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Melbourne Institute News December 2012 ISSN 1442-9500 (print)

ISSN 1442-9519 (online)

Print Post Approved PP381667/01204

Issue 38

Half a Century of Insight Celebrated

Half a Century of Insight Celebrated

Page 1

Outlook Conference Places National Spotlight on the Melbourne Institute Page 2

The Policy Providers: A History of the Melbourne Institute Page 4

PwC Melbourne Institute Asialink Index 2012 Page 5

New Melbourne Institute Policy Briefs Series Page 6

GP Mums Are $100,000 p.a. Worse Off than Male GPs Page 6

‘Substantial Impact’ of Melbourne Institute Research Highlighted Page 7

The Melbourne Institute marked its 50th birthday on 6 December 2012 with a conference and dinner. The conference examined the contribution of the Melbourne Institute to economic and social policy over the past half century. Over 100 attendees heard lively discussions on policy areas from macroeconomics to health and education and the role of the Melbourne Institute today. In his address, Dr Guy Debelle, Assistant Governor (Financial Markets) of the Reserve Bank of Australia, focused on three main areas of contribution by the Melbourne Institute to the greater good of Australian macroeconomics: leading indicators and business cycle analysis; modelling and forecasting; and surveys, most prominently the consumer sentiment series, the inflation expectations series and, more recently, the HILDA panel data series. The other conference sessions covered similar themes related to the Institute’s role as a major provider of economic and social policy advice in Australia since 1962. The current Director, Professor Deborah Cobb-Clark, and three former Directors, Professor Peter Dawkins (Vice-Chancellor and President of Victoria University), Stephen Sedgwick (Public Service Commissioner) and Professor Richard Blandy (Adjunct Professor at the University of South Australia), participated in a dynamic roundtable discussion of the role of the Melbourne Institute within the University of Melbourne and its future contribution to public policy. On the same evening, the conference attendees and invited guests enjoyed a dedicated dinner in the splendid setting of Ormond College where Professor Bruce Chapman (Australian National University) regaled those in attendance with some colourful stories and anecdotes. The recordings from the 50th anniversary conference are available from the Melbourne Institute website and invited papers from the sessions will contribute to a special issue of the Australian Economic Review in 2013.

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


Outlook Conference Places National Spotlight on the Melbourne Institute The hosting of the eighth Economic and Social Outlook conference by the Melbourne Institute and The Australian once again placed the Melbourne Institute in the national spotlight and at the centre of public policy debate and analysis. Participants at the conference concentrated on identifying strategies for Australia to not only cope with, but thrive in, a volatile world. The conference was opened by The University of Melbourne Vice-Chancellor Professor Glyn Davis. In his response, Paul Kelly, Editor-at-Large for The Australian, noted that the timing of the conference was fortuitous given the recent release of the White Paper on Asia and the mid-year budget review. These documents provided the foundation for the conference discussion given the uncertain, unpredictable and weaker global economic environment. In the second session, Professor Ian Harper, Professor Deborah Cobb-Clark and Gary Banks set the scene for the conference by providing an overview of the Australian situation in the global context. In the third session, there was a lively discussion about the likely impact on Australia of recent developments in international financial markets. Addressing the lunch on the first day of the conference, former Treasury Secretary and Westpac Chairman Ted Evans shared his views about the importance of informed public debate. He argued that, as an institution, the Productivity Commission is crucial for underpinning public debate, while the media also has an important role in provoking public debate. Concurrent sessions in the afternoon involved sessions on Asia, which addressed the issue of economic change in Asia and how it affects Australia, and examined the

