Monash University. 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, commenced in January 1996 and a five-year strategic plan was developed to raise the Institute’s profile in academia, business, government and the community sector. The unifying theme of its research agenda was the link between economic performance and social outcomes. Since 1996 the Institute has doubled or more than doubled in size on a range of measures, including staff numbers, revenue, refereed journal articles and media references. Peter Dawkins was appointed for a second five-year period (2001 to 2005) and a new strategic plan was developed. In the new strategic plan the Institute aimed to achieve a national and international reputation for excellence in its ‘hard-headed but soft-hearted’ economic and social research, and to continue contributing strongly to public policy discussion. In pursuing this agenda, it planned to continue growing in size. In 2003 its income was over $8.1 million and it employed about 38 staff.

Strategic Objectives The Melbourne Institute aims: 1. to consolidate and build on our strength and reputation in labour economics and social policy; 2. to consolidate and build on our strength and reputation in applied macroeconomics; 3. to build upon the foundations laid in recent years in the following areas of applied microeconomics: • industrial economics, • economics of education, • economics of health; 4. to enhance our reputation in academia for high quality research output and research training in applied economic and social research and to foster a scholarly research environment; 5. to engage with policy makers, business and community groups, contributing strongly to economic and social debates and policy discussion and development in Australia, through publications, conferences, seminars, forums and other relevant means; 6. to strengthen the Melbourne Institute as a supportive workplace for outstanding staff; 7. to achieve continuous quality improvement in the academic and administrative management of the Melbourne Institute; and 8. to enhance the financial viability of the Melbourne Institute to ensure that it has a resource base which enables it to best achieve its research and community development objectives.

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DIRECTOR’S REPORT Overview 2003 was an important year for the Melbourne Institute which continued to grow in size, importance and in the quality of the research undertaken. Our twin objectives are to produce high quality research output on important issues relating to the Australian economy and society, and to make major contributions to and foster informed debate and discussion about important public policy issues. Our second economic and social outlook conference, ‘Pursuing Opportunity and Prosperity’, held jointly with The Australian newspaper, was another major flagship event which symbolised our contribution to fostering public policy debates. The release of the second wave of data of the survey of household, income and labour dynamics in Australia (HILDA) symbolised our commitment to making a large contribution to knowledge about the Australian economy and society. Our publication of 21 refereed journal articles and numerous research papers and reports, and two Professor Peter Dawkins books, represented our ongoing commitment to high quality applied economic and DIRECTOR social research output. Our substantial growth in research income indicates that an increasing number of clients and sponsors are willing to fund our research activities and this in turn has been leading to an increase in the funds provided by the University to the Melbourne Institute because the university funding formula rewards success in obtaining external income. This improved financial situation is also creating an environment within which it is proving possible to make investments in raising the quality of our research and the extent to which we are able to provide time for our staff to produce refereed journal articles from their funded research. We expect this to pay dividends over the next few years in a significant boost in our contribution to the academic literature, while sustaining and enhancing our contribution to Australian policy discussion and debates. In 2003, I was also Dean of the Faculty of Economics and Commerce for a year, which meant that I was not able to give the Melbourne Institute as much attention as usual. Special thanks to Associate Professor David Johnson and Professor Mark Wooden who took on additional leadership and management responsibilities as a result.

New Staffing and Adjunct Appointments A substantial number of new staff joined the Institute in 2003. These included the appointment of Associate Professor Bruce Headey as Deputy Director of HILDA; Dr Hielke Buddelmeyer, Dr Lixin Cai and Mr Paul Jensen (who has since obtained his PhD) as Research Fellows; and Ms Vu Thi Hong Ha as a Research Officer. Mr Ben Methakullawat was also employed on a temporary contract as a Research Officer for most of the year. Mr Nikos Thomacos, Ms Angie Cumming and Ms Claire Merlo were also recruited as administrative staff.

Farewell to David Johnson, Don Harding and Others It seemed like the end of an era in 2003 when we farewelled Associate Professor David Johnson, my Deputy Director, who took up a senior position in the Victorian Department of Treasury and Finance. David was a true stalwart of the organisation who made an enormous contribution to the Melbourne Institute over a period of 21 years. This was very evident at his farewell when a large number of current and former staff came together to celebrate his tremendous contribution to the Melbourne Institute over many years and to wish him well for the future. David conducted an extensive range of

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Associate Professor David Johnson


projects over his career at the Melbourne Institute and was responsible for the Institute maintaining a keen interest in the subject of poverty and the area of social economics within which this is placed. He also led our research project on tax reform during the debate about the GST. He was also active in research on the economics of industry and a wide array of research projects for many clients. He was an excellent Deputy Director who provided considerable help, support and advice to me in my role as Director since 1996. The other senior staff member who had been a key member of the leadership team since my appointment was Dr Don Harding, who led our Macroeconomics group, which for a long time was known as the Centre for Business Cycle Analysis. Don, who joined the Melbourne Institute a year or two before me, made many contributions to the Melbourne Institute, both in enlarging and enhancing the range of products produced by his team, but also in undertaking an internationally significant research agenda on business cycle analysis, partly in collaboration with Professor Adrian Pagan at Dr Don Harding the Australian National University. As well as some excellent journal articles this also resulted in a PhD dissertation at Yale University, from which he received his doctorate in 2003. At this time Don decided to move on to a Senior Lectureship in our sister department, the Department of Economics. We are pleased that he maintains an association with us and continues to collaborate with our Macroeconomics group. Other staff who left us during 2003 were Associate Professor Tim Fry, Dr Ben Jensen, Dr Joanne Loundes, Ms Kelly Jarvis, Ms Fiona Zammit, Mr Jean-Luc Garlick and Ms Lara Hammond. We wish them all the very best for the future.

Advisory Board 2003 was Mr Tony Cole’s first year as Chairman of the Advisory Board. Thanks to Tony for settling into this role very successfully and for his continuing role as Chair of the Melbourne Institute Business Economics Forum. The Advisory Board continues to perform a crucial role in providing strong links with government and business as well as monitoring our activities and providing invaluable operational and strategic advice. New members in 2003 were Professor Max Corden, Mr Bill Scales and Ms Carol Austin.

Administrative Staff and Technical Support I would like to take this opportunity to thank the administrative and technical support team who plays very important roles in ensuring the smooth operation of the Melbourne Institute. Also, I would like to thank them for the tremendous effort that was provided to ensure the smooth running of the Pursuing Opportunity and Prosperity Conference, which was held in November 2003. Special thanks to Ms Fiona Zammit for her contribution to the Melbourne Institute in her time as Business Manager since 2001. In 2003 she left to become the Business Manager in the School of Graduate Studies. Many thanks also to Mr Jean-Luc Garlick who left us after nine years of service, mainly as Finance and Information Technology Manager.

Ms Fiona Zammit Administrative and technical support team in 2003

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OUTLOOK FOR 2004 AND 2005 Move to New Building In 2004, the Melbourne Institute has moved to new premises on the sixth and seventh floors of the Alan Gilbert Building in the new University Square development.

Social Policy Research Since 2001 the Melbourne Institute has been engaged in a major program of social policy research for the Department of Family and Community Services (FaCS). By The Alan Gilbert Building mid-2004 that program had generated 14 papers published or forthcoming in peer-reviewed journals and other publishing outlets, with a further 10 papers under review. The initial contract was for four years. A new contract covering a five-year period was put out to tender in the latter half of 2003 and the Melbourne Institute was subsequently awarded a new contract to commence in 2005. That contract is for $620,000 per year (indexed).

The HILDA Survey Since mid-2000 the Melbourne Institute has had responsibility for managing Australia’s first large-scale, nationally representative household panel survey. The initial funding from the Federal Government provided for four waves of data collection, with funding for a further year approved in May 2003. As part of the May 2004 Budget, however, a further $30 million was committed to the HILDA Survey, effectively guaranteeing that at least eight waves of annual data collection will take place. Once again the Melbourne Institute will continue to manage the survey, with fieldwork outsourced to ACNielsen. Part of the Melbourne Institute’s management role is the dissemination of public-use data from the survey. To that end the Melbourne Institute is organising a major conference of HILDA Survey data users to be held at the University of Melbourne in September 2005. It is expected that this conference will become a regular biennial event that will showcase the potential for these data to help improve our understanding of the impact that different economic and social trends are having on the lives of ordinary Australians.

The Melbourne Institute Economic and Social Outlook Conference (organised jointly with The Australian newspaper) The Melbourne Institute has now held two highly successful major economic and social outlook conferences. Run in conjunction with The Australian newspaper, the first of these, the Towards Opportunity and Prosperity Conference, was held in April 2002, and was followed, in November 2003, by the Pursuing Opportunity and Prosperity Conference. Both conferences were followed by two highly successful published volumes that, using a unique blend of extracts from conference contributors and editorial commentary, summarised the key themes emerging from these conferences. Given their success, the Melbourne Institute and The Australian intend organising a third conference to take place on 31 March and 1 April 2005. Once again the conference will bring together leaders from politics, the public service, business, unions, community groups, and academia to discuss the major economic and social policy issues confronting Australian policy-makers. 10


40th Anniversary Project on Dimensions of Poverty and Disadvantage In 2003 it was announced that a research project investigating poverty and disadvantage in Australia would be launched. We have received some funding from the Victorian Department of Treasury and Finance; the Melbourne Institute believes that this project is of such importance that it will, if necessary, fund the project out of its own reserves. Under the leadership of Associate Professor Bruce Headey, the project will use data from the HILDA Survey to assess the extent of poverty and disadvantage in Australia, their persistence over time, and the ability of Australians to escape poverty. Unlike most conventional treatments, the project will not focus solely on relative income deprivation, but instead will develop an analysis of poverty that is multi-dimensional, thus taking into account more explicitly such factors as joblessness, ill-health and disability, a lack of education, and social exclusion.

New Zealand MITTS The New Zealand Treasury has commissioned the Melbourne Institute to build a behavioural microsimulation model that can be run using output from the Treasury’s static microsimulation model TaxMod. A behavioural microsimulation model allows the user to estimate the work-incentive effects of financial changes in social security and taxation, and to incorporate these changes in the prediction of the effect of such policy changes on government revenue and expenditure. This project builds on the work done for the New Zealand Treasury in 2003 and on our experience with building the Melbourne Institute Tax and Transfer Simulator (MITTS), a behavioural microsimulation model for Australia. This is a major project, which is divided into several stages. It started late in 2003 and is expected to be completed by the end of 2004.

The Economics of Ageing It is widely recognised that demographic transition, and especially population ageing, is generating major public policy issues, many of which were highlighted by the Treasury in its Intergenerational Report, released at the time of the 2003 Federal Budget. The Melbourne Institute is well equipped to undertake research in this area, especially given (i) our central role in the management of the HILDA Survey, which is inherently a study of the ageing process; (ii) the ability of the MITTS model to simulate the labour supply responses of different demographic groups; and (iii) the model-building expertise of the Applied Macroeconomics group. Indeed, the Melbourne Institute has already begun undertaking research in this area, completing, in 2004, projects for the Victorian Department of Treasury and Finance on the impact of population ageing on labour force participation rates in Victoria, and for FaCS on cohort differences in wealth. The Melbourne Institute will be, however, giving greater explicit attention to ageing research in its 2005 operational plan. Developments being pursued include: • partnership in a Centre of Excellence bid, being led by Professor John Piggott at the University of New South Wales; and • development of an intergenerational dynamic general equilibrium model by the Applied Macroeconomics group.

Research on the Economics of Health and the Economics of Education Since 2002 we have been building up our research activities in the economics of health and the economics of education. In 2004 we have submitted a bid to the NH&MRC for a major research program in health economics. We have also conducted a conference on ‘Making Schools Better’.

Applied Macroeconomics Research Program Professor Guay Lim was appointed in June 2004 as the Head of the program and plans are underway to consolidate and expand the two long-standing areas of research strengths, namely in survey-based macroeconomics and in the forecasting and indicator analysis of the macroeconomy. The Applied Macroeconomics group also intends to develop a model with intergenerational features to examine the macroeconomics of population ageing and to conduct research on savings, superannuation and retirement finance. 11


STAFF, ASSOCIATES AND RESEARCH STUDENTS Staff Members in 2003 Research Staff Director and Ronald Henderson Professor Professor Peter Dawkins BSc Lough MSc(Ec) Lond PhD Lough FASSA FIPAA (Vic) Deputy Director, Director HILDA Survey Project, and Director of the Labour Economics and Social Policy Research Program Professor Mark Wooden BEc Hons Flin MSc Lond Deputy Director and Principal Research Fellow Associate Professor David Johnson DipAgEc NE BAgSc MCom PhD Melb (until 6 October 2003) Director, Applied Macroeconomics Research Program and Principal Research Fellow Dr Don Harding BEc DipEc MEc ANU PhD Yale (until 11 July 2003) Director, Applied Macroeconomics Research Program and Principal Research Fellow Dr Peter Summers BA MA MSc PhD Iowa Director, Applied Microeconomics Research Program and Senior Research Fellow Dr Elizabeth Webster BEc Hons MEc Monash PhD Camb Professorial Research Fellow Professor Derek Bosworth BA Lanc MSc PhD Warw Principal Research Fellow and Deputy Director HILDA Survey Project Associate Professor Bruce Headey BA Oxf MA Wisc PhD Strath Principal Research Fellow Associate Professor Tim Fry BA Hons Kent MA PhD Manc Senior Research Fellows Dr Mariah Evans BA Reed MA Ill PhD Chicago Dr Guyonne Kalb MEc Erasmus PhD Monash Dr Jongsay Yong BA BSocSc Hons MSocSc NUS MA PhD Brit Col Research Fellows Dr Hielke Buddelmeyer MSc Vrije/Am MA PhD NYU Dr Lixin Cai BEd Henan MA Renmin MEc PhD ANU Dr Michael Chua BEc Hons PhD UNE Mr Simon Freidin BSc Hons GradDipCompSc LaT Mrs Glenys Harding BEc ANU Dr Ben Jensen BCom Hons PhD Melb

