Andrew Leigh

THE POSTCODE PARADOX: WHY IS AUSTRALIAN INTERGENERATIONAL MOBILITY SO LOW, AND WHAT CAN WE DO TO INCREASE IT?

EVATT FOUNDATION NSW PARLIAMENT LECTURE

SYDNEY

TUESDAY, 25 SEPTEMBER 2018

I acknowledge that we meet on the land of the Gadigal people of the Eora nation and pay respect to their Elders past and present. I’m grateful we’re joined by current parliamentarians John Graham, Julia Finn, Mick Veitch, Adam Searle, and Penny Sharpe, and former parliamentarians Jeannette McHugh and Bruce Childs. Special thanks to Clara Edwards and Chris Sheil of the Evatt Foundation for the honour of speaking with you today. And what better respondent could I have than Labor’s candidate for Balmain, 94 years after Evatt first won that seat for our party? Elly Howse will be a great member for Balmain, and I hope you will support her in that goal.

To speak in honour of Herbert Vere Evatt is to be reminded of one’s own inadequacies. State parliamentarian at age 31. High Court judge at 36. Attorney General under Curtin. President of the United Nations General Assembly. Leader of the Federal Opposition. Chief Justice of NSW. Author of seminal books on the Rum Rebellion, the royal prerogative, and Labor’s conscription split.

But like many Labor figures of his era, Evatt also had a strong involvement with Rugby League. As you know, the working class game of Rugby League was created in Australia in 1907 because the gentleman’s sport of Rugby Union refused to pay its players. Enforced amateurism was fine for the well-to-do, but working men needed to be compensated for taking time off work. League grew rapidly, soon displacing Union in New South Wales and Queensland. Evatt was one of the many Labor activists involved in League, serving as one of the founders of Sydney University’s Rugby League club.[1] When he first ran for Balmain, Evatt advertised in the official rugby league journal that he was ‘the rugby league candidate’.

Yet despite its egalitarian beginnings, the early decades of League showed the kind of fixed hierarchy that would have made a baron blush. From 1925 to 1929, the winners were South Sydney, South Sydney, South Sydney, South Sydney and South Sydney. In the post-war era, St George won 11 premierships in a row. Eastern Suburbs, Balmain and Parramatta have won three back-to-back premierships.

Now, if I’ve named your favourite team, your first instinct may be to think that there’s nothing better than staying on top of the ladder forever. But if you put team loyalty to a side for a moment, you might think that fans benefit from a sport with a little more unpredictability and fluidity, a bit more of what economists call ‘competitive balance’.

Beginning in the 1970s, League began to get more competitive balance.[2] The High Court’s decision of Buckley v Tutty made it easier for players to move across teams. New clubs were encouraged to enter the competition, with the number of teams almost doubling from the 1970s to the 1990s. In 1990, a salary cap was instituted, limiting the ability of the richest teams to snap up all the best players.

It’s been two decades since any team won back-to-back Rugby League premierships.

The story of Rugby League illustrates that it is possible to move from a static, predictable environment into one that is more fluid, mobile, and surprising. But it didn’t happen by accident. Social mobility on the Rugby League ladder came about because we changed the rules.[3] We allowed new competitors, we let people move around, and we placed limits on what money could buy. Sure, none of it was perfect. Wage maxima in the 1970s were largely disregarded. A League draft was overturned by a 1991 court decision. Type ‘NRL salary cap’ into Google, and the next word it will suggest is ‘breaches’. But for all that, League has a good deal more social mobility today than if it was a purely free market. League today is a better game than it was when Doc Evatt and his contemporaries helped found the sport. And whether you’re a Labor or a Liberal voter, you get to enjoy a game where the season premier isn’t predestined at the start of the season.

It turns out that this commitment to mobility isn’t just restricted to the playing field. Most people, regardless of ideology, find the idea of a feudal society distasteful. Across the political spectrum, whether you’re talking to progressives or conservatives, almost everyone believes in a society where a child’s outcomes aren’t predestined from birth.

Measuring Mobility

So, how well does Australia live up to that ideal? One way of answering that question is to look at how much parents’ incomes affects the incomes of their children, a measure known as the intergenerational elasticity. This lets us see the impact on children’s incomes of a 10 percent increase in parental incomes. If a 10 percent increase in parental incomes boosted children’s incomes by 10 percent, we might conclude that it’s essentially impossible to jump up or down the social hierarchy. If the same increase in parental income had zero impact on children, then we’d be looking at a society where everyone moved across social classes based on their talents, not their parents.

In the United States, a 10 percent increase in parental income translates into about a 5 percent increase in children’s incomes. In Scandinavian nations, it means less than a 2 percent increase. In other words, parental income matters more than twice as much in the United States. So much for the American ‘land of opportunity’, where ‘anyone can make it’. These figures suggest that it’s significantly easier to move from rags to riches in Norway or Denmark than it is in the United States.

In 2007, I carried out the first internationally comparable estimate of Australia’s intergenerational elasticity, and judged that a 10 percent increase in parental income boosted children’s incomes by around 2½ percent. That suggested Australia is less mobile than Scandinavia, but more mobile than the United States. But in 2017, researchers used the same methodology – with considerably more data – and revised the estimate upwards to 3½ percent.