economic re-emergence of Asia and Australia’s increasing engagement with the region. The health session was opened by setting the broad discussion agenda: ‘Will health reform work given the major changes to hospital funding and performance management?’. The current issues facing the Australian health care system and evidence on the extent to which financial incentives can and have changed the behaviour of health care providers were presented. The session on school education focused on school education reform, particularly funding reform. Raising the quality of school leadership, increasing school autonomy, improving school governance, and linking teachers’ pay with performance, together with rigorous performance management, are some of the measures that could empower and incentivise schools to drive improvement. During the fifth session, ‘Federal Financial Relations’, there was a lively discussion of the strategies for dealing with the reform impasse generated by different levels of government. The ability of the Commonwealth Government to drive reforms to improve the efficiency of the tax system has been hampered by the considerable taxation and expenditure powers vested in the states by the constitution, and the constitutional constraints placed on Commonwealth spending powers. A case was made for a raft of tax reforms for boosting economic wellbeing in Australia. Deputy Prime Minister and Treasurer Wayne Swan began his dinner address by outlining several key points from the recently released White Paper on Asia. He went on to argue that the current government has consistently improved the long-term position of the Australian budget by making significant structural savings, some of which have not been popular. Mr Swan concluded by saying that all governments have difficult choices to make and that he is proud of the choices that have been made in Australia, arguing that they have put Australia on a path to a more equal society.

The Hon Wayne Swan MP addressing the conference dinner Page 2 - Melbourne Institute of Applied Economic and Social Research


Professor John Daley, The Hon Nick Greiner AC and Senator the Hon Penny Wong participating in a panel discussion

The Hon Wayne Swan MP, Paul Kelly and Professor Deborah Cobb-Clark at the conference dinner

In the afternoon concurrent session, ‘Future Fiscal Shock’, a discussion of the future fiscal challenge facing Australian policy-makers occurred. The ‘Homelessness’ session discussed the dysfunction of the existing system of service delivery for homeless people in Victoria and that homelessness more often than not results from policy failures in other areas than housing, and highlighted education, employment and health policies. The speakers in the ‘Productivity and Innovation’ concurrent session discussed the decline in productivity growth that has been occurring in Australia for about a decade, and offered possible remedies with different time horizons.

The second day commenced with a panel discussion on how to make Australian cities more productive and efficient. Concurrent sessions in the morning on the second day involved a session on the ‘Demographic Dilemma’: the Australian population is not only ageing, but also shifting in its composition, and one of the most challenging components of population change to predict is the net migration rate which depends on the economy. Another concurrent session, ‘Restoring the Balance’, saw a lively debate about strategies for moving the government from a borrower to a saver. Increases in savings rates have reduced GST revenues and lead to a narrowing of the tax base. The three speakers in the ‘Trade and Industry Policy’ session were in agreement about the benefit to Australia of continuing trade liberalisation. Opposition Leader Tony Abbott began his lunch address by outlining his views on the key required attributes of a federal government seeking to ensure prosperity and security. He emphasised the importance of taking a long-term view with a productivity focus and a genuine commitment to fiscal sustainability, attributes which he argued were severely lacking in the current government.

The Hon Tony Abbott MHR addressing the conference lunch

Professor Glyn Davis AC and Professor Deborah Cobb-Clark

Professor Judith Sloan began the final session of the conference by reflecting on the title of the conference, given that Australia had been ‘lucky’ to escape the global financial crisis relatively unscathed and the focus was now on securing future prosperity. The recordings and presentations from the 2012 Economic and Social Outlook conference are available from <www. melbourneinstitute.com/miaesr/events/conferences/ Outlook_2012/conference_outlook_2012_program.html>.

Professor John Haisken-DeNew and The Hon Malcolm Turnbull MP

The Hon John Brumby MP addressing the conference

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The Policy Providers: A History of the Melbourne Institute Written by Professor Ross Williams, The Policy Providers: A History of the Melbourne Institute of Applied Economic and Social Research, 1962– 2012 was officially launched as part of the Melbourne Institute’s Economic and Social Outlook Conference on 31 October. The Policy Providers tells the story of how the Institute rose from inauspicious beginnings to achieve national prominence. Through the efforts of its foundation director, Ronald Henderson, within a decade the Institute’s researchers had provided the blueprint for today’s Medicare and the impetus for the national regulation of financial institutions, and had alerted Australians to the existence of significant pockets of poverty. Since then, it has become a respected resource that has persuaded policy makers to implement recommendations based on its quality research. In speaking at the book launch, Tony Cole (the current Melbourne Institute Advisory Board Chair) reflected on the contribution of the Melbourne Institute over

Professor Ross Williams (seated) with (from left) the current Dean Professor Paul Kofman and former deans of the Faculty Professor Margaret Abernethy, Professor Peter Dawkins and Professor Peter Lloyd

the years. On introducing the author, Professor Ross Williams, Professor Margaret Abernethy (former Dean of the Faculty of Business and Economics) commented on the entertaining story of the history of the Melbourne Institute told in The Policy Providers. An ebook of The Policy Providers is available from <www. mup.com.au> and a hard copy can be purchased at the University Co-op Bookshop <www.coop-bookshop.com.au>.

