TRANSCRIPT – ABC702 WITH RICHARD GLOVER
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
6 May 2013
TOPICS Inequality, Australian egalitarianism
Archive for the ‘Inequality’ Category.
TRANSCRIPT – 2CC with Mark Parton
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
6 May 2013
TOPICS: Inequality, Australian egalitarianism, Liberal Party advertising
I chatted with Kieran Gilbert and Senator Mitch Fifield about the Coalition’s divided stance on Paid Parental Leave, and about my research on inequality in Australia.
The SMH, Age, Canberra Times and West Australian today have reports of my updated top income inequality data. If you’re curious, here’s a link to the raw figures (warning: large Excel file), and here’s a link to the methodology paper.
I’ve also done a couple of interviews today about it:
On ABC702 yesterday, I enjoyed a conversation with host Richard Glover and guests Dick Smith and Malcolm Turnbull, ranging from carbon pricing to urban congestion, parliamentary roles to economic growth, helicopter travel to books that make you cry. Here’s a podcast.
On ABC 666 yesterday, host Genevieve Jacobs asked me to remove the politician’s hat temporarily, and speak about my research with Pamela Katic on wealth inequality in Australia. Here’s a podcast.
Combining data from surveys, inheritance tax records, and rich lists, we estimate top wealth shares for Australia from World War I until the present day. We find that the top 1 percent share declined by two-thirds from 1915 until the late-1960s, and rose from the late-1970s to 2010. The recent increase is sharpest at the top of the distribution, with the top 0.001 percent wealth share tripling from 1984 to 2012. The trend in top wealth shares is similar to that in Australian top income shares (though the drop in the first half of the twentieth century is larger for wealth than income shares). Since the early twentieth century, top wealth shares in Australia have been lower than in the UK and US.
On 6 March, I’ll be giving the Inaugural NATSEM Annual Lecture, entitled “Estimating Top Wealth Shares in Australia Over the Past Century” (based upon some analysis I’ve been doing with Pamela Katic).
It’ll be held at the University of Canberra from 5-7pm. Event & RSVP details here.
I spoke in parliament today about Teach for Australia (Joe Hockey, speaking before me, had wrongly suggested that my electorate was named after Malcolm Fraser, so I had to set him straight).
Tax Laws Amendment (2012 Measures No. 6) Bill 2012, 14 February 2013
It is my great pleasure to serve as the member for Fraser, a seat named after Jim Fraser, who was the ACT’s sole representative in this House from 1951 through to 1970. It is true that he did serve alongside Malcolm Fraser for much of that period, but there are significant differences in outlook between them. Jim Fraser was a proud Labor member, committed to social justice, committed to the rights of workers and a true reforming member of this House. While the shadow Treasurer may seek to model his politics on those of Malcolm Fraser, that is not my role model here in this place.
I rise today to speak about one of the schedules in the Tax Laws Amendment (2012 Measures No. 6) Bill 2012, which provides tax deductible gift-recipient status to an organisation known as Teach For Australia. Teach For Australia is modelled on Teach For America, which is now in its third decade. Teach For America bases its success on two vital truths: firstly, that there is no more important job that teaching disadvantaged children and, secondly, that there is a reservoir of idealism among talented university students. More than one in 10 US Ivy League graduates now applies to Teach For America. Its recruiting is so selective that it is able to take just the top 20 per cent of applicants.
In parliament today, I spoke about superannuation, and about aged care.
Superannuation Legislation Amendment (Reducing Illegal Early Release and Other Measures) Bill, 11 February 2013
In 1991, the then Prime Minister Paul Keating said of the superannuation guarantee:
‘It will make Australia a more equal place, a more egalitarian place and hence a more cohesive and happier place.’
We do not often talk about happiness and superannuation in the same breath, but I think we should, because a strong superannuation system is a system that ensures dignity in retirement. It ensures that Australian retirees can enjoy that extra grey nomad trip and the comfort of being able to spend time with loved ones without worrying about paying the bills. It ensures that generations that have given much to Australia enjoy the retirement to which they are entitled.
I have an opinion piece in the Australian today, continuing to prosecute the case that Labor is the true party of small-L liberalism in Australia (on the same theme, see also my first speech, this Global Mail article and this speech to Per Capita).