One way to think about these figures is to compare them with something more familiar – the hereditability of height. It turns out that for every additional 10 centimetres of parental height, a child is likely to be around 5 centimetres taller. So in the United States, you’re about as likely to inherit your spot in the social hierarchy from your parents as you are to inherit your height, while in Scandinavia, income is less than half as hereditable as height. In Australia, parental income is two-thirds as hereditable as parental height. If you want to get rich in Australia, choose your parents wisely.

Over the long term, you might think that it all washes out – like the maxim ‘shirtsleeves to shirtsleeves in three generations’.[4] But my research with Greg Clark and Mike Pottenger suggests that status is surprisingly persistent.[5] We focus on rare surnames, held by less than 200 Australians in the modern era. These are names such as Cade, Harbison, Mendelsohn and Zwar. Using records from biographies of high-status individuals, graduation records from Sydney and Melbourne Universities, and convict records, we are able to explore whether those families that were high-status in the 1870s are high-status in the 2010s. Our results show strong persistence over time. Indeed, on this measure, Australia is no more mobile than Britain or the United States.

Someone who has grown up believing in the myth of equal opportunity may find some of these results challenging. But spare a thought for our American friends. In a recent study, Raj Chetty and his co-authors estimated the degree of social mobility in the United States and Canada.[6] In particular, they look at the chance that a child born in the bottom fifth of the income distribution jumps to the top fifth. In the United States, the odds of making such a Horatio Alger style leap are 1 in 13. In Canada, the odds are 1 in 7. They reach the brutal conclusion that you’re twice as likely to realise the American Dream in Canada.

This isn’t just a story about wage earners – it applies to innovators too. We’ve long known that the apple doesn’t fall far from the tree. But it turns out that even if you want to start the next Apple, it helps to grow up around money trees. Combining massive datasets on tax records and patent claims, researchers have shown that inventors are much more likely to have been raised in an affluent household.[7] Compared with children who grew up in the bottom half of the income distribution, a child who grew up in a top 1 percent household is ten times as likely to become an inventor by age 30. Whether someone becomes an inventor has much more to do with their exposure to innovation in childhood than their mathematical and reading abilities. As the authors point out, this implies that there are many ‘lost Einsteins’: people who might have gone on to be great inventors, if only they were given the right environment.

Has intergenerational mobility gotten worse? Not in a relative sense. For the United States, the impact of a parent’s rank in the income distribution on their child’s relative rank is about the same now as it was in the 1970s.[8] Similarly, my own research for Australia does not suggest any major changes in social mobility since the 1960s.[9]

But when it comes to absolute mobility, it’s a different story. Nine out of ten American children born in the 1940s would grow up to earn more than their parents.[10] But by the 1980s, only about half would earn more than their parents. This stagnation of living standards – powerfully captured by Bruce Springsteen in songs like ‘My Hometown’ and ‘Youngstown’ – has been a driver of the opioid epidemic and the increase in suicide rates plaguing the United States at present. Those who argue against economic growth would do well to recognise that the desire to see our children do better than ourselves is a powerful force. It’s no coincidence that ‘deaths of despair’ and an increase in right-wing populism are more prevalent in the regions where economic outcomes are most dismal.

Given all this, I was surprised to see that the Productivity Commission’s recent report took such a sunny view about mobility in Australia, concluding that ‘economic mobility is high in Australia, with almost everyone moving across the income distribution over the course of their lives’. Implicit in this statement is that we should be pleased if we see some movement – in effect that, that the benchmark should be feudalism rather than equal opportunity. If you think that any mobility is good, you’ll be pleased with the status quo. If you think we should aspire to be a nation where babies born into poor households have the same life chances as babies born into rich households, you’ll conclude that we could do a lot better.

A more accurate conclusion would be that reached by Sylvia Mendolia and Peter Siminski, authors of the leading study estimating intergenerational income elasticities for Australia. They conclude that ‘Australia is not particularly mobile in an international context. It is less mobile than the Scandinavian countries as well as Germany, Canada and New Zealand, but is more mobile than France, Italy the US and the UK.’

Pathways

To understand how to improve social mobility, we need to start by exploring the main pathways through which parents shape their children’s economic outcomes. Using the full universe of tax returns, Raj Chetty and his collaborators with the Equality of Opportunity Project have mapped intergenerational mobility across the United States.[11] As you’ll recall, the chance of an average child moving from the bottom fifth to the top fifth is 1 in 13. But it turns out that there is wide variation across the nation. In Charlotte, the odds are an appallingly low 1 in 23, while in San Jose they are much better: 1 in 8.

Mapping this variation in mobility, the researchers are able to identify several patterns. High mobility places tend to be less residentially segregated and more equal, suggesting that it’s harder to climb a ladder when the rungs are spaced further apart. Upwardly mobile areas have better primary schools – indicating the power of education to act as an engine of mobility. And regions with more intergenerational mobility appear to have greater family stability and stronger social capital – implying that healthy civic communities are able to improve class-mixing.

Another channel through which intergenerational mobility might entrench itself is via childhood exposure to stressful experiences. A recent study looked at what happened to Canadian children who were in utero in winter 1998, when an ice storm collapsed the electric grid, and temperatures plunged below minus 20 degrees. When followed up in their teenage years, children whose families were worst affected by the storm tended to have poorer health, including autoimmune diseases and metabolic diseases.[12]

The most striking aspect of the study is that the stress of the ice storm had led to changes in the epigenome, affecting what are known as DNA methylation levels. This suggests that our DNA, despite being millions of years old, can be affected by experiences of harsh deprivation when we are very young.