Economics of the Health Workforce Conference A conference on the ‘Economics of the Health Workforce’ will be held on 6 and 7 July 2013 at the Australian National Maritime Museum in Sydney. The conference is being organised by Professor Tony Scott of the Melbourne Institute and Professor Bob Elliott of the University of Aberdeen. It will be held adjacent to the iHEA World Congress (<www. healtheconomics.org/congress/2013/>) in Sydney in July 2013. What Is the Conference About? The focus of the conference will be on micro-econometric studies of health workforce supply and demand. Among the topics to be explored are pay and wage setting; competition in health labour markets; human capital formation; occupation and specialty choice; career transitions; gender differences; geographic distribution of health professionals; international migration; and the evaluation of policy interventions directed at health professionals’ labour markets. Papers that inform policy are particularly welcome. There is now the opportunity to complement current research with a collection of papers that illustrate how advanced theoretical and econometric techniques in labour market analysis can be used to gain insights into important features of the labour markets for medical and other health professionals. Conference Format and Special Issue The conference will include two days of plenary sessions with space for around 14 papers. There will be no concurrent or parrallel sessions. Each paper will be allocated 55 minutes, comprising 35 minutes for presentation, 10 minutes for a discussant, and 10 minutes for general questions and discussion. A small scientific committee will select the papers for presentation. There will be a special issue of Health Economics that will include papers submitted from those presented at the conference. It is therefore preferable that submitted papers have not been accepted by a journal. Submission of Papers and Registration The deadline for submission of full drafts of papers is 28 February 2013. We will be in touch about registration closer to the time. Submissions may be made online <fbeunimelb.asia.qualtrics.com/SE/?SID=SV_e3eFd1aYLzWJ7Ct> or by emailing <p.hope@unimelb.edu.au>. All submissions must include full contact details of the paper presenter or the main contact for the submission. General Enquiries Please contact Penny Hope, Functions Manager, <melb-conf@unimelb.edu.au> for further details. Page 4 - Melbourne Institute of Applied Economic and Social Research


PwC Melbourne Institute Asialink Index 2012 The 2012 PwC Melbourne Institute Asialink Index was launched by the Minister for Foreign Affairs and Trade, Senator the Hon Bob Carr, in Sydney on 26 November 2012.

PwC Melbourne Institute Asialink Engagement Index 500

Asia25

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350 Index

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The fifth edition of the PwC Melbourne Institute Asialink Index continues to demonstrate the critical importance of Australia’s economic relationships with Asia. While the rest of the world continues to underperform in the wake of the global financial crisis, Asia has continued to grow strongly. In particular, ongoing strong growth in China, Australia’s major trading partner and second most important investment partner, has underpinned Australia’s economic performance in recent years and this is also reflected in the current update of the Index. The 2012 Asialink Index confirms that Australia’s engagement with Asia has increased in all but five of the past 20 years, a remarkable achievement. Prospects for future engagement also remain promising, as reflected in the Federal Government’s recent White Paper, Australia in the Asian Century. In particular, there is significant scope for increased engagement with the region’s second and third most populace countries—India and Indonesia. There is also evidence that Australian states and cities are forging their own paths, and building new business, political and cultural links with counterparts in Asia.

• Australia’s trade surplus with Asia25 declined by 7.7 per cent in 2011 following a similar decline in 2010 as growth in imports continued at around double the rate of the growth in exports. This is consistent with the post-float highs in the value of the Australian dollar.

The Index is Australia’s only comprehensive broad-based measure of our engagement in Asia. It includes elements of engagement such as trade, investment, research and business development as well as the less often focused upon sectors of education, tourism, migration and humanitarian assistance. It has become an important resource for policy makers, business leaders and the academic community.

