16 August 2012

Putting topical issues to the test

The rigour behind the rhetoric in arguments for and against asset sales, limits on government spending and other fiscal policies will be put to the test in a series of debates to be held at Victoria University.

Experienced economists, academics and policy advisors from a range of organisations will debate four propositions at the Victoria Business School between August and November.

Organised by Victoria’s Chair in Public Finance, Professor Norman Gemmell, and the Head of the Government Economics Network, Dr Girol Karacaoglu, the debates are designed to highlight the analytical strengths and weaknesses of opposing perspectives on topical issues.

“The debates tackle the types of real-world policy choices and trade-offs that governments are regularly confronted with,” says Professor Gemmell.

The first debate will discuss whether it is sensible to have a limit on government spending, a provision in the ACT party’s confidence and supply agreement with the National party.

“It’s a pretty strong constraint,” says Professor Gemmell, “and one that a left-leaning government might be unlikely to buy into. The debate will highlight how much of this policy is about political preference and how much comes from solid reasoning.”

A later debate will discuss New Zealand’s policy of taxing capital income at 28 percent and whether the rate should be lower.

“In Scandinavia, for example, interest income on deposits in the bank is taxed at about half the rate of earnings to encourage people to save. The Minister of Finance is seeking advice on whether New Zealand should change its tax rate for investments so it’s timely to discuss the issue.”

The third debate will examine views for and against the Crown selling 100 percent, rather than 49 percent, of its shareholding in state owned enterprises. “These are choices that economists have long examined carefully, independently of the political rhetoric that usually accompanies such discussion,” says Professor Gemmell.

The final session will cover whether New Zealand should lower the discount rate for public sector projects, something that plays an important role in the cost-benefit analysis of public investment projects to decide which should proceed.

The debates will be modelled on a court of law, with one speaker making the case for the proposition and another opposing it. A commentator will sum up at the end and outline middle ground in the argument.

Professor Gemmell expects the debates to attract public and private sector economists and policy makers from government departments and Ministers’ offices.

“It’s important that we talk directly to those people as they have a big influence on policy development Academics understand the research and the literature that underpins the various perspectives.”

The first debate, to be held 28 August, will feature Dr Bryce Wilkinson, director of the economic consultancy Capital Economics Limited, arguing in favour of New Zealand retaining a zero percent cap on real per capita government spending growth. Dr Wilkinson, a former director at the New Zealand Treasury, has a background in public policy analysis, capital market research and microeconomic advisory work.

The opposing argument will be put forward by Dr Bill Rosenberg, an economist and director of policy for the Combined Trade Unions (CTU). A former deputy director of the Centre for Teaching and Learning at the University of Canterbury, Dr Rosenberg is widely published on globalisation, trade and e-learning.

Professor Gemmell says the debates will be a-political and speakers have been chosen because of their expertise and their respect for the way in which research can support policy.

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