Supporting evidence comes from studies of rats. Some rat mothers are more inclined to care for newborn rats – giving them lots of licking and grooming in their first week – while others spend less energy looking after the young. So researchers randomly assigned rats to high-care and low-care environments.[13] They found that when rats are assigned to a more caring environment, it changes their epigenome. The DNA ends up being programmed differently, in a way that makes the rats less stressed later in life.[15] As researcher Moshe Szyf puts it, this suggests that ‘DNA is not just a sequence of letters. ...  DNA is a dynamic movie. Our experiences are being written into that movie, which is interactive. ’[15]

Intergenerational inequality may even be shaped by differences before birth. Stress, toxins and micronutrients all affect how a child develops in the womb. Babies born too light (below 2.5 kilograms) or too early (before 37 weeks) are more likely to have health complications, less likely to do well at school, and less likely to earn a decent income.[16]

In richer Australian households, only 3 percent of babies are of low birth weight. In poorer households, that figure is 7 percent. Similarly, in affluent households, only 4 percent of babies are born early. In disadvantaged household, that figure is 9 percent.[17] The womb is an amazing organ, providing developing babies with all the nutrients they need to grow from a single cell to an infant weighing a few kilograms. But even in that environment, we know that development differs.

Boosting Mobility

So what might we do to increase intergenerational mobility rates in Australia?

First, we need to recognise that ‘start at the beginning’ isn’t ambitious enough. We actually need to start by reducing pre-birth inequality. This requires reducing the share of pregnant mothers who smoke, drink, use drugs or are subject to intimate partner violence. One of the most promising interventions seems to be nurse home visits, though as a Cochrane Review pointed out, we still need to learn more about why some home visiting programs work, while others have no effect.[18] The Cochrane Review also points to some surprising findings, such as the fact that financial incentives seem to be particularly effective in helping pregnant women quit smoking.[19] The vital importance of a healthy pregnancy also reinforces the value of paid parental leave, properly funded legal aid for family violence victims, and the ability to visit a doctor without worrying about the cost.

Second, measures that reduce overall income inequality are also likely to increase mobility. One reason why it is more difficult for a child to move from the bottom fifth to the top fifth of the distribution in certain regions of the United States is that the income gap between those groups is so much greater. Looking across countries, economist Dan Andrews and I found a similar pattern. More inequality – less intergenerational mobility.[20] A more progressive tax system, a more employee-friendly industrial relations system, and competition laws that limit monopoly power are likely to deliver a more equal society, which in turn is likely to lead to greater mobility. It simply doesn’t make sense to say that you care about mobility but not about inequality.

One factor that is shaping both equality and mobility is the decline in the Australian home ownership rate, which is now as low as it has been since the 1950s. The drop has been especially marked among young people, with the home ownership rate for 25-34 year-olds dropping from 61 percent in 1981 to 45 percent in 2016. Over that period, young people have essentially been priced out of many markets. In the early-1980s, the typical home cost around twice annual income. Now, the typical home costs around five times the average income. Part of the increase is due to the confluence of negative gearing and the capital gains tax discount, which together have greatly increased the incentive for investors to speculate in the housing market. Unlike many other countries, Australians can deduct their interest losses against wage earnings, and then pay a lower tax rate on their capital gains. Labor’s prospective changes to negative gearing and capital gains will rebalance the market away from investors and towards first home buyers.

Analysis of inheritance patterns by the Grattan Institute suggests that the investor bias in our current tax system is entrenching inequality across generations. They point out that most household wealth is held in property, and note that ‘inheritances tend to transmit wealth to children who are already well-off. … If the patterns continue, then on average the younger generation will ultimately have more resources than its parents, but the wealth will be much less equally shared.’[21] The wealthiest fifth of Australians are almost ten times as likely to receive a sizeable inheritance than the poorest fifth.

There are plenty of other policy areas where the impact on children is underappreciated. For example, the Australian incarceration rate is presently as high as it has been since 1901. More than 40,000 Australians are behind bars, including more than 10,000 Indigenous Australians. While data on the children of prisoners is scant, the available evidence suggests that there is at least one child for every person in prison. This suggests that more than 40,000 Australian children currently have a parent behind bars. Prison strains marriages, and children are more likely to have behavioural problems when a parent is in jail. According to US research, the odds that a family falls into poverty rise by 40 percent when a father is incarcerated.[22]

Third, it is vital to recognise the role that quality schooling plays in improving social mobility. For example, children in disadvantaged households are less likely to be exposed to reading. One study estimates that in Australian households with highly educated parents, six out of ten children are read to every day.[23] Where parents have low levels of education, that figure falls to three out of ten.

You are no doubt familiar with Australia’s fall in test scores over recent years. From the 1960s to the early-2000s, the literacy and numeracy of 14-15 year olds either flatlined or fell slightly.[24] From 2000 to 2015, the international PISA exams show Australian 15 year-olds going backwards in maths, reading and science, with the drop equivalent to 3-6 months of learning.[25] NAPLAN results for grades 3, 5, 7 and 9 show only slight evidence of improvement since 2008.

