When the Industry Commission (IC) proposed slashing car tariffs in 1997, many people warned that such a move would spell the death of Australia's car industry and result in widespread unemployment.
But a group of Monash University economists, members of the Centre of Policy Studies/Impact Group, went to work on the proposals and came up with quite different conclusions.
According to centre director Professor Peter Dixon, the group believed there would be very good growth prospects in the industry with very little reduction in actual employment.
They found that while reducing tariffs by the amount the IC had recommended might result in 6000 fewer jobs in the industry than there would otherwise have been, tariff cuts would not result in massive retrenchments.
"In other words, instead of going from 110,000 to 116,000 jobs over five years, which would represent normal growth, there'd perhaps be no growth at all," Professor Dixon said.
To make the calculations, Professor Dixon and his colleagues used an economic model they developed back in 1975. Originally called the Orani Model after Professor Dixon's wife, it was renamed in 1991 when the centre moved to Monash University's Clayton campus from the University of Melbourne. Constantly updated and refined, the model uses Gempack software developed by Dr Ken Pearson, a professorial fellow at Monash.
"Without doubt it's the most widely used model for this type of detail in Australia," according to the centre's deputy director and one of the model's developers, Professor Brian Parmenter. "I would say it's the most widely used model for practical applications in the world."
Economic modelling - or analysis of the impact of economic policies - is a complex and highly competitive field. Economists feed data into a computer, which calculates diff-erent outcomes depending on the variables. The information is used by policy-makers and business for strategic planning and policy formulation.
Professor Dixon said the model had been designed to be flexible, enabling it to be used for many different purposes. "One of the main reasons we've been able to transfer it so easily, both domestically and overseas, is because of the user-friendly nature of the technology," he said.
The Centre of Policy Studies has carried out work for a wide range of government departments, statutory authorities and major businesses. Briefs vary from examining the implications of a drop-off in numbers of foreign students in Australia to the impact of tariff cuts in the textile, clothing and footwear industries.
The centre's training courses attract participants from around Australia and as far afield as Scandinavia, Russia, South Africa, the US, and many Asian nations. It also runs training programs in places such as China, the Philippines and Thailand. Earlier this year, Monash staff ran a modelling course in Taiwan which focused on the impact of environmental policy decisions.
According to Professor Parmenter, a major part of the Monash Model's success has been its accessibility, which has always been part of the centre's philosophy. That openness has also raised the competitive stakes.
"A lot of people have done our courses or worked for us or been our students, so they do a lot of analysis based on our model without directly interacting with us," he explained. "People commission us to do some things and do others themselves. And other consultants use our methods in competition with us."
The 1998 Monash Model is a far more sophisticated version of what the Dixon-Parmenter group developed all those years ago, reflecting the increasing complexity of the economic landscape.
Its continuing relevance, however, is underlined by the number of developing nations which choose the Monash Model over its competitors. There are currently nearly 40 licensed users of the Gempack software in Australia and more than 80 overseas.
A few years ago, Professor Parmenter was contacted by a South African-based economist who wanted to do some modelling. He said he'd read about the Orani Model in an Impact Project monograph many years ago.
"When he took a job with the South African Government in the early 1990s, he remembered our book and went back to the library to find it," Professor Parmenter recalled with a laugh. "I asked him if it had been read by anyone else in the intervening years. Unfortunately, it hadn't."
As a result of this contact, the Monash group began a collaborative modelling program in South Africa, which has since become the best developed of the group's overseas operations.
Dr Ken Pearson's user-friendly software
has allowed the Monash Model to be easily transferred
around Australia and overseas.
Monash Professors Peter Dixon and Brian Parmenter
say their economic model was designed to be flexible,
allowing it to be used for many purposes.