Andrew Leigh

I spoke yesterday at a Canberra ceremony to mark the anniversary of the Battle of the Coral Sea. It was an special honour to meet navy veteran Gordon Johnstone, who served as a telegrapher in the Battle of the Coral Sea (picture by Peter McDermott).

Speech to the Australian-American Association Canberra Division Battle of the Coral Commemorative Service

9 May 2013
Canberra

Andrew Leigh
Parliamentary Secretary to the Prime Minister

[Acknowledgements omitted]

The Battle of the Coral Sea was a unique battle in history.

It was the first time aircraft carriers engaged one another, never sighting their enemies.

It remains the largest naval battle in to have taken place off Australia’s coast.

We stand here in front of the Australian-American memorial. It is not the most modest piece of architecture in Canberra.

Neither are aircraft carriers. This was brought home to me when visiting New York recently, where the decommissioned USS Intrepid sits at anchor. There is something awesome about walking on the deck of a ship that can carry 100 aircraft.

The importance of the Battle of the Coral Sea was not lost on Australians in May of 1942. Prime Minister Curtin described the battle in a speech at the time: ‘Events that are taking place today are of crucial importance to the whole conduct of the war in this theatre . . . I should add that at this moment nobody can tell what the result of the engagement may be. If it should go advantageously, we shall have cause for great gratitude and our position will then be somewhat clearer. But if we should not have the advantages from this battle for which we hope, all that confronts us is a sterner ordeal and a greater and grave responsibility.’

Able Seaman Roy Scrivener of HMAS Hobart described his impression of the Australian and American forces massed to meet the Japanese Navy as: ‘The most magnificent sight I had ever seen.  There were two aircraft carriers, there were battle ships, there were cruisers, there were destroyers and trailing astern and a little separated, were the tankers with their destroyer escorts. And what a wonderful feeling I had until I realised, my God, they’re not here to play games. We’re all here for fair dinkum trouble!’

Fair dinkum trouble they found. Thankfully, the Australian and American naval forces were successful, and the Japanese Navy never reached as far south as they did on this occasion.

Today, we honour the successes of the Australian and American forces. But we also recognise the valour of their Japanese foes.

It is also worth noting that throughout the early-1940s, the German naval forces were urging the Japanese to adopt a policy of targeting merchant ships. But the Japanese, under Admiral Suetsugu, resisted, arguing instead that their principal target were naval vessels, not civilian ships.

We honour our Japanese opponents in World War II with the same spirit of those Australians who, after the midget submarine attacks on Sydney Harbour in May 1942, gave the deceased submariners a full military funeral on Sydney heads.

As member for Fraser, I have a direct connection with the Battle of the Coral Sea. The suburb of Crace in my electorate is named after Edward Kendall Crace, whose son Vice Admiral John Crace commanded the Australian fleet in the Battle of the Coral Sea. I am reminded of the battle each time I visit the suburb of Crace.

We are also reminded of it through the ANZUS treaty, a lasting partnership with the United States. The treaty would not be finalised until 1951, but it was forged in the crucible of World War II.

Lest we forget.

A recent trip to Perth prompted some thoughts on Coalition costings, starting with what's happened in Western Australia.

Of Cuts and Cons

The Barnett Liberals were elected promising to deliver a $4.8 billion swag of ambitious infrastructure projects: the Metro Area Express Light Rail, the Perth Airport line and the Perth to Darwin highway. But their promises are a sham.

Scrutinise the costing details and you find the most brazen of creative accounting cons: the projects rely on an ‘assumption’ that the Commonwealth would fork out $3 billion.

Where did they get this number? Certainly not from the Commonwealth. They just made it up. You can promise whatever you like when there’s imaginary money to pay for it.

This was just one of the Liberals’ tricks uncovered by WA Treasury, who red-flagged the contribution assumption as a ‘substantial risk’ to the Liberals’ budget integrity.

Let’s be clear. The issue is not the merit of the programs. The issue is Mr Barnett blatantly misleading the community about what he can deliver.

Perhaps Mr Barnett might claim that his costings were premised on swinging a mate’s rates deal if Mr Abbott is elected on 14 September. Not likely. Tony Abbott has admitted that the Liberals ‘have no history of funding urban rail and I think it’s important that we stick to our knitting’. (Conversely, Federal Labor have put more into urban public transport than every previous government since Federation – combined.)

Unlike the Federal Liberals, Labor will not automatically veto rail investment. We will assess the Barnett proposals on their merits, in the established process. The process involves picking up the phone to the Commonwealth and setting out details of the projects so that a formal assessment can take place.

Depending on the outcome of the funding bid - $1.6 billion of which Mr Barnett hadn’t even submitted prior to winning the election – Western Australians could be left with a $3 billion Barnett black hole.

Now that’s a lot, but it’s loose change compared to the $70 billion fiscal crater engulfing Mr Barnett’s Federal Coalition colleagues.

Seventy billion is not a Labor figure. It’s what Joe Hockey admitted to Sunrise on 12 August 2011.

Mr Abbott has racked up this $70 billion blowout by saying ‘yes’ to every vested interest while yelling ‘no’ to Labor’s responsible savings.

What Mr Abbott hasn’t done is outline exactly how he plans to plug his $70 billion black hole. Mr Abbott has only revealed a handful of his cut-back plans – and they’re not pretty.

Speaking on 3AW on 3 February 2010, prior to the last election, Mr Abbott told listeners that he’d go to the election ‘with a list of promises, a list of commitments and we will fund them without new or increased taxes’.

But Mr Abbott’s business tax hike will affect 3,200 successful Australian businesses, which will be passed onto Australian families through higher prices.

And don’t take my word for it. In a recent interview with Mr Abbott on Adelaide’s 5AA radio, the host asked ‘The Fin Review today reports that the nation’s largest companies are unhappy with what it will cost them – they think it might cost about $100 million on average for these big companies. They would in turn, turn that around into a tax on more Australians, wouldn’t they?’

Mr Abbott responded ‘Well, obviously businesses do pass on costs and if there was a levy that was to fund something, yes that would be a cost.’

So he’s gone from saying he won’t increase taxes to proudly admitting that his tax will slug Australian families at the shops or when they fill up the car with petrol

Tony Abbott likes to talk tough on tax, but he in fact wants to bring almost 1 million Australians back into the tax system by abolishing Labor’s increase in the tax free threshold.