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Mr Paul Jensen BEc USyd Ms Anne Leahy BCom GCertClassics Melb Ms Nellie Lentini BA Monash Dr Joanne Loundes BEc Hons Murdoch PhD Melb Dr Alfons Palangkaraya BSc MA PhD Oregon St Ms Rosanna Scutella BCom Hons Melb Dr Lei Lei Song BA E.China MSc Wuhan MEc W’gong PhD Melb Dr Yi-Ping Tseng BEc Taiwan PhD ANU Ms Nicole Watson BSc UWA GDipMgtSc Canb Dr Roger Wilkins BCom Hons MCom Hons Melb MSc Wisc PhD Melb Research Officers Ms Vu Thi Hong Ha BEc Hons ANU Ms Kelly Jarvis BEc Hons Monash Mr Woei Tian Liew BSc MSc LaT GDipEc Melb Mr Ben Methakullawat BCom Hons Melb Ms Penelope Smith BEc Hons UWA MCom Melb Ms Diana Warren BCom MCom Hons W’gong Research Assistant Ms Kerry Ware

Postgraduate Students Ms Kinga Elo BA MSc (Finance) BUESPA MA (Eco) CEU Mr Yasar Gedik BEc Hons LaT MCom Melb Mr Matt Hammill BEc Newcastle BCom Hons Melb Mr Wang-Sheng Lee BA Colby MA Michigan Ms Rosanna Scutella BCom Hons Melb Ms Penelope Smith BEc Hons UWA MCom Melb


General Staff

New Staff Members in 2004

Business Managers Mr Nikos Thomacos BBus (Eco) RMIT BA Hons Deakin Ms Fiona Zammit DipEd BEd Deakin (until June 2003) Finance and Information Technology Manager Mr Jean-Luc Garlick BSc DipHum DipEcCom LaT (until August 2003) Finance and Administration Manager Ms Rachel Derham BSc Melb Functions Manager Ms Karen Roe BA Hons MA LaT PGDACS Melb (on secondment) Functions Coordinator Ms Penelope Hope BA LaT Executive Assistant to the Director Ms Lara Hammond (until March 2003) Administrative Assistants Ms Angie Cumming DipBus NMIT Ms Claire Merlo BA Deakin Ms Rosy Qin BCom DipEd Melb

Research Staff Professorial Fellows Professor Guay Lim BEc MEc PhD ANU Professor Anthony Scott BA Hons Newcastle MSc York PhD Aberdeen Research Fellow Dr Sher Verick BA BSc MEcDev ANU PhD Bonn Research Officer Mr David Black BCom Hons Melb

General Staff Executive Assistant to the Director Ms Heidi McLean BA Hons UTas MCom Melb Administrative Assistants Mr Duane Barron Ms Vibeke Pedersen BA Hons BMus Melb Administrative Assistant, HILDA Ms Samantha Roberts BA LaT

Staff Members in 2003–2004

Professor Peter Dawkins

Mr Duane Barron

Mr David Black

Professor Derek Bosworth

Dr Hielke Buddelmeyer

Dr Lixin Cai

Dr Michael Chua

Ms Angie Cumming

Ms Rachel Derham

Dr Mariah Evans

Mr Simon Freidin

Associate Professor Tim Fry

Mr Jean-Luc Garlick

Ms Vu Thi Hong Ha

Ms Lara Hammond

Dr Don Harding

Mrs Glenys Harding

Associate Professor Bruce Headey

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Ms Penelope Hope

Ms Kelly Jarvis

Dr Ben Jensen

Mr Paul Jensen

Associate Professor David Johnson

Dr Guyonne Kalb

Ms Anne Leahy

Ms Nellie Lentini

Mr Woei Tian Liew

Professor Guay Lim

Dr Joanne Loundes

Ms Heidi McLean

Ms Claire Merlo

Mr Ben Methakullawat

Dr Alfons Palangkaraya

Ms Vibeke Pedersen

Ms Rosy Qin

Ms Samantha Roberts

Ms Karen Roe

Professor Anthony Scott

Ms Rosanna Scutella

Ms Penelope Smith

Dr Lei Lei Song

Dr Peter Summers

Mr Nikos Thomacos

Dr Yi-Ping Tseng

Dr Sher Verick

Ms Kerry Ware

Ms Diana Warren

Ms Nicole Watson

Dr Elizabeth Webster

Dr Roger Wilkins

Professor Mark Wooden

Dr Jongsay Yong

Ms Fiona Zammit

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Adjunct Professors and Associates in 2003 Adjunct Professors Professor Jeff Borland MA PhD Yale Head, Department of Economics, The University of Melbourne Research interests include analysis of the operation of labour markets in Australia, applications of microeconomic theory to labour markets, and the economics of sport. Within the Melbourne Institute, Jeff is an associate editor of the Australian Economic Review and is involved in the Labour Economics and Social Policy program. Professor John Creedy BSc (Eco with Stats) Brist BPhil (Eco) Oxf Truby Williams Chair of Economics, Department of Economics, The University of Melbourne (on leave in 2002–2003 at the New Zealand Treasury) Research interests include income distribution, public economics, labour economics, and history of economic analysis. Within the Melbourne Institute, John has been joint editor of the Australian Economic Review and contributed to tax and welfare research programs. Professor John Freebairn MAgEc NE PhD Davis FASSA Department of Economics, The University of Melbourne Research interests include taxation reform, labour economics, especially employment, infrastructure pricing and investment, and microeconomic reform. Within the Melbourne Institute, John has made substantial contributions to research in the areas of unemployment and tax reform, public finance and public policy. Professor Danny Samson BEc PhD UNSW Head, Department of Management, The University of Melbourne Research interests include operations management, business competitiveness, strategy and ecommerce. Within the Melbourne Institute, Danny contributes to the Applied Microeconomics program, is chief investigator of an ARC SPIRT Grant and is also involved in collaboration on research on innovation.

Professorial Fellows Professor Bruce Chapman BEc Hons ANU PhD Yale Professor of Economics and Director of the Centre for Economic Policy Research, RSSS, The Australian National University Research interests include labour economics, the economics of education, applied econometrics, industrial relations and economic policy issues. Within the Melbourne Institute, Bruce contributes to the Applied Microeconomics program and is a key contributor to economic policy debate. Professor Robert Drago BS Tulsa MA PhD Mass/Am Professor of Labour Studies and Women’s Studies, Pennsylvania State University Research interests include economics of work and family. Within the Melbourne Institute, Robert contributes to the Labour Economics and Social Policy program.

Professor Alan Duncan BA Hons Manc DPhil York Professor of Microeconomics, School of Economics, University of Nottingham Research interests include welfare program evaluation, analysis of work incentives, static and behavioural tax microsimulation, econometric models of labour supply, and labour market and welfare program participation. Within the Melbourne Institute, Alan is a key contributor to the development of the MITTS model. Professor Jonathan Kelley BA Camb PhD Berkeley Director, International Survey Project, The Australian National University Research interests include quantitative sociology and social economics. Within the Melbourne Institute, Jonathan produces the International Social Science Survey in conjunction with the Australian National University. He is a contributing author of the Australian Social Monitor and a key figure in the Labour Economics and Social Policy program.

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Professor Boris Schedvin BEc PhD Syd Research interests include economic history with particular interests in the transformation of the Australian economy and of Australian economic and scientific institutions during the course of the twentieth century. Within the Melbourne Institute, Boris contributes to the research agenda in the areas of education policy, health policy research and intellectual property research. Professor Ross Williams BCom Melb MScEc PhD Lond FASSA Research interests include economics of education, household consumption and saving, federal–state finance, and the allocation of time by households.

Principal Fellows Dr Ernst Boehm AUA BEc Hons MEc Adel MCom Melb DPhil Oxf Research interests include the measurement and dating of the business cycle, and the economic history of Australia. Within the Melbourne Institute, Ernst developed the leading, coincident and lagging indexes of Australian economic activity as well as the leading index of inflation. He published the results of these indexes in the monthly Westpac – Melbourne Institute reports between 1985 and 1994. Dr Gary Marks BSc Hons MSc Melb PhD Qld Research interests include the youth labour market; unemployment, earnings, pathways to full-time work; and education/early school leaving, achievement in literacy and numeracy, and educational participation. Within the Melbourne Institute, Gary is involved in the HILDA project.

Dr John Nieuwenhuysen BA Hons MA Natal PhD LSE FASSA Research interests include taxation, industrial relations, industrial regulation, economic growth, immigration, welfare and poverty. Within the Melbourne Institute, John contributes to sourcing funds for research projects, developing new publications and our media coverage.

Senior Fellows Dr Denise Doiron BA Monc MA PhD UBC Senior Lecturer, University of New South Wales Research interests include industrial relations and bargaining theory, labour economics and labour and social policy. Within the Melbourne Institute, Denise contributes to the Labour Economics and Social Policy program and is collaborating on a project which is estimating the demand for child care and labour supply in Australian households. Dr Mardi Dungey BEc Tas PhD ANU Fellow Research, School of Pacific and Asian Studies, The Australian National University and Senior Lecturer, Faculty of Economics, The Australian National University. Research interests include exchange rate volatility, macroeconomic modelling and time series econometrics. Within the Melbourne Institute, Mardi contributes to the Applied Macroeconomics program. Associate Professor Sandra Hopkins BA Hons Otago MCom UNSW PhD Tas Economics, School of Economics and Finance, Curtin University of Technology Research interests include health policy, health insurance and economics and gender.

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Dr Mark Rogers BSc Lond MSc Warw PhD ANU Tutor in Economics and Management, Harris Manchester College, Oxford University Research interests include economic growth and industrial organisation with a particular focus being on firm-level performance using Australian data. Within the Melbourne Institute, Mark is involved in the creation and analysis of the Innovation Scoreboard and a major SPIRT project on the performance of Australian enterprises. Dr Michael Shields BA Hons Stafford MSc Health UNY PhD Leic Senior Lecturer, Department of Economics, The University of Melbourne Research interests include labour economics, health economics and microeconometrics. Within the Melbourne Institute, Mike is assisting with our research in the area of health economics.

New Honorary Appointment in 2004 Adjunct Professor Professor Bill Griffiths BAgEc Hons New England PhD Illinois Professor of Econometrics, Department of Economics, University of Melbourne Research interests include model averaging, statistical inference for welfare measures, inequalityconstrained estimation, and applied Bayesian econometrics.

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ADVISORY BOARD Members in 2003 Chairperson Mr Tony Cole, Principal – National Practice Leader, Investment Consulting, Mercer Investment Consulting

Members Ms Carol Austin, Investment Services Director, Contango Asset Management Mr Gary Banks, Chairman, Productivity Commission Ms Sharan Burrow, President, Australian Council of Trade Unions Professor Max Corden, Professorial Fellow, Department of Economics, The University of Melbourne Mr Tony Cole, Chairman of the Advisory Board, addressing the Pursuing Opportunity and Prosperity Conference Professor Peter Dawkins, Director and Ronald Henderson Professor, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Mr Bill Evans, General Manager, Economics, Westpac Banking Corporation Father Nic Frances, Executive Director, Brotherhood of St Laurence Professor John Freebairn, Professor, Department of Economics, The University of Melbourne Associate Professor David Johnson, Deputy Director, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Professor Frank Larkins, Deputy Vice-Chancellor (Research), The University of Melbourne Mr Ian Little, Secretary, Department of Treasury and Finance Associate Professor Alison McClelland, Associate Professor, Department of Social Work, La Trobe University Mr Phil Ruthven, Executive Chairman, IBISWorld Mr Bill Scales, Group Managing Director, Corporate and Human Relations, Telstra Mr Glenn Stevens, Assistant Governor (Economic), Reserve Bank of Australia Mr Mark Sullivan, Secretary, Department of Family and Community Services Dr Pete Summers, Senior Research Fellow, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Mr Nikos Thomacos, Business Manager, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Dr Elizabeth Webster, Senior Research Fellow, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Professor Mark Wooden, Professorial Research Fellow, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Mr Nikos Thomacos joined the Melbourne Institute as Business Manager in August 2003, following the departure of Ms Fiona Zammit in January. Associate Professor David Johnson left to accept a position with the Department of Treasury and Finance and Professor Mark Wooden was appointed the new Deputy Director. Dr Pete Summers was appointed Head of the Macroeconomics Research Program following the departure of Dr Don Harding.

New Members in 2004 Professor Maggie Abernethy, Dean, Faculty of Economics and Commerce, The University of Melbourne Professor Guay Lim, Professorial Research Fellow, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne Professor Guay Lim joined the Melbourne Institute in March 2004, replacing Dr Pete Summers as Head of Macroeconomics when he left the Melbourne Institute in May to return to the United States. 18


Dr Pete Summers, Mr Andrew Whitecross (representing Mr Mark Sullivan), Professor Guay Lim, Ms Carol Austin, Professor Mark Wooden, Mr Nikos Thomacos, Professor Max Corden, Dr Beth Webster, Professor Tony Scott (visitor), Fr Nic Frances, Professor John Freebairn, Mr Gary Banks, Mr Ian Little, Professor Peter Dawkins, Professor Maggie Abernethy and Mr Tony Cole

Associate Professor David Johnson

Mr Glenn Stevens

Mr Bill Evans

Mr Phil Ruthven

Associate Professor Alison McClelland

Mr Bill Scales

Professor Frank Larkins

Ms Sharan Burrow

Mr Mark Sullivan

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RESEARCH AREAS Labour Economics and Social Policy Overview 2003 was another very successful year for the Labour Economics and Social Policy (LE&SP) Research Program. On a cash basis, the program generated over $6.5 million worth of research and consulting income, thus accounting for the bulk of not only the Melbourne Institute’s external income, but also the bulk of the external research income of the Faculty. As a result, the program was the major contributor to the Melbourne Institute’s healthy profit recorded in 2003. Labour Economics and Social Policy team The major source of income was again the Household, Income and Labour Dynamics in Australia (HILDA) Survey, the funding of which was extended during 2003 to cover a fourth wave. This contract, however, is concerned with the collection and production of a survey-based dataset, and not directly with the creation of research output. The major sources of research activity during 2003 were: • the Social Policy Research Services Contract with the Australian Government Department of Family and Community Services; • an Australian Research Council funded research program titled ‘The Dynamics of Economic and Social Change’; and • two major contract research projects undertaken for the New Zealand Treasury and the Australian Government Department of Employment and Workplace Relations respectively. More importantly, the growth in contract research income in recent years is beginning to bear fruit in terms of publications. Collectively, 19 DEST-approved journal articles were published by the staff of the LE&SP program during 2003. Further, there are at least another 12 publications forthcoming and a large number of papers under review. In 2004 activity will continue to be dominated by the HILDA Survey, with wave 4 to commence in August, the FaCS Social Policy Research Contract, which will be in its fourth year, and the ARC-funded research program. In addition, a major new contract has been negotiated with the New Zealand Treasury to build a MITTS-style microsimulation model for New Zealand. We are also instigating, with funding from the Victorian Government, a new research initiative in the area of poverty.