However, what you may be less aware of is how we’re doing on educational inequality: the gap between students in the top tenth of performers and students in the bottom tenth of performers. This so-called 90/10 gap is a measure of inequality in the school system, and has been shown to correlate strongly with income inequality.[26] 

Using data from the OECD’s latest PISA exams, I looked at the performance of the top tenth and bottom tenth of test score performers.

Our top tenth of students are very good. Not surprisingly, our best outperform the average student in any country – but they also do pretty well against top performers elsewhere. Take a student from the top tenth in any Australian school and send them on exchange to another advanced nation, and – assuming they know the language – they’ll hold their own with the best students there.

But then there’s the bottom tenth. Australia’s lowest-performing students are well below the average in any advanced country. Indeed, if you wanted to find a country where Australia’s bottom tenth are on par, you’d need to be thinking of nations such as Brazil, Indonesia and the Dominican Republic.

Subtract the bottom tenth score from the top tenth score, and you’ve got a measure of educational inequality. For science, maths and reading, Australia’s level of educational inequality puts us in the top third of the advanced world.[27]

In each of these subjects, the typical student at the 90^th percentile is more than five years of achievement ahead of their counterpart at the 10^th percentile.[28] Remember that this is a grade 9 test. So the typical student at the 90^th percentile is performing at year 12 level, while the typical student at the 10^th percentile performs at year 7 level. They’re a whole high school apart.

Without proper funding and evidence-based school policies, these gaps will remain significant. That means not only higher levels of inequality, but also lower levels of social mobility. Evidence-based education reform is at the core of boosting intergenerational mobility in Australia. That’s why a Labor Government will restore the $14 billion that has been cut from public schools, and put in place an evidence institute for schools, to ensure that education policies are shaped by the best available research.

Fourth, we need to track our performance on intergenerational mobility. Earlier, I was critical of the conclusions reached by the Productivity Commission’s most recent discussion of the issue. In my view, the problem arises because it hasn’t delved deeply into the data, relying instead on putting together the available studies, which are of variable methodologies and quality.

In an important speech titled ‘The Case for Opportunity’, Chris Bowen announced last year that a Labor Government would task the Productivity Commission to produce an Equality of Opportunity Report every five years. Like the Intergenerational Report, it would aim to focus national attention on how Australia is tracking in improving social mobility. As Chris has flagged, this report would be more than a literature review - it would aim to produce fresh estimates of intergenerational mobility in Australia, following the methodological lead of Raj Chetty and the Equality of Opportunity Project. The report might also look at which parts of Australia are the best drivers of social mobility. I would be surprised if such original analysis led to the sanguine conclusion that our nation as a whole cannot improve on the mobility front.

Conclusion

In the National Library’s Albert Namatjira archive, there’s a small black and white photograph of a formal lunch, dated sometime between 1947 and 1950.[29] The image feels candid, but sitting over their cut-crystal dessert bowls we have a trio that could not have come together by chance. Albert Namatjira sits in the middle, hunching slightly forward, with his hands by his side. On his left is Mary Gilmore, in a similar pose. The pair are looking away in the same direction, they are paying attention. Meanwhile, on Namatjira’s right, a serenely self-possessed Doc Evatt momentarily rests his spoon, savouring his meal with his eyes closed.

It wouldn’t be fair to say this is a fitting portrait of Evatt, but anyone who knows some details of his life would agree there is something characteristically remote and self-assured captured in that image.

There were many things the self-assured Evatt didn’t see. He didn’t see that defending the rights of minorities was inconsistent with defending the White Australia Policy. He didn’t see that the rules of engagement from the courtroom wouldn’t translate to the parliament. He looked to rely on the iron abstraction of rights and principles and missed the social cues that successful politicians can pick out from watching the crowd. He overstayed his time in public life. As Michael Kirby put it when he delivered the first of these lectures, Evatt at the end of his life was in failing health. ‘In my youth as an articled clerk, I was surrounded by well-groomed young men who mocked this mental giant in his closing months. He was like Lear, disconsolate.’[30]

But in his best days, Evatt saw how Australia could be a better nation.  He recognised the value of education and family payments in allowing Australians to realise their potential and to retain their ability to choose their own path. As the President of the United Nations General Assembly, he saw very clearly the fundamental significance of asserting a set of rights that all people should have a right to claim, and an obligation to observe.

So – this photo? A trio of equals sharing pride of place on the head table? Could be. After all, at that time, Evatt was one of Australia’s most successful international statespeople and our staunchest advocate for the value and importance of human rights. Mary Gilmore had a whole lifetime behind her of adventure, utopianism and activism. Albert Namatjira’s paintings had earned him critical acclaim, wealth and international renown.

This image tells a story of equality. Not even a decade had passed between that moment and the election of the first woman to Australian parliament. It would be nearly two decades before indigenous Australians were counted as full citizens.

What was the reality, and what are the questions that reality still proposes to us nearly seven decades years later?

The general values that Evatt helped entrench in the Declaration of Human Rights will always provide benchmarks for our aspirations.

It is clear enough though that in some areas, such as reducing racism and sexism, we’ve made distinct progress since the 1940s. On the sporting field, our competitions tend to be more egalitarian and mobile. It’s not just Rugby League. The story of the GWS Giants could only have happened due to a set of institutions that encourage underdogs and start-ups in the AFL.

