Andrew Leigh

My Chronicle column this month offers a bit of advice to those finishing high school this year.

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In today's AFR, I have an obituary for the late Gary Becker.

The man who looked at the economics of everything, Australian Financial Review, 6 May 2014

Gary Becker began to apply economics to crime when he was running late for a meeting, and had to choose whether to spend extra time parking legally – or park illegally and risk getting a ticket. After considering the size of the fine and the chance of getting caught, he decided to take the risk and park illegally. (He didn’t get a ticket.)

In the 1960s, applying economics to crime was a radical thing to do. Economics then was focused around a narrower set of questions, such as trade, inflation, wages, competition and savings. Crime was the domain of other social sciences, such as psychology and sociology, which saw criminals as having quite different motivations from the law-abiding.

Becker didn’t dismiss morality, but also argued that it was important to see criminals as being affected by the chance of being caught and the size of the punishment. His work led economists to study how crime might be affected by prison terms and police numbers, as well as by unemployment rates and inequality.

In 1976, Becker summed up his style of economics as ‘maximizing behaviour, market equilibrium and stable preferences, used relentlessly and unflinchingly’. It was an approach that he began in his 1955 PhD thesis, which was on the economics of discrimination. Becker argued that the level of discrimination we observe depends not only on people’s prejudices, but also on the market.

For example, suppose prejudiced employers are refusing to hire members of a particular group. In a competitive market, what is to stop a new firm from employing the most productive members of that group, and making more profit? Subsequent studies validated Becker’s theory by showing that as industries became more competitive, the level of racial and gender discrimination fell.

Becker’s work not only won him the Nobel Prize – it encouraged other economists to embark on what its proponents called ‘the economics of everything’ and its critics dubbed ‘economic imperialism’. Popularised in Steven Levitt and Stephen Dubner’s Freakonomics books, the economics of everything has seen economics confidently pushing into topics that were formerly the exclusive domain of sociologists, education researchers, and political scientists.

In my own work as an economist at the Australian National University, Becker’s example was extraordinarily influential. During that time, I wrote papers that looked at the impact of child gender on divorce, the Baby Bonus on birth timing, and obesity on wages. With a suite of co-authors, I looked at trust, media bias, political betting markets and ethnically-identifiable names. Indeed, I even analysed whether beauty affected the electability of federal politicians, a study that makes me uneasy now that I’m a datapoint rather than a datacruncher.

The strength of modern microeconomics as a discipline comes from a marriage of two things: a Becker-like willingness to apply theory to new areas, and the explosion in new data. Chat to empirical researchers in the world’s top economics departments, and they’ll tell you how they’re coding up uncommon surnames to look at social mobility, satellite imagery to look at growth in Africa, or wine magazines to see whether those who advertise get better reviews.

Becker won his Nobel Prize in 1992 not merely for providing insights into the discipline, but for expanding its scope. As well as crime and discrimination, he peered into the family – using economic analysis to consider how families share the work, choose how many children to have, and decide how much to invest in their children. In 1964, he posited the then-controversial notion that we should think of education and skills as a form of capital, productive in the same way as factories and tools. If you’ve ever used the term ‘human capital’, you’re channelling Gary Becker.

As a pivotal member of the University of Chicago’s economics department, Becker’s political preferences were a touch to the right of mine. But only a fool listens solely to people on his side of politics. I found it hard to read anything by Becker without gaining new insights – even where I disagreed.

For the past decade, Becker co-wrote a public policy blog with a fellow economist, judge Richard Posner. In his final three entries (written in February and March of this year), Becker argued that the US should end its embargo on Cuba, that America should adopt a HECS-style system of income-contingent university loans, and that marijuana should be decriminalized. Each bears the trademark Becker approach: big issues, lucidly articulated, with a controversial conclusion.

Andrew Leigh is the federal member for Fraser, and a former professor of economics at the Australian National University. He is the author of The Economics of Just About Everything (forthcoming, Aug 2014).

My op-ed in today's Telegraph looks at what Charlie Sheen and Joe Hockey have in common.

Committed to dividing society by eroding basic principles, Daily Telegraph, 6 May 2014

A few years ago, after trashing yet another hotel room so badly that he was barred from the hotel, actor Charlie Sheen simply got his publicist to do the talking. There’s nothing to see here – he told the newspapers – just a quiet night out with some friends.

Perhaps Joe Hockey has been watching too many re-runs of Two and a Half Men, because his fiscal strategy since the election has a touch of Sheen about it. After winning office, the Coalition manufactured a budget crisis, doubling the budget deficit by rejecting 55 Labor tax measures. Going soft on multinationals. Scrapping the mining tax. Ending the carbon price. A billion here, a billion there – and soon you’re talking real money.