Social Policy Research Services Contract The current FaCS Social Policy Research Services Contract commenced in 2001 and comes to an end in 2004. The research activity undertaken under this contract is mainly intended to help improve the quality of public decisionmaking within the broad field of social policy. The project is also supported by funds from the Faculty of Economics and Commerce which are intended to ensure that the research generates not only output for government but also for academic audiences. Table 1 summarises the range of topics covered by the program. As can be seen, the range of work being undertaken is extremely broad and varied, with individual projects ranging from the evaluation of specific government programs to analyses of variations across individuals in their reported well-being. By the end of 2003, this contract had generated 17 papers in the Melbourne Institute Working Paper Series and 21 papers submitted for external publication (six of which have either been published or accepted for publication).

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Table 1: Social Policy Research Services Contract Projects, 2003 and 2004 Projects Completed in 2003 Project 3: Effect of Changes to Activity Test Arrangements on Exit from Payments – B: Intensive Review Project 7: Effect of Changes to Activity Test Arrangements on Exit from Payments – C: Job Seeker Diary Project 9: Economic and Sociological Analyses of Communities: Existing Research Findings Project 12: Attitudes to Provision for Old Age Project 24: Effect of Family Composition and Worklessness on the Distribution of Income and Expenditure Project 28: The Importance of Where People Live for Subjective Welfare Project 29: International Comparison of Trends in the Polarisation of Employment Project 30: The Effect of Childcare Costs on Labour Supply Project 31: Extending the Range of Distributional Measures in MITTS (MITTS-B) Project 32: MITTS – GAUSS for Windows Projects in Progress at the End of 2003 Project 2: Effect of Changes to Activity Test Arrangements on Exit from Payments – A: Mutual Obligation Project 6: Effect of Changes to Activity Test Arrangements on Exit from Payments – D: Work for the Dole Project 19: Comparison of Alternative Specifications for the Labour Supply Models in MITTS Project 23: Jobless Households (HILDA) Project 25: Effects of Divorce on Children’s Education, and Whether They Are Accounted for by Moving House Project 26: Effects of Education, Fertility and Divorce on Married Women’s Employment: Patterns Past, Present and Future Project 27: Working Time Preferences in Couple Households Project 33: Use of HILDA in MITTS Project 34: Transitions to Retirement – A Review Project 35: Underemployment in Australia Project 36: Job Search of the Unemployed – Description and Determinants Project 37: Understanding the Nature of and Factors Behind ‘Successful’ Exit from DSP Project 38: Extending Output Produced by MITTS: (a) Empirical Confidence Intervals on Predicted Values in MITTS, (b) MITTS-B Simulation for Individual Households Project 39: Validation of MITTS-A Project 40: Dynamic Properties of Income Support Receipt Projects to Commence in 2004 Project 41: Cohort and Distributional Analysis of the Wealth of Australians Project 42: Financial Stress, Wealth, Poverty and Indebtedness Project 43: Who Uses Child Care, for What Purpose, and What Is Their Experience of Balancing Work and Family Life? Project 44: The Causes of Long Term Unemployment Project 45: Incentives of the Current System (ANTS) for Single and Married Mothers Project 46: Reweighting of SIHC for Use in MITTS

During 2003 the Melbourne Institute also submitted a tender for funding under the next Social Policy Research Services Contract covering the period 2005 to 2009. This bid was successful with a total of $620,000 per annum (indexed) awarded. With additional matching funding from the Faculty, this project will continue to be a major source of research activity during the next five years.

HILDA Survey During 2003 collection of data from the second wave was finalised and the data prepared for its public release in early 2004. As discussed in more detail in the HILDA Survey Annual Report for 2003, there were a total of 8326 households in the wave 2 sample, and interviews were obtained at 7245 of these, representing a household response rate of 87 per cent. The total number of individuals interviewed was 13,041. A key feature of the wave 2 survey was the inclusion of a special module for the collection of data on wealth. This is a very important innovation. While aggregate statistics on the wealth of Australian households are now regularly compiled, these data provide no indication of how wealth is distributed across households. The HILDA data thus should fill this void. Initial indications are that the HILDA data match the aggregate statistics quite well, once the nature of the sample is taken into account. (Like all random surveys, the HILDA Survey will understate total wealth due to insufficient representation from the very wealthy.) While the wave 2 data were being collected, work on the design of the wave 3 instruments was being undertaken. The main feature of the wave 3 instruments was the inclusion of a special module on issues relating to retirement from the paid workforce. Wave 3 went into the field, on schedule, in August 2003 and was complete by March 2004. The other major development during 2003 was the provision of additional funding by the Commonwealth for a fourth wave starting in 2004.

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Of course, the key reason for this survey is to generate data that stimulate policy-relevant research. To date, all indicators are that there has been, and continues to be, immense interest in HILDA within both government and academia. There were, for example, 205 orders for the wave 1 unit record data file, which is more than anticipated given the wave 1 file is only a cross-section. Further, it seems likely that the number of orders of the wave 2 data will exceed that for wave 1. This use is also reflected in a large and growing number of academic papers, many of which can be downloaded from the HILDA Survey website. A number of these are now gradually finding their way into journals. Finally, a special issue of the Australian Journal of Labour Economics to appear in 2004 is dedicated to articles that use the HILDA Survey data.

ARC Project: The Dynamics of Economic and Social Change This project received funding from the ARC under its Discovery program. In addition, the Melbourne Institute has seen fit to provide further funds from its Faculty allocation. This program of research is focused on understanding economic and social change and how such change affects individual Australians and their families. It is built around the analysis of the first three waves of the HILDA Survey. There are three sub-programs: • income, poverty and well-being; Professor Mark Wooden and a panel discussion at the HILDA • labour supply and work incentives; and Conference • the changing nature of work. During 2003 work was commenced within each of these sub-programs. A summary of the progress made is provided in Table 2. As can be seen, substantive progress has been made on six topics, and already two papers have been accepted for publication, and we are confident that all of the topics being pursued will generate published output. In 2004, research on a number of new topics has commenced. Included here are the structure of household wealth, employment transitions, intra-household pay differentials, changing working time preferences and working from home. Table 2: Summary of Progress: The Dynamics of Economic and Social Change Research Program Program/Topic

Researchers

Outputs

Income, Poverty and Well-Being The Effects of Wealth and Income on Subjective Well-Being

Bruce Headey and Mark Wooden

Chapter in forthcoming book, Rethinking Well-Being. Paper presented at the Economists Conference, September 2003. Paper submitted to Economic Record.

Changing Nature of Work Non-Standard Employment and Job Quality

Mark Wooden and Diana Warren

Family Structure and Working Hours Preferences

Robert Drago (Penn State), Yi-Ping Tseng and Mark Wooden

Working Hours and Work–Family Balance

Mark Wooden

Melbourne Institute Working Paper 15/03. Paper accepted in Journal of Industrial Relations. Melbourne Institute Working Paper 1/04. Paper submitted to Journal of Family Studies. Paper presented at the Pursuing Opportunity and Prosperity Conference 2003 and the Families Australia Conference 2004.

Labour Supply and Work Incentives Health Status and Labour Force Participation

Lixin Cai and Guyonne Kalb

Child Care Costs and Female Labour Supply

Hielke Buddelmeyer

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Melbourne Institute Working Paper 4/04. Paper presented at the Australian Labour Market Research Workshop 2004 and the Australian Health Economists Conference 2004. Working paper being finalised.


Other Research Projects and Activities Labour Supply in New Zealand The Melbourne Institute was commissioned by the New Zealand Treasury to estimate a model of labour supply for New Zealand. The project was subdivided into two components, the first stage aiming to estimate a wage model which, in combination with the Treasury’s static microsimulation model TaxMod, provided the necessary input for the second stage where a labour supply model was estimated. The project was completed in 2003. Two working papers have appeared in the Treasury’s working paper series. The first paper on wage models has been accepted for publication in New Zealand Economic Papers.

Modifying Income Support in the Tax and Transfer System This project, commissioned by the Department of Employment and Workplace Relations, involved use of the MITTS model and centred on the analysis of the costs and behavioural effects of the kind of reforms canvassed in the Federal Government’s discussion paper, Building a Simpler System to Help Jobless Families and Individuals. A preliminary report was submitted to the Government early in 2004.

Safety in the Mining Industry The Minerals Council in Australia commissioned the Melbourne Institute to examine workplace safety and length of working hours in the mining industry in Australia over the period 1991 to 2000. The final report was delivered to the Minerals Council in May 2003, and presentations of the finding were made to the Minerals Council in April and September of 2003. Following on from this project, further consultancy work on safety performance of the NSW coal mining industry was undertaken for the NSW Minerals Council towards the end of 2003.

Rehabilitation Services for Injured Workers The Victorian Workcover Authority (VWA) engaged the Melbourne Institute to evaluate the cost-effectiveness of a labour market assistance program for workers’ compensation recipients that had been trialled by the VWA in 2001 and 2002. Evaluation of the success of the program was undertaken using administrative data on workers’ compensation recipients, the primary focus being on the achievement of ‘return to work’ outcomes. This consultancy drew heavily on the expertise in program evaluation techniques that the Melbourne Institute has developed in recent years.

International Reform Monitor The Melbourne Institute is the Australian partner in an international forum for the discussion of interesting and current reforms in the fields of social policy, labour market policy and industrial relations. The forum is run by the Bertelsmann Foundation and provides the opportunity for international comparisons of experience and knowledge in social policy. There are 15 members of the forum, all from developed countries in Western Europe and the Pacific rim. Twice a year, each country details current reforms in the fields listed above. The reforms are compiled into a non-technical monograph aimed at a broad audience of policy makers, academics, public servants, business people and other interested persons. The publication is distributed within the member countries and is also available on the web at <www.reform-monitor.org>. It has proved to be a valuable means of comparing social policy in the member countries with over 80,000 visits to the website per year. The group meets each year to discuss the development of the project and to present findings on particular issues. Associate Professor David Johnson attended the 2003 meeting held in Rome.

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Sixth Labour Econometrics Workshop The sixth Labour Econometrics Workshop was held on 8 and 9 August 2003 at the University of Melbourne, organised by the Melbourne Institute in collaboration with the Department of Economics. Despite the specialist nature of this workshop, around 50 participants from 19 different institutions attended. There were nine sessions of contributed papers and an invited session by Dr Dean Hyslop from the New Zealand Treasury on the use of panel data techniques. The workshop was highly successful in provoking lively discussion around the interesting presentations.

Labour Economics Seminar Series Every year the Melbourne Institute brings leading international and Australian researchers to the Institute to present their research as part of its Labour Economics Seminar Series. Under the guidance of Dr Yi-Ping Tseng, 2003 was easily our most successful year. As can be seen from Table 3, the program this year attracted 11 speakers, well in excess of our budgeted six speakers. Moreover, the calibre and reputation of many of the speakers was extremely high, including the likes of Professor Richard Burkhauser, Professor Robert Willis and Professor Richard Disney, who are all acknowledged world leaders in their fields.

Table 3: Labour Economics Seminar Program, 2003 Date

Presenter

Topic

5 February 2003

Professor Richard Burkhauser (Cornell University)

The Employment of People with Disabilities in the 1980s and 1990s: What Data Can and Can Not Tell Us

25 February 2003

Dr Michael Keating (Australian National University)

Earnings and Inequality: Some Policy Implications

12 March 2003

Dr Denise Doiron (University of New South Wales)

Search and Search Methods over the Business Cycle: The Case of Young Australians

11 April 2003

Professor Howard Gospel (Kings College London and London School of Economics)

The Provision of Training in Britain: Case Studies of Inter-Firm Coordination

16 May 2003

Professor John Nevile (University of New South Wales)

Does Work for the Dole Help Participants Find Jobs?

14 July 2003

Professor Buhong Zheng (University of Colorado at Denver)

Mobility Measurement, Transition Matrices and Statistical Inference

26 September 2003

Professor Robert Willis (University of Michigan)

Survey Design, Serendipity, and the Growth of Knowledge

31 October 2003

Dr Matthew Gray (Australian Institute of Family Studies)

Lone and Couple Mothers: Understanding of the Interaction between the Labour Market and the Social Security System

11 November 2003

Mr Jeremy Lise (Queensâ&#x20AC;&#x2122; University)

Equilibrium Policy Experiments and the Evaluation of Social Programs

17 November 2003

Professor Richard Disney (University of Nottingham)

A New Method for Estimating Public Sector Pay Premia: Evidence from Britain in the 1990s

16 December 2003

Dr Christopher Worswick (Carleton University )

Immigrant Earnings Profiles in the Presence of Human Capital Investments: Measuring Cohort and Macro Effects

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Staffing 2003 also saw a number of new appointments, with Dr Hielke Buddelmeyer and Dr Lixin Cai joining the Melbourne Institute as Research Fellows and Associate Professor Bruce Headey joining the HILDA Survey project as Deputy Director (on a part-time basis). In addition, Dr Gary Marks has been seconded from the Australian Council for Educational Research to work on projects making use of the HILDA Survey data. The only departure was Associate Professor David Johnson who left the Institute in September 2003 to take up a senior appointment in the Victorian Public Service.