Liberals are conservatives while Labor is the true party of Alfred Deakin, The Australian, 10 January 2013
In the United States, if you want to insult a right-winger, call them a ‘liberal’. In Australia, if you want to insult a left-winger, call them a ‘Liberal’. In both countries, liberalism has become detached from its original meaning.
It’s time to bring Australian liberalism back to its traditional roots. Small-L liberalism involves a willingness to protect minority rights (even when they’re unpopular) and a recognition that open markets are the best way to boost prosperity.
I’m writing a short book on income inequality for Black Inc. It will cover the long-run data on inequality (going back to the late-18th century), at the lifestyles of the rich and poor today, and at the extent of social mobility. It’ll also look at what drives inequality, and why inequality might be good or bad.
What do you think the title should be?
In today’s AFR, I have a piece on inequality and superannuation.
Superannuation Inequity Needs Redressing, Australian Financial Review, 10 October 2012
Wealth in Australia is more unequally distributed than incomes. That’s largely because those of us on higher incomes are able to save more than disadvantaged Australians. This becomes a wedge over the course of a lifetime. By the time rich and poor people reach retirement, those at the top of the distribution have contributed more, and earned more returns on their contributions.
Since the Commonwealth began paying pensions in 1909, a central purpose of retirement incomes policy has been to prevent poverty among the elderly. When the Keating Government introduced universal superannuation in 1992, the boost was primarily for low and middle-income earners, since many high-wage workers already had more than 9 per cent of their wage directed into superannuation. Similarly, the Gillard Government’s decision to boost contributions to 12 per cent will have its greatest benefit for low-wage workers.
In today’s AFR, I have a column on why inequality matters.
Take the test, which society do you prefer? Australian Financial Review, 26 September 2012
To see whether you care about inequality, take this simple test. Suppose you had an equal chance of being born into any of the five wealth quintiles in Australia. Would you prefer to be born into a society where the share of wealth held by each of the quintiles was 1%, 6%, 12%, 20% and 62%? Or a society where the shares were 15%, 17%, 20% 24% and 24%?
Actually, I’m cheating, because I already know the answer. The first set of numbers is the actual distribution of wealth in Australia: 1% for the poor and 62% for the rich. But when surveyed about their ideal distribution of wealth, respondents almost universally want a more egalitarian distribution. Indeed, the figures I’ve shown are the wealth distribution preferences of the most affluent, who thought that the poor should have 15% of wealth, and the rich 24%.
Last Wednesday, I spoke with La Trobe University economist Jan Libich about some of my academic findings – from teacher pay & aptitude to child gender & divorce – and possible policy implications. If you want to read more, the research is available at my academic website: www.andrewleigh.org.
And if you’d like to watch Jan’s other interviews (including with Eric Leeper and Don Brash), they’re available on his YouTube channel.
The long tail of academic publishing means that two years after leaving my professorial post at ANU, I’m still having pieces appear in the journals. In case it’s of interest, here are the handful of publications that have come out in 2012.
- ‘Does Racial and Ethnic Discrimination Vary Across Minority Groups? Evidence From a Field Experiment’ (with Alison Booth and Elena Varganova) (2012) Oxford Bulletin of Economics and Statistics
- ‘Bargaining Over Labor: Do Patients Have Any Power?’ (with Joshua Gans) (2012) Economic Record
- ‘How Much Did the 2009 Australian Fiscal Stimulus Boost Demand? Evidence from Household-Reported Spending Effects‘, B.E. Journal of Macroeconomics
- ‘How Partisan is the Press? Multiple Measures of Media Slant’ (with Joshua Gans) (2012) Economic Record
- ‘Teacher Pay and Teacher Aptitude’ (2012) Economics of Education Review
- ‘The Economics and Politics of Teacher Merit Pay’ (2012), CESifo Economic Studies (forthcoming)
- ‘Intergenerational Income Mobility in Urban China’ (with Cathy Gong and Xin Meng) (2012) Review of Income and Wealth (forthcoming)
- ‘Effects of Temporary In-Work Benefits for Welfare Recipients: Examination of the Australian Working Credit Programme’ (with Roger Wilkins) (2012), Fiscal Studies (forthcoming)
All my academic work – including many replication datasets – is available at www.andrewleigh.org.