In the election campaign, Mr Abbott promised that he would not raise taxes, and that his government would keep its word.  ‘There should’, he said, ‘be no new tax collection without an election.’

At election time, a report from the public servants who head the departments of Treasury and Finance made clear that Labor would have had the budget back in surplus in 2016. After Joe Hockey’s first budget update, we had red ink as far as the eye could see.

The Commission of Audit recommendations are what you might expect from a report that asks big business to write our social policies. Higher fees to see a doctor will – as the Australian Medical Association and the Doctors’ Reform Society have said – make us a sicker society. The Commission wants bricklayers and nurses to wait until 70 to get the basic pension.

If the government must break a promise, it could start with its unfair parental leave scheme, which gives the most to those who have the most. Australia currently has a scheme, which recognises that a baby born into a poor family is worth as much as a baby born into a rich family.

Since the early-1990s, CEO pay has risen three times as fast as the minimum wage, but the Commission of Audit thinks the ‘wage problem’ is at the bottom. It’s hard to see the fair go from the fairway.

The question for Australia is whether we let this continue. With a government as committed to cuts at the bottom as it is to giveaways at the top, Australian egalitarianism is under threat like never before.

Andrew Leigh is the Shadow Assistant Treasurer.

 

MEDIA RELEASE

No support for Government’s regressive ACNC repeal

Public submissions to the Senate inquiry into the abolition of the Australian Charities and Not for Profits Commission (ACNC) have been clear in sending a message to the Abbott Government not to scrap the Commission.

In March, the Senate referred the ACNC (Repeal) (No. 1) Bill 2014 to the Senate Economics Legislation Committee for inquiry and report. Submissions closed on Friday with a range of organisations including The Shepherd Centre, Australian Women’s Health Network and Associated Christian Schools having their say about the important role the Commission has played for the sector.

Organisations have labelled the repeal legislation a backward step and criticized the lack of consultation with the sector about the changes.

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On 5 May 2014, I joined Kieran Gilbert on Sky AM Agenda to discuss Treasurer Joe Hockey's strategies for fundraising from big business, and government decisions that have allowed multinationals to shift profits offshore.

E&OE TRANSCRIPT

TELEVISION INTERVIEW - SKY AM AGENDA

SUBJECT/S: Federal Budget; Debt tax; Political donations

KIEREN GILBERT: This is AM Agenda. Thanks for your company this Monday morning. With me now, the Shadow Assistant Treasurer, Andrew Leigh.

Andrew Leigh, you've heard a lot of what Josh Frydenberg has had to say and the Liberal Party of the last couple of days about getting the budget back. This is normal for pre-budget season, that ideas are floated and if it's going to be a tough budget of course, it's not going to be that popular.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Kieran, what's normal at this stage is that the budget is off at the printers and what's extraordinary is that the Government is still clearly trying to work out what's in the budget. I mean, the idea that Mr Abbott couldn't go to Indonesia at the personal invitation of the Indonesian President does indicate that there's a real sense of crisis in the Government about the budget. And, they're engaging in what troubles me, because it's such a misleading campaign about the true state of nation's finances when the Coalition took over. Since then, the Government's added $68 billion to the four year deficit, doubling that deficit and as Josh Frydenberg noted, getting the IMF to blow the whistle on rampant spending. But that's the IMF blowing the whistle on Joe Hockey who has now taken off the spending cap that existed when Labor was in government.

GILBERT: You've watched politics and been close to it for a long time now. You know full well that budgets are deliberated on, worked on, until the last days. It's very rare that you would have a budget go a week out to the printers. That's not accurate is it?

LEIGH: It ought to be done and dusted at this stage Kieran and the notion that the Government’s still trying to decide whether or not it's going to break its promise on the debt tax, whether it's going to break a promise on a GP tax, whether it's going to break a whole range of range of promises to pensioners and vulnerable Australians really ought to be concerning to anyone who wants to see good public policy done in Australia.

GILBERT: But what the Government argues and what the Prime Minister has argued this morning, we played the comment at the start of the program, is that for equity basically, they're suggesting that you've got to look at the idea of a debt tax for those on higher incomes because. And I'll put it to you, that if you do target those on welfare and welfare payments at the lower income scale, why shouldn't you target those wealthier Australians to also make a contribution?

LEIGH: What the Government is doing, is basically unravelling the carbon price mechanism. So, the carbon price raised the tax on pollution and lowered the price of work at the same time. The Government is doing the reverse.  They want to raise the price of work and the want to lower the price of pollution. So, we'll get less participation and more pollution as a result of what the Government's doing. And it has to do that because it loses such a large amount of revenue in scrapping the carbon price. Scrapping the carbon price isn't just bad environmental policy, it's bad economic policy as well.

