As the Abbott Government gets down to work on their second budget, ministers like Josh Frydenberg are already talking about making new and deeper cuts. But they wouldn't need to do that if they hadn't said 'no' to real and significant sources of revenue, as I explain in this op-ed for The Australian.
When you're in a hole, stop digging, The Australian, 27 January
As Australians continue to rage about the unfairness of the Abbott Government’s first budget, Treasurer Joe Hockey is preparing to hand down his second one in just four months’ time.
His new Assistant Treasurer, Josh Frydenberg, has flagged that spending may again be slashed in the 2015-16 fiscal plan. He seems determined to prove that this government’s entire economic strategy can fit into one four-letter word: cuts.
Then again, that’s about the nicest four-letter word Australians have been using to describe the government’s economic strategy.
Australians who have watched the government rip $80 billion from schools and hospitals, $23 billion from pensions, $11 billion from foreign aid, $5 billion from universities and $3 billion from Medicare in its first year alone will rightfully be worried about where Mr Frydenberg’s fresh round of cuts will come from.
With the government announcing a Productivity Commission review which looks set to hack into unions, the minimum wage and unfair dismissal laws, I joined Linda Mottram on Sydney's ABC 702 to talk about why these things are an important protection against growing inequality. Here's the transcript:
ABC 702 SYDNEY
FRIDAY, 23 JANUARY 2015
SUBJECT/S: Productivity Commission review; minimum wages; inequality
LINDA MOTTRAM: Joining me now is the Shadow Assistant Treasurer Andrew Leigh. Andrew, good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning Linda, how are you?
MOTTRAM: Well thanks. Now, what do you make first of all of the review itself – is it necessary?
LEIGH: I don't believe so, Linda. If we look at the story of the last couple of decades, it's been a period in which we've seen much slower growth in minimum wages than we have in average earnings. We've seen a rise in inequality and we've seen a fall in industrial disputes. Union power is lower now than it was in the past, and the union density rate is the lowest that it's been in my lifetime. So the notion that when we've got the slowest wage growth in a decade, the real problem for Australia is a ‘wages breakout’ just seems to be askew from the fundamental facts of what's going on in the economy.
“When Australians spend the first six months of the year working for the government with tax rates nearly 50 cents in the dollar it is a disincentive. You’re working July, August, September, October, November, December just for the government and then you start working for yourself and your own household income after that.” – Joe Hockey, 3AW, 19 January
Joe Hockey's suggestion that Australians pay almost half their incomes in tax doesn't stack up, so why does he keep repeating it?
Why applied maths is too taxing for Joe, Daily Telegraph, 23 January
Since Joe Hockey claimed Australians pay almost 50 cents in the dollar in tax, plenty of people have pointed out the flaws in his maths.
But is it true that the man running Australia's economy really doesn't get the basics of our tax system? Or is he just so focused on the wealthiest Australians that he's lost sight of everyone else?
The first thing wrong with Hockey's claim is that Australia's top tax bracket is 45 cents in the dollar.
Factoring in a further 2 per cent each for the Medicare Levy and the government's high-income levy gets you to 49 per cent. But that would still only apply to people earning more than $180,000 a year; the back of my envelope suggests that less than 2 per cent of Australian adults have an individual income that high.
On the back of news today that the Abbott Government is going to wave through a big increase in private health insurance premiums, I joined David Speers on Sky PM Agenda to talk about why that would be bad for everyone's health. Here's the transcript:
SKY PM AGENDA
THURSDAY, 22 JANUARY 2015
SUBJECT/S: Tony Abbott’s attack on Medicare; spike in private health insurance premiums
DAVID SPEERS: Let me bring in the Shadow Assistant Treasurer now, Andrew Leigh, our guest this afternoon. I wanted to talk to you about health insurance premiums. But can I just pick up though on the Medicare changes firstly. What is Labor's approach to any sort of co-payment? Even if there was further change to only apply it to wealthier Australians, is it something you would contemplate at all?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: David, all we have got at the moment are thought bubbles from the Government. I mean, the Government apparently thinks today that its main problem is that the prime minister doesn't ‘skite’ enough. I think what the Australian people want from their Prime Minister is not more skiting, but more considered policy development. We know in the case of the co-payment, that doctors are against it, patients are against it and the health experts are against it. They don't want patients being priced out of going to the GP and ending up in the emergency room. That’s the more expensive bit of our health system, and the bit where – compared to other developed countries – we spend far more of our health budget.