Applied Macroeconomics Introduction In 2003 the Applied Macroeconomics group continued with its program of academic research on business cycles as well as on producing its regular publications, economic indicators and forecasts. Following the departure of Dr Don Harding to the Department of Economics, the Macro group was led by Dr Pete Summers. The main academic output of the group took the form of a significant number of conference papers that are listed at the back of this annual report. A number of submissions to journals were also made. See the Institute Director’s report for a tribute to the extensive contributions of Dr Don Harding to the Melbourne Applied Macroeconomics research team Institute.

TD Securities – Melbourne Institute Experimental Monthly Inflation Gauge After a year of preparation, the TD Securities – Melbourne Institute Experimental Monthly Inflation Gauge was launched on 23 July 2003 in the Australian Credit Forum in Sydney. This new indicator aims to provide markets and policy makers with a timely update of inflation trends, and is based on methodology used by the Australian Bureau of Statistics in calculating its quarterly consumer inflation index for Australia. Since its public launch, the Inflation Gauge has demonstrated its usefulness as a timely and accurate guide to inflation pressure in the Australian economy.

Melbourne Institute Survey of Consumer Inflationary Expectations and Melbourne Institute Wages Report The Macro group also produced two other related reports: the Dr Pete Summers, third from left, with Mr Chris monthly Melbourne Institute Survey of Consumer Inflationary Richardson, Mr Bill Evans and Mr Saul Eslake at the Pursuing Opportunity and Prosperity Conference Expectations, which presents survey findings summarising respondents’ expectations about the likely rate of inflation in Australia in the coming year, and the quarterly Melbourne Institute Wages Report, which records employees (self-reported) wage changes over the previous 12month period and is designed to capture growth in wages (not levels) and the source of wage change.

Westpac – Melbourne Institute Survey of Consumer Sentiment In 2003 the Macro group continued to produce reports based on its monthly survey of consumers. The key report relates to the consumer sentiment index for Australia, which is an average of five indexes reflecting respondents’ evaluations of their household financial position over the past and coming year, expectations about the one-year and five-year economic outlook, and views about current buying conditions. Consumer sentiment for each of the four largest states (New South Wales, Victoria, Queensland and Western Australia) was measured on a quarterly basis.

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ING – Melbourne Institute Household Saving Report An important extension of the consumer survey is presented in the ING – Melbourne Institute Household Saving Report. This quarterly report presents data on households’ current financial position, their current saving behaviour and preferences, their motivation for saving, their preferred assets, their debt positions and the coverage of superannuation.

Westpac – Melbourne Institute Indexes of Economic Activity In 2003 the Macro group continued with its program of research in business cycles and indicators. This monthly report presents the Melbourne Institute’s leading, coincident and lagging indexes of economic activity for Australia. The leading index is aimed at providing an indication of the likely pace of economic activity in Australia in six to nine months time.

Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends Research into the state of the economy was also published in the Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends. This publication aims to provide an authoritative analysis of the international, national and state economic environments, with a particular focus on the state economies and on reading the business cycle.

Research Staff Significant changes have occurred in the leadership of the Applied Macroeconomics Research Program since early 2003. First, as noted earlier, Dr Don Harding, long-time Director of the area, left the Melbourne Institute for a position in the economics department of the University. Second, Dr Pete Summers, who succeeded Don and led the program through most of 2003 and into the first half of 2004, has now returned to the United States. A tribute to his contribution to the Melbourne Institute will be included in the 2004 Annual Report. The program is now going through a significant phase of restructuring under the leadership of Professor Guay Lim, who commenced as a Professorial Research Fellow at the start of 2004. She now leads a small team comprising Dr Lei Lei Song (Research Fellow), Dr Michael Chua (promoted to Research Fellow in 2003), Ms Anne Leahy (Manager Economic Indicators), Ms Penelope Smith (Research Officer) and Ms Kerry Ware, who collects price information for the TD Securities – Melbourne Institute Inflation Gauge project. Postgraduate students during this period included Ms Penelope Smith, Mr Matt Hammill and Ms Kinga Elo. Since mid-2004, the Macro group has been consolidating on its strengths in survey-based macroeconomics, and has been improving its indicator and forecasting analysis. The Macro group also plans to expand its interests into intergenerational modelling.

Applied Microeconomics Introduction During 2003, the Microeconomics section engaged in a number of projects dealing with industrial economics, especially the economics of innovation and intellectual property and the costs of the health and education sectors in Australia. Dr Elizabeth Webster leads this section with assistance from Dr Jongsay Yong. There were several major changes in the staffing of this section during 2003. Associate Professor Tim Fry and Dr Joanne Loundes left in the early part of the year. Congratulations to Associate Professor Tim Fry who was appointed to a Chair at RMIT University. Dr Joanne Applied Microeconomics research team Loundes, who completed her PhD in 2002, worked for the Melbourne Institute for over six years. Congratulations to Joanne for her appointment with the Department of Foreign Affairs and Trade. Dr Ben Jensen moved to the Victorian Premiers’ Department and Ms Kelly Jarvis left to take up a scholarship for her PhD. During the year, we were joined by two new Research Fellows, Paul Jensen and Alfons Palangkaraya who recently completed their PhDs at the AGSM and Oregon State University respectively, and a new Professorial Fellow, Dr Joanne Loundes 26


Derek Bosworth (UMIST, United Kingdom). During 2004, we were joined by the health economist Professor Tony Scott (Aberdeen University, Scotland) and Professor Bill Griffiths (Department of Economics, University of Melbourne). We also had the pleasure of an extended visit from Professor Sir Laurie Hunter of the University of Glasgow.

Health Economics Four major projects, summarised below, were completed on the Australian health system. Dr Jongsay Yong and Associate Professor David Johnson undertook a study (Costly Ageing or Costly Deaths? Understanding Health Care Expenditure Using Australian Medicare Payments Data) and this was presented at the International Conference on Population Ageing and Health, Canberra, 8 and 9 December 2003. Dr Jongsay Yong also completed a study (Preventive versus Curative Health Care: The State of Public Health in Australia) for the Victorian Department of Treasury and Finance. Finally Dr Jongsay Yong, Dr Alfons Palangkaraya, Dr Beth Webster, Professor Peter Dawkins and Associate Professor Sandra Hopkins (from Curtin University) undertook a study for the Victorian Department of Premier and Cabinet on the effects of recent government policies on the take-up rate of private health insurance and usage of public hospitals.

Costly Ageing or Costly Deaths? Understanding Health Care Expenditure Using Australian Medicare Payments Data In health economics and health care planning, the observation that age cohorts are generally positively correlated with per capita health expenditures is often cited as evidence that population ageing is the main driver of health care costs. Several recent studies, however, challenge this view, finding that individuals incur the highest health care costs around the time before their death. Thus, they argue, it is proximity to death rather than ageing that is driving health care costs. Dr Jongsay Yong and Associate Professor David Johnson have examined this issue by estimating a two-equation exact aggregation demand model using Australian Medicare payments data over an eight-year period (1994â&#x20AC;&#x201C;2001). The results suggest that once proximity to death is accounted for, population ageing has either a negligible or even negative effect on health care demand.

Preventive versus Curative Health Care: The State of Public Health in Australia Public health, or synonymously population health, refers to the collective efforts of society to prevent disease and promote and restore health of a population. In reviewing the state of public health activities in Australia, Dr Jongsay Yong found that expenditure on public health accounts for a small share of total national health spending, although the pattern is broadly in line with the experience of other developed countries. On both counts, Australia lags behind only Canada, but is far ahead of several European countries such as Finland, France and Switzerland.

Recent Private Health Insurance Policies in Australia: Health Resource Utilisation, Distributive Implications and Policy Options This report by Professor Peter Dawkins, Associate Professor Sandra Hopkins, Dr Beth Webster and Dr Jongsay Yong, with the assistance of Dr Alfons Palangkaraya, was commissioned by the Victorian Department of Premier and Cabinet to examine two issues that are important in assessing the performance of recent private health insurance policy changes: (i) how the policy changes affect utilisation of health care resources, specifically utilisation of public and private hospitals; and (ii) what the distributive implications are. They found that the data did not support the contention that public hospital utilisation has been reduced as more households enrol in private health insurance. There is no evidence that waiting times for elective surgery in public hospitals has fallen over the period. In addition, the distributive effects of the recent policy changes are unequivocal: they disproportionately favour high income earners.

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Effects of Recent Carrot-and-Stick Policy Initiatives on Private Health Insurance Coverage in Australia Subsequent to the report discussed above, Dr Alfons Palangkaraya and Dr Jongsay Yong extended the analysis to isolate the effects of those different policies using the 1995 and 2001 National Health Survey data. These two datasets allow the estimation of private health insurance demands before and after the policy changes. Consequently, they also allow for a counterfactual analysis of what would have happened had there been no new policies. Combined with the age-specific Lifetime Health Cover (LHC), the counterfactual analysis indicates that the effects of LHC fall between 42 per cent and 75 per cent of the overall increase in private health insurance membership.

Industrial Economics Mr Paul Jensen, Mrs Glenys Harding, Dr Beth Webster and Dr Alfons Palangkaraya undertook four studies related to the determinants and effects of innovation and knowledge transmission. In addition, Dr Jongsay Yong, together with Dr Michael Chua, Mr Hsein Kew and Professor Mark Goh, undertook two studies on the effects of deregulation on the international airline industry.

SMEs and their Use of Intellectual Property Rights in Australia There is a common, largely anecdotally based belief that registered intellectual property is a less efficient form of protection for SME inventors compared with inventors from large firms. Mr Paul Jensen and Dr Beth Webster, together with a number of law and management researchers from the Intellectual Property Research Institute of Australia, undertook a study on the usage of intellectual property by SMEs in Australia for the Australian Department of Industry, Tourism and Resources. This involved interviews with key people across Australia, a series of case studies, a small survey and an analysis of intellectual property data. Part of this report was extended to produce a working paper. It estimates patent and trade mark rates per employee in Australia but does not find a significant difference between the large firm and SME sectors once industry effects are taken into account.

Examining Biases in Measures of Firm Innovation A challenge for applied studies of innovation is to find quality-adjusted and unbiased measures for the extent and type of innovative activity in firms. This paper by Mr Paul Jensen and Dr Beth Webster considers, in the light of the uses for these measures, how well we expect these common indicators quantify innovative services and how well they actually correlate using data from a sample of 641 companies. Their findings show that compared with survey measures, the accounting and administrative measures have different biases with respect to firm size, industry sector and innovation type. This paper was presented at the Innovations and Intellectual Property, Applied Econometrics Association Conference, Singapore, INSEAD, 15â&#x20AC;&#x201C;16 July.

Patterns of Trademarking Activity in Australia Over the past quarter of a century, trade mark applications have grown by 2.3 per cent per annum faster than real GDP in Australia. Mr Paul Jensen and Dr Beth Webster have explored the factors associated with this growth. In their paper, which was presented at the Trade Mark Conference, organised by the Intellectual Property Research Institute of Australia at the University of Melbourne, they found some evidence that over the past two decades, trademarking has been associated with more inventive companies, the growth of the service sector, globalisation and industry-based microeconomic reforms. There is provisional evidence that higher levels of real income per capita have supported some of these factors.

Local Knowledge Spillovers in the Indonesian Manufacturing Industry Dr Alfons Palangkaraya together with Professor Bee Yan Aw argue that while knowledge spillovers are long held to be of great economic importance, these spillovers may be facilitated by physical and technological proximity. Little empirical work has been undertaken on data from developing countries. They examine the relationship between knowledge spillovers and both technological and geographical proximities using micro panel data of Indonesian

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manufacturing plants between 1990 and 1995. They find both physical and technological proximity are significant. Knowledge spillovers are stronger among plants in the same industrial sector and their magnitude decreases monotonically with geographical distance.

R&D and IP Scoreboard 2003 The R&D and Intellectual Property Scoreboard 2003 was released in August. This report, which presents a league table of companies having the highest density of R&D expenditure and patent, trade mark and design applications, was prepared by Dr Beth Webster, Head of the Applied Microeconomics group Mrs Glenys Harding using data from IBISWorld and IP Australia. She was assisted by other staff from the Intellectual Property Research Institute of Australia, most notably Mr Saba Elkman and Professor Andrew Christie.

Airline Code-Share Alliances and Costs: Imposing Concavity on Translog Cost Function Estimation Dr Jongsay Yong, Dr Michael Chua and Mr Hsein Kew provide an assessment of how airline code-share alliances affect the costs of the airline industry. This paper makes two contributions to the literature. First, it measures the effects of airline alliances by estimating a translog cost function using a panel dataset of 10 major US-based airlines over 29 quarters. Second, it ensures concavity of the estimated cost function. The paper was presented at the Australasian Meeting of the Econometric Society, Sydney, 9–11 July 2003.

Impacts of Code-Share Alliances on Airline Cost Structure: A Truncated Third-Order Translog Estimation Dr Jongsay Yong and Professor Mark Goh (National University of Singapore) analyse the proliferation of alliances following deregulation of the international airline industry. An important question arises: are alliances cost savings or competition reducing? This study addresses the first part of the question. However, the answer has bearing on the second part as well, since results in industrial economics suggest that, unless a merger (or alliance) can substantially reduce costs, consumers are unlikely to enjoy lower prices. A truncated third-order translog cost function is estimated using quarterly firm-level data of 10 airlines. This paper was presented at the Australasian Meeting of the Econometric Society, Sydney, 9–11 July 2003.