GILBERT: In terms of the equity scenario, if they are trying to reduce debt and deficit, and you're going to reign in middle class welfare and welfare for those on lower incomes, shouldn't those on higher incomes also make a contribution?

LEIGH: It's such a clear broken promise Kieran from a man who criss-crossed the country for three years saying that if people should know anything about him, it would be that he wouldn't break his promises. To take a simple example, if we have a one per cent levy on people earning over a $100,000 that raises less than $2 billion a year in an environment in which the Government has already added $68 billion to the deficit.

GILBERT: I want to look now at the front page of the Sydney Morning Herald and The Age. This is the story on Joe Hockey. 'Treasurer for sale' is the headline. The Prime Minister has responded to this story this morning. Let's play you a little of Tony Abbott on the Nine Network Today Show.

TONY ABBOTT: I haven’t actually seen the story but I do want to make the point that all political parties have to raise money. Typically you raise money by having events where senior members of the party go, and obviously they meet people at these events. The alternative  to fundraising in this time-honoured way is taxpayer funding at a time when we’re talking about a very tough budget indeed. The idea that we should scrap private fundraising and fund political parties through the taxpayer I think would be very odd.

GILBERT:Is there anything wrong here? This is something that has gone on for a long time isn't it? Peter Costello had a very similar Club 200 in his seat of Higgins for years.

LEIGH: Joe Hockey likes to give the impression that he is everyone's friend. But now we learn it costs $5,500 to be a friend of Joe's, or $11,000 if you want to be a friend with benefits. And you can see the sorts of benefits that flow. For example, one of the government's first decisions on coming to office was to go soft on the taxation of multinational companies, to take away a $700 million measure that Labor was going to put in place that would have seen those companies fairly taxed.

GILBERT: So, you're alleging that Joe Hockey has been bought by big business?

LEIGH: I'm not alleging a specific link between a specific payment but this is a Government which is clearly running schemes in which they get corporate donations from the top end of town and then run a Commission of Audit by the big end of town and then institute policies that benefit the top end of town such as going soft on multinational taxation.

GILBERT: Isn't this just donations being paid for access, and the Labor Party has functions where you have companies and other groups like the unions having to pay to attend and sit at the table of a Shadow Minister for example.

LEIGH: We worked to bring down these disclosure thresholds. Don't forget John Howard took the disclosure threshold from $1,500 to $10,000. It's now indexed up to $11,500, coincidentally, just a bit higher than the payment amount of friends of Joe Hockey club. The result of that is very large donations can be made without being disclosed.

GILBERT: He's within the rules though. That's what you're saying.

LEIGH: He is certainly within the rules from everything that we have read so far. But I don't think it's appropriate for people to be making such large donations and for them not to be publically disclosed because I think ultimately cash of that scale does cause challenges for the effective operation of our democracy. And this is a Government which is taking away the income support bonus, the Low Income Superannuation Contribution, the School Kids bonus from low and middle income families and then it's giving tax breaks to mining billionaires, tax breaks to multinationals who are profit shifting. It's refusing to even fairly tax people with super balances over $2 million. So, for the top end of town, the age of entitlement is just beginning.

GILBERT: Andrew Leigh, thanks for your time.

LEIGH: Thank you Kieran.

ENDS

I appeared on ABC Lateline to discuss budget speculation and the government's priorities.

E&OE TRANSCRIPT
TELEVISION INTERVIEW

ABC LATELINE
FRIDAY, 2 MAY 2014

SUBJECT/S: Deficit Tax; Commission of Audit Report; Federal budget; GP Tax; Federal ICAC.

EMMA ALBERICI, PRESENTER: As we heard earlier, the Prime Minister has cancelled his trip to Bali, rejecting an invitation by the Indonesian President that many had seen as an olive branch extended after a period of strained relations between the two countries.

That news broke just after we recorded our political forum tonight which was dominated by discussion of the Government's first Budget.

We were joined from Melbourne by Coalition's Kelly O'Dwyer and in Canberra by Labor's shadow assistant Treasurer Andrew Leigh.

Welcome to you both.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Thanks Emma.

KELLY O'DWYER, LIBERAL BACKBENCHER: Great to be with you.

EMMA ALBERICI: Kelly O'Dwyer, on the deficit tax, why is it okay for the Coalition to break an election promise but when Labor did it Tony Abbott said it brought our democracy into disrepute?

KELLY O'DWYER: Well, Emma, I think we're getting a bit ahead of ourselves here. While there's been a lot of reportage about a deficit or a debt tax or a levy, we've seen that reportage be quite different in all of it papers and the Budget yet hasn't been delivered. It will be delivered...

