First, any reform of education will need to involve significant increases in government spending.

I believe this is completely wrong. I don’t believe there is a strong evidentiary case on spending more on education, as opposed to things like introducing more competition along, eg, the lines recently speculated on by NG, or at least more flexibility at the individual school level.

See eg Andrew Leigh; or Alex Tabarrok (the weaker half of marginalrevolution).

You would have seen Peter Martin’s recent opinion piece which (like other commentators such as Brian Toohey and Mike Stekettee) also take a different view. http://petermartin.blogspot.com/2008/02/tuesday-column-please-please-dont-put.html

One thing that stuck out to me is the assertion that:

‘its a generally accepted rule of thumb in Canberra (but not necessarily in Martin Place) that the trade-off between fiscal policy and monetary policy is that each increase in the budget outcome over last years outcome of $3 to $4 billion has the same effect on demand as a 25 basis point increase in the cash rate.’

That just doesn’t sound convincing to me. I have absolutely no basis to disagree, but it sounds like it overplays the effects of fiscal policy.

On micro reform, no mention of the ALP’s changes to industrial relations laws. Personally I suspect that in the medium term these changes will have a greater effect on future inflation than the tax cuts, with the added bonus of higher unemployyment (effectively a shift outward in the Philips curve).