Education Economics Associate Professor David Johnson, Dr Ben Jensen, Professor Peter Dawkins, Professor Stephen King (Department of Economics), Dr Malcolm Anderson and Professor Brian Caldwell (Faculty of Education) completed five papers on the economics of education for the Victorian Department of Treasury and Finance. These included ‘Education Needs and Opportunities’, ‘Stocktake of Existing Knowledge’, ‘The Funding and Structure of Schools’, ‘The Labour Market for Teachers’ and ‘Productivity in Schools over Time’.

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CONTRIBUTIONS TO POLICY ANALYSIS AND DEBATES One of the Melbourne Institute’s strategic objectives is to contribute strongly to economic policy analysis, discussion and development in Australia. Examples of such contributions in 2003 include: • Professor Peter Dawkins was appointed as a personal member of the Prime Minister’s Science, Engineering and Innovation Council. He also continued to serve on the Federal Government’s Welfare Reform Consultative Forum. • Hard Heads, Soft Hearts: A New Reform Agenda for Australia was released at the 40th Anniversary Dinner at Ormond College on 7 February. Edited extracts were published in various issues of The Australian newspaper, including a major feature in the inquirer section. Professor Peter Dawkins and Mr Paul Kelly conducted a number of radio interviews about the book. • In March 2003 the first HILDA Survey Conference (jointly organised with the Department of Family and Community Services) was attended by over 160 people and received extensive coverage in the media. • HILDA Survey wave 1 data were being used extensively by researchers in both academia and in government, with over 200 registered users, about half of whom were employed in the public sector. • Professor Mark Wooden was an invited speaker at the annual conference of the Industrial Relations Society of Australia in March, where he spoke on the issue of casual employment. • The Canberra forum in March was based upon Hard Heads, Soft Hearts: A New Reform Agenda for Australia. Along with Professor Peter Dawkins and Mr Paul Kelly, speakers were The Hon. Tony Abbott MP (then Minister for Employment and Workplace Relations) and Ms Jenny Macklin MP (Deputy Leader of the Opposition). It was attended by over 190 people including members of parliament, senior public servants, senior academics, ambassadors, and representatives of a large range of organisations based in Canberra and New South Wales. • The Melbourne forum in April featured the launch by the State Treasurer, The Hon. John Brumby MLC, of a report by the Department of Treasury and Finance, Shaping a Prosperous Future: Prospects, Issues and Choices. • The Canberra and Melbourne forums in June focused on the safety of superannuation, based upon the Policy Forum in the March Australian Economic Review. • The Canberra and Melbourne forums in September focused on water pricing and availability, based upon the Policy Forum in the September Australian Economic Review. • Australia’s ‘premier policy conference’, the Pursuing Opportunity and Prosperity Conference, conducted jointly with The Australian, was a major event in November. Over 300 people attended, and we had a very impressive list of speakers. Extensive coverage in The Australian gave the conference a very high profile. • Our ongoing economic indicators (for example, Westpac – Melbourne Institute Consumer Sentiment Index and Westpac – Melbourne Institute Indexes of Economic Activity) and forecasts continued to create considerable interest. • The Melbourne Institute continued to inform social policy through research activities as part of its Social Policy Research Services Agreement with the Department of Family and Community Services. • In November, Professor Jeff Borland, Dr Guyonne Kalb, Dr Yi-Ping Tseng, Dr Roger Wilkins and Professor Mark Wooden all made presentations at the annual two-day FaCS Research Workshop in Canberra. • The Melbourne Institute undertook a number of policy-relevant research contracts for a range of policy organisations, including the Department of Employment and Workplace Relations, the Victorian Department of Treasury and Finance, the Victorian Workcover Authority and the New Zealand Treasury. • In December 2003, Professor Peter Dawkins was appointed as a member of the Expert Reference Group for a project on Commonwealth–State relations, organised by the Victorian Government in association with other states, chaired by Professor Glyn Davis.

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The Weekend Australian, 15 November 2003

Rise and shine it’s reform time Pursuing Opportunity and Prosperity Conference, article by Dean of Economics Peter Dawkins The Sydney Morning Herald, 13 April 2003

The Age, 16 January 2003

Baby it’s time

Why shopping isn’t dropping

HILDA Survey, Professor Mark Wooden on couples having children outside of marriage

Westpac – Melbourne Institute Survey of Consumer Sentiment on the rise in consumer sentiment for January

The West Australian, 8 October 2003

Families in debt danger ING – Melbourne Institute Household Saving Report, 42,000 WA families are spending more than three-quarters of their income paying off debts Herald Sun, 14 October 2003

Many kids in jobless homes Professor Peter Dawkins on the problem of jobless households in Australia The Age, 16 October 2003

Household wealth continues to surge Westpac – Melbourne Institute Survey of Consumer Sentiment, household wealth is growing at its fastest rate in 14 years The Australian Financial Review, 15 November 2003

The lucky country has never had it so good HILDA Survey, Professor Mark Wooden on Australians’ high scores on survey measures of satisfaction The Weekend Australian, 15 November 2003

Singles boom to blame for the falling birth rate Pursuing Opportunity and Prosperity Conference, Melbourne Institute

The Weekend Australian, 15 November 2003

Australia’s smartest companies IPRIA and Melbourne Institute on the release of a list of Australia’s most innovative companies The Australian, 20 November 2003

Exposed: failing of work for dole Professor Jeff Borland and Dr Yi-Ping Tseng on the economic impact of the Work for the Dole program The Canberra Times, 22 November 2003

Baby boomers must work on Pursuing Opportunity and Prosperity Conference, Melbourne Institute, on maintaining a strong economy as the population ages

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MELBOURNE INSTITUTE BUSINESS ECONOMICS FORUM IN MELBOURNE In 2003, the Melbourne Institute Business Economics Forum in Melbourne continued into its seventh year and generated considerable interest. The quarterly forums were exceptionally well attended. Breakfasts were held on 23 April at the Grand Hyatt and 24 June and 16 September at the Hotel Sofitel in Melbourne. The final forum for 2003 was incorporated into the Pursuing Opportunity and Prosperity Conference held at the University of Melbourne on 13 and 14 November. At each forum, the Melbourne Instituteâ&#x20AC;&#x2122;s forecasts were presented and discussed, and special topics were canvassed such as superannuation, water pricing and availability, Mr John Brumby, Treasurer of Victoria and shaping a prosperous future for Victoria. In addition to Melbourne Institute researchers Dr Pete Summers and Associate Professor David Johnson, a number of external commentators were involved in the forums. These included The Hon. John Brumby MLC (Victorian Treasurer), Professor Tom Valentine (University of Western Sydney), Dr Jon D. Stanford (University of Queensland), Mr Ramani Venkatramani (Australian Prudential Regulation Authority), Dr Geoff Edwards (La Trobe University), Dr Alistair Watson (Freelance Economist) and Mr Greg Wilson (Department of Sustainability and Environment). The Chairmen were Mr Tony Cole (Mercer Investment Consulting) and Mr Phil Ruthven (IBISWorld).

Members Gold

Associate

Business Council of Australia Department of Innovation, Industry and Regional Development Department of Treasury and Finance Mercer Investment Consulting The University of Melbourne

ANZ Banking Group CEDA City of Melbourne Department of Premier and Cabinet Holden IBISWorld Productivity Commission Urban Land Corporation Victorian Workcover Authority

Individual Institute for Private Enterprise The Australian Securities and Investments Commission Victorian Auditor Generalâ&#x20AC;&#x2122;s Office

Dr Pete Summers addressing a meeting of the Business Economics Forum

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The audience at a meeting of the Business Economics Forum


MELBOURNE INSTITUTE PUBLIC ECONOMICS FORUM IN CANBERRA In 2003, the Melbourne Institute Public Economics Forum in Canberra continued into its fifth year and generated considerable interest. The quarterly forums were well attended. Luncheons were held on 25 March and 17 June at Old Parliament House and 9 September at the Hyatt Hotel, Canberra. The final forum for 2003 was incorporated into the Pursuing Opportunity and Prosperity Conference held at the University of Melbourne on 13 and 14 November. At each luncheon, the Melbourne Instituteâ&#x20AC;&#x2122;s news was presented, and special topics were canvassed, such as a new reform agenda for Australia, focusing on Hard Heads, Soft Hearts: A New Reform Agenda for Australia, based on the April 2002 Economic and Social Outlook Conference, Towards Opportunity and Prosperity; the safety of superannuation; and water The audience at a meeting of the Public Economics pricing and availability. In addition to Melbourne Institute researchers, Forum Dr Pete Summers and Professor Peter Dawkins, guest speakers included Mr Paul Kelly (The Australian), The Hon. Tony Abbott MP (then Minister for Employment and Workplace Relations), Ms Jenny Macklin MP (Deputy Leader of the Opposition), Professor Tom Valentine (University of Western Sydney), Dr Jon D. Stanford (University of Queensland), Mr Charles Littrell (Australian Prudential Regulation Authority), Professor John Freebairn (The University of Melbourne), Professor Mike Young (CSIRO) and Dr Conall Oâ&#x20AC;&#x2122;Connell (Department of Environment and Heritage). The Chairman was Dr Ken Henry (Commonwealth Treasury).

Members Gold

Associate

Australian Taxation Office Department of Family and Community Services Department of Industry, Tourism and Resources Department of the Treasury ING Mercer Investment Consulting Parliamentary Library Reserve Bank of Australia Westpac Banking Corporation

Australian Bureau of Statistics Australian Public Service Commission Department of Disability, Housing and Community Department of the Treasury Department of Transport and Regional Economics IdeaWorks Productivity Commission

Individual Australian Bureau of Statistics Department of Defence Department of Prime Minister and Cabinet Health Services Australia New Zealand High Commission Queensland Investment Corporation

Mr Tony Abbott and Ms Jenny Macklin both spoke at the Public Economics Forum and the Pursuing Opportunity and Prosperity Conference in 2003

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PURSUING OPPORTUNITY AND PROSPERITY CONFERENCE

• Economic and Social Stocktake • Outlook for the Economy • Welfare Reform – Is It Helping the Disadvantaged into Jobs and Mainstream Society? • University Reform Workplace Relations Minister Mr Kevin Andrews, federal Sex • What’s Wrong with the Housing Market? Discrimination Commissioner Ms Pru Goward, ACTU Secretary • How Do We Reduce Work Disincentives in the Tax Mr Greg Combet and Professor Mark Wooden from the Melbourne and Social Security System? Institute at the Pursuing Opportunity and Prosperity Conference • Schools: Is the State System in Decay? • Indigenous Development • The Great Australian Trade Debate – Asia and the United States; the WTO and the FTA • Innovation and Commercialisation • Living and Working in Australia – Early Evidence from the HILDA Survey • The Health Insurance Debate • Water Scarcity – The New Reform Agenda • What Now for Competition Policy? • Keeping Older Workers in Work • Creating Family Friendly Communities • Corporate Philanthropy • Three Treasury Secretaries – What is the Budget Constraint?

Photo by The Australian

On 13 and 14 November 2003, the Melbourne Institute and The Australian held their second joint Economic and Social Outlook Conference, entitled ‘Pursuing Opportunity and Prosperity’. Large numbers of baby boomers are retiring from the labour force or have already done so. At the same time the fertility rate has been declining. How will we achieve opportunity and prosperity for all Australians with this rising ‘dependency ratio’? This question became the major theme of the conference. The conference in November 2003 brought together a varied range of leading thinkers from academia, politics, public service, business, unions and community groups to debate the future policy agenda in the context of an ageing population. Raising labour force participation and sustaining productivity growth emerged as major imperatives to sustain future prosperity. Policies examined through the intergenerational lens included work and family; the transition from welfare to work; education and innovation; health reform; indigenous development; the future of free trade; new issues in microeconomic reform; and the constraint imposed by the budget. The sessions covered by the conference were:

The speech at the Gala Dinner was given by the Governor of the Reserve Bank, Mr Ian Macfarlane, who talked about ‘The Australian Economy in the 21st Century’. The sessions were well attended over the two days of the conference, with over 300 delegates in attendance. The conference was covered extensively in The Australian and other media and a book based on the conference, entitled Reforming Australia: New Policies for a New Generation and edited by Professor Peter Dawkins and Mr Mike Steketee (from The Australian), was released in 2004.