On economic inequality, though, we’ve fallen below the levels of Evatt’s era. In the postwar decades, wages grew faster on the factory floor than in the corner office. For the past generation, the reverse has been true. We are becoming a less equal nation. Left unchecked, it is likely that this increase in inequality will also translate to a decrease in mobility.

An immobile society threatens human rights in a way Evatt would have grasped immediately – it depletes individuals’ agency and diminishes their horizons. And if we don’t fix this problem, think of what we’re leaving to future generations of Australians. Consider what kind of Australia it would be if the postcode of a child’s birth determined her destiny.

Evatt helped shape the United Nations Charter. He was at the heart of the work that led to the Universal Declaration of Human Rights and was the elected President of the General Assembly when the UN adopted that declaration. An Australian looking outward, Evatt could see where we fitted into the world. He saw how openness and a few agreed common principles could be the foundations of shared prosperity and ongoing peace.

As one of the architects of the UN charter, Evatt helped draft its talismanic overarching commitment to ‘the dignity and worth of the human person, in the equal rights of men and women and of nations large and small.’

Evatt had worked to deliver this new worldwide forum for rational consensus, diplomacy. He had soared on the wings of high principle, helping to set the lofty pitch of the Universal Declaration, and he had been tenacious in the political clinches to guard the interests of the smaller member nations.

But Evatt has another more prosaic legacy.

As Michael Kirby saw it, when Evatt rallied Australians to defeat the Menzies government’s referendum to ban the Communist Party, he had protected one of the cornerstones of tolerant, modern Australia:

‘…the wonderful thing he safeguarded for us, by a most courageous exhibition of practical idealism, was the pluralist, liberal democracy we live in: accepting diverse opinion. He knew that human rights matter most when small unpopular minorities are threatened.’

Evatt’s principled victory over the meaner instincts behind Menzies’ referendum is worth celebrating for its own sake. But for Michael Kirby, the resolute manner in which Evatt guarded this tradition that he believed in so strongly sets a test for all future generations. Evatt’s example forces us to ask, again and again, if ‘we are equal to the similar tests of our resolves and to our idealism’ that he faced, and faced down.

None of us want to leave our children a less fair Australia. So we look to a similar test of our principles, and the strength of our resolve to live up to them. Can we meet to the test that Evatt set?

ENDS

Authorised by Noah Carroll, ALP, Canberra.

[1] ‘Dr. H. V. Evatt’. The Canberra Times. 19 December 1930. p. 1.

[2] Ross Booth, Comparing Competitive Balance in Australian Sports Leagues: Does a Salary Cap and Player Draft Measure Up? Sport Management Review, Volume 8, Issue 2, September 2005, Pages 119-143

[3] And no, I’m not proposing capping Australian workers’ salaries!

[4] The equivalent Japanese saying is: ‘rice paddies to rice paddies in three generations’. The Scottish saying is more descriptive: ‘The father buys, the son builds, the grandchild sells, and his son begs.’

[5] Clark, G., Leigh, A. and Pottenger, M., 2017. Immobile Australia: Surnames Show Strong Status Persistence, 1870–2017. IZA Working Paper 11021, IZA, Bonn.

[6] Chetty, R., Hendren, N., Kline, P. and Saez, E., 2014. Where is the land of opportunity? The geography of intergenerational mobility in the United States. Quarterly Journal of Economics, 129(4), pp.1553-1623.

[7] Bell, A.M., Chetty, R., Jaravel, X., Petkova, N. and Van Reenen, J., 2017. Who becomes an inventor in America? The importance of exposure to innovation (No. w24062). National Bureau of Economic Research.

[8] Raj Chetty, Nathaniel Hendren, Patrick Kline, Emmanuel Saez, and Nick Turner, Is the United States Still a Land of Opportunity? Recent Trends in Intergenerational Mobility, American Economic Review Papers and Proceedings 104(5): 141-147, 2014

[9] Leigh, A., 2007. Intergenerational mobility in Australia. The BE Journal of Economic Analysis & Policy, 7(2).

[10] Chetty, R., Grusky, D., Hell, M., Hendren, N., Manduca, R. and Narang, J., 2017. The fading American dream: Trends in absolute income mobility since 1940. Science, 356(6336), pp.398-406.

[11] Chetty, R., Hendren, N., Kline, P. and Saez, E., 2014. Where is the land of opportunity? The geography of intergenerational mobility in the United States. Quarterly Journal of Economics, 129(4), pp.1553-1623.

[12] Cao-Lei, L., Massart, R., Suderman, M.J., Machnes, Z., Elgbeili, G., Laplante, D.P., Szyf, M. and King, S., 2014. DNA methylation signatures triggered by prenatal maternal stress exposure to a natural disaster: Project Ice Storm. PloS one, 9(9), p.e107653.

[13] Szyf, M., Weaver, I.C., Champagne, F.A., Diorio, J. and Meaney, M.J., 2005. Maternal programming of steroid receptor expression and phenotype through DNA methylation in the rat. Frontiers in neuroendocrinology, 26(3-4), pp.139-162.

[14] See also McGowan, P.O., Suderman, M., Sasaki, A., Huang, T.C., Hallett, M., Meaney, M.J. and Szyf, M., 2011. Broad epigenetic signature of maternal care in the brain of adult rats. PloS one, 6(2), p.e14739.