He has also pledged to hit 3.6 million Australians with a $4 billion super tax hike.  This will reduce the retirement savings of low income Australians, including more than 350,000 shop assistants and cashiers, 200,000 food and hospitality workers, and 80,000 cleaners.

He’ll also abolish SchoolKids Bonus – a measure intended to helping with education expenses – taking $1,200 a year from the average family’s budget.

Who could forget the Liberals’ 2010 election costing debacle? They claimed their costings had been audited, but the accountants were fined by the Institute of Charted Accountants for breaching professional standards.

Nearly three years later, not much has changed. The Liberals claim their policies are costed – Andrew Robb says the costings sit in his top drawer. But to this day, they remain secret.

Australian families need to ask: if the Coalition’s policies were good for them, would the Opposition really be keeping them secret?

TRANSCRIPT – SHOWDOWN WITH PETER VAN ONSELEN
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
7 May 2013

TOPICS:                                Carbon pricing, revenue write downs, cut in interest rates, Liberal Party conscience vote for equal marriage, the federal Budget

Peter van Onselen:         Welcome back you’re watching Showdown. I’ve been speaking to Peter Reith, joining us out of Melbourne as well as Senator Cory Bernardi, joining us out of South Australia, we’re now also joined by Dr Andrew Leigh the Parliamentary Secretary to the Prime Minister, who joins us out of Canberra. Mr Leigh thanks for your company, or Dr Leigh I should say, don’t want to down grade you before we get the interview started.

Andrew Leigh: Now worries at all, good to see you Peter.

Peter van Onselen:         Can I, I just want to start by going back to you, Senator Cory Bernardi if I can. On your blog today you’ve had a bit of a crack at the style of the government that is being run by David Cameron over there in the in the UK. You’ve called it a soft-left policy agenda led by a man who’s most notable commitment has been to make the once proud Conservative Party more green than Labour, but what intrigued me was the next line; you said a few years ago there were a number in the Liberal Party here who actually thought this was the best path for us to adopt. Who was that?

Cory Bernardi:                   Well Peter you know we had an extensive debate about the emissions trading scheme and supporting Labor’s policy. I was not one of those who subscribed to that I warned about the dangers for the Liberal Party about going down that path, and I think the proof is in the pudding. If you look in the United Kingdom’s experience, David Cameron I think won an election, but he was forced into coalition when he should never have been because the Labour party was so bad over there, and here, because we actually took a principled stand about was in the national interest, Tony Abbott came within a whisker of becoming Prime Minister at the last election, and I think, you know, the rest is history. The caravan that…

Peter van Onselen:         But Senator how does this work? You were at the vanguard of having a problem with Malcolm Turnbull and the Liberal Party more broadly pushing to support the ETS ahead of Copenhagen. You were at the vanguard of opposing that. Yet the people that were all around Malcolm Turnbull are now the same people that are the senior people around Tony Abbott. Now I know the Liberal Party’s a broad church, but is that at least a little bit surprising?

Cory Bernardi:                   Oh I don’t think so. I think you know, Tony Abbott will always choose the team that he wants around him. He’s got an experienced team. You know quite frankly, I think we’ve got a good policy agenda to take into the next election, but one of the points I want to make is that you know, aping the Labor Party is a recipe for disaster. We are, you know, a centre-right party. We should be espousing the principles that have built the Liberal party over many , many decades and that’s about supporting families, about supporting small business, about lower taxation and you know, the maximum level of freedom that we can have in an orderly society. And I think we need to limit the growth and size of government and we certainly need to stop the government from borrowing you know, tens of billions of dollars every single year because they can’t control their spending.

Peter van Onselen:         Andrew Leigh, can I just bring you in and ask you about the levy that was announced by the Prime Minister in relation to paying for the NDIS. Now as an economist, you are someone who as I understand it, when the levy was originally rejected by the Prime Minister, had some strong economic reasoning why that kind of specific allocation of levies to pay for specific government spending was not a good idea. Yet now that is the path that now the Government is going down.

Andrew Leigh: Well Peter the big change in the revenues is just the striking difference between this year and last. So compared to the last budget, revenues for this budget are projected to be coming in seventeen billion dollars smaller. Now for those who don’t carry billions of dollars in your bank account, the way of thinking about that is that’s one full one full per cent of GDP. It’s a massive write down and I’m sure there hasn’t been a bigger write down in the history of the Commonwealth and that’s led the Government to be making a set of announcements, including the levy that you pointed to, in order to make those books balance. Now, it’s got to be clear, this is not a decision of the Government that has caused this revenue write down; with the same set of taxes, we are bringing seventeen billion dollars less revenue, and that’s a challenge for us and of course-

Peter van Onselen:         can I ask you this though, because isn’t one of the issues here that during the Costello years they underestimated revenue, during the Swan years, you have, or the Government has overestimated revenue. Now my understanding is that there is a range that is put by Treasury to the Government for the various estimates and Costello had a penchant for always taking the bottom of that range and hence he was always discovering that there was extra revenue left in the kitty when the good times rolled on. Wayne Swan when he’s presented with that range goes for the higher end on the estimates for the Budget and therefore, unsurprisingly, when we’re not in such good times there’s a massive underestimation there. Isn’t that why it’s bad policy to turn around and spend the money before it’s come into the kitty when you know that firstly, you’re on the higher side of the range that you select, and secondly you know from historical evidence that there has been a constant inaccuracy in these numbers anyway?

Andrew Leigh: Peter I’ve spent time as a secondi in Treasury, spent six months there, I’ve certainly never heard of what you’re talking about either for Peter Costello or for Wayne Swan. I’ve never heard of people suggesting that the forecast on revenue were anything but the best guess from the ‘boffins’. The problem is that when you’re forecasting revenue, you’re taking a growth forecast and then you’re also trying to extrapolate from that what company profits will look like. We’ve got something of the moment of the perfect storm at the moment in the combination of drop off in commodity prices, but the dollar staying high because of the strong appetite for Australian bonds, and then of course this unique situation of real growth outpacing nominal growth. All of that is pretty unusual and that’s led to this big revenue write down.  We’re still an economy which is doing extraordinarily well by international standards, strong growth, half the unemployment rate of Europe…

Peter van Onselen:         There’s obviously worries though, with the Reserve Bank dropping interest rates today though, I mean that might be a good thing for home owners, but at the end of the day, it is a sign of softness isn’t it?