EMMA ALBERICI: Are you saying we're not going to get such a tax or levy?

KELLY O'DWYER: The Budget's going to be delivered on the 13th of May and I haven't seen it yet Emma, so I can't tell you exactly what's in it but the Treasurer will deliver it on the 13th of May and at that time we'll know exactly what is part of it Budget rather than the fevered speculation that we have seen to date. We also know that Labor is running a pretty strong scare campaign on all sorts of issues but I don't know that that's terribly helpful or constructive.

EMMA ALBERICI: Hold on, back to the deficit tax, the Prime Minister and Treasurer have both had ample opportunity to deny it and they haven't done so, in fact the Prime Minister has been at pains to defend the idea.

KELLY O'DWYER: All prime ministers and treasurers a couple of days out before a Budget - and I think we're something like 10 days out before the Budget now - they don't rule in or rule out anything that may or may not be in the Budget. I mean this is pretty standard practise.

EMMA ALBERICI: It is step further to defend it though, isn't it?

KELLY O'DWYER: That's your assessment of what's being done here. I think the fundamental point to note here is we have been having a discussion over the last little while about the legacy we have been left by the Labor Government and that is a pretty serious one. They trashed our Budget, they refused to fix it and they locked in spending in the future years.

EMMA ALBERICI: Let's go back to the question though because otherwise we're going to run out of time. And it was about breaking promises. Andrew Leigh?

ANDREW LEIGH: Tony Abbott had the opportunity over past years to say that he was going to increase income taxes or he could have said promises don't matter all that much because situations change.

He did neither of those two things. He criss-crossed the country talking about the importance of promise-keeping and in fact at one stage he said that there should be no new taxes without a new election which does make you wonder whether he's about to take us back to the polls.

Fundamentally, Mr Abbott needs to stand up to the test that he set for the former Government which he castigated for putting in place a temporary fixed-price period on the carbon price. I'm really concerned we're seeing the unravelling of the carbon price which increased the taxes on pollution and lowered the taxes on work. Mr Abbott's discovering that once you forego the substantial revenue from the carbon price, now he's going to have to increase taxes on work. That's the wrong recipe for an Australia in which we should be seeing more people in the workforce but less pollution.

EMMA ALBERICI: Andrew Leigh, in Government Labor spent money it didn't have in every one of its six years in power. How can you now criticise it Coalition for trying to be more responsible with taxpayers' money?

ANDREW LEIGH: Emma, you know if you look around the world that Australia's public finances are in extraordinarily good shape. When we left office debt around a 10th of GDP and we were one of just three developed countries to avoid recession through the global financial crisis.

In half a year in office Joe Hockey has managed to double the deficit, adding $68 billion to the deficit through things like going soft on multinational profit shifting, not being willing to pursue modest labour measure to more fairly tax the superannuation of people with more than $2 million in their super balances.

Collectively, those decisions have doubled the deficit and now the Government is turning around and saying, well, it's going to have to be those with chronic disease, people with disabilities, low-income Australians who bear the burden of the fact that Mr Abbott and Mr Hockey haven't been willing to fairly tax multinational companies when they try and shift profits to other jurisdictions.

EMMA ALBERICI: Kelly O'Dwyer?

KELLY O'DWYER: Well what Andrew Leigh didn't say is where Australia started on the journey when Labor was actually elected. We started in a very strong position because we'd paid back all of Labor's debt. That's the reason we went through the global financial crisis very well and that's the reason we're in a stronger position today when you compare us to a number of other economies.

What Andrew fails to appreciate is what people have been saying all along and people including organisations like the International Monetary Fund and that is that we have a huge spending problem. Labor got us into a huge spending problem. Of the 17 most advanced economies that they looked at recently, they said that Australia was increasing spending at the fastest rate.

That's ahead of Canada, that's ahead of the USA, that's ahead of France, that's ahead of Germany. I just don't think that Labor gets it. They're not accepting any responsibility for the position that they left us in. They talked about delivering surpluses. They didn't deliver one in the six years that they were in Government, in fact they delivered the highest deficits, five of the highest deficits that we have ever achieved in our nation's history and they added huge debt burdens to future generations. Looking forward, up to $667 billion that we know about if we do nothing today.

That's why the Commission of Audit was so important in being able to provide recommendations to Government. It was to actually look at how do we go about fixing this problem that we have inherited by Labor? And the fact is Labor don't want to be part of the solution. They in fact want future generations to pay for their recklessness.

EMMA ALBERICI: Kelly O'Dwyer, we wouldn't be facing this so-called Budget emergency if John Howard hadn't got the ball rolling on middle-class welfare, things like the unmeans-tested baby bonus and the Family Tax Benefit.

KELLY O'DWYER: We'd actually delivered surpluses. We could afford to pay for the money that was...