• Tourism engagement with Asia contributed strongly to the overall rise in engagement in 2011, with broadly unchanged overall numbers coming to Australia (which camouflages a big jump in incoming Chinese tourists), but a 13.9 per cent increase in the number of Australians holidaying in Asia (with big increases in travel to Thailand, Indonesia and India).

Index in Brief • Overall engagement with China sharply rose by 53.5 per cent in 2011, driven by investment flows, especially outward investment from Australia into China. Strong growth in tourism also contributed (inward and outward), while education engagement with China rose only slightly. • Japan retained second position in trade and is Australia’s pre-eminent investment partner, accounting for more than half of total inward investment into Australia from Asia in 2011. • Trade in goods and services with Asia25 underpinned Australia’s overall engagement in the region in 2011. Growth in trade with China and

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Indonesia was particularly important, up by 10.7 and 13.7 per cent respectively. Trade with ASEAN overall was also supportive, while trade with India fell.

• Australia’s net investment balance with Asia shifted from a net inflow in 2010 to a net outflow in 2011, reflecting a 34.8 per cent fall in net inward investment and a 70.1 per cent rise in net outward investment. Australia’s net inward and outward investment with the rest of the world fell in 2011.

• Overall education engagement fell in 2011, due largely to a decline in engagement with India; there was a 5.1 per cent fall in incoming Indian student numbers. For Asia25 as a whole, incoming student numbers fell by 1.9 per cent but outgoing numbers rose by a similar amount. • Engagement with ASEAN rose strongly by 7.6 per cent in 2012 reflecting increases in virtually all components of engagement. ASEAN accounted for 14.5 per cent of Australia’s global trade in 2011. The PwC Melbourne Institute Asialink Index is available from the Melbourne Institute website at <www.melbourneinstitute. com>. For further information please email the report’s authors: Dr Russell Thomson <russell.thomson@unimelb.edu.au> or Anne Leahy <anneel@unimelb.edu.au>.

Melbourne Institute of Applied Economic and Social Research - Page 5


New Melbourne Institute Policy Briefs Series In 2013 the Melbourne Institute will launch a new collection of research publications entitled Melbourne Institute Policy Briefs Series.

Melbourne Institute Policy Briefs Series Policy Brief No. 1/13 The Case for Making Public Policy Evaluations Public Deborah A. Cobb-Clark THE MELBOURNE INSTITUTE IS COMMITTED TO INFORMING THE DEBATE

This new series will present a discussion of current research undertaken by staff of the Melbourne Institute. This series will examine current policy issues and provide an analysis of these issues that is independent and accessible to a wide range of audiences.

The first brief in the series is entitled ‘The Case for Making Public Policy Evaluations Public’. It will be released in February 2013. This brief, by Melbourne Institute Director Professor Deborah

Cobb-Clark, sets out the case for making public policy evaluations public. It first reviews the various challenges associated with impact evaluations, paying particular attention to the unique hurdles involved in evaluating Indigenous policy. Lessons learned from clinical trials registries in medical research are then used to argue that Australian economic and social policy evaluations could be improved by making them public. Professor Cobb-Clark argues that all components of any program evaluation, including the unit-record data on which it rests, must be widely and publicly available, so that results can be replicated and confirmed. “Widespread publication of evaluation results must become the norm.” Melbourne Institute Policy Brief No. 1/13 can be downloaded for free from our website in February 2013. If you would like to receive an email notification when new Policy Briefs become available, contact the Melbourne Institute at <melb-inst@unimelb.edu.au>.

GP Mums Are $100,000 p.a. Worse Off than Male GPs ©iStockphoto.com/dolgachov

New research indicates that the take home pay of female doctors with children is being dwarfed by the earnings of male GPs who choose to have children, prompting calls for greater workplace flexibility. The study, led by Melbourne Institute health economist Professor Tony Scott, found that male GPs with children earn up to $105,000 a year more than their female counterparts. The research finds women with children work fewer hours, but also that ‘doctor dads’ work longer and harder. “Male GPs with children seem to work longer hours in order to be the responsible ‘breadwinner’ as their partners take time off,” Professor Scott said. “This behaviour change increases the gap in earnings between male and female doctors.” The study — published as Melbourne Institute Working Paper No. 24/12 — also found that female GPs who have children earn up to $25,000 less than childless female doctors. They also earn significantly less than male GPs without children. “As more women become doctors, the impact of this on access to health care and health care costs is important for medical workforce policy,” Professor Scott said.