Andrew Leigh: Well it is a far cry from those days where you would hear people say that interest rates would always be lower under a Coalition Government, isn’t it, Peter? Certainly this is welcome news for homeowners and as the Reserve Bank has said in its statement, it’s weighed up a set of factors, it’s looked at some of the domestic strengths but also the international challenges, the pressure that the high Australian dollar’s put on the economy and overall decided that a quarter point cut would be appropriate.

Peter van Onselen:         Peter Reith can I bring you in and ask you, you were a Shadow Treasurer once upon a time yourself. You were also a senior minister, Minister for Workplace Relations, and if I understand correctly a member of the Expenditure Review Committee for the Howard Government for some time as well, how do you see this debate about the idea that well, revenue is just, you know, underperforming expectations so therefore there’s nothing untoward in what’s happened.

Peter Reith:                        I think quite frankly Andrew, I think what you have to say is laughable. Uh, I mean, look sure there are ups and downs in numbers, but I mean there’s just been one blunder after another under Labor, I mean the mining tax, the carbon tax, you’ve fixed it to Europe. You know, the figure there is three dollars, it’s twenty three…

Andrew Leigh: What has that got to do with any of this?

Peter Reith:                        Well it’s all coming mate, it’s all adding to the problems, fiscal policies that you’ve got. Look the wasting…

Andrew Leigh: It’s all part of the vibe. It’s all part of the thing.

Peter Reith:                        It’s not, it’s the wastage. Uh the fact is you haven’t been, you know, you were running the line a minute ago “oh the dollar’s high”, well mate I’ve got news for you; the dollar was high a year ago when the last Budget was done.  I mean if that’s such a big factor why wasn’t that put in? Why are you still using you know, last year’s arguments? Now the fact is that a government that had been a lot more prudent than you have, instead of, you know, giving people this nonsense about how great the economy is, you know, the RBA has cut it back again today, record lows and you can’t even acknowledge the fact that there are big slices of the Australian economy that got real problems and we’ve got a turning down on the mining industry. Now, you know, a bit of realism, you know, inserted into the decision making on the Budget would’ve avoided a fair chunk of the problems that you’ve got. And on top of that, you know, you’re still in a mode where you think you can just go on spending and, of course, those days are gone.

Peter van Onselen:         Andrew Leigh your response?

Andrew Leigh: Well certainly what we’re doing is taking the best advice of Treasury, I reject what Peter has said there entirely…

(Peter Reith:                      You’ve got to stop blaming everybody else Andrew)

Andrew Leigh: …in terms of decisions the Government has made. The decision on pricing carbon for example is in accord with what every sensible economist would advocate. I mean, you’ll have the shonks and shysters telling you that direct action and soil magic can somehow deal with climate change, but this is the economically responsible thing to do, to put a price on carbon pollution. And what you’ve got to realise is that internationally, Australia’s position is strong: ten per cent government debt is extremely low by international standards, but we have…

Peter van Onselen:         Can I, can I ask you about that, sorry to interrupt you. It is low and I don’t disagree with that, but it is also true isn’t it that it has risen at a sharp rate comparable to a lot of countries that started with a lot higher debt and have now obviously ended up with even higher debt. In this country it remains low but it’s only low because we started with no debt. The scale of the increase has been pretty significant.

Andrew Leigh: Well I mean when you put in place stimulus spending you backed quickly. The alternative is to lose hundreds of thousands of jobs. Everyone that tells you we should not have taken on debt in the global financial crisis is saying that they wish unemployment had been driven up to double-digits, as it has been in Europe, because that’s the alternative…

Peter van Onselen:         But couldn’t we have just dumped interest rates? Couldn’t we have used monetary instead of fiscal policy?

Andrew Leigh: Well we did both as you recall Peter, I mean we put in place monetary policy which has an impact on sectors of the economy that are borrowing. But then of course, that’s only a portion of the economy, and as OECD, IMF, were advising at the time, as most countries did, you then want to inject some fiscal policy at the same time, both through house hold payments which have a quick effect and through infrastructure spending which has a larger multiplier. All of what we did in the down turn was text book. The result was to save hundreds of thousands of jobs and to put Australia in a debt position which is low by international standards.

Peter Reith:                        Yeah but you’re just running over the facts here because, look  I don’t disagree with half of what you say, but you know, the other half you don’t get it right. I mean, Malcolm Turnbull, when he was Leader of the Opposition got up in the Parliament and said, “well, we understand why you’ve done what you’ve done so far, but cranking up even more stimulus we think is going too far”. Now, you don’t have an answer to that because there isn’t an answer to it, and Malcolm Turnbull was proved to be absolutely right and this was just another poor judgement call by your Treasurer, you know, thinking that just spending more money, you know, was somehow the answer and unfortunately it’s not. It’s the same with Gonski as well I might say, you know, just spending is the way to fix problems when, a lot of problems aren’t just fixed by spending more money.

Peter van Onselen:         Alright gentlemen, time out, we’re going to take a commercial break. When we comeback we’ll continue the debate including, I’d like to see the thoughts of Senator Cory Bernardi in relation to the issue of whether or not the Liberal Party should have a conscience vote on gay marriage after the next election. Back in a moment.

COMMERCIAL BREAK

Welcome back. You’re watching Showdown where I’m joined out of Melbourne by former Howard Government minister Peter Reith, out of South Australia by Liberal Senator Cory Bernardi and out of Canberra by the Parliamentary Secretary to the Prime Minister Dr Andrew Leigh. We’re going to move on to other subjects, but first if I can Andrew Leigh, can I just ask you Andrew Leigh, we’ve just had the Victorian Budget today; how is it that with revenue write downs they can forecast surpluses going forward over the next three years as well as deliver one in the current financial year, yet with write downs also at a federal level, we’re not in a position where we’ve got that kind of forecasting.

Andrew Leigh: Well we’re relying on more volatile tax bases at the federal level is one straightforward answer, Peter. Company tax revenues are much more volatile than GST revenues, so it makes it easier to project at a state level. But I do think that this is a good reason why Victoria should be signing on to the Gonski Reviews. I think it certainly signals that it’s about time that kids in low income schools in Victoria got a fair deal.

Peter van Onselen:         But isn’t just the case though that there might be volatile tax mixes at the federal level compared to the state level, but isn’t it just a case of fiscal conservatism at the end of the day if they are as volatile as you say. Don’t imprint spending into them before you actually know the return is. Be much more moderate and then be surprised on the upside?