EMMA ALBERICI: So it was okay to introduce those measures just because you could afford them at the time because we were in a mining boom?

KELLY O'DWYER: The point I was about to make Emma is we were balancing the Budget and doing more than that. We were in fact putting money aside so after we'd paid off Labor's...

EMMA ALBERICI: Aren't the structural problems with our Budget on account of the fact that this middle-class welfare started under John Howard?

KELLY O'DWYER: If you'd let me finish Emma, I was just saying after we'd paid back Labor's $96 billion they left us with, we'd put $45 billion aside which forms the Future Fund today which is a net asset. We actually delivered a net asset to the Australian people. The Labor Party certainly have not done that. They have in fact left future debt for future generations and they have locked in spending. The truth is that they actually received more revenue, despite what they have said in the past, they received more revenue than the previous Coalition Government, $70 billion more. It's just that they doubled spending. That's why we are in the situation that we're in today.

ANDREW LEIGH: Emma, there's a number of points to respond to there. The first is that as you correctly identified, the proceeds of Mining Boom Mark I were largely squandered by the Howard Government because it was locking in spending that was not sustainable so in Government we made the decision to end the baby bonus. We got little help from the Coalition there. Joe Hockey at one stage comparing it to China's one-child policy to scale back the baby bonus and we means tested the private health insurance rebate.

It's still Coalition policy to take away that means test despite the fact that the private health insurance rebate's one of the fastest-growing areas of Government expenditure. Now Kelly refers the to the recent IMF report but of course that report is based on Joe Hockey's recent fiddling of the figures. While we were in office we kept a two per cent real spending cap on Government spending after the global financial crisis.

KELLY O'DWYER: But you didn't achieve it Andrew.

ANDREW LEIGH: We achieved it every year.

KELLY O'DWYER: No, no it was 3.5.

ANDREW LEIGH: When Joe Hockey became Treasurer, he took that cap off and of course when you take that cap off then you see a big blow-out in spending so the IMF is assessing Joe Hockey's Budget update which is a worrying Budget update. It's an extraordinary Treasurer who can manage to double the deficit in just six months.

KELLY O'DWYER: What Andrew's said is not correct.

ANDREW LEIGH: Now going back to trying to balance the Budget off the backs of the poor and what really worries me about this Commission of Audit is that we've had 20 years in which CEO pay has risen twice as fast as average wages and three times as fast as the minimum wage. But what does a CEO-dominated Commission of Audit say is their recommendation? They think there's a wages problem and it's the minimum wage that needs to be cut. It is this dystopian vision of Australia I think and one that hurts the poorest and most vulnerable in the area of fighting an equality.

KELLY O'DWYER: I didn't realise this was a monologue Andrew.

EMMA ALBERICI: Let me bring, let me bring... let me bring Kelly O'Dwyer in here because you have made a number of points which clearly Kelly O'Dwyer is taking offence to so let's have a listen to what she has to say.

KELLY O'DWYER: Well they talk about this cap that they put in place, this cap on growth in real spending. They say, 'wasn't it fantastic? We put this cap in place and it was two per cent.' The problem is they didn't abide by it. On average it was 3.5 per cent and when you look beyond the forward estimates, when you look in...

ANDREW LEIGH: After the global financial crisis.

KELLY O'DWYER: Andrew, let me finish. I listened to your monologue. In 2017/2018, in the fifth year beyond that forward estimates period in fact the real growth was six per cent. That's going to be encapsulated in this Budget this year which was a tripling of their supposed cap. They want to talk about Budget forecasts, they want to talk about projections. Let me tell you they, for instance, projected they were going to get a surplus almost every year. The deficits that they started with in some years were $12 billion which turned into $44 billion. They had heroic assumptions in there regarding growth. We really, coming into Government...

EMMA ALBERICI: We can't ignore the facts that there was a global financial crisis during their years-

KELLY O'DWYER: That was only part of their spending. They doubled spending ongoing. It wasn't just a one-off. It was entrenched within the Budget and this is the problem we need to address today.

EMMA ALBERICI: Let's talk about some of the issues we assume will form part of the Budget thinking. On the GP co-payment, Andrew Leigh, when you were a PhD student at Harvard you argued co-payments were sensible because it would make people think twice before going to the doctor. What or who changed your mind on that?

ANDREW LEIGH: Emma, I've changed my views since university days, as have many other people, and fundamentally on this I think it's the evidence coming forward from health professionals who weren't represented on the Commission of Audit, like the Australian Medical Association, the doctors reform society, they've said that the real challenge in Australia is that if you deter people with chronic disease from both going to the doctor, you end up having more people in hospitals.