[15] ‘Moshe Szyf: How Do Our Experiences Rewire Our Brains And Bodies?’, TED Radio Hour, 25 August 2017

[16] John Komlos, ‘In America, inequality begins in the womb’, PBS NewsHour, 20 May 2015.

[17] These differences are between the top and bottom quartile of family income. Australian Institute of Family Studies. (2011). The Longitudinal Study of Australian Children: Annual Statistical Report 2010, AIFS, Canberra, p.131. These gaps persist even after controlling for parity, gender, race, ethnicity, Indigeneity, marital status, maternal age at birth, and smoking: Martinson, Melissa L., and Nancy E. Reichman. ‘Socioeconomic Inequalities in Low Birth Weight in the United States, the United Kingdom, Canada, and Australia.’ American journal of public health 106, no. 4 (2016): 748-754.

[18] Turnbull C, Osborn DA. Home visits during pregnancy and after birth for women with an alcohol or drug problem. Cochrane Database of Systematic Reviews 2012, Issue 1. Art. No.: CD004456. On home visits to reduce family violence, see Mejdoubi, Jamila, Silvia CCM van den Heijkant, Frank JM van Leerdam, Martijn W. Heymans, Remy A. Hirasing, and Alfons AM Crijnen. ‘Effect of nurse home visits vs. usual care on reducing intimate partner violence in young high-risk pregnant women: a randomized controlled trial.’ PloS One 8, no. 10 (2013): e78185. For a comprehensive review of the relevant systematic reviews, see G. Justus Hofmeyr, James P. Neilson, Zarko Alfirevic, Caroline A. Crowther, Lelia Duley, Metin Gulmezoglu, Gillian M. L. Gyte, Ellen D. Hodnett, 2011, Pregnancy and Childbirth: A Cochrane Pocketbook, John Wiley & Sons, Hoboken, NJ

[19] Chamberlain C, O’Mara-Eves A, Porter J, Coleman T, Perlen SM, Thomas J, McKenzie JE. Psychosocial interventions for supporting women to stop smoking in pregnancy. Cochrane Database of Systematic Reviews 2017, Issue 2. Art. No.: CD001055.

[20] Andrews, D. and Leigh, A., 2009. More inequality, less social mobility. Applied Economics Letters, 16(15), pp.1489-1492.

[21] John Daley and Danielle Wood, 2014, ‘The wealth of generations’, Grattan Institute Report No. 2014-13.

[22] Jason Furman and Douglas Holtz-Eakin, ‘Why Mass Incarceration Doesn’t Pay’, New York Times, 21 April 2016, p.A29

[23] Bradbury, Bruce, Miles Corak, Jane Waldfogel, and Elizabeth Washbrook. 2015. Too Many Children Left Behind: The U.S. Achievement Gap in Comparative Perspective, New York: Russell Sage Foundation.

[24] Leigh, Andrew, and Chris Ryan. ‘Long-run trends in school productivity: Evidence from Australia.’ Education Finance and Policy, 6, no. 1 (2011): 105-135.

[25] Australia’s average PISA scores have been as follows. Reading: 528 (2000), 525 (2003), 513 (2006), 515 (2009), 512 (2012), 502 (2015). Maths: 524 (2003), 520 (2006), 514 (2009), 504 (2012), 494 (2015). Science: 527 (2006), 527 (2009), 521 (2012), 510 (2015). The standard deviations of Australia’s test scores are 103, 93 and 102 respectively. The conversion to months of reading is based on the assumption that students learn at a rate of half a standard deviation per year, as used in Andrew Leigh, ‘Estimating teacher effectiveness from two-year changes in students’ test scores.’ Economics of Education Review 29, no. 3 (2010): 480-488. NAPLAN scores show a similar rate of student progress. Note that a 2015 Grattan Institute report followed the UK Education Endowment Fund in assuming that learning occurs at a rate of one standard deviation per year (Higgins, S., Kokotsaki, D. and Coe, R. (2012) ‘The Teaching and Learning Toolkit: Technical Appendices’, Education Endowment Foundation, The Sutton Trust). I know of no evidence that Australian or British students progress this rapidly.

[26] See for example Jo Blanden and Sandra McNally, 2015, ‘Reducing Inequality in Education and Skills: Implications for Economic Growth’, EENEE Analytical Report No. 21, Prepared for the European Commission

[27] Based on the 2015 PISA literacy, mathematics and science tests.

[28] It’s worth mentioning two possible biases. On one hand, the estimate that students progress at one standard deviation per year is probably at the upper end. If students progress more slowly, then the 90/10 gap, expressed in years of achievement, is even larger. But the estimate could also be biased in the opposite direction, since measurement error will increase the variance (relative to an estimate of the variance in true underlying ability).

[29] The image is available at https://nla.gov.au/nla.obj-146940434/view

[30] Michael Kirby, ‘H V Evatt – Libertarian Warrior’, HV Evatt Memorial Address, NSW Parliament, 30 August 1991.

========

Response to the Hon. Andrew Leigh: Intergenerational inequality and mobility

Elly Howse, Labor Candidate for Balmain

Evatt Foundation NSW Parliament Lecture

Sydney

25 September 2018

I acknowledge the traditional owners, the Gadigal people of the Eora nation, and pay respect to their Elders past, present and emerging.