Andrew Leigh: Peter, you sound like what you’re saying is that we should have made savings of $160 billion dollars over our last five Budgets, which is precisely what we’ve done. You sound like you might be saying we ought to put in place a levy to cover most of the cost of the DisabilityCare Australia and putting in place some targeted saves around family tax benefit. All these are things we’ve done and you’ll see more savings measures being announced in the coming days. As you say, that’s the prudent response when you get a revenue write down. But it’s not to sell off the family silver, it is not to trash DisabilityCare Australia, a system depended on by 410,000 people with disabilities and their carers. That I think isn’t the Australian way…

Peter van Onselen:         … but the thing is Andrew, I’ve got to take you to task a little bit on this because yes there are volatile taxes at a federal level but the states are reliant on GST revenue and in the case of Victoria there’s been a $7 billion write down on GST revenue into Victoria. Yet despite that, they’re still projecting surpluses.

Andrew Leigh: Well, Victoria has made some pretty savage cuts, Peter, and I think if you speak to nurses, police officers, fire fighters in Victoria, they might have a different complexion on the …

Peter van Onselen:         …so are you saying that if Labor was delivering the Budget you wouldn’t have made the savage cuts and therefore you’d be in deficit?

Andrew Leigh: Labor is always going to make targeted savings measures. We are going to make sure that we impose whatever cost there is on those who can best bear it. Tony Abbott by contrast is committed to giving tax cuts first to big miners and big polluters and then to handing out $75,000 cheques to some of the most affluent households in Australia through his gold-plated paid parental leave scheme which seems neither of your other two guests can defend…

Peter van Onselen:         …alright we’re not going there. Peter Reith’s had plenty of time on that one. Let me just go to you Senator Cory Bernadi, entirely different subject now…

Cory Bernadi:                     Well, can I just answer some of those things that Andrew raised, I mean, he’s boasting about $160 billion worth of savings. He’s not talking about the massive tax increases that he’s already foisted upon the economy. He’s not talking about the $300 billion worth of debt that they’ve racked up over the last six years. This is an outrageous sleight of hand and a nonsense. They have completely mismanaged their spending. Revenues are up and they just have no idea how to control their spend thrift ways and there’s nothing to show for it. This is the great problem we’ve got: nothing to show for it.

Peter van Onselen:         Alright we’ll take that as a comment as a certain other person in television often says. Let me ask you Cory Bernadi, as I said, on an entirely different subject, the issue of a conscience vote for gay marriage is something that an increasing number of Liberals are coming out and saying they’re in favour of after the next election. Tony Abbott has said that he’ll take that to the Party Room. The Liberal Party does have a proud tradition of providing conscience votes on certain issues. I know where you stand on the issue of gay marriage, but where do you stand on the issue of whether or not it should be a conscience vote for individual Liberal MPs?

Cory Bernadi:                     Well I’ll make the point that we have a tradition of conscience votes where we have no official Party position. Our Party position is that we support the existing definition of marriage as being between a man and a woman. We’ve supported that, you know, since the foundation of the Liberal Party quite frankly. Now, we also, I make the point, have the freedom for every single member of the front bench, or the back bench to vote according to their conscience if they don’t like the Party position. Now, I don’t detect any appetite quite frankly, amongst the general public or amongst the Party room to change our position right now. There might be one or two murmurings, but you know, quite frankly it’s not a mainstream issue. People are more concerned about the cost of living, about, you know, how this government is borrowing money and mortgaging the future of their kids.

Peter van Onselen:         so you don’t think it should be a conscience vote as simple as that? You’re of the view it should stay a Party vote?

Cory Bernadi:                     I absolutely support the existing Party policy.

Peter van Onselen:         And can I ask you on that, because when you were just talking about it, you made the point that, you know, that marriage should be between a man and a woman as something that’s been Liberal Party policy since, you know, the founding of the Liberal Party basically. Does that mean for you personally, if the Party room goes the other way and decides to make it a conscience vote issue, is that something you have a major problem with? Or would you just accept that that’s the Party Room position and it’s a change of policy for the Liberal Party, albeit one which is a complete change from the historical direction of the Party until now?

Cory Bernadi:                     Well the Party Room decision would be the binding decision. Ultimately I would still vote according to my own conscience on that particular matter. But I think there would be widespread electoral issues attached to the Liberal Party taking that position. Now, I have no evidence for that, I’m just supposing it. But look, let me say this Peter, it is not a mainstream issue. No one out there is talking about this in any significant sense. They’re worried about the cost of living and the mortgaging of their children’s future by this spend thrift government. That is what people are worried about. They want to see a change in government. They want to see a radical change in approach and some more responsibility attached to what their government does.

Peter van Onselen:         Peter Reith I think they will see a change of government and I know you agree with me on that. What’s your view on whether the Liberal Party should make the gay marriage issue a conscience vote irrespective of what your view is on the actual matter of gay marriage itself?

Peter Reith:                        I think Tony’s on the right track on this one. What he said is that after the election he’ll raise the issue in the shadow cabinet and then take the shadow cabinet view to the Party room and I think that’s the right process. And if he sticks to that and if he consults with the organisation as well I don’t think he’ll get into too much trouble.

Peter van Onselen:         But what’s your personal view? Do you think that, do you agree with Senator Cory Bernadi that it’s a Party position and it’s not something that is necessarily of the style of issue that should be a conscience vote or do you disagree with that?

Peter Reith:                        I must say I’m pretty relaxed about this issue and if they have a conscience vote I’d be quite happy with that myself. But I think, the main thing from the politics is that, you know, it’s got to handled sensitively by Tony and you know, give everybody a fair shake of what they’ve got to say about it so I think that’s the key thing. I think it probably will go through in the next term, but you know, time will tell.

Peter van Onselen:         Alright, we’re almost out of time, but Andrew Leigh before we go, I haven’t asked you about the cuts, or the cuts to increases if you want to put it that way, in terms of family payments that have been talked about by the Labor Party today. It strikes me that for a Party that is unashamedly a party of you know, people in lower socio-economic circumstances that they are the people impacted heavily by these removed increases. Why go down that path rather than finding other cuts, for example even to the SchoolKids Bonus which isn’t so targeted to low income earners only.

