Offshore profit shifting by big multinational firms is a big concern of mine, not least because it creates an unbalanced playing field for small Australian businesses. Here's my latest opinion piece in the Daily Telegraph explaining why:
SHIFTY BUSINESS OF DODGING THE TAX MAN, Daily Telegraph, 12 August 2014
Glen is a chippy running his own small company. He employs a couple of apprentices, mostly building homes and units in the western suburbs. Business has been good this year; so good that the Australian Tax Office should be sending him an end-of-year bill worth tens of thousands of dollars.
Except it won’t, because Glen has a cunning plan to reduce his tax bill to zero. He’s established a company, GlenCarp, with its registered office in Jersey (a tax haven) and a head office in Switzerland. His Australian carpentry business is a branch operation of the Swiss parent, using the now dormant legal shell of an Australian body corporate in an attempt to hide the reality of its Australian carpentry business. By taking large, unnecessarily expensive loans from associates overseas, GlenCarp avoided paying any tax this year.
This morning I talked with Sky's Kieran Gilbert about the unfolding humanitarian crisis in Iraq and the importance of distinguishing between extremism and any single religious or community group. Here's the video and transcript:
SKY AM AGENDA
MONDAY, 11 AUGUST 2014
SUBJECT/S: Iraq; religious extremism; privacy implications of new surveillance powers.
KIERAN GILBERT: This is AM Agenda. Thanks for your company. With me this morning is Labor frontbencher Andrew Leigh and Liberal frontbencher Paul Fletcher. Paul, first to you: in terms of Australian support for the US led operation in Iraq, the Prime Minister says Australian support is likely and possible by the end of the week.
PAUL FLETCHER, PARLIAMENTARY SECRETARY FOR COMMUNICATIONS: Yes Kieran, good morning. As the Prime Minister has said, indeed as President Barack Obama has said, this is a humanitarian disaster in Northern Iraq with thousands of people trapped on a mountainside surrounded by the extraordinarily barbaric ISIS forces. The Prime Minister has said that the government is looking at whether we can assist in humanitarian aid particularly dropping food, water and so on. We have a couple of C130s based in the United Arab Emirates and one of the questions is whether those might be made available. The Prime Minister has said there will be a decision on that within days and as the Prime Minister has also said, there would be not many Australians who would disagree that if there's the chance to go assist in this humanitarian disaster that we would want to do that.
GILBERT: Andrew Leigh, what's Labor's position on this at this point, and the Obama air strikes? Of course, you were very much opposed to that Iraq operation of more than a decade ago. But this is very different with the Islamic state threatening religious minorities and the entire population of Northern Iraq.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Kieran, Labor did oppose the war on Iraq and we've seen ISIS formed in 2006, largely in response to that. Our position is to certainly support the actions the government is taking and indeed it is worth noting that this is one of the powerful areas in which Australia's humanitarian program can save lives. We were disappointed, for example, to see that Australian aid to Iraq was running at about $8 million last year but was cut to $0 in the May budget. I think Australia is the kind of country that can afford to help in these sorts of situations but also to continue to save lives around the globe.
On Sunday morning I joined Weekend Sunrise to talk about how economics can help make sense of run times in the Sydney City to Surf and much else besides - find out how by watching the clip:
In the latest edition of The Spectator, I've reviewed Gordon Peake's Beloved Land: Stories, Struggles and Secrets from Timor-Leste. The book which paints a very different picture of the country than the one most Australians are familiar with; read on to find out how:
Guilt trip, The Spectator, 9 August 2014
If you had to pick one emotion to characterise Australia’s attitude towards East Timor, it would be guilt.
We are right to feel guilty about 1942, when Australian troops retreated from Timor, leaving many of the East Timorese who fought alongside us to be killed by the Japanese. We should feel guilty about 1975, when we failed to speak up about the invasion of East Timor. We ought to feel guilty about 1978, when we extended de jure recognition of Indonesian sovereignty over East Timor. And we should feel guilty too about 1999, because we could have done better in the process that led to the referendum and the many thousands who lost their lives.
And yet, most of the time, Australians don’t think about East Timor at all. Between cricket and celebrity cooking, Barack Obama’s latest speech and Lady Gaga’s latest outfit, there isn’t much space in the Australian news cycle for a nation of 1.2 million people sitting 700 kilometres off the coast of Darwin.
This morning I joined Marius Benson on ABC NewsRadio to talk about the worrying spike in unemployment in the latest ABS jobs figures. Here's the transcript:
FRIDAY, 8 AUGUST 2014
SUBJECT/S: Unemployment figures; Abbott Government’s unfair budget.