“To maintain the participation of women in the medical workforce, medical training programs and medical jobs need to be made more flexible.” The research is based on the experiences of 3,618 GPs surveyed between 2008 and 2009 as part of the Medicine in Australia: Balancing Employment and Life (MABEL) panel survey. Melbourne Institute Working Paper No. 24/12, ‘One Man’s Blessing, Another Woman’s Curse? Family Factors and the Gender-Earnings Gap of Doctors’ by Stefanie Schurer, Daniel Kuehnle, Anthony Scott and Terence Chai Cheng, can be downloaded from the Melbourne Institute website at <www. melbourneinstitute.com>. For more information, email Professor Tony Scott at <a.scott@unimelb.edu.au>.

Page 6 - Melbourne Institute of Applied Economic and Social Research


‘Substantial Impact’ of Melbourne Institute Research Highlighted A national trial undertaken by 12 Australian universities found significant economic, social and environmental benefits, or ‘impact’, arise from research undertaken at Australian universities. A review of 162 research case studies singled out research conducted within the Melbourne Institute as having ‘substantial impact on Australian policy development’. The ‘Excellence in Innovation for Australia’ (EIA) trial conducted by The Australian Technology Network of Universities (ATN) and Group of Eight Universities found that research conducted by the Melbourne Institute has been instrumental in ensuring that the Household, Income and Labour Dynamics in Australia (HILDA) Survey is now numbered among the elite panel surveys in the world. Innovative survey design and extraordinary sample retention has led to the HILDA data underpinning a broad range of economic and social research projects both nationally and internationally. The outcomes of this research effort have had a substantial impact on Australian policy development, including for example: tax changes proposed by the Henry Review; the government’s 2011 Paid Parental Leave policy; federal minimum wage decisions; and informing monetary policy settings. The unit-record data from the HILDA Survey are made available for use to researchers in academia, government and other research organisations (both in Australia and overseas). The survey has been designed with the broad objective of providing researchers and policy makers with a tool for assessing a wide range of economic, demographic, and social policy issues, including: the

Some members of  the HILDA Survey team

incidence and dynamics of poverty; asset allocation, wealth accumulation, and income changes throughout the life course; the correlates and impact of changes in physical and mental health; household formation and dissolution; social capital; and subjective wellbeing. The primary objective of the EIA trial was to establish the impact that research has on Australian society and economy. Assessors from business or industry comprised 70 per cent of the panel membership; the rest came from universities. The trial focused on impact assessment using case studies of research as opposed to the traditional university research metrics such as how many times research has been published or cited. In other words, the trial was to establish external impact relevance to Australia. Australia has one of the highest percentages of its researchers in universities amongst developed economies, nearly 60 per cent. However, the report found that universities have not been pro-active in articulating and communicating the impact of this research in a manner that is readily understood by the broader community.

Melbourne Institute Relocation On 10 December 2012 the Melbourne Institute shifted to a new location. We moved to the fifth and sixth floors of the Faculty of Business and Economics Building. Our new contacts details are: Melbourne Institute of Applied Economic and Social Research The University of Melbourne Level 5, 111 Barry Street Faculty of Business and Economics Building Carlton, Victoria 3010 Australia T: +61 3 8344 2100 F: +61 3 8344 2111 E: melb-inst@unimelb.edu.au W: www.melbourneinstitute.com Melbourne Institute of Applied Economic and Social Research - Page 7


