The history and legacy of the Melbourne Institute

The Melbourne Institute of Applied Economic and Social Research was devised to bring new voices, empirical evidence and academic research to the slowly broadening national policy discussions of the 1960s.

63 years on, in a landscape filled with opinions competing for attention, it continues to drive policy change and bring vital economic data to everyday people across Australia.

Joining the conversation

Then Prime Minister Robert Menzies’ leadership in the 1950s saw Australia’s economy shift, growing a desire to hear from a wider range of perspectives in economic policy discussions.

To ensure they were included in this movement, a group of economists at the University of Melbourne sought the advice of Ronald Henderson, an esteemed collaborator who was in Australia on sabbatical.

Members of the Melbourne Institute eat dessert at a long table.
After 63 years, the tradition of the Melbourne Institute continues.

Reflecting on his experience with the Department of Applied Economics at Cambridge University, he suggested the formation of a similar group in Melbourne.

In the spirit of collegiality, Richard Downing and the Economics Department heeded that advice, forming the Institute of Applied Economic Research in 1962, with Henderson at the helm as Director.

Within just a few years, the Institute was already having an impact, and by 1966, they published the initial findings of their first major poverty study.

Bringing data to Australians

As the founding head, Henderson is rightfully remembered for his leadership, but his deputy , Dr Duncan Ironmonger, also had a profound impact on the future of the Institute.

Before coming to the University, Dr Ironmonger had worked with the Australian Bureau of Statistics, and brought an appreciation for the effective use and accessibility of data.

Setting up a laboratory colloquially (and by all accounts, appropriately) known as  ‘The Hut’, the Institute led the way in the use of computers. Staff were expected to learn new technology skills on the job.

Without the internet or any viable means of digital data transfer, staff would take hard copy data sets to The Hut, where they’d be manually entered and distributed to other researchers.

Professor Beth Webster, now the Institute’s director, began her first stint at the organisation in 1983 as a research fellow.

As a junior researcher, she saw first-hand the impact that Ironmonger and the Institute’s methods quickly made on not just their research, but the output of the entire economic community.

“At that stage, the Melbourne Institute was really heads and shoulders above what else was going on,” Professor Webster said.

Making the appropriate data available for everyone is a vital component for the Institute’s aim to influence understanding and policy.

Throughout the decades, they’ve tried to share key economic information with everyone, no matter whether they’re conducting research at a neighbouring institution, leading the country in Canberra, or reading the newspaper on the tram.

“You can maybe convince 10% of people just on the strength of an argument alone. To really get up to 80% of people being convinced, you need to give them data, and a lot of data from different perspectives of an idea,” she said.

“Even with changing directors, we’ve kept up that ability to be on the forefront of quality data collection.”

Prime Minister Anthony Albanese at the 2023 Economic and Social Outlook Conference, presented by the Melbourne Institute and The Australian. Photo from Casamento Photography.

Building relationships, influencing decisions

From the outset, the Institute has sought to be an instrument of change, influencing decisions and adding to the conversation across the country.

That influence cannot be achieved through academic thinking and research alone; you have to ensure the message is reaching the right people.

“We have to make sure we have a voice heard in that room, whether it be in federal politics, in state politics, or in business,” says the Institute’s senior manager, Scott Soper.

One of the benefits of the Institute’s long history, he says, is the ongoing relationships it has retained with key people.

“We’re always trying to build connections with the decision makers.”

To maintain that level of influence with the country’s economic and political spheres, an organisation must remain consistent.

The key for the Institute, Professor Webster says, is the cultivation of an environment that encourages both collaboration and the renewal of ideas.

“We’ve got researchers like Professor Guyonne Kalb, who’s looking at refreshing a model she built 20 years ago, and updating it to address current concerns in the macroeconomic, fiscal and monetary environment,” Professor Webster says.

This culture doesn’t just promote the expansion of research – it ensures that the key tenets of the Institute can be sustained over the years while retaining the contributors who make the organisation what it is.

The Institute into the future

Professor Henderson arrived at the University in the 1960s with a desire to use applied economics to tackle the country’s challenges.

When confronted with today’s challenges, Professor Webster doesn’t back down either.

“We need to look at the environment,” she says.

“There’s a lot of economic issues behind it – you’ve got to look at how you incentivise business to make transformations and link up with the research and development sector.

“Then we can look at household behaviour. How can we create incentives to make the transformation to renewable energy?”

The Institute may no longer be in The Hut, punching statistics into large computers, but it is still bringing data to Australians, collaborating and, ultimately, contributing to the conversation.

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