Thank you to the Evatt Foundation for giving me the opportunity to respond, and thank you Andrew for your excellent lecture. It’s so important that Labor has representatives like Andrew in our parliament.

It’s a strange coincidence for me to be speaking at an Evatt Foundation event. In 1925 at age 31, Doc Evatt was elected to the NSW Legislative Assembly as the Labor member for Balmain – the seat I am now running for as a 30 year old.

Like Evatt, I am also a graduate of the University of Sydney, and I’ve been involved with St Andrew’s College – his old stomping ground.

I can’t say that I plan to follow in his footsteps in the law, or fall foul of my Premier if I’m elected, but it is nice to share some similarities with Evatt.

In thinking about Doc Evatt and intergenerational inequality, I’d say that he probably did reasonably well in life. We know he was very bright. But more importantly, his family were well off. Even though we know his father died when he was quite young, Evatt was able to complete his schooling and attend university before going into politics and the judiciary.

But we forget Evatt’s life was not the norm for most Australians in the early 20^th century. For example, take my maternal grandmother’s story.

A year before Evatt became the Member for Balmain, my grandmother was born, the middle of five children from a working class family in Annandale. She attended Annandale North Public School and then Riverside Girls High School. Her father worked on the railways and was by all accounts an incredibly intelligent man but had little formal education. He experienced recurring bouts of depression and alcohol addiction, ending up in Callan Park psychiatric hospital until his death.

When my grandmother was in Year 8, she was forced to leave school so she could get a job to help support the family. This was devastating for her but the norm for girls and women at the time – and I should say remains the norm for many girls across the world today.[1]

My grandmother maintained her fascination in education for the rest of her life, encouraging her two children to finish school and pursue a university education – something she had been prevented from doing. She loved education so much that she bequeathed her body to the School of Medical Sciences at the University of New South Wales so others could keep learning!

I was the youngest of her four grandchildren. I was born in 1988 – the year of the bicentenary. Australia in the late 1980s had changed hugely from the Depression-era Australia my grandmother knew.

My experience growing up in inner Sydney was very different. Suburbs like Redfern, Chippendale, Glebe and Balmain were becoming more multicultural and upwardly mobile. These suburbs were filled with a range of people - teachers, public servants, university students, hospitality workers, shopkeepers, public housing tenants. The other kids in my street and at school were not all Anglo but also Lebanese, Greek, Turkish, Pacific Islander, Chinese and Aboriginal.

I grew up in a household where both my parents were university-educated and maintained full time jobs. We had access to high quality, affordable, local childcare. We had stable, secure housing - although it did take until my teenage years for my parents to pay off their mortgage. My parents encouraged me to read and could help me with my homework.

Where we lived there were plenty of parks and green spaces nearby, as well as swimming pools, public libraries, and easy access to public transport. I could play sport, do ballet, have music lessons, see concerts, borrow the latest books, go to the movies. We weren’t rich but we had everything we could have needed for a fulfilling, joyful childhood.

There is no doubt my grandmother, and my parents for that matter, worked hard to provide for us. But everyone works hard. ‘Working hard’ doesn’t belong only to those who do well in life.

The concept of ‘work hard, get ahead’ is a distractor. It distracts us from the empirical evidence: that social mobility within and between generations is determined by one’s access to economic and intellectual resources, which are scaffolded by a complex web of government policies that can support or hinder people to ‘get ahead’ in life.

So my family’s experience of intergenerational mobility wasn’t necessarily the result of ‘working hard’. We were Anglo-Australian, we lived in a major city, but we were also the beneficiaries of significant policy changes by governments over the last fifty years.

These changes occurred in the key areas we know influence social mobility, which Andrew touched on tonight: education and training; health; employment; housing.

In education, we’ve seen a raft of reforms to increase educational attainment in Australia. State governments have invested in our school system – such as implementing policies that supported young people to stay until Year 10, and later on the completion of Year 12 or an equivalent qualification.[2]

Reforms by the federal government made it possible for people like my parents – first in family – to enter university, either because of Commonwealth scholarships or the abolition of university fees. The development of a formal TAFE and vocational training sector has mean t you can re-train and gain other qualifications to help you find work and upskill, whether you want to be a barista, a plumber or a community health worker.   

In health, we have a system which is the envy of many around the world. You are not charged to visit your local bulk-billing GP or to have an X-ray for a broken arm. Medicines listed on the Pharmaceutical Benefits Scheme are heavily subsidised by the Australian government. You don’t have to worry about the cost of treatment in our public hospitals. We provide high-level nursing and midwifery care for pregnant women, and subsidise vaccinations for children so that everyone can get the best start in life – an important aspect of reducing intergenerational inequality.

In employment, we have a strong and proud trade union movement which has fought for secure work with decent pay and conditions. Occupational health and safety laws allow us to do our work and come home safely to our families. Compulsory superannuation means we have access to income when we retire, with further support through the safety net of the age pension. We also provide childcare subsidies to assist parents in continuing to work, although I do note there’s plenty of room for improvement.

In housing, we’ve had significant increases in housing stock through Commonwealth and state government schemes, particularly since World War II. This led to the biggest increase in home ownership ever in Australia.[3] More recently, we’ve had First Home Buyer grants and stamp duty exemptions, all focused on promoting home ownership.

All of these policy and legislative changes support and enhance social mobility within and between generations, and reduce inequalities within the population more broadly.