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Mr Michael Stutchbury, Editor at The Australian; Mr Dennis Trewin, Australian Statistician; Mr Gary Banks, Chairman of the Productivity Commission; Dr Ken Henry, Secretary to the Treasury; Mr Chris Mitchell, Editor-in-Chief at The Australian; Professor Peter Dawkins; The Governor General; and Ms Fay Marles, the Universityâ&#x20AC;&#x2122;s Chancellor

Mr Ian Macfarlane, Governor of the Reserve Bank, addressing the conference dinner

Mr Tony Abbott speaking to journalists

Treasury Secretaries Session: Mr Ian Little, Secretary, Victorian Department of Treasury and Finance; Mr Tony Cole, Principal, Mercer Investment Consulting and former Secretary to the Treasury; and Mr Ted Evans, former Secretary to the Treasury

Dr Ken Henry, Secretary to the Treasury, addressed the conference on intergenerational issues

Mr Gerhardt Pearson, Executive Director, Balkanu Cape York Development Corporation

Professor Allan Fels, Dean, Australia and New Zealand School of Government; Professor Stephen King, University of Melbourne; Mr Mark Latham, then Shadow Treasurer; and Mr Graeme Samuel, Chairman, ACCC

Mr Paul Kelly, Editor-at-Large, The Australian; and Professor Peter Dawkins, Ronald Henderson Professor, Director, Melbourne Institute and Dean, Faculty of Economics and Commerce

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Australian-Based Speakers and Chairs The Hon. Tony Abbott MP Mr Geoff Allen (The Allen Consulting Group) Mr Kevin Andrews MP Mr Larry Anthony MP Mr Gary Banks (Productivity Commission) Ms Julie Bishop MP Professor Jeff Borland (The University of Melbourne) Professor Derek Bosworth (The University of Melbourne) Dr Neil Byron (Productivity Commission) Professor Brian Caldwell (The University of Melbourne) Professor Bruce Chapman (Australian National University) Mr Tony Cole (Mercer Investment Consulting) Mr Greg Combet (Australian Council of Trade Unions) Professor Peter Cullen (Federation of Australian Scientific and Technologies Societies) Professor Peter Dawkins (The University of Melbourne) Professor John Deeble (Australian National University) Mr Saul Eslake (ANZ Banking Group) Mr Bill Evans (Westpac Banking Corporation) Mr Ted Evans AC Professor Allan Fels AO (Australia and New Zealand School of Government) Professor John Freebairn (The University of Melbourne) Mr Michael Fullilove (Lowy Institute for International Policy) Professor Joshua Gans (Melbourne Business School) Professor Ross Garnaut AO (Australian National University) Professor Alan Gilbert (The University of Melbourne) Ms Julia Gillard MP Mr Robert Gottliebsen (The Australian) Ms Pru Goward (Equal Rights and Sex Discrimination Commission) Professor Robert Gregory AO (Australian National University) Professor Ann Harding (The University of Canberra) Mrs Glenys Harding (The University of Melbourne) Ms Elaine Henry OAM (The Smith Family) Dr Ken Henry (The Treasury) His Excellency the Major-General Philip Michael Jeffery AC, CVO, MC Dr Peter Jonson (Australian Institute of Commercialisation) Dr Michael Keating AC (Australian National University) Mr Paul Kelly (The Australian) Professor Stephen King (Melbourne Business School) The Hon. Lynne Kosky MP Dr Jonathan Lacey (Aglient Technologies) Ms Katie Lahey (Business Council of Australia)

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Professor Marcia Langton AM (The University of Melbourne) Mr Mark Latham MP Ms Kate Legge (The Australian) Mr Sam Lipski (The Pratt Foundation) Mr Ian Little (Victorian Department of Treasury and Finance) Professor Peter Lloyd (The University of Melbourne) Dr Philip Lowe (Reserve Bank of Australia) Ms Winsome McCaughey (Australian Business Arts Foundation) Mr Patrick McClure (Mission Australia) Mr Ian Macfarlane (Reserve Bank of Australia) Ms Jenny Macklin MP Ms Fay Marles AM (The University of Melbourne) Mr George Megalogenis (The Australian) Mr Chris Mitchell (The Australian) The Hon. Dr Brendan Nelson MP Senator Kay Patterson MP Mr Gerhardt Pearson (Balkanu Cape York Development Corporation) Mr Chris Richardson (Access Economics) Mr Graeme Samuel AO (Australian Competition and Consumer Commission) Professor Peter Saunders (Centre for Independent Studies) Dr Elizabeth Savage (University of Technology, Sydney) Mr Bill Scales AO (Telstra) Dr Richard Scotton AO (Health Economist) Dr Ed Shann (Productivity Commission) Professor Fiona Stanley AC (Australian Research Alliance for Children and Youth) Mr Mike Steketee (The Australian) Mr Michael Stutchbury (The Australian) Dr Pete Summers (The University of Melbourne) The Hon. Wayne Swan MP Mr Warwick Temby (Housing Industry Association) Mr Dennis Trewin (Australian Bureau of Statistics) The Hon. Mark Vaile MP Senator Amanda Vanstone MP Ms Asa Wahlquist (The Australian) Mr Alan Wood (The Australian) Professor Mark Wooden (The University of Melbourne)

International Speakers Professor Richard Disney (University of Nottingham) Professor Alan Duncan (University of Nottingham) Professor Neal Halfon (Center for Healthier Children, Families and Communities, UCLA) Mr Neil Sterritt (Sterritt Consulting)


PUBLICATIONS BY SUBSCRIPTION Melbourne Institute Economic and Social Journals Australian Economic Review in 2003 2003 saw one very notable change to the editorial team. Following his resignation from the Melbourne Institute in September to take up a senior position in the Victorian Department of Treasury and Finance, Associate Professor David Johnson resigned from the position of Managing Editor. David was directly associated with the Australian Economic Review for over 14 years. He was appointed the Business Manager of the Review in 1989 before being made one of the joint editors in 1992, a position he held until his resignation. We wish David well in his new endeavour. Professor John Freebairn has taken over the position of Managing Editor. The format of the Review during 2003 remained largely unchanged, and has continued to retain its strong emphasis on issues of contemporary policy relevance, publishing policy forums on the security of superannuation assets, the pricing and availability of water resources and executive remuneration. The contributed articles published have also covered a diverse mix of policy-relevant topics including, for example, retailing strategies in the telecommunications industry, the protection of employee entitlements following corporate failure, the conduct of monetary policy and the impact of minimum wage laws. In 2003 the Review published 38 articles, compared with 43 published in 2002. The size of the Review was a little bigger with a total of 463 pages. In Table 4, we show the distribution of articles by type for the last four years. In 2003 we received 41 submissions in the Contributed Articles section. While up on last yearâ&#x20AC;&#x2122;s total of 35, this number is still below the long-run average. Table 5 shows the number of submissions for the past four years. The acceptance rate for papers that have been published has been 34 per cent over the past four years (papers published as a percentage of submissions). Table 4: Published Articles, 2000 to 2003 Type of Article

2000

2001

2002

2003

Invited Articles

1

1

3

1

Contributed Articles

17

17

14

15

Policy Forum

13

20

21

13

Data Surveys

4

3

1

5

For the Student

4

4

4

4

387

487

462

463

Pages

Table 5: Submissions, 2000 to 2003(a) Contributed Articles

2000

2001

2002

2003

Brought forward from previous year(b)

37

30

22

11

Submissions during year

40

56

35

41

77

86

57

52

17

17

14

6

Decisions made Accepted: Published Accepted: In queue

2

2

5

4

Rejected/withdrawn

30

47

27

19

Resubmit

11

7

3

18

In process

17

13

8

7

77

86

57

54

Notes: (a)Contributed articles only. (b) Sum of acceptances in queue, re-submissions and articles in process.

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Australian Social Monitor The Australian Social Monitor aims to monitor and analyse important social trends and attitudes. The Australian Social Monitor is published with support from the International Social Science Surveys/Australia and ANUTECH at the Australian National University. Poor sales, however, have led the Melbourne Institute to discontinue its publication. 2004 will be the last year of publication.

Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends The Quarterly Bulletin is sponsored by Mercer Investment Consulting and provides an authoritative analysis of international, national and state economic environments, with a particular focus on the state economies and on reading the business cycle.

Melbourne Institute Economic and Social Indicators Westpac – Melbourne Institute Indexes of Economic Activity Published monthly the Westpac – Melbourne Institute Indexes of Economic Activity examines movements in leading, coincident and lagging indicators of economic activity in Australia, together with comparative data from overseas. It also includes a quarterly leading index of inflation. Indices of economic activity are designed to enhance the decision making process of financial and business managers by anticipating and identifying turning points in the economy. Each index blends several variables that reflect different aspects of the economy; their combination is intended to give a more representative picture than any one indicator would by itself.

Westpac – Melbourne Institute Survey of Consumer Sentiment The Consumer Sentiment Index is the average of five responses on consumers’ evaluation of their household financial situation over the past year, the coming year and the next five years, anticipations of economic conditions over the coming year and the next five years and a view on buying conditions for major household items; assessments of future unemployment are also recorded. Each quarter, consumers are also surveyed on their views on buying conditions for cars and dwellings, the wisest place for savings and economic news recall. This report is produced monthly.

Westpac – Melbourne Institute Survey of Consumer Sentiment: NSW, Victoria, Queensland, Western Australia Each quarter we present the same consumer sentiment data as in the Westpac – Melbourne Institute Survey of Consumer Sentiment (except news recall data) on consumer sentiment for New South Wales, Victoria, Queensland and Western Australia.

Melbourne Institute Survey of Consumer Inflationary Expectations The consumer inflationary expectations measures are designed to represent the average householder’s expected rate of consumer price rises over the coming 12 months. The survey produces a direct measure of inflationary expectations as consumers are asked whether, and by how much, they believe prices will go up or down. The report is produced monthly.

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ING – Melbourne Institute Household Saving Report The Household Saving Report contains data on householders’ current saving behaviour, reasons for saving, current household asset and debt structure and their assessment of the best ways to hold assets. The report is produced quarterly.

Melbourne Institute Wages Report The Wages Report records employees (self-reported) wage changes over the previous 12-month period. This survey has been designed to capture the growth in wage rates. The report is produced quarterly.

TD Securities – Melbourne Institute Experimental Monthly Inflation Gauge TD Securities and the Melbourne Institute have developed a monthly inflation indicator to give markets and policy makers a monthly update on inflation trends. Based on the ABS methodology of calculating the quarterly consumer price index, the TD Securities – Melbourne Institute Experimental Monthly Inflation Gauge estimates month to month price movements for a wide-ranging basket of goods and services across main capital cities. This report is produced monthly.

Poverty Lines: Australia Poverty Lines: Australia is a quarterly newsletter that updates the ‘Henderson Poverty Line’ as defined in the 1973 Commonwealth Commission of Inquiry into Poverty. The Poverty Lines are standard reference material for those concerned with social welfare policy in Australia. The income levels of various sized families are used to ascertain when and where a poverty situation occurs.

Other Melbourne Institute Publications Produced in 2003 Household, Income and Labour Dynamics in Australia (HILDA) Survey Annual Report 2003 The Household, Income and Labour Dynamics in Australia (HILDA) Survey is a householdbased panel survey, which aims to track all members of an initial sample of households over an indefinite life. Further, the sample is automatically extended over time by ‘following rules’ that add to the sample any new children of members of the selected households as well as new household members resulting from changes in the composition of the original households. This publication includes highlights from waves 1 and 2, including publications, presentations and technical papers for 2003.

Melbourne Institute Working Paper Series The Melbourne Institute working papers are indicative of research projects undertaken within the Melbourne Institute. In 2003, 29 working papers were produced.

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STAFF PUBLICATIONS, PRESENTATIONS, SEMINARS, WORKSHOPS AND MEDIA COVERAGE, 2003 Books Dawkins, P, Kelly, P, eds, Hard Heads, Soft Hearts: A New Reform Agenda for Australia, Allen & Unwin, Crows Nest, Australia. Webster, EM, Profits, Edward Elgar Publishing, Cheltenham, United Kingdom.

Contributions to Books Headey, BW, Muffels, R, ‘Welfare capitalism: the ten year impact of governments on poverty, inequality and financial risk in West Germany, the Netherlands, and the USA’, in Krause, P, Backer, G and Hanesch, W, eds, Combating Poverty in Europe: The German Welfare Regime in Practice, Ashgate, Aldershot, United Kingdom, pp 23–40.

Refereed Journal Articles Creedy, J, Johnson, DT, Valenzuela, R, ‘A cost function for higher education in Australia’, Australian Journal of Labour Economics, vol 6, pp 117–134. Creedy, J, Kalb, G, Kew, H, ‘Flattening the effective marginal tax rate structure in Australia: policy simulations using the Melbourne Institute Tax and Transfer Simulator’, Australian Economic Review, vol 36, pp 156–172. Evans, M, ‘Participation in voluntary organisations, Australia 2001–2002’, Australian Social Monitor, vol 6, pp 19–33. Evans, M, Kelley, J, ‘Abortion and moral reasoning: sources of attitudes towards abortion’, Australian Social Monitor, vol 6, pp 74–88. Evans, M, Kelley, J, ‘Internationalism: is there a rift between the new world and the old?’, Australian Social Monitor, vol 6, pp 5–10. Evans, M, Kelley, J, ‘Trends in Australian attitudes to abortion, 1984–2002’, Australian Social Monitor, vol 6, pp 45–53. Headey, BW, ‘Pet ownership: good for health?’, Medical Journal of Australia, vol 179, pp 460–461. Headey, BW, Headey, D, ‘German reunification: welfare gains and losses East and West’, Social Indicators Research, vol 64, pp 107–138. Headey, BW, Muffels, R, ‘Policy goals and outcomes in three worlds of welfare capitalism’, Schmollers Jahrbuch, vol 123, pp 27–42. Johnson, DT, Wilkins, RK, ‘The net benefit to government of higher education: a “balance sheet” approach’, Economic Papers, vol 22, pp 1–20. Kalb, G, Williams, J, ‘Delinquency and gender’, Applied Economic Letters, vol 10, pp 425–429. Kelley, J, ‘Ideology and fear of genetic engineering: public opinion in Australia, 1993–2002’, Australian Social Monitor, vol 6, pp 54–62. Kelley, J, Evans, M, ‘Assessing age pension options, part 1: Australian public opinion 1994–2001, with comparisons to Finland and Poland’, Australian Social Monitor, vol 6, pp 67–73. Kelley, J, Evans, M, ‘Stepparenting in Australia’, Australian Social Monitor, vol 6, pp 1–4. Loundes, JE, Tseng, Y, Wooden, MP, ‘Enterprise bargaining and productivity in Australia: what do we know?’, Economic Record, vol 79, pp 245–258. Song, LL, Webster, EM, ‘How segmented are skilled and unskilled labour markets: the case of Beveridge Curves’, Australian Economic Papers, vol 42, pp 332–345. Tseng, Y, Wilkins, RK, ‘Reliance on income support in Australia: prevalence and persistence’, Economic Record, vol 79, pp 196–217.

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Webster, EM, Jarvis, KM, ‘The occupational career paths of Australian tradesmen’, Labour and Industry, vol 14, pp 61–81. Wilkins, RK, ‘Immigrant earnings adjustment: the impact of age at immigration’, Australian Economic Papers, vol 42, pp 292–315. Wilkins, RK, ‘Immigrant and native-born earnings distribution in Australia: 1982–1996’, Australian Journal of Labour Economics, vol 6, pp 83–115. Wooden, MP, ‘Long-hours working and enterprise bargaining’, Agenda: A Journal of Policy Analysis and Reform, vol 10, pp 259–271.