Andrew Leigh: Well Peter, the SchoolKids Bonus goes to people receiving Family Tax Benefit Part A so you’re talking about the same group of people. Look, I would ideally like to have seen these increases to the Family Tax Benefit Part A go ahead but in the current budgetary circumstances that’s simply not feasible. But we are putting in place a range of measures to assist that group, for example, the increase in superannuation contributions which Tony Abbott will rip away. Two thirds of those three million low income earners are women. Tony Abbott by contrast has said today that he thinks his gold-plated paid parental leave is good because it pays women of calibre more to have babies. Presumably what he means by that is that nurses, that child care workers, that cleaners are not women of calibre. I think that’s pretty troubling.

Peter van Onselen:         And I’ll have to interrupt you because we are way out of time but I know that Paul Murray live will be discussing exactly that issue after the commercial break. Peter Reith, Senator Cory Bernadi and Dr Andrew Leigh, thank you one and all for your company on this edition of Showdown. Thank you for your company in watching and I will see you again for Contrarians on Friday.

I spoke on Breaking Politics with Tim Lester and Senator Fiona Nash this morning about the upcoming budget, government revenue, the Coalition's internal disagreements on their paid parental leave scheme, and sports betting promotion.

http://media.theage.com.au/news/national-times/a-plague-on-both-parties-4251555.html

TRANSCRIPT – BREAKING POLITICS WITH TIM LESTER
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
7 May 2013

TOPICS:                                The budget, government revenue, paid parental leave, sports betting.

Tim Lester:          So to our Tuesday regulars on Breaking Politics. Senator Fiona Nash is with the National Party, she’s in her Young electorate office this morning, and Andrew Leigh, Labor MP here in Canberra has come in the Parliament House studio. Welcome to you both on Breaking Politics this morning.

Let’s begin our discussion with the announcement from Penny Wong this morning, the confirmation of a $17 billion hole in the budget this year because of revenue write downs and changes to Family Tax Benefit A, the scrapping of a planned handout under Family Tax Benefit A. What do you read from that, Fiona Nash?

Fiona Nash:        Well I think it just really shows, Tim, the shambles economically that this government is. We had the Treasures, Wayne Swan, telling us hundreds of times that the budget was going to be in surplus by the middle of this year and now we see this huge, huge black hole potentially in front of the government. People out there on the ground realise that their government simply cannot manage the economy, that they have just made a huge mess of it. So while people out there in the communities are trying to do the right thing, trying to manage and balance their household budgets, we’ve just seen the enormous waste and mismanagement from this Labor government and people are feeling incredibly disappointed about that and even stronger Tim, they’re just furious that the Labor government has made such a mess of the country economically.

Tim Lester:          Andrew Leigh, you’d obviously have some counter comments to that, but give us also a sense of the scale of $17 billion write down this financial year. How big a budget hole is that?

Andrew Leigh: Well Tim, Fiona is certainly right to talk about this being huge. It’s more than 1 per cent of GDP and it’s of the scale that Ken Henry advised the government to go with stimulus when we were hit by the global financial crisis. This is a very significant chuck of tax revenue. But where Fiona’s wrong is where is she’s talking about revenues, but of course this is a tax write down. This is not to do with what the government is spending, it’s to do with the amount of tax revenue that’s coming in. And that’s occurred because while commodity prices have come off, the dollar has stayed high. That’s a challenge to both sides of politics, frankly. It’s a challenge as much to the Coalition that would fund a paid parental leave scheme from company tax revenue, and will find that – if they were to win office – that company tax revenues coming off will make that very difficult for their accounting.

Tim Lester:          And so this morning families eligible for Family Tax Benefit A are looking at losing three, four, five hundred dollars in the coming year. Not money they already had, but money they might have budgeted on, to try and patch that hole. Is that a good cut?

Andrew Leigh: No one’s family tax benefits are going down. These are just changes that have been announced but haven’t been put into place. This is a difficult decision, as are some of the other difficult decisions we’ve made, such as means-testing the private health insurance rebate, means-testing the baby bonus and restricting it to second and subsequent children. None of these are straightforward, but when your tax revenue comes down from 24 per cent GDP to 22 per cent of GDP, you know it might be higher in nominal dollars, but it certainly hasn’t kept pace with the demands and the economy over that period.

Tim Lester:          Fiona Nash, you’re deeply critical of the budget management of the current government. Yet as well while we sit here today, your side of politics, the Coalition, is looking at the rolled gold paid parental leave scheme, vastly more expensive than the Labor government’s option. Do you agree with those inside the Coalition party room who are now saying Tony Abbott’s plan needs reassessing?

Fiona Nash:        Well firstly, just to respond to Andrew there, we see from this government, from the Prime Minister, this continuation of promises that are never delivered. And that’s what really, really, getting people’s goat out in the community. So the fact that last budget, this funding promised under the Family Tax A changes, the increase was heralded as a wonderful thing for families coming down the track. And yet now we see it’s never eventuated. The NDIS promise, we still haven’t seen that. The Gonski reforms, there’s still nothing. And people out there in the community, Tim, they really, really understand that this is a government that promises but never delivers. And on the paid parental leave system, look Tony is really looking at this as a workforce productivity issue. It’s about those women out there in the community that need better assistance than they currently do, because it’s a fair and appropriate thing to do. Now Tony believes, and has right from day one, that this is a very good way of addressing that issue about workforce productivity. And it’s also very good for small business out there in the regions, those small businesses are really going to benefit from this without the cost impost and that’s going to help out in the region. So I’m very supportive of Tony Abbott pushing his policy.

Tim Lester:          Andrew Leigh, is the Coalition right to be looking at paid parental leave on such a large scale when the budget looks like this?

Andrew Leigh: Well this is an extremely expensive measure, Tim, and that’s because it provides up to $75 000: if you’re a woman who’s taking off six months and your salary is up to $150 000, the government will give you $75 000. If you’re a woman on a lower income you’ll get much less. Traditionally the Australian social safety net has been so effective because it’s been targeted. It’s disproportionately provided more to those at the lower end of the income spectrum. But this is the opposite – it’s a policy that gives the most to those that have the most, and that’s why it turns out to be so expensive.  And it’s funded by a company tax increase, and we know that the company tax ultimately falls on workers, so all workers will pay for that company tax increase but it will end up going disproportionately to the most affluent households.

Tim Lester:          I want to move on to a couple of other issues around this morning, if we can before we go. The front of several of Fairfax’s newspapers this morning has the story of the analysis of seventy of our wealthiest in this country earning more than $1 million a year and they’re not paying a cent in tax. Doesn’t that suggest that there is something is awry in a system where people on such large incomes are so capable of avoiding tax liability?