EMMA ALBERICI: Can I just point out what you had said in a paper back then. Yes it was 10 years ago but you're a PhD student and you argued that as economists have shown "the ideal model involves a small co-payment, not enough to put a dent in your weekly budget but enough to make you think twice before you call the doctor."

ANDREW LEIGH: A co-payment might have been right when the Hawke Government proposed it in 1990 and maybe it was right in 2003, but we've seen massive increases in out of pocket costs in Australia and we know when we look across developed countries the real challenge for Australia is we have too many people in hospitals. If you curtail access to private health care you end up getting into a situation where you blow out a number of people in hospitals and a hospital is far more expensive than a GP.

I've spoken to a large number of GPs in my electorate, to friends who deal on the front line as doctors with people with chronic disease and I'm strongly persuaded that a GP tax would be a bad idea and that we ought to listen to the health experts on this.

EMMA ALBERICI: Is there anything in the Commission of Audit, Andrew Leigh, that you do support?

ANDREW LEIGH: I think the Commission of Audit suggesting that Tony Abbott shouldn't go ahead with his parental leave scheme is wise indeed.

EMMA ALBERICI: I don't think it says quite that, does it?

ANDREW LEIGH: They don't go as far as the Productivity Commission when we asked the Productivity Commission whether a wage replacement scheme would be appropriate they said no, that wouldn't boost productivity or participation and you've got independent experts like Saul Eslake saying the same thing.

The reason for saying that the flat rate scheme is better is that it fits also with Australia's social safety net which is either giving more to the most disadvantaged or having flat-rate payments across the board. This is an unusual payment that gives the most to those who have the most. It was described by the Liberal Party as being appropriate because parental leave is an ‘entitlement’. So much for the end of the age of entitlement - if you're a millionaire family having a baby then the age of entitlement's just beginning it seems.

EMMA ALBERICI: I want to move on because we are running out of the time. Let's talk about the corruption inquiry in NSW. It's claimed the scalp of the State's Police Minister today and this afternoon Kelly O'Dwyer, your fellow Federal MP Karen McNamara has been accused of electoral fraud. Given what's already happen to former assistant Treasurer Arthur Sinodinos, how unsettling is all of this for your Government?

KELLY O'DWYER: Look, my understanding is that both Karen McNamara and also Senator Arthur Sinodinos were called as witnesses to ICAC and both of them have been involved in presenting evidence to them but not been directly accused of any corruption and I think that's an important point to make. There have been other allegations made at ICAC regarding corruption. That needs to be fully investigated and those people who have been found to be corrupt need to face the full force of the law. Corruption is a terribly corrosive aspect to our democracy and our society and it's not something that any one of us can stand for.

EMMA ALBERICI: Just finally and briefly, former Federal Independent MP Tony Windsor has called on Clive Palmer and the other Federal Independents this week to call for a Federal corruption inquiry. I'm wondering from you both, would you be in support of such a move? Andrew Leigh?

ANDREW LEIGH: I think it's an idea worth exploring and people have noted that the Federal level it's the stand-out on not having a corruption panel. I do think that as Kelly has rightly said, corruption is insidious because it cuts into confidence, confidence that people can rely on those with whom they're doing deals, that contracts will be fair, that they can rely on getting a fair go from the Government. Also as a former judge's associate, I have a strong view that no-one should be above the law but that everyone's entitled to the presumption of innocence, and that certainly goes for the Coalition members that Kelly mentioned before.

EMMA ALBERICI: Kelly O'Dwyer?

KELLY O'DWYER: I certainly think that there has been no allegations of corruption Federally and if there were then obviously they need to be investigated by the appropriate bodies and my understanding is that that can be investigated currently so my view would be any criminal activity should be investigated and anybody who does the wrong thing should face the full force of the law.

EMMA ALBERICI: Kelly O'Dwyer, Andrew Leigh, thank you both very much.

ANDREW LEIGH: Thanks, Emma. Thanks, Kelly.

KELLY O'DWYER: Terrific to be with you.

This week's Canberra Weekly magazine asked me to name my 'five favourite things'. Here's how it turned out.

I joined renowned journalist Michelle Grattan to discuss the short-run and long-run challenges facing Australia. You can listen to (or download) the conversation here, or via my iTunes podcast channel.

On 1 May, I spoke with PVO about the tricks that Joe Hockey has used to double the deficit, and the risk that his cuts will increase inequality.



PVO NEWSHOUR TRANSCRIPT, THURSDAY, 1 MAY 2014



SUBJECT/S: Commission of Audit Report; Federal budget; Programs including PPL, Disability Care and Higher Education Contribution Scheme.