Other Journal Articles Chua, M, Leahy, A, ‘Forecasts for the states and territories’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 1.03, pp 10–16. Chua, M, Leahy, A, ‘Forecasts for the states and territories’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 2.03, pp 10–16. Marks, G, Rothman, S, ‘Longitudinal studies of Australian youth’, Australian Economic Review, vol 36, pp 428–434. Song, LL, Chua, M, ‘Forecasts for the states and territories’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 3.03, pp 10–16. Song, LL, Chua, M, ‘Forecasts for the states and territories’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 4.03, pp 10–16. Song, LL, Leahy, A, ‘Australia: outcomes and outlook’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 2.03, pp 1–6. Song, LL, Leahy, A, ‘United States’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 2.03, pp 7–9. Song, LL, Summers, P, Leahy, A, ‘Australia: outcomes and outlook’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 1.03, pp 1–6. Song, LL, Summers, P, Leahy, A, ‘Australia: outcomes and outlook’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 3.03, pp 1–6. Song, LL, Summers, P, Leahy, A, ‘Australia: outcomes and outlook’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 4.03, pp 1–6. Song, LL, Summers, P, Leahy, A, ‘United States’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 1.03, pp 7–9. Song, LL, Summers, P, Leahy, A, ‘United States’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 3.03, pp 7–9. Song, LL, Summers, P, Leahy, A, ‘United States’, Mercer – Melbourne Institute Quarterly Bulletin of Economic Trends, no. 4.03, pp 7–9. Webster, E, ‘The effects of wages on aggregate employment: a brief summary of empirical studies’, Australian Economic Review, vol 36, pp 134–142.

Conference Proceedings Shields, M, Wooden, MP, ‘Marriage, children and subjective well-being’, Conference Proceedings, Eighth Australian Institute of Family Studies Conference – ‘Step Forward for Families: Research, Practice and Policy’, 12–14 February, Australian Institute of Family Studies, Melbourne Exhibition Centre, Melbourne. Smith, PA, ‘A Bayesian approach to inference for a threshold autoregression with a unit root’, Conference Proceedings, Proceedings of the 2003 PhD Conference in Economics and Business, 5–7 November, The University of Western Australia. Weston, R, Wooden, MP, ‘The HILDA Survey and research on families’, Conference Proceedings, Eighth Australian Institute of Family Studies Conference – ‘Step Forward for Families: Research, Practice and Policy’, 12–14 February, Australian Institute of Family Studies, Melbourne Exhibition Centre, Melbourne.

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Wilkins, RK, ‘Underemployment in Australia: evidence from the HILDA Survey’, in Carlson, E ed, The Full Employment Imperative, Conference Proceedings, Path to Full Employment, 10–12 December, University of Newcastle, Australia.

Melbourne Institute Working Papers Borland, J, Tseng, Y, ‘How Do Administrative Arrangements Affect Exit from Unemployment Payments? The Case of the Job Seeker Diary in Australia’, Working Paper no. 27/03. Borland, J, Wilkins, R, ‘Effects of Activity Test Arrangements on Exit from Payments: The 9-Month Intensive Review’, Working Paper no. 25/03. Creedy, J, Kalb, G, ‘Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation’, Working Paper no. 16/03. Creedy, J, Kalb, G, Scutella, R, ‘Evaluating the Income Redistribution Effects of Tax Reforms in Discrete Hours Models’, Working Paper no. 21/03. Creedy, J, Kalb, G, Scutella, R, ‘Income Distribution in Discrete Hours Behavioural Microsimulation Models: An Illustration of the Labour Supply and Distributional Effects of Social Transfers’, Working Paper no. 23/03. Creedy, J, Scutella, R, ‘The Role of the Unit of Analysis in Tax Policy Reform Evaluations’, Working Paper no. 28/03. Freebairn, J, Dawkins, P, ‘Unemployment Policy: Lessons from Economic Analysis’, Working Paper no. 22/03. Fry, TRL, Jarvis, K, Loundes, J, ‘Industrial Relations Reform at the Enterprise and Workplace’, Working Paper no. 7/03. Fry, TRL, Jarvis, K, Loundes, J, ‘Industrial Relations Reform: Who Are the Pro-Reformers?’, Working Paper no. 11/03. Fry, TRL, Webster, E, ‘Conflict Inflation: Estimating the Contributions to Wage Inflation in Australia during the 1990s’, Working Paper no. 6/03. Gans, J, King, SP, ‘Anti-Insurance: Analysing the Health Insurance System in Australia’, Working Paper no. 10/03. Henry, K, ‘Address to the Melbourne Institute’s 40th Anniversary Dinner’, Working Paper no. 17/03. Jensen, B, Harris, MN, ‘Neighbourhood Measures: Quantifying the Effects of Neighbourhood Externalities’, Working Paper no. 4/03. Johnson, D, Headey, B, Jensen, B, ‘Communities, Social Capital and Public Policy: Literature Review’, Working Paper no. 26/03. Johnson, D, Scutella, R, ‘Understanding and Improving Data Quality Relating to Low-Income Households’, Working Paper no. 18/03. Johnson, D, Wilkins, R, ‘The Effects of Changes in Family Composition and Employment Patterns on the Distribution of Income in Australia: 1982 to 1997–1998’, Working Paper no. 19/03. Kalb, G, Kew, H, Scutella, R, ‘Effects of the Australian New Tax System on Government Expenditure with and without Behavioural Changes’, Working Paper no. 9/03. Kalb, G, Scutella, R, ‘Wage and Employment Rates in New Zealand from 1991 to 2001’, Working Paper no. 13/03. Leahy, A, Loundes, J, Webster, E, Yong, J, ‘Industrial Capabilities and Productivity in Victoria: Part I The Company Survey’, Working Paper no. 12/03. Loundes, J, Rogers, M, ‘The Rise of Trade Marking in Australia in the 1990s’, Working Paper no. 8/03. Maani, SA, Kalb, G, ‘Childhood Economic Resources, Academic Performance, and the Choice to Leave School at Age Sixteen’, Working Paper no. 1/03. Rogers, M, ‘Competition, Agency and Productivity’, Working Paper no. 20/03. Shields, M, Wooden, M, ‘Investigating the Role of Neighbourhood Characteristics in Determining Life Satisfaction’, Working Paper no. 24/03. Song, LL, ‘Do Underlying Measures of Inflation Outperform Headline Rates? Evidence from Australian Data’, Working Paper no. 29/03. Summers, P, ‘Bayesian Evidence on the Structure of Unemployment’, Working Paper no. 3/03. Webster, E, ‘Forces Shaping Firms’ Decisions to Innovate: Evidence from Large Australian Organisations’, Working Paper no. 5/03. Webster, E, Jarvis, K, ‘The Occupational Career Paths of Australian Tradesmen’, Working Paper no. 14/03.

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Wilkins, R, ‘Labour Market Outcomes and Welfare Dependence of Persons with Disabilities in Australia’, Working Paper no. 2/03. Wooden, M, Warren, D, ‘The Characteristics of Casual and Fixed-Term Employment: Evidence from the HILDA Survey’, Working Paper no. 15/03.

Reports Borland, J, Tseng, Y, ‘How Do Administrative Arrangements Affect Exit from Unemployment Payments? The Case of the Job Seeker Diary in Australia’. Borland, J, Wilkins, R, ‘Effects of Activity Test Arrangements on Exit from Payments: The 9-Month Intensive Review’. Christie, AF, D’Aloisio, S, Gaita, KL, Howlett, MJ, Webster, EM, ‘Analysis of the Legal Framework for Patent Ownership in Publicly Funded Research Institutions’. Creedy, J, Kalb, G, Scutella, R, ‘Income Distribution in Discrete Hours Behavioural Microsimulation Models: An Illustration of the Labour Supply and Distributional Effects of Social Transfers’. Creedy, J, Scutella, R, Kalb, G, ‘Evaluating the Income Redistribution Effects of Tax Reforms in Discrete Hours Models’. Farrell, L, Fry, T, Harris, M, ‘A Pack a Day for Twenty Years: Smoking and Cigarette Pack Sizes’. Johnson, D, Headey, B, Jensen, B, ‘Communities, Social Capital and Public Policy’. Johnson, D, Scutella, R, ‘Understanding and Improving Data Quality Relating to Low-Income Households’. Johnson, D, Wilkins, R, ‘The Effects of Changes in Family Composition and Employment Patterns on the Distribution of Income in Australia: 1982 to 1997–1998’. Kalb, G, Kew, H, Scutella, R, ‘Effects of the Australian New Tax System on Government Expenditure with and without Behavioural Changes’. Leahy, A, ‘ING – Melbourne Institute Household Saving Report’, Quarterly Report. Leahy, A, ‘Melbourne Institute Survey of Consumer Inflationary Expectations’, Monthly Report. Leahy, A, ‘Westpac – Melbourne Institute Indexes of Economic Activity’, Monthly Report. Leahy, A, ‘Westpac – Melbourne Institute Survey of Consumer Sentiment’, Monthly Report. Leahy, A, ‘Westpac – Melbourne Institute Survey of Consumer Sentiment: NSW, Victoria, Queensland, Western Australia’, Quarterly Report. Leahy, A, ‘Westpac – Melbourne Institute Unemployment Expectation Index’, Monthly Report. Leahy, A, ‘Westpac – Melbourne Institute Wages Report’, Quarterly Report. Leahy, A, Loundes, J, Webster, E, Yong, J, ‘Industrial Capabilities and Productivity in Victoria: Part 1 the Company Survey’. Loundes, J, Rogers, M, ‘The Rise of Trade Marking in Australia in the 1990s’. Marks, G, Hillman, K, Beavis, A, ‘The Dynamics of the Australian Youth Labour Market in Australia: The 1975 Cohort’. Shields, M, Wooden, M, ‘Investigating the Role of Neighbourhood Characteristics in Determining Life Satisfaction’. Song, LL, ‘Do Underlying Measures of Inflation Outperform Headline Rates? Evidence from Australian Data’. Summers, P, ‘Bayesian Evidence on the Structure of Employment’. Summers, P, Webster, E, Yong, J, Leahy, A, Loundes, J, ‘Industrial Capabilities and Productivity in Victoria’. Webster, E, ‘Forces Shaping Firms’ Decisions to Innovate: Evidence from Large Australian Organisations’. Webster, E, Fry, T, ‘Conflict Inflation: Estimating the Contributions to Wage Inflation in Australia during the 1990s’. Wilkins, R, ‘Labour Market Outcomes and Welfare Dependence of Persons with Disabilities in Australia’. Wooden, M, Warren, D, ‘The Characteristics of Casual and Fixed-Term Employment: Evidence from the HILDA Survey’. Yong, J, ‘Preventative versus Curative Health Care: The State of Public Health in Australia’.

Staff Seminars and Presentations Borland, J, Tseng, Y, ‘Does Work for the Dole Work?’, presented to the Department of Family and Community Services, Canberra, 10 September. Borland, J, Tseng, Y, ‘How Do Administrative Arrangements Affect Exit from Unemployment Payments? The Case of the Job Seeker Diary in Australia’, presented to the Department of Family and Community Services, Canberra, 10 September.

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Borland, J, Wilkins, R, ‘Effects of Activity Test Arrangements on Exit from Payments: The 9 Month Intensive Review’, presented to the Department of Family and Community Services, Canberra, 10 September. Chua, M, Kew, H, Yong, J, ‘Airline Code-Share Alliances and Costs: Imposing Concavity on Translog Cost Function Estimation’, presented to the Econometric Society Australasian Meeting, Sydney, 9–11 July. Creedy, J, Kalb, G, Scutella, R, ‘Evaluating the Income Redistribution Effects of Tax Reforms in Discrete Hours Models’, presented to the Econometric Society Australasian Meeting, Sydney, 9–11 July. Dawkins, P, ‘Address to Graduation Ceremony’, University of Melbourne, 16 December. Dawkins, P, ‘The Economic, Social and Environmental Performance of Australia: A Stocktake’, presented to the Pursuing Opportunity and Prosperity Conference, Melbourne Institute of Applied Economic and Social Research, Melbourne, 13–14 November. Dawkins, P, ‘Hard Heads, Soft Hearts: A New Reform Agenda for Australia’, presented to The Smith Family, Sydney, 9 April. Dawkins, P, ‘Hard Heads, Soft Hearts: A New Reform Agenda for Australia’, presented to Executive Conversations, Institute of Public Administration (Victoria), Melbourne, 24 June. Dawkins, P, ‘Hard Heads, Soft Hearts: A New Reform Agenda for Australia’, presented to The Cranlana Program, Melbourne, 13 August. Dawkins, P, ‘Hard Heads, Soft Hearts: Rats, Mice and Higher Education Reform’, presented to the Senior Administrator’s Conference, University of Melbourne, Stonlea, 27 October. Dawkins, P, ‘Jobless Households in Australia’, presented to the Welfare Reform Consultative Forum, Canberra, 14 March. Dawkins, P, ‘Skills and Attributes of Graduates: Employer Survey’, presented to the Deans and Heads Conference, University of Melbourne, Lorne, 11 February. Doiron, D, Kalb, G, ‘Effects of Childcare Demands and Policies on Household Labour Supply in Australia’, presented to the Treasury of New Zealand, Wellington, New Zealand, July. Jensen, P, Webster, E, ‘The Changing Pattern of Trade Marking in Australia’, presented to the Trade Mark Conference, Intellectual Property Research Institute of Australia, University of Melbourne, 26 September. Kalb, G, ‘Effects of Childcare Demands and Policies on Household Labour Supply in Australia’, presented to the Social Policy Research Workshop, Department of Family and Community Services, Canberra, 24–25 November. Kalb, G, ‘How Can Social Policy Improve Economic Participation?’, presented to the Department of Family and Community Services/Department of Employment and Workplace Relations Technical Workshop on Labour Market Change, Participation, and the Structure of Income Support, Canberra, 5 June. Kalb, G, ‘Using MITTS’, presented to the Department of Family and Community Services, Canberra, August. Kalb, G, Scutella, R, ‘Labour Supply in New Zealand, 1991–2001’, presented to the Treasury of New Zealand, Wellington, New Zealand, July. Kalb, G, Scutella, R, ‘Wage Rates in New Zealand from 1991 to 2001’, presented to the Treasury of New Zealand, Wellington, New Zealand, July. Leahy, A, Loundes, J, Webster, E, Yong, J, ‘Industrial Capabilities in Victoria’, presented to the Victorian Department of Premier and Cabinet, Melbourne, 4 April. Smith, P, ‘A Bayesian Approach to Inference for a Threshold Autoregression with a Unit Root’, presented to the Econometric Society Australasian Meeting, Sydney, 9–11 July. Smith, P, ‘A Bayesian Approach to Inference for a Threshold Autoregression with a Unit Root’, presented to the Australian PhD Conference, Perth, November. Smith, P, ‘How Well Do Markov Switching Models Describe Actual Business Cycles? The Case of Synchronization’, presented to the Australasian Macroeconomic Workshop, Hong Kong Institute for Monetary Research, Hong Kong, September. Smith, P, ‘Identification and Normalization in Markov Switching Models of Business Cycles’, presented to the Department of Econometrics and Business Statistics Seminar Series, Monash University, August. Smith, P, ‘Identification and Normalization in Markov Switching Models of Business Cycles’, presented to the Department of Economics Research Seminar Series, Royal Melbourne Institute of Technology, September. Smith, P, ‘Identification and Normalization in Markov Switching Models of Business Cycles’ presented to the Department of Economics Workshop, La Trobe University, September.