Today’s AFR runs a cut-down version of Jason DeParle’s New York Times magazine piece on family structure and mobility. They asked me to write a short column on the Australian situation to accompany it.
Family Dynamics Affect Poverty, Australian Financial Review, 3 August 2012, R7
There are two polar views on why poverty persists across generations. On the hardline conservative view, poverty is the result of bad choices: not staying in school, not taking a job, not waiting to have a child. At the other end of the spectrum is the view that poverty is simply a lack of money. Provide enough income support, and intergenerational poverty will disappear.
In our hearts, most of us know that neither of these views can be right. And yet many progressives have found the conservative view so harsh that we have recoiled from any discussion about the role that families play in determining children’s outcomes.
My Drum article today is on inequality.
Tall Poppies in the Land of the Fair Go, The Drum, 18 July 2012
Since 1980, 14 per cent of all personal income growth in Australia has gone to the richest 1 per cent.
That group – currently those individuals earning over about $200,000 – have received 14 times their share of Australia’s economic growth in the past generation.
I’m giving a Blackfriars Lecture at the Australian Catholic University on inequality next Monday night. Details here (and flyer below). Continue reading ‘Blackfriars Lecture – ‘The Eye of the Needle: Why Inequality Matters’’ »
On ABC Radio National’s Saturday Extra program, I spoke with Geraldine Doogue about rising inequality and unchanged (for now) social mobility. Here’s a podcast.
At one point in the podcast, I mentioned an article of mine which found that a majority of High Court associated in the period 1993-2000 attended just three universities (Sydney, UNSW and Melbourne). Full article here.
I spoke in parliament about my latest community conversation on disadvantage, which focused on intergenerational poverty.
Fraser Community Summit, 31 May 2012
Every six months or so I hold a conversation to talk about disadvantage in the Fraser electorate. On Tuesday, 29 May I was pleased to welcome 10 representatives from local community sector groups up to Parliament House for an early breakfast conversation. I call it a community summit, but really it is more of an informal conversation with people I regard as my brains trust on poverty.
The focus of this conversation was on intergenerational disadvantage and how to stop the cycle of poverty from replicating itself across generations. One of the attendees at the summit made the point that disadvantage itself is now more complex than it was in the past and is often interrelated with issues such as mental illness, poor health, substance abuse, domestic violence and addiction. Another attendee told the story of a child whose parents were addicted to hard drugs and who was never given anything by his parents; all he had were the things that he had found or stolen. Another spoke about families who eat McDonald’s every meal because it is simpler to get takeaway than to prepare a meal. Attendees were concerned about the impact of imprisonment on the children of those who are behind bars.
I spoke today on a private member’s motion, moved by Adam Bandt, to raise the level of Newstart by $50 per week.
Private Member’s Motion – Adam Bandt
28 May 2012
The issue of movement from welfare into work is one that has long concerned me. It was the reason that I chose 12 years ago to study overseas, researching on the topic of poverty and inequality, looking at the issue of how to move people from welfare into work and the relative effectiveness of interventions such as government jobs, wage subsidies and training programs.
It is important that we make that transition from welfare into work as straightforward as possible, particularly for families with children. We know that there are intergenerational cycles of joblessness and we know that high-quality programs that increase employment are at the core of a civilised society.
An article in Fairfax papers today asks several MPs’ view on raising unemployment benefits. Not surprisingly, it contains only a snippet of the conversation that I had with journalist Stephanie Peatling. So I thought it might be worth setting out my thoughts on the issue in more detail.
Unlike pensions, which are aimed at being ongoing for multiple years, unemployment benefits are designed to be a temporary payment. Nonetheless, I share the feeling of many of my colleagues that the current level of unemployment benefits are an extremely low amount to live on. If we doubled tax revenue, I’d raise unemployment benefits in a heartbeat. But tax revenue has actually fallen (from around 24% of GDP under Howard to 22% now). So anyone who proposes an expensive policy like significantly increasing unemployment benefits needs to identify which taxes they’d increase or which spending programs they’d cut. (And in the current parliament, how they’d get the change through both Houses.) For example, if you asked me ‘would you scrap an NDIS to raise unemployment benefits?’, I’d say no.