Andrew Leigh: The difference between Australia and the US, Tim, is that they have a thing called the alternative minimum tax which is in some sense a cap on deductions and would mean that in the United States, you wouldn’t be able to see a situation like that. We haven’t developed caps on deductions.

Tim Lester:          We should?

Andrew Leigh: Well, the economic case is simply that you ought to be entitled to the same deductions regardless of where you are on the income scale. So if you earn a million dollars and you give it all to charity, you shouldn’t be paying any tax. The alternative minimum tax is actually if you did that, you would pay tax. I think that’s a difficult conversation to have and you want to understand more than just looking at 70 people, you want to actually look right across the income scale to see if this would be a sensible thing to do in Australia.

Tim Lester:          Fiona Nash, are you concerned that a large number of such big income earners didn’t pay any tax in 2010-2011? Is our system awry do you think, or not?

Fiona Nash:        I think the Australian people expect people to contribute fairly when it comes to the tax system. I think that out there in our communities people expect that there’ll be that contribution fairly from those that are contributing to the tax system. Now in this particular instance, I’m not aware of those individual circumstances. But out there in regional communities, we as the National Party every day are out there seeing people battling, working hard, our farmers facing drought now again in a lot of areas, and facing some real difficulties. When they read stories like that, they’re not surprisingly a bit concerned  and want to makes sure that that fairness and equity is actually there in the tax system.

Tim Lester:          Fiona Nash, to close perhaps, an issue that keeps cropping up now quite regularly, this of sports betting and advertising of sports betting during games. Labor MP Stephen Jones says neither of the major parties are being tough enough on limiting sport betting and he’s bringing in a private members bill that will ban the promotion of odds, pretty much at everything except horse races and greyhound races. Is he right? Is that something we should support, or is that too much a case of kids gloves?

Fiona Nash:        As a mother, Tim, I have real concerns about the prevalence of these types of gambling advertisements and I think that Tony Abbott has got it absolutely right on this when he talks about that industry should try and sort it out, but if not he is absolutely prepared to step in and make sure that those things are done properly. And I think he’s absolutely right that if industry is not going to sort it out, then I believe that government certainly has a role to do that.

Tim Lester:          But Tony Abbott isn’t talking nearly as tough at Stephen Jones at the moment in terms of strict limits here. You think we should adopt Tony Abbott’s wait-and-see approach?

Fiona Nash:        Well I think it’s fair to give the sector, the industry some time to appropriately deal with it. I don’t use Stephen Jones as my litmus test for policy development, unfortunately for him. But certainly I think we do need to come into this and make sure we get it right, and if industry isn’t going to get it right, isn’t going to make sure that we have those constraints there, then government absolutely has a role to step in and make sure that happens.

Tim Lester:          Andrew Leigh, your thoughts? A private members bill that might be worth supporting, or no?

Andrew Leigh: Well Tim, I certainly share Fiona’s concern. As a dad, the only solution that I’ve found to this is to try and move the conversation away from betting and to use those odds as a way to teach my boys about maths.

Time Lester:       But you shouldn’t have to do that while watching a footy match, right?

Andrew Leigh: That’s right, I’m making the best of what I regard as a bad situation. I’m trying in some sense to distract them from money and into learning something. I think the code of conduct that the government has put in place with broadcasters where odds promotion is restricted to breaks in play has been an important step and has seen significant reduction in the promotion of odds. But I do think that this is an issue that concerns many Australians, I’ve certainly had constituents talk to me at my shopping centre stalls and in my electorate office with their concerns about this. So it’s something that I’ll be watching closely and I think, similarly to Fiona, I’m very interested to see how the industry responds and whether we need this big stick approaches, or whether we can actually deal with it through voluntary regulation.

Tim Lester:          Andrew Leigh, Fiona Nash, delighted to have you on board with Breaking Politics. Thanks for coming in, and we’ll talk again next Tuesday.

TRANSCRIPT – ABC702 WITH RICHARD GLOVER
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
6 May 2013

TOPICS                                 Inequality, Australian egalitarianism

Richard Glover:                 How much do you have to earn to be in the top 10% of society? What about the top 1%? What about the top 0.1%? How much do you have to earn to be in that elevated crowd, what do you recon? For instance, the top 1%, how much do you think you’d have to earn each year to be kind of 1 in 100 type bread winner in this country? The numbers have been crunched by Andrew Leigh, he’s now a Labor MP but he was a professor of economics at the Australian National University and these numbers grew out of the research that he did there for a forth coming book Battlers and Billionaires and Andrew Leigh joins us on the line, good afternoon.

Andrew Leigh: Good afternoon Richard

Richard Glover:                 Now, before we get into that matter of you know, how much you do have to earn to be in the top 1% of the top 10%, your interest in this has been to look at inequality and whether it’s grown or not in Australia.

Andrew Leigh: Yes, that’s right Richard. I regard inequality as being sort of an important part in the Australian national story, egalitarianism sort of deep in the Australian legend whether that’s through the work of Paterson or Lawson or whether through the egalitarianism of calling one-another ‘mate’, rather than using the term ‘sir’, so Battlers and Billionaires is about telling that national story. And there’s obviously a bit of number crunching of the kind that you’ve talked about in your intro.

Richard Glover:                 Okay people might have the sense that we’re less equal then we ever have been, that’s not true though, back in the 1950s we were perhaps at our most un-equal.

Andrew Leigh: That’s right, well there’s this spike in the early 1950s in the Korean war wool boom, that’s a sort of one-off ping in inequality, but then if you go right back to the 1910s - 1920s that’s a more unequal time than today, but then we saw a drop in inequality from the 1910s to the late 1970s. Then the last three decades has been the opposite direction; a widening of the gap between rich and poor.

Richard Glover:                 Can we go back to the 1910s for a moment, what’s society look like to make it so un-equal?

Andrew Leigh: Well one of the things about the 1910s is you’ve got pretty unequal land holding, so that comes out of the early land allocation process of the 18^th century, as well as the squatters taking over large tracks of land for grazing. So the big gaps from that period are really between the landed and the rest whereas now the big gaps are between the highly paid and the rest. It’s sort of a labour market gap that’s opened up now.

Richard Glover:                 And In the 1950s, you mentioned the war boom, I mean we all know that the war was fought in a very cold place and that did create a good market for wool for a while in order to clothe all those soldiers, presumably the beneficiaries were mostly farmers.