44


Song, LL, ‘Do Underlying Measures Outperform Headline Rates: Evidence from Australian Data’, presented to the Econometric Society Australasian Meeting, Sydney, 9–11 July. Song, LL, ‘Do Underlying Measures Outperform Headline Rates: Evidence from Australian Data’, presented to the Australasian Macro Workshop, Hong Kong, 23–24 September. Summers, P, ‘How Well Do Markov Switching Models Describe Actual Business Cycles: The Case of Synchronisation’, presented to the On the Wealth of Nations: Extending the Tinbergen Heritage Conference, Erasmus University, Rotterdam, Netherlands, 10–11 April. Summers, P, ‘Identification and Normalisation in Markov Switching Models of Business Cycles’, presented to the Econometric Society Australasian Meeting, Sydney, 9–11 July. Summers, P, ‘Identification and Normalisation in Markov Switching Models of Business Cycles’, presented to the Economics Department Seminar, Kansas State University, 19 December. Summers, P, ‘The Macroeconomic Outlook’, presented to the 29th Annual Conference of the Australian Mushroom Growers Association, Melbourne, 9 October. Summers, P, ‘The Macroeconomic Outlook’, presented to the Pursuing Opportunity and Prosperity Conference, Melbourne Institute of Applied Economic and Social Research, Melbourne, 13–14 November. Summers, P, Smith, P, ‘Identification and Normalisation in Markov Switching Models of Business Cycles’, presented to the 23rd International Symposium on Forecasting, Mérida, Mexico, 16 June. Summers, P, Smith, P, ‘Identification and Normalisation in Markov Switching Models of Business Cycles’, presented to a seminar at the Federal Reserve Bank of St Louis, 19 June. Tseng, Y, Harris, M, Tang, KK, ‘Employee Turnover: Less is Not Necessarily More?’, presented to the International Conference on the Comparative Analysis of Enterprise (Micro) Data, Cass Business School, London, 15–16 September. Tseng, Y, Wooden, MP, ‘Working Time Preferences of Couple Households’, presented to the Social Policy Research Workshop, Department of Family and Community Services, Canberra, 24–25 November. Watson, N, ‘Coaxing Cross-Sectional Estimates from a Longitudinal Survey: The HILDA Experience’, presented to the Workshop on Sample Surveys and Statistical Methodology, University of Wollongong, 3 November. Watson, N, Wooden, M, ‘The Household, Income and Labour Dynamics in Australia (HILDA) Survey: An Overview’, presented to the Information Session for the Department of Family and Community Services, Brisbane, 10 February. Webster, E, ‘Forces Shaping Firms’ Decisions to Innovate: Evidence from Large Australian Organisations’, presented to the Econometric Society Australasian Meeting, Sydney, 9–11 July. Webster, E, ‘What to Do About the Growing Problem of Work Deprived People?’, presented to the New South Wales Society of Economists, Sydney, 2 April. Webster, E, ‘Women in Economics’, presented to the Conference of Economists, Australian National University, Canberra, 29 September. Wilkins, R, ‘Underemployment in Australia: Evidence from the HILDA Survey’, presented to the Social Policy Research Workshop, Department of Family and Community Services, Canberra, 24 November. Wilkins, R, ‘Underemployment in Australia: Evidence from the HILDA Survey’, presented to the Path to Full Employment Conference, Centre of Full Employment and Equity, University of Newcastle, 11 December. Wilkins, R, ‘Workplace Safety and Hours of Work in the Australian Mining Industry 1991–92 to 1999–2000’, presented to the Minerals Council of Australia, 7 May. Wilkins, R, ‘Workplace Safety and Hours of Work in the Australian Mining Industry 1991–92 to 1999–2000’, presented to the Minerals Council of Australia CEO Forum on Health and Safety, 3 September. Wooden, M, ‘Balancing Work and Family at the Start of the 21st Century: Evidence from Wave 1 of the HILDA Survey’, presented to the Pursuing Opportunity and Prosperity Conference, Melbourne Institute of Applied Economic and Social Research, Melbourne, 13–14 November. Wooden, M, ‘Casual Employment in Australia: Evidence from the HILDA’, presented to the Industrial Relations Society of Australia National Convention, Glenelg, South Australia, 28 March. Wooden, M, ‘Non-Standard Employment and Job Satisfaction’, presented to the Recruitment and Consulting Services Association’s Flexible Workforce Symposium, Australian Graduate School of Management, Sydney, 22 September. Wooden, M, ‘The HILDA Survey: An Overview’, presented to the HILDA Survey Conference, Melbourne Business School, 13 March.

45


Wooden, M, ‘The HILDA Survey: Development, Issues and Prospects’, presented to the SOEP Anniversary Conference ‘Past Achievements and Future Prospects of Household Panel Studies’, Berlin, 7–9 July. Wooden, M, ‘The Importance of Where You Live for Life Satisfaction’, presented to Melbourne Institute Workshop, 8 April. Wooden, M, ‘The Importance of Where You Live for Life Satisfaction’, presented to a Social Policy Research Centre Seminar, University of New South Wales, 15 April. Wooden, M, Headey, B, ‘Economic Well-Being and Subjective Well-Being: The Effects of Income and Wealth’, presented to the 32nd Conference of Economists, Australian National University, Canberra, 29 September–1 October. Wooden, M, Shields, M, ‘Marriage, Children and Subjective Well-Being’, presented to the Eighth Australian Institute of Family Studies Conference ‘Step Forward for Families: Research, Practice and Policy’, Melbourne Exhibition Centre, 12–14 February. Wooden, M, Weston, R, ‘The HILDA Survey and Research on Families’, presented to the Eighth Australian Institute of Family Studies Conference ‘Step Forward for Families: Research, Practice and Policy’, Melbourne Exhibition Centre, 12–14 February.

Melbourne Institute Workshop Series Carlaw, K (University of Canterbury), ‘Optimal Obsolescence’, 14 May. Chua, M, ‘A Note on Bayesian Model Averaging Additional Models’, 2 September. Cooper, R (University of Western Sydney), ‘Development Traps Due to ICT-Human Capital Interdependencies’ (with G Madden), 26 August. Dawkins, P, ‘The Future Agenda of the Melbourne Institute’, 6 May. Harding, D, ‘Rationale for Using Turning-Point Information to Study Dynamics’, 10 June. Headey, B, ‘Do Generous Welfare States Generate Long Term Efficiency Gains which Counterbalance Short Term Losses’, 4 February. Jensen, P, ‘Impact of Incentives, Uncertainty and Transaction Costs on the Efficiency of Public Sector Outsourcing Contracts’, 14 October. Johnson, D, ‘Comparative Health Care Systems’, 15 July. Kalb, G, ‘Effects of Childcare Demands and Policies on Household Labour Supply in Australia’ (with D Doiron), 16 September. Kew, H, ‘Airline Code-Share Alliances and Costs: Imposing Concavity on Translog Cost Function Estimation’ (with M Chua and J Yong), 1 July. Payne, A (McMaster University), ‘Do Government Grants to Private Charities Crowd Out Giving or Fundraising?’ (with J Andreoni), 20 February. Scutella, R, ‘Evaluating the Income Redistribution Effects of Tax Reforms in Discrete Hours Models’ (with J Creedy and G Kalb), 13 May. Song, LL, ‘Do Underlying Measures of Inflation Outperform Headline Rates? Evidence from Australian Data’, 24 June. Summers, P, ‘Identifying Business Cycles Using Markov Switching Models’, 20 May. Tseng, Y, ‘Employee Turnover: Less is Not Necessarily More?’, 9 September. Tseng, Y, ‘Working Time Preferences of Couple Households’, 21 November. Wilkins, R, ‘Underemployment in Australia: Evidence from the HILDA Survey’, 18 November. Wooden, M, ‘The Importance of Where You Live for Life Satisfaction’ (with M Shields), 8 April. Yong, J, ‘Costly Ageing or Costly Deaths: Understanding Health Care Cost Escalation Using Australian Medicare Claims Data’, 2 December.

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Thesis Palangkaraya, A, ‘Essays on the Implications of Firm Behaviors in Learning, Locating, and Advertising’.

Media Coverage In 2003, 1235 references to the Melbourne Institute were identified in the print media and on radio and television. Melbourne Institute staff and products were cited in The Australian, The Weekend Australian, The Australian Financial Review, The Age, The Sunday Age, Herald Sun, The Sydney Morning Herald, The Canberra Times, The West Australian, Northern Territory News and various other newspapers and on radio and television stations. Some notable inclusions in the Melbourne Institute’s media coverage are presented on page 31.

47


FINANCE AND PERFORMANCE INDICATORS Table 6: Income and Expenditure of the Melbourne Institute, 1999 to 2003 1999

2000

2001

2002

2003

Income Non-University Funds made up of $2,032,641 Subscription Services $263,670 Forums/Conferences $112,943 Contract Research $1,068,191 Grants $587,837 Faculty of Economics Department Allocation $150,000 Other University Funds $125,125 Total Income $2,307,766

$2,299,358 $190,595 $222,173 $1,181,994 $704,596

$4,901,284 $189,695 $111,558 $4,134,352 $465,679

$4,773,959 $188,859 $345,935 $4,039,946 $199,219

$7,116,242 $200,069 $318,221 $6,457,114 $140,838

$150,000 $188,426 $2,637,784

$150,000 $535,679 $5,586,963

$150,000 $852,929 $5,776,888

$397,630 $616,448 $8,130,320

Expenditure Salaries Other Expenditure Total Expenditure

$1,482,567 $824,817 $2,307,384

$1,721,936 $885,090 $2,607,026

$2,042,948 $3,520,924 $5,563,872

$2,562,695 $3,102,524 $5,665,219

$2,515,255 $4,798,833 $7,314,088

$383

$30,758

$23,092

$111,670

$816,232

Surplus

Notes: This financial statement is on an accrual basis. Research income is allocated in the year in which the work is done. Table 7: Performance Indicators (a) 1999

2000

2001

2002

$506,508 33% $625,200 73% $855,230 36% $1,986,938 45% 13 –24% 22 –37% 115 –26% 4 33% 0

$465,679 –8% $3,327,032 432% $815,597 –5% $4,608,308 132% 18 38% 22 0% 132 15% 4.5 13% 0.5

$170,219 –63% $2,911,180 –12% $1,653,559 103% $4,734,958 3% 27 50% 31 41% 112 –15% 4.5 0% 0

$122,838 –28% $5,927,229 104% $1,320,251 –20% $7,370,318 56% 21 –22% 22 –29% 83 –26% 5 11% 2

505 96% $528,472 5% 303 42%

550 9% $500,620 –5% 188 –38%

561 2% $517,976 3% 591 na

540 –4% $478,965 –8% 956 62%

268 –50% $484,337 1% 1235 29%

$2,307,766 9%

$2,637,784 14%

$5,586,963 112%

$5,776,888 3%

$8,130,320 41%

15.39 9%

17.59 14%

37.25 112%

38.51 3%

54.20 41%

Research Performance Research Income National Competitive Research Grants

Publications

Higher Degree Students

$380,952 10% Other Public Research Grants $361,938 6% Industry and Other Research Funds $630,050 14% Total External Research Income $1,372,940 11% Journal Articles (accepted by DEST) 17 0% Total Publications (accepted by DEST) 35 0% Total Publications 156 36% Research Higher Degree Students 3 (Full-time equivalent) –40% Research Higher Degree Completions 1

Business, Government and Public Policy Debates Subscriptions to Melbourne Institute Products (Excluding Australian Economic Review) Value of Subscriptions and Sponsorships References to the Melbourne Institute in the Media(b) Financial Performance Total Income

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

2003

Notes:(a) Figures in italics represent the percentage increase/decrease each year. These figures are provisional. (b) 1999 to 2000 figures are based on a different counting method.

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2003 Annual Report - Melbourne Institute  

Melbourne Institute of Applied Economic and Social Research Level 7, Alan Gilbert Building 161 Barry Street The University of Melbourne Vi...

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