Economic Reform

The Benefits of National Economic Reform:
May 2015 report to ACOLA

As part of a study on "Australia's comparative advantage", the Australian Council of Learned Academies (ACOLA) commissioned Independent Economics to develop and present alternative economic scenarios for Australia to demonstrate how our economic future depends on whether governments undertake major reform in ten key areas. The scenarios were developed using the Independent Macro-econometric model.

The ten areas of reform are:

  • taxation
  • competition policy
  • free trade agreements
  • federalism
  • workplace relations
  • infrastructure
  • labour force participation
  • innovation
  • migration
  • education

Key Finding

Our report finds that without reform, living standards are only likely to rise modestly, taking real annual consumption per head from $36,000 today to $45,000 in 2030. However, with comprehensive reform, annual consumption per head is modelled to rise to $55,000, implying a reform dividend to living standards of $10,000 per head. By 2050 this reform dividend rises further, to over $15,000 per head.

Access the reports

Access the Independent Economics report "Australia's Comparative Advantage: economic scenarios".

Access the full ACOLA study "Australia's comparative advantage" (ACOLA web-site).

The Economic Impact of Migration:
March 2015

A report on "the Economic Impact of Migration" was prepared by the Migration Council of Australia using modelling commissioned from Independent Economics. "Migration" and "No Migration" scenarios for the Australian economy were simulated to 2050. Previous studies have allowed for the effects of skilled migration on the labour market, including through boosts to productivity and the employment to population ratio. This study goes further by also allowing for:

  • the linkage from higher population growth to higher rates of investment and wealth accumulation
  • a higher population providing greater economies of scale in infrastructure but a thinner spreading of the benefits from natural resources
  • the contributions to productivity growth from education and research and development, based on the theory of semi-endogenous growth
  • the linkages from the age composition of the population to government spending on social security, education and health

Download the Economic Impact of Migration Report

Download "The Economic Impact of Migration".

Contribution of VET to the economy

This report, which was commissioned by TAFE Directors Australia, provides "Cost-benefit analysis and returns from additional investment in Vocational Education and Training (VET)". It builds on previous studies of the economic contribution of additional investment in VET by:

  • fully including benefits not only for graduates but also for module completers
  • fully including benefits not only for up-skillers but also for re-skillers
  • modelling the role of VET as supplier of 43 detailed occupations to 120 industries
  • estimating the internal rate of return to VET investment for policy evaluation of further investment in VET

Key Findings

  • the internal rate of return to additional investment in VET is estimated at a high 18% p.a.
  • this reflects the fact that, in present value terms, the benefits in the form of higher employability and productivity easily outweigh the costs in terms of foregone earnings while studying and tuition
  • the additional investment in VET associated with the 2009 National Agreement for Skills and Workforce Development (NASWD) is estimated to have significant ongoing benefits for the Australian economy
  • households are better off by $0.6 billion per year
  • the workforce is more skilled with a 0.3% boost to the supplies of Technicians and Tradespersons as well as Community and Personal Service Workers
  • industries to expand significantly include manufacturing, automotive repair and personal services

Download the VET Contribution Report

Download "Cost-benefit analysis and returns from additional investment in Vocational Education and Training (VET)".

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