But something is shifting, and we as progressive thinkers and activists should be worried.

According to the Australian Council of Social Service, inequality is at its highest in almost 40 years. The highest 20% of Australian households now live with five times as much income as the lowest 20%.[4] 

As Andrew pointed out, in our education system inequalities are growing – no doubt fuelled by the inability of successive federal governments to implement a fair school funding model. But it’s not just about school - research released last week shows that children in disadvantaged families and communities have less access to extracurricular activities, local libraries and facilities.[5]

Inequalities between and within generations also persist when governments slash funding for universities, TAFE and vocational training - and fees balloon to extraordinary amounts. How do you ‘get ahead’ in life when entry level jobs require an undergraduate or even a postgraduate qualification, leaving you saddled with a HELP debt of $50,000?[6]

This is further compounded by cuts to penalty rates for weekend and public holiday work, and the stagnation of wages. Plus there is the real and ever present risk from conservative governments to restrict trade union organising in workplaces, thus attacking workers’ rights’ to permanent and secure work with decent pay and conditions. How does my generation ‘get ahead’ when we are stuck in a cycle of casual and fixed term or contract jobs and our workplaces have low union density?

On top of this insecurity in education and employment, my generation has witnessed the mass selling of public assets. In NSW, $53 billion worth of public assets have been sold or leased since the Liberal/National Government was elected in 2011.[7]

Essential government and public sector services are being privatised and out-sourced: aged care; childcare; public transport; electricity; disability services; homelessness services.

How do you encourage your kids to love reading if the public library down the road gets closed because it’s not ‘profitable’? How do you have secure housing when public housing stock is so limited, and house prices and rents have soared?

Governments have pursued their attacks on these essential services at the same time as chanting the individual-centric ‘work hard and get ahead’ mantra, to the point where most of us now believe it.

It’s hard to get ahead in life if you’ve had no government support to retrain and reskill after you’ve lost your job, or if you can’t complete your schooling, or if you have been waiting over two years for a hip replacement. I won’t even mention it is doubly harder if you are an Indigenous Australian, or you’ve been in prison, or you have a disability, severe mental illness or substance use disorder.

These people all work hard. But their one opportunity for social mobility and a better life is through government policies and the provision of services that too many of us take for granted. 

So we must stop getting tugged back into a conversation about ‘working hard’ and ‘lifters or leaners’. We’re at real risk of becoming more like the Australia of the 1920s, in which your postcode or family background did determine your outcome in life – as it did for Doc Evatt, and as it did for my grandmother.

We cannot forget that good government can have a huge and profound impact on people’s lives.

How else to explain that the granddaughter of a poor working class girl from Annandale is now running for state parliament? It’s certainly not because I’m the smartest or because I’ve worked the hardest.

Rather I’m here because I’m the beneficiary of government policies that have promoted equity and social mobility. These policies have allowed my parents and millions of other Australians, regardless of their postcode or family background, to get an education, to gain decent employment, to buy a house, and to access services regardless of income or capacity to pay – as is their right, as is everyone’s right in this country.

These policies don’t happen by accident: they are the result of careful policymaking by progressive governments who are voted in by us to promote fairness, justice and equality.

This is the great vision that Doc Evatt set out for us. Let’s protect and build on it for the sake of future generations.

[1] According to UNESCO’s 2016 figures, worldwide there are 263 million children and adolescents out of school, with girls of primary school age more likely to be out of school compared to boys. See: UNESCO (2018). ‘One in five children, adolescents and youth is out of school’. Fact sheet no.48, February 2018. http://uis.unesco.org/sites/default/files/documents/fs48-one-five-children-adolescents-youth-out-school-2018-en.pdf.

[2] ‘Minimum school leaving age jumps to 17’. Sydney Morning Herald, 28 January 2009. Sydney: Fairfax Ltd. https://www.smh.com.au/national/minimum-school-leaving-age-jumps-to-17-20090128-7r4d.html.

[3] Eslake, S. (2013) Australian housing policy: 50 years of failure. Submission to the Senate Economics References Committee, 21 December 2013. Canberra: Commonwealth Government. https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Affordable_housing_2013/Submissions.

[4] Australian Council of Social Service (2018). Inequality in Australia 2018. https://www.acoss.org.au/wp-content/uploads/2018/07/Inequality-in-Australia-2018.pdf.

[5] Redmond, G., Skattebol, J. (2018). ‘Young Australians’ prospects still come down to where they grow up.’ The Conversation (AU), 17 September 2018. https://theconversation.com/young-australians-prospects-still-come-down-to-where-they-grow-up-102640. 

[6] Recent statistics from the ATO show the number of HELP debts above $50,000 has increased by approximately 25% between 2015-16 and 2016-17. See: Ferguson (2018). Updated Higher Education Loan Program (HELP) debt statistics. Parliamentary Library, 1 May 2018. Canberra: Australian Parliament. https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/FlagPost/2018/May/HELP-debt-statistics.

[7] Montoya, D., Ismay, L. (2017). Privatisation in NSW: a timeline and key sources. NSW Parliamentary Research Service, 6 June 2017. Sydney: NSW Parliament. https://www.parliament.nsw.gov.au/researchpapers/Documents/Privatisation%20in%20NSW%20-%20a%20timeline%20and%20key%20sources.pdf.