PETER VAN ONSELEN: Well now it's time for the Shadow Assistant Treasurer Andrew Leigh, who joins me live from Canberra, Dr Leigh, thanks very much for being there. Straight up first question which has come from one of our Twitter followers, he says, he doesn't put 'Doctor' in but I'll pay you that respect, Dr Leigh, you were part of the circus that created this mess, is that true?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Peter, when we left office and according to the Secretaries of Treasury and Finance the budget was returning to surplus in 2016-17 and we'd applied a strict spending cap of 2 per cent. In the time since he's been in office, Joe Hockey has managed to double the deficit: pretty extraordinary effort given he's only had about half a year to do it.

VAN ONSELEN: In fairness, that's all just based on the numbers isn't it, that's based on adjustments - largely based on adjustments between expected growth and predictions in terms of growth in government spending?

LEIGH: He's done a few things. He's spent more, so there's his gold plated Parental Leave Scheme. He's fiddled the numbers as you say and Treasury was very clear that that was the Treasurer’s decision and not theirs. And then he has refused to go ahead with a whole bunch of sensible tax measures, such as fairly taxing multinational companies which foregoes three quarters of a billion dollars revenue. Put it all together and he's doubled the deficit, and then of course he turns around and says, 'woah, this is a bit of a problem'. Well frankly Joe, if you had followed through with some pretty sensible measures, such as fairly taxing high income earners' superannuation, then you wouldn't have this budget situation. It's manufactured.

VAN ONSELEN: Let's get on Dr Leigh to the Commission of Audit. It's disingenuous isn't it to try to hang the Commission of Audit on the government, their terms of reference were to find $70 billion in cuts. No one really thinks that that's what the government is going to do, this is a good thing isn't it? This Commission of Audit provides options to a government when we know what they're going to with it then we can decided whether we're going to be critical or not, that's fair?

LEIGH: Peter, I'm all for expert advice but anyone that thinks that this is the best team of experts that you could draw up to carefully think about Australian social policy, probably also thinks that rock and roll wrestling isn't staged.

VAN ONSELEN: Well take us through this. Who on the Commission of Audit do you think was a dodgy appointment?

LEIGH: Well this is a Commission which is put together by big business and it is big business writing social policy.

VAN ONSELEN: So who wouldn't you have on it?

LEIGH: I would had a much more representative Commission of Audit. I'd like to see representatives from the disabilities sector, the social sector, the trade union sector...

VAN ONSELEN: You're avoiding the question, names, I want names Dr Leigh. I want to know who you would have sacked from the Commission of Audit, that'll give me a headline.

LEIGH: Peter it is much more about making sure that there are people on that Commission of Audit battling for ordinary Australians. Let's take the issue of wages. Over the last two decades, CEO wages have gone up twice as fast as average wages and three times as fast as the minimum wage. But whose wage is the Commission of Audit concerned about? They reckon the minimum wage is far too high and it needs to be cut.

VAN ONSELEN: But what about the recommendations? I hear what you say about a broader representation, but the Commission of Audits role in terms of its terms of reference was to find cuts, you seem to be talking as though is some kind of social compact, is your point that there would have been different versions of cuts that might have been suggested by a more sort of, representative sample on the Committee?

LEIGH: Absolutely Peter, and I got into public life, as you know, to bring about good reforms, and good reforms are often fired up by great experts. But frankly, when it comes to reform, Joe Hockey couldn't go two rounds with a revolving door. He wants to manufacture a budget crisis and then he wants to cut back support to the elderly, the sick and some of the most vulnerable in the community. That's not reform, that's simply ideology.

VAN ONSELEN: Is there anything in there that Labor likes? I mean you've had a chance to look at it today. I'm not asking for you to commit to it obviously. You'll want more time to do that, but is there anything in there that that you like the look of, that you hadn't thought of, by way of stabilising the budget?

LEIGH: I'm certainly pleased to see that the Commission of Audit along with the Liberal backbench is critical of Tony Abbott's Parental Leave Scheme. It's a scheme which is the opposite of means testing...

VAN ONSELEN: Alright, I'll give you that one, I'll give you a second one, is there a second thing that you like the look of?

LEIGH: Peter, I've had this report for a couple of hours, the government has had it for months...

VAN ONSELEN: But you must have some highlighted sections that you though were perhaps worthy of consideration, what are they?

LEIGH: Peter, what I see out of this Commission of Audit, is a pathway that leads us much more down the American road. When Australians go overseas, so often we'll run into Americans, and will chuckle at their system that spends far more and gets far worse results. But if you're saying that our system, our health system ought to be Americanised, well that's not evidence-based policy. Again that's just pure ideology, and if you're doing it because you can't get tough with multinational firms, if you're doing it because you can't fairly tax the superannuation of people with more than $2 million in their superannuation accounts, then that's pretty tough to people with disabilities getting one shower a week, being told by the Commission of Audit: you're going to have to wait a little bit longer before Disability Care comes to you.