Recent Melbourne Institute Working Papers 21/12 ‘Sons’ Unexpected Long Term Scarring Due to Fathers’ Unemployment’ Michael Kind and John P. Haisken-DeNew 22/12 ‘Labour Market Impacts from Disability Onset’ Cain Polidano and Ha Vu 23/12 ‘The Worldwide Count of Priority Patents: A New Indicator of Inventive Activity’ Gaétan de Rassenfosse, Hélène Dernis, Dominique Guellec, Lucio Picci and Bruno van Pottelsberghe de la Potterie 24/12 ‘One Man’s Blessing, Another Woman’s Curse? Family Factors and the Gender-Earnings Gap of Doctors’ Stefanie Schurer, Daniel Kuehnle, Anthony Scott and Terence Chai Cheng 25/12 ‘Subjective Well-Being: Weather Matters; Climate Doesn’t’ John Feddersen, Robert Metcalfe and Mark Wooden 26/12 ‘Earnings Mobility and Inequality: An Integrated Framework’ Paul Gregg, Rosanna Scutella and Claudia Vittori 27/12 ‘Peer Effects in Adolescent Cannabis Use: It’s the Friends, Stupid’ John Moriarty, Duncan McVicar and Kathryn Higgins 28/12 ‘Immigrant Wage and Employment Assimilation: A Comparison of Methods’ Deborah Cobb-Clark, Barbara Hanel and Duncan McVicar Working Papers can be downloaded for free from <www.melbourneinstitute.com/miaesr/publications/default.html>. If you would like to receive an email notification when new Working Papers become available, contact the Melbourne Institute at <melb-inst@unimelb.edu.au>.

HILDA Survey Research Conference The 2013 HILDA Survey Research Conference will be held on 3 and 4 October 2013 at the University of Melbourne. The aim of the conference is to provide a forum for the discussion of research based on the Household, Income and Labour Dynamics in Australia Survey. Attendance at the conference is open to all, but should be of special interest to both users of the HILDA Survey data and persons with an interest in the outcomes from longitudinal survey research in the broad field of economic and social policy. Submissions and Travel Subsidies Contributors can submit (i) full papers, which will be subject to an external refereeing process; (ii) extended abstracts; or (iii) brief abstracts for a poster presentation. All papers presented will also be assigned to a discussant. Contributions towards the travel and accommodation costs of paper presenters (but not poster presenters) will be available. We will cover the cost of an economy airfare and two nights accommodation for all Australian-based presenters (but limited to one person per paper). Conference registration fees will also be waived. Part subsidies will also be available for a limited number of overseas-based speakers. Selection and Submission Guidelines The number of papers is restricted to maximise room for discussion. Priority will be given to papers that exploit the longitudinal nature of the data. Papers on panel survey methods and that provide cross-national comparisons are also welcome. Presenters of papers that are not selected will be offered the opportunity to make a poster presentation. Submissions will only normally be accepted from registered users of the HILDA Survey data. If you have an idea that you think would be of interest to participants but does not use the HILDA Survey data please contact Professor Mark Wooden at <m.wooden@unimelb.edu.au>. All papers and abstracts need to be received by 31 May 2013 and should be emailed to <p.hope@unimelb.edu.au>. Submission guidelines can be found at <www.melbourneinstitute.com>. Registration Fees The registration fees (inclusive of GST) are Early Bird: $225 (before or by 16 August 2013); Standard: $290 (after 16 August 2013); and Student: $120 (must register by Early Bird date). Further Information Further details about the conference can be found on the Melbourne Institute website. Please contact Penny Hope at <p.hope@unimelb.edu.au> or (03) 8344 2151 for any enquiries regarding the conference or submission process.

Melbourne Institute News Views expressed by the contributors to Melbourne Institute News are not necessarily endorsed or approved by the Melbourne Institute. Neither the Melbourne Institute nor the Editor of Melbourne Institute News accepts any responsibility for the content or accuracy of information contained in this publication. Editor: Rachel Derham tel: (03) 8344 2158, fax: (03) 8344 2111, email: r.derham@unimelb.edu.au. Sub-Editor: Nellie Lentini. Contributors: Professor Deborah Cobb-Clark, Eoin Hahessy, Penny Hope, Anne Leahy, Professor Tony Scott, Ryan Sheales, Professor Ross Williams, Professor Mark Wooden.

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


#38 December 2012 - Melbourne Institute News