Andrew Leigh: That’s absolutely right, so if you at those earning over £20,000 in that year, 90% are farmers. It’s an astonishing shock and really it’s driven by the fact that you can’t increase wool supply in a single year; sheep take a couple of years to breed and so this massive demand from the US military just drove the price of wool through the roof and Australia’s farmers are the beneficiaries.

Richard Glover:                 Now if you drive around the Australian country side and have a look at country houses, you can sometimes see, with an eagle eye, the 1950s wing and you can tell that it was built in that period with the money that came from the Korean war.

Andrew Leigh: Yes, astonishing payouts and one of the things they say of that era, was that the purchasing processes of wool meant that certain farmers had a bit of that income spread over the coming decade and so there’s a lot of upgrading of farm machinery in the 1950s as a result of that incredible wool boom.

Richard Glover:                 Now in more recent years how have we travelled, in you know say the last 10 or 20 years?

Andrew Leigh: So if you take the top 1% share, the richest 1/100^th of Australian adults, that’s roughly doubled since 1980. Back in 1980, they had 5% of income, 5 times their proportionate share, and now they’re up to 9% of income - so a significant increase. There was a little blip down in the global financial crisis but the top 1% share has begun increasing again over recent years.

Richard Glover:                                 Okay so 1981 was when we were at our most equal?

Andrew Leigh: That’s right, under the prime ministership of Malcolm Fraser the Australian top 1% share was at its lowest, and it steadily grew right through the Hawke, the Keating, the Howard era.

Richard Glover:                 It’s interesting isn’t it? People associated with a conservative government that would help out the rich but not so.

Andrew Leigh: Well it’s a lot of the changes aren’t policy changes, they’re technology: so the advent of computers for example that’s great if you’re a lawyer, not so good if you’re a typist. Your younger listeners probably don’t even recall that there was once an occupation called typists, but the advent of computers was pretty tough on that sector.

Richard Glover:                                 So information technology has actually led to more inequality?

Andrew Leigh: That’s right. Technology typically benefits those with higher levels of education and so one way of thinking about inequality is a race between education and technology. If we increase education fast then that can have an equalising effect, but if technology gets away from education then it has an unequal effect.

Richard Glover:                 And I guess we’re ling in a time now that, I mean people say that you know it’s very hard, if you’re unskilled it is very hard to get a job, the idea that you can get a good job just using your muscle used to be quite easy in maybe in 1970, not so good anymore.

Andrew Leigh: Absolutely right. So if you were an inarticulate bloke, who didn’t finish high school, then actually in the early `60s, if you were good with your hands there were a lot of options. Now there are not many options around and those options that exist Richard, tend to have fairly flat earnings. So if you take the earnings of for example a cleaner or a security guard, they don’t increase much over the course of a career. A fifty year old in those occupations earns about what a twenty-five year old does, which is pretty painful if you think about a career in those industries.

Richard Glover:                 What about the other end of the scale we hear about the bank executives and so forth who are paid just millions and millions of dollars each year, when people complain about that they say “well it’s a globalised economy, if we don’t pay or commonwealth bank or ANZ don’t pay our executives this sort of money, they will go to Scotland, they will go to England, they will go to Germany or whatever.”

Andrew Leigh: There’s certainly got to be a hint of truth about that, I mean you look back to the early 1980s and there are a number of reports that talk about the low quality of Australian management talent of that era. But what you’ve got now, is you’ve got Australian companies looking to pay an international wage because they do an international search. You ask a company ‘would you pay above median for your CEO?’ and nine out of ten company boards say yes. Of course, nine out of ten can’t actually pay above average and so the effect is a ratcheting up effect.

Richard Glover:                 How do we compare to other countries overseas, we’ve got an idea of ourselves as egalitarian; do the figures show that we are?

Andrew Leigh: If you take sort of the 30 or so rich countries in then we’re about in the top third, so we’re not as unequal as the United States but we’re significantly more unequal then most European countries.

Richard Glover:                                 So the top third in the sense of equality or inequality?

Andrew Leigh: Inequality, sorry so, so, so we-

Richard Glover:                                 We are among the third most unequal?

Andrew Leigh: Exactly. Exactly so we’re, the United States is generally regarded as the rich country that has the biggest gap between rich and poor. Sweden, Finland, Norway are regarded as the most equal rich counties, and we’re closer to the US then we are to the Scandinavians.

Richard Glover:                 Okay so now we come to the figures, and I invite everyone to think about what they earn themselves, and put their figure against the figures that you’re going to supply. How, how much do you need to earn today to consider yourself in the top 1%?

Andrew Leigh: Ah so, last year we have is 2010-11 which is %210,000 to enter that top 1%. That’s an individual income.

Richard Glover:                                 $210,000 as an individual?

Andrew Leigh: Yes -

Richard Glover:                                 And then you’re in the top 1%.

Andrew Leigh: That’s right.

Richard Glover:                                 How do you get in the top 0.1%?

Andrew Leigh: $688,000 as an annual income puts you in the top 0.1%.

Richard Glover:                 Then you’re in the uber-rich, but of course the executives who make headlines often make not $688,000 but 3 million or 5 million. Don’t they?

Andrew Leigh: That’s right and so if you get, if you’ve got a million dollar salary then you’re in the top 0.5 per cent and so on upwards. And you see rising inequality right through. One of the things that Tony Atkinson and I noticed when we crunched this data is; not only is the gap between the top 1% and the rest increasing, but the gap between the top 0.1% and the rest of the top 1% is increasing as well.

Richard Glover:                 Some people argue within equality that actually the bottom end has been, has done quite well and they point to, Mr Howard did actually take a lot of money and give it to, certainly to working families for instance under family benefit, tax benefits and so forth and this helped the bottom end but it’s really the middle class who have suffered in Australia over the last 20 years, do you agree with that?

Andrew Leigh: Well you see income growth right through the scale in Australia which is different from what you see if you look at the United States. You know the bottom 10% in the US are earning basically after inflation are earning what they earned in the early seventies. That’s not true here. The bottom 10% have seen real gains in incomes, but they’ve seen smaller real gains then the top 10% have seen, so we’ve got all boats rising but we’ve got the ocean liners rising faster than the tug boats.

Richard Glover:                 And the dinghies left behind. Andrew Leigh is here. What about if the top ten per cent, what sort of sum of money do you have to earn to be in the top 10%?