MARIUS BENSON: Andrew Leigh, on the unemployment figures: the Employment Minister Eric Abetz expressed disappointment but said you can't blame the government for this rise in unemployment because the Budget is still substantially blocked in the Senate. He blames, obviously, Labor for that.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: These figures are extraordinarily bad for Australia. A 12-year high for unemployment and a nine-year low for the share of Australians in work. That's something that ought to deeply concern the government. The fact is Australia now has worse employment outcomes than in the Global Financial Crisis. The reason that we did well in the Global Financial Crisis was the swift actions of the Labor Government: taking on modest levels of debt in order to save hundreds of thousands of jobs. Part of the reason we're doing badly now is that we have a government which is trash-talking the economy, driving down business and consumer confidence, and firing people. I mean, in my own electorate in the ACT, we're seeing the firing of public servants which is adding to these unemployment numbers.
BENSON: When you look at the numbers closely, the principal reason for the increase in the total is that the participation rate is up. So it's simply more people looking for work.
LEIGH: The economy isn't adding jobs as people are moving in to seek work. That ought to be a deep concern for the government. And governments ought to be concerned about their short-run and long-run policies. In the short run, in an environment where you've got the transition out of the mining boom, then you ought to have a government which is looking to create demand. This federal Budget has been doing anything but. It's taking away from those who have the highest propensity to spend - those who are at the bottom on the income spectrum - and it's cutting back on a range of government programs. And then in the long run, governments have to be investing in the productive capacity of the economy - in skills and infrastructure. And this again is a Budget that takes away from education, takes away from the National Broadband Network, takes away from urban rail. So it will hit the short- and the long-run jobs growth in the economy.
Today the Herald Sun features an extract from my book 'The Economics of Just About Everything', exploring the link between money and team performance in the AFL. Read on...
Who's the Moneyball star of the AFL? Herald Sun, 7 August 2014
Moneyball tells the true story of how Oakland A's general manager Billy Beane (played by Brad Pitt) put together a great baseball team on a shoestring budget. The movie has two messages: first, money helps win games. Second, some sports teams spend their money more wisely than others.
But how does Moneyball apply to the AFL? Money allows teams to buy better players (up to the salary cap), to hire better coaches and to buy experts like physiotherapists, masseurs and even statisticians. But do some AFL teams spend their cash more wisely than others?
Last night Peter van Onselen and I hashed out some ways the Abbott Government could make its rotten budget fairer. Here's the video and transcript:
Last night I joined the panel on ABC's The Drum to talk about how economics can help us make better sense of the world around us (and my new book 'The Economics of Just About Everything). Here's the interview:
Inside Story is currently featuring an extract from my new book 'The Economics of Just About Everything', which looks at the unexpected benefits of Australia's gun buyback scheme. Read on...
THE UPSIDES OF THE BUYBACK
On the chilly Melbourne evening of Sunday 9 August 1987, nineteen-year-old former army cadet Julian Knight drank several beers at the Royal Hotel in Clifton Hill then packed a bag with an M14 semi-automatic, a Ruger 10/22 semi-automatic, and a Mossberg pump action 12-gauge shotgun. As he later told the police, “I wanted to see what it was like to kill someone.”
Most bullets are less than a centimetre wide, but when they enter a person’s body they make a far larger hole. One reason for this is that, once inside your body, a bullet begins to “yaw,” or tumble. Because bullets are a few centimetres long, the tumbling effect is far more destructive than if the bullet had continued to travel in a straight line.
In addition, a cushion of air known as a “pressure wave” precedes the bullet, temporarily creating a cavity inside the body that can be much wider than the trajectory of the tumbling bullet. The combined impact of a tumbling projectile and a pressure wave means that the entry wound can be as small as a fingernail, while the exit wound can be as large as a tennis ball.
The Australian Financial Review was good enough to publish an extract from my new book 'The Economics of Just About Everything', which you can read here.
If you like what you see, why not support your local independent bookstore by buying a copy?
AN ECONOMIST'S GUIDE TO ONLINE DATING
What’s a desperate and dateless economist to do? The economics of dating comes down to three simple rules:
1. There is no perfect match, but some matches are definitely better than others.
2. You won’t know how well suited you are to someone until you get to know them.
3. Time is scarce, so a decision based on limited information is probably better than no decision at all.
The challenge of dating is that you don’t have enough information and you don’t have enough time to get it. To give you an idea of just how severe the problem is, let’s imagine that you’re aged 18 to 25, and you’re trying to find the person you’re best suited to in that age range.
To begin, there are about 1.5 million men and 1.5 million women to choose from in Australia. If you picked a sex, and spent only three minutes with each of those people, then it would take 25 years of speed dating to find the person you liked the most. Things are harder still if you want more than three minutes to assess each person, if you’re bisexual, if you want someone older or if you think true love resides overseas.
Fortunately, economic theories are rarely deterred by problems involving large numbers. Better yet, economists are familiar with precisely this kind of problem. It’s called an “optimal-stopping problem”.