Tag Archives: investment

Abbott’s foreign investment policy

This is the sen­tence that makes me feel most uncom­fort­able: Vot­ers are like­ly to be less hos­tile to for­eign invest­ment if they think that the gov­ern­ment is pre­serv­ing a well-bal­anced econ­o­my.Extract from We are pledged to real reform | The Aus­tralian Most of the Abbott state­ments about man­u­fac­tur­ing assis­tance, trans­ac­tion costs and “eco­nom­ic diver­si­ty” that […]

Big tobacco bites back

The Gillard government’s plain pack­ag­ing for cig­a­rettes leg­is­la­tion is dis­com­fort­ing even for those who have no patience with the huge and unnec­es­sary costs that tobac­co use impos­es on the Aus­tralian pub­lic health sys­tem.It looks like anoth­er piece of heavy-hand­ed, “go for the jugu­lar” gov­ern­ment reg­u­la­tion (like the appalling NBN, the car­bon tax and the blan­ket […]

The blind bouncer: arrogant and costly

The Trea­sur­er has appar­ent­ly told the media that the For­eign Invest­ment Review Board “unan­i­mous­ly” rec­om­mend­ed the pro­hi­bi­tion of the Sin­ga­pore Stock Exchange’s bid to merge with (or take over) the Aus­tralian Secu­ri­ties Exchange. What does “una­nim­i­ty” mean or mat­ter in secret tri­bunal? Noth­ing what­ev­er. Swan should draw no com­fort from that. But by far the […]

Trahaison des clercs

What­ev­er your views on the mer­its of the SGX/ASX deal—I’m scep­ti­cal of the durable val­ue, but there is a rash of glob­al con­sol­i­da­tion in that industry—do you agree with me that it is mad­ness to install a tri­bunal of bureau­crats at the door to the Aus­tralian invest­ment­mar­ket exact­ing an obscure toll on for­eign firms such […]

Resources tax mess

Hen­ry Ergas explains what’s wrong with the Brown­ian ‘Resources Super Prof­its Tax’ (apart from the appalling, ide­o­log­i­cal snip­ing at for­eign investors). “Unfor­tu­nate­ly, we have a long his­to­ry in this coun­try of inter­ven­tions that, were they capa­ble of per­fect imple­men­ta­tion, might increase wel­fare. Typ­i­cal­ly, when real­i­ty hits, they have the oppo­site effect. The sci­en­tif­ic tar­iff, which […]

Discounting the Intergenerational Report

[H]ow often does the IGR [Inter­gen­er­a­tional Report], in five pages vaunt­ing pub­lic invest­ment in infra­struc­ture, use the term ‘cost ben­e­fit analy­sis’? Not once. Clear­ly, sug­gest­ing that pub­lic invest­ment only be under­tak­en when the ben­e­fits exceed the costs is no longer polit­i­cal­ly cor­rect.” Extract from Hen­ry Ergas in The Aus­tralian
Hen­ry Ergas is—as ever—right on the mon­ey. The 2010 IGR has been writ­ten like a gov­ern­ment press release. It does not seri­ous­ly eval­u­ate the evi­dence nor even offer cost-ben­e­fit analy­sis of the cur­rent government’s infra­struc­ture pro­grams (that it prais­es) in the light of the changes it projects.

What can we make, for exam­ple, of an IGR whose chap­ter on ‘Cli­mate’ fails even to men­tion the impacts of migra­tion pol­i­cy or pop­u­la­tion growth when eval­u­at­ing the effi­ca­cy and eco­nom­ic impacts of a pro­posed emis­sions cap/objective/trading scheme?

Why do we need an IGR that mere­ly regur­gi­tates what the Gov­ern­ment has already claimed about its own poli­cies? An inter-gen­er­a­tional report must be an inde­pen­dent and rig­or­ous review of the evi­dence about pol­i­cy out­comes to be of any use in the nec­es­sary debates about grow­ing our wealth or max­imis­ing our oppor­tu­ni­ties. The cur­rent edi­tion is a poor effort from such a tal­ent­ed group (Trea­sury).

Shorting common sense

I’ve pre­vi­ous­ly not­ed that the pol­i­cy of ban­ning short-sell­ing looked just like the sort of hunch dri­ven reg­u­la­tion that hurts both the econ­o­my and com­mon sense. Its pro­hi­bi­tion ofspec­u­la­tion on price falls was Canute-like.

Now here’s some strong evi­dence that bans such as ASIC’s had adverse impacts on pre­cise­ly fac­tor most need­ed in a cri­sis of mar­ket con­fi­dence: liq­uid­i­ty.

The evi­dence sug­gests that the knee-jerk reac­tion of most stock exchange reg­u­la­tors around the globe to the finan­cial cri­sis – impos­ing bans or reg­u­la­to­ry con­straints on short-sell­ing – was at best neu­tral in its effects on stock prices. The impact on mar­ket liq­uid­i­ty was clear­ly detri­men­tal, espe­cial­ly for small-cap and high-risk stocks. More­over, it slowed down price dis­cov­ery” Extract from Short-sell­ing bans in the cri­sis: Alessan­dro Beber and Mar­co Pagano