Andrew Leigh: $81,000 dollars takes you into the top 10% - probably the figure that I find surprises people the most.

Richard Glover:                 Is that right? Because they think that’s not that much and yet you’re obviously within the

Andrew Leigh: Exactly, there are more families that have incomes over $81,000 but if your individual income is over $81,000 dollars then you’re earning a higher income than 90% of Australian adults.

Richard Glover:                 Which brings us to that whole debate again of what is rich, which we have every time you know somebody, talks about means testing something and people, various people -

Andrew Leigh: Do we have to have this debate Richard?

Richard Glover:                 Yeah, various people including some people on the Labor side say well you can make $120,000 dollars, you’re not rich, but you know, by on your figures within the top 5% or something.

Andrew Leigh: Exactly, and look that’s what I find is the most useful and tractable way of looking at things, because I think there is just, there’s far heat than light around whether or not somebody calls someone else rich. So I can certainly say that I don’t know whether $210,000 is rich or poor but it puts you in the top 1% of individual income earners.

Richard Glover:                                 Okay, if you’re earning $81,000 as an individual you’re in the top 10%?

Andrew Leigh: Correct.

Richard Glover:                 And just, can we come down just one set of figures too, If you’re earning something like $65,000 or something like that, where are you then?

Andrew Leigh: Ah, so our figures are just looking at the top because that allows us to go way back to the beginning of the century. So I’d be,

Richard Glover:                 Guessing.

Andrew Leigh: Yes, guessing at that stage but um, my guess is that it would put you somewhere around the top twenty or thirty per cent.

Richard Glover:                                 So you’re still comparatively well off?

Andrew Leigh: Yes, that’s right, yes.

Richard Glover:                                 Very good. Interesting to talk to you Andrew, thank you so much.

Andrew Leigh: Likewise Richard. Thanks again.

My Chronicle column this week focuses on some terrific Canberra community activists.

Strong Fibre in Canberra Fabric, The Chronicle, 7 May 2012


One of Canberra’s great features is the strength of our civic fabric. And it’s no more apparent than among young Canberrans who are giving back to our community.

Recently, I held a breakfast roundtable for a group of these ‘social entrepreneurs’, to discuss the opportunities and challenges they’re facing. Let me tell you about some of them.

• The Raising Hope Foundation, led by Ben Duggan, provides opportunities for students in the ACT to develop esteem and self-belief.  Raising Hope works with local schools to make sure that schoolkids at risk of slipping through the cracks get the support they need.


• Created by Sunny Forsyth, Abundant Water raises money to help people in the Southeast Asian nation of Laos get clean drinking water. Effective water filters can be made at a relatively low cost, and Abundant Water works to support communities getting them.


• Focused on Canberra, Brad Carron-Arthur’s work with the Youth Suicide Prevention Network aims to help reduce the scourge of youth suicide. A young man who ran from Canberra to Cape York to raise awareness of mental health, I’m sure he’ll make an impact on improving suicide prevention.


• Most social entrepreneurs focus either on local or international disadvantage. Raize the Roof, chaired by Danielle Dal Cortivo, aims to do both. They support the Starlight Children Foundation in Australia and SOS Children’s Villages in Botswana. And they’re doing it in a unique way: building a house in Bonner with help from local tradespeople, and then selling it off to raise money for charity.

There are many peak bodies and larger organisations in Canberra, and we appreciated the insights of people such as Rikki Blacka of Volunteering ACT and Julie McKay of UN Women.

Navigating the murky waters of charitable foundations and managing to keep your volunteer base upbeat is no easy task, and it was useful to hear different experiences from those at the roundtable. With increasing numbers of government agencies and companies allowing their employees time off to volunteer, Volunteering ACT plays a critical role in ‘matchmaking’ volunteers and charities.

Just as in business, growth in the community sector depends crucially on building new organisations. The activists who joined my latest social entrepreneurship roundtable are living proof that Canberra’s community sector is faring well.

From suicide prevention to better water in Laos, they’re focused on issues that go well beyond themselves. Each of these social entrepreneurs faces challenges in making their group successful. But with the support of others I’m confident they will continue to grow.

Andrew Leigh is the federal member for Fraser, and his website is www.andrewleigh.com. If you’d like to assist any of these organisations, please email [email protected] or phone 6247 4396.

TRANSCRIPT – 2CC with Mark Parton
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
6 May 2013

TOPICS:                                Inequality, Australian egalitarianism, Liberal Party advertising

MARK PARTON:                What is the definition of rich in 2013? To some extent the definition of rich I don’t think ever changes. Anyone who earns about three times as much as you do is rich, that perception applies to pretty much every one. Andrew Leigh’s got some more specific figures for us though, in 2013 in Australia, to be ultra-rich you need $210,000 a year; that sounds pretty fair. Now there’s even a filthy rich figure, Mark Sullivan are you listening? The uber-rich figure is $688,700. Can you imagine the changes that it would make in your life, not even if you were on that salary all the time, but just if you had it for a year, just if you get three quarters of a million dollars in salary for a year. Now Andrew Leigh’s calculated the new cut off points as part of his research for his coming book on inequality in Australia which is titled Battlers and Billionaires, this is research that he started years and years ago when he was a professor of economics at the Australian National University, he’s updated the calculations using tax office data from 2010-11 from the financial year and these are figures released last week and I’ll get him to explain. Andrew good morning,

ANDREW LEIGH: G’day Mark how are you?

MARK PARTON:                Not bad, how do you determine who’s ultra-rich and I’ve used the term filthy rich, I don’t think you have.



ANDREW LEIGH: I haven’t used any of these terms at all Mark, I think they’re… they all seem to be political dynamite. So my study with Tony Atkinson simply looked at what it takes to be in the top 1% of the top 0.1%, so as you said, $210,000 takes you into the top 1%, that’s the individual income and over $690,000 takes you into the top 0.1%; the richest 1/1000th of income earners.

MARK PARTON:                Okay, what this data has shown is that there is a growing gap between the rich and poor.



ANDREW LEIGH: That’s right, so if we go… if we take say the top 1% share; that’s doubled over the last generation, that’s about 1980 or so. Take the top 0.1%, they’ve tripled their share of national income over that period, and it’s a pattern which you see in other English-speaking countries as well; US, UK, New Zealand, Canada.

MARK PARTON:                It’s a fascinating thing that when you start