As an economist, I think about tradeoffs, which I’m starting to realise may be somewhat atypical in politics. Perhaps some people answer the question as ‘if the money was free and you didn’t have to lose any of your favourite programs, would you raise unemployment benefits?’. If that’s the question, count me in as a supporter too.
I’m also concerned about the social consequences of intergenerational poverty, since it does look like there may be adverse impacts of welfare dependence in families with children. This is something I’ve worried about quite a bit while since when I was an econ prof at ANU (see for example this paper, or this recent speech). So the JET scheme (which provides childcare to high-needs parents for 10 cents an hour) strikes me as important for the next generation. The ANU ‘Youth in Focus’ study has some valuable insights on the issues too (though the links to it are alas broken at present).
In the latest issue of Labor Voice, I argue that progressives should like economic growth. Full text over the fold.
The Pro-Growth Progressive: How Economic Reform Can Make Us Happier, Labor Voice, Issue 3, 2012
As Australians, we’re used to economic growth . It’s the benchmark by which governments are often judged. Yet it is easy to forget how unusual growth is in human history.
Go back a few centuries to the Victorian era and the average person was no better off than the average caveman . There were a lucky few who enjoyed tea in china cups, but the true living standards of 1800 were better captured by Charles Dickens than Jane Austen.
Indeed, economic historian Greg Clark makes the point that on some measures, the vast mass of the world’s population were worse off in 1800 than their ancestors of 100,000BC. For example, Britons in the Victorian era were shorter – reflecting their poor diet and exposure to disease in childhood.
In 1800, life expectancy was around 30-35 years, pretty much what it was on the savannah. Citizens of 1800 probably worked longer hours than cavemen. From the Stone Age to the Renaissance, most people ate around 2000 calories a day, compared to the 3000 calories a day that we consume.
I spoke tonight at the Sydney Institute on the topic of inequality. The embedded video is a short version, and the long-play version of my speech is below.
Why Inequality Matters, and What We Should Do About It*
Andrew Leigh MP
Federal Member for Fraser
May Day 2012
Imagine a ladder, in which each rung represents a million dollars of wealth. Imagine the Australian population spread out along this ladder, with their distance from the ground reflecting their household wealth.
On this ladder, half of all households are closer to the ground than they are to the first rung.
The typical Australian household is halfway to the first rung.
Someone in the top 10 percent is at least 1½ rungs up.
A household in the top 1 percent is at least 5 rungs up.
Gina Rinehart is 5½ kilometres off the ground.
I have an opinion piece in the National Times today on the implications of the leadership challenge for the future direction of the ALP.
Party values must rise to the challenge, National Times, 28 February 2012
When they’re in progress, political leadership challenges are like cyclones: throwing policies into disarray, snapping friendships in an instant, and hurling participants off into the distance.
Yet as history shows us, the morning after a leadership challenge often dawns clear. Gough Whitlam saw off two leadership challenges from Jim Cairns before gaining a large swing in the 1969 election, and going on to win in 1972. After the Coalition’s loss in the 1993 election, some worried that leadership infighting would doom them to irrelevance. Three years later, united around Howard, the Coalition won a crushing victory and 11½ years in office.
I spoke today in parliament on a motion relating to same-sex marriage. Stephen Jones also tabled a private members’ bill today, which will come up for a vote in the coming months.
Same-Sex Marriage – Supporting Reform
13 February 2012
This is the third time I have spoken publicly on same-sex marriage. In August 2011, I reported back to parliament on the views of my constituents for and against same-sex marriage. Within Labor Party forums I have also spoken out in favour of changing our part platform. But this is the first time I have spoken in parliament since the Labor Party changed its national platform. That platform now reads:
In 2007, I published a paper with Tony Atkinson that looked at how the income share of top groups (eg. the richest 1%) had changed over time. The analysis is based on crunching tax data, national accounts figures, and population statistics.
We’ve now updated the analysis with the latest taxation data, which covers the year 2008-09. Unsurprisingly, it shows a slight downtick for that year, which is mostly due to a fall in the non-salary incomes of the rich.
For anyone researching or writing about inequality, the full spreadsheet is available at this link. There is also a writeup by Markus Mannheim in the Canberra Times, and you can podcast my chat today on ABC Radio National’s Life Matters with the splendid Richard Aedy.