VAN ONSELEN: Alright I want to ask you about, well I want to ask you about HECS firstly. Do you take the view that I do, this wasn't in the Commission of Audit, that HECS payments should be paid back in full by people that go on to earn higher wages because of their education, rather than just the current component of HECS which is only a percentage of the costs of their university studies?

LEIGH: So, you're arguing Peter that full costs of the education should be paid back? At the moment you pay about half back.

VAN ONSELEN: Well you get a law degree, the state pays roughly half of it, you pay for the other half via HECS. But if you go on to earn half a million, a million dollars a year, don't you think that you should have the pay the whole thing back?

LEIGH: Well I guess the principle behind this is that there is private benefit to education, and there's a public benefit to education, and the current split seems pretty fair to me. By getting an education, we know that you are more productive, your co-workers benefit, you're more likely to pay higher taxes...

VAN ONSELEN: But why should the plumber down the road pay for the lawyer to get their law degree, via their taxes, it should just be a user pays system, up the income scales. But if you decide to go work for example for the legal aid commission, you're doing a community service. Your salary never rises to that of a corporate lawyer, then fine, you don't pay all the way up the HECS. This is my idea of course it's not in the Commission of Audit, but it seem fair to me.

LEIGH: Look Peter I think it's an interesting argument. The reason that I disagree with it is that I do believe that there's a public good element to education, even from my old profession of corporate law. And I think that the reason why we, why a Labor government, under Bob Hawke, said people ought to contribute something, it's fair to contribute something, but the taxpayer ought to chip in too. Because we're all better off from a better educated society.

VAN ONSELEN: Alright, I've got to be super quick here, because I'm over time and I'm being told to wrap it up, but I've got to get your views on the Paid Parental Leave Scheme, with it being adjusted down it's in line The Greens package. It's also in line with what Unions New South Wales advocated for back in 2008. Why can't Labor get on board?

LEIGH: Peter, again, we've got the Government doing deals with the Greens, they did the deal with The Greens to have unlimited debt, and now apparently doing a deal with the Greens...

VAN ONSELEN: But Unions New South Wales as well is Labor affiliated?

LEIGH: I don't know what they have argued for but I will tell you that this Parental Leave scheme runs against the fabric of the Australian social safety net, which is always said payments should be flat rate or else giving more to the most disadvantaged. But why should a baby that's born into an affluent family attract three, four, five, times as much money as a baby that's born into a low income family? Why does it cost more to raise a baby in an affluent household? It's not the way we've always done things in Australia, and it gives the lie to the so called 'budget crisis'. If there's a budget crisis, why the gold-plated, diamond-encrusted Parental Leave scheme?

VAN ONSELEN: Alright, you got the line in, Dr Leigh appreciate your company, thank you very much.

ENDS

MICHELLE ROWLAND MP, SHADOW MINISTER FOR CITIZENSHIP AND MULTICULTURALISM and MEMBER FOR GREENWAY

ANDREW LEIGH MP, SHADOW ASSISTANT TREASURER and MEMBER FOR FRASER

DR CHRIS BOURKE MLA, MEMBER FOR GINNINDERRA



MEDIA RELEASE

CANBERRA COMMUNITY CONCERNED BY RACIAL DISCRIMINATION ACT CHANGES

Members of Canberra’s multicultural community are concerned by the Abbott Government’s plans to weaken the Racial Discrimination Act, ACT MLA Chris Bourke said today.

Dr Bourke was speaking after attending the Canberra Multicultural Community Forum last night where a range of community leaders condemned the Government’s proposed watering-down of the Racial Discrimination Act.

“Giving a green light to racial abuse will have dire consequences for our country and people targeted including increased mental and other health issues,” Dr Bourke said.

The forum also heard from Dr Helen Watchirs, the ACT Human Rights and Discrimination Commissioner; Australian National University law professor Simon Rice; and Mr Rod Little, chair of the ACT Aboriginal and Torres Strait Islander Elected Body.

“Protection against racist hate speech is fundamental to Australia’s success as a multicultural nation,” said Dr Andrew Leigh, who was among the 50 Canberrans at last night’s forum.

“If the Government bothered to properly consult with the community, as the Opposition is doing, then it might come to appreciate the lasting damage that racism has on many individuals and why these proposed changes to the Racial Discrimination Act are so abhorrent,” said Shadow Minister for Citizenship and Multiculturalism, Michelle Rowland.

Ms Rowland encouraged people to tell  the Abbott Government what they think of the proposed changes by sending a submission to [email protected]. Submissions close today.

WEDNESDAY, 30 APRIL 2014