My ACT Labor colleagues and I are really worried about the Abbott Government's moves to privatise public service functions. All Canberrans know what that means: even more jobs on the chopping block.
JOINT MEDIA RELEASE
PUBLIC SERVICE BRACES FOR MORE JOB CUTS
Labor’s Federal representatives are extremely concerned about the Abbott Government’s plans for privatising public sector functions, which will ultimately lead to more job losses in Canberra.
The Abbott Government is making plans to privatise tens of thousands more public service jobs as part of its ‘contestability program’.
Reports out over recent days suggest more than 30,000 Commonwealth Government jobs may be lost over the next few years as a result.
There is no doubt this will impact services across the country.
Thousands of workers in Canberra now have little to no job security, placing them under enormous personal strain. This new threat comes on top of the rolling redundancy program which is already underway, and will see 16,500 public servants laid off over the next few years.
Australians rarely have much sympathy for public servants. But as I outline in this piece for the Canberra Times, they're real people and are facing real challenges because of the Abbott Government's public service cuts.
Public service recruitment freeze keeps Canberra locked in uncertainty, Canberra Times, 19 January
At one of my regular mobile offices in Gungahlin, I met a young couple – let’s call them Jess and Dan. Jess struck me as the kind of person employers are always crying out for: bright, well-spoken, professional, passionate about her work.
Like a third of all Canberrans, Jess works for a federal government department. She has three degrees and has volunteered overseas, as well as having years of experience in the public service which she gained by working on short-term contracts. She’s obviously seen as a great asset to her current agency, because in October last year her bosses ruled her eligible for a permanent position.
Unfortunately for Jess, that news came on the same day that the Abbott Government declared a total hiring freeze across the public service. Federal public servants are always amongst the first to be sacrificed when Liberal governments are looking to make savings, and the current Government has proven itself no exception. Having said they would axe 12,000 jobs, the Abbott Government is cutting 16,500 positions from the public service over the next few years. The Government has put a hiring freeze in place as a way to get to that target.
Despite being pinged for this last year, Joe Hockey has repeated wrong claims about how much tax Australians have to pay. Let's set the record straight on this.
ANOTHER HOCKEY CLAIM UP IN SMOKE
Treasurer Joe Hockey has resorted to outright mistruths in an effort to sell his unfair budget.
In an interview with Melbourne’s 3AW radio, Mr Hockey falsely claimed that Australians are paying “nearly 50 cents in the dollar” in tax.
Based on that incorrect figure, he went on to claim that: “Australians spend the first six months of the year working for the Government.”
These claims are false, as Mr Hockey well knows.
Australia’s top marginal tax rate of 45 per cent takes effect only when a person’s annual earnings exceed $180,000. In 2011-12, the most recent year for which tax statistics are available, just 293,540 Australians earned above that threshold.
On the first AM Agenda of the year, I joined Kieran Gilbert to talk about the government's latest backflip on Medicare and the sustainability of health spending in the long term. Here's the transcript:
SKY AM AGENDA
MONDAY, 19 JANUARY 2015
SUBJECT/S: Abbott Government’s cuts to Medicare; Queensland state election; Joint Strike Fighter espionage; Bali Nine executions
KIERAN GILBERT: Welcome to the program Assistant Education Minister Simon Birmingham and Shadow Assistant Treasurer Andrew Leigh. Gentlemen, good morning. Senator Birmingham, first of all I want to get your thoughts on this leak yesterday in the Sunday Telegraph. Samantha Maiden is reporting that Peter Dutton, the former health Minister, and Joe Hockey argued against reducing the rebate for GPs for shorter consultations. That didn't go ahead anyway as we know, that was due to start today. But the fact that we're seeing leaks from the Expenditure Review committee, that very senior portion of the Cabinet, has got to be a big worry to start the new year?
SIMON BIRMINGHAM, ASSISTANT EDUCATION MINISTER: Good morning, Kieran. Look, I'm not terribly worried nor interested in unsourced leaks, whether they're accurate or not, who knows. What I'm more interested in is, and what the Government is more interested in, is getting the policy settings right. Sussan Ley as the new Health Minister is going to go out and consult extensively with the health sector, with the medical profession to try to ensure we can come up with the right policy that delivers sustainability for Medicare in the long term. We want to ensure we can secure Medicare's future in a way that recognises that those who can afford to make a contribution to their healthcare should be making a greater contribution. It is hard; let's understand that this policy, as with so many measures the Government is pursuing at present, is all about getting the budget back under control. It’s about ensuring our economic settings and our fiscal settings and our budgetary settings are sustainable for the long haul.
GILBERT: Do you accept that the approach to this point has been a bit below average, to put it mildly, in terms of the efforts to reform Medicare? There's been two backflips in two months when it comes to your approach to reforming Medicare.
Following on from my opinion piece in the Herald Sun about the sharing economy, I joined Ross Stevenson on Melbourne's 3AW to talk about how services like Uber are changing established industries. Here's the transcript:
MONDAY, 19 JANUARY 2015
SUBJECT/S: sharing economy
ROSS STEVENSON: As we've been discussing this morning, there's an interesting article by the Shadow Assistant Treasurer Andrew Leigh, Member for Fraser, in the Herald Sun about Uber and the sharing economy. It's described as a ride-sharing service – I think that's quite deliberately chosen so that they don't use the word 'taxi' – and Andrew Leigh thinks it’s a great idea. Andrew, good morning to you.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning Ross, how are you?
STEVENSON: Good. I think John and I have both used Uber, as you have, from time to time. There are two Ubers though. It varies from state to state, I assume, but there are two Ubers in Melbourne. One of them is a VHA car, that is to say, someone who already has a licence that they've paid the government for. The other one, UberX, is someone who hasn't paid the government a cent. I know you think it's a good idea, but is it fair on taxi drivers who've paid half a million bucks for licence?
LEIGH: It's an incredibly tough area, I think, to try and get this regulation right, Ross. I certainly wasn't aiming to step in there with a final solution. But I do think that increasingly, smartphones are changing the way in which we travel, and I think services like Uber and Lyft are ultimately going to be here to stay. So the question for governments is whether they just stand back and say that the old regulations are perfectly fine, or whether they say that maybe we need to react to what's going on. For example, Uber does its own checks, but they're not the government checks and they don't have access to all of the government databases.
With the new Assistant Treasurer flagging plans to change the rules governing default super funds, I joined Marius Benson on ABC NewsRadio to explain why industry funds are a good bet. Here's the transcript:
MONDAY, 19 JANUARY 2015
SUBJECT/S: Industry superannuation funds; global economic outlook.
MARIUS BENSON: Andrew Leigh, do you believe it's a legitimate exercise for the Government to review the role of union officials on super boards?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Marius, I think the Government ought to be most focused on making sure that the retirement security of Australians is assured. Rather than playing political games, they ought to be focusing on the returns. Now, the last time I looked at the numbers, the industry super funds were returning an average of seven per cent a year, retail super funds were returning an average of six per cent a year. So why the Government thinks that it ought to be a top priority to shift the playing field towards retail funds is beyond me. An extra one per cent a year translates into potentially tens of thousands of dollars more in retirement savings for workers. That's the goal the Government ought to be focused on.
BENSON: So are you saying those union officials on the boards are doing a better job, getting a better return than other board members in areas where union officials aren't represented?
LEIGH: I don't think it's about particular individuals. I think there is a benefit to having a diversity of experiences on a board, and certainly I think union officials have a place, as do business experts. But on the practical matter, if you're trying to tip the playing field towards the retail funds and deliberately skew away from the industry funds then the effect of that is to tip towards the lower-performing part of the sector. I'd really love to see the Treasurer and the Assistant Treasurer be less focused on what's good for their mates and more focused on what's good for all Australians in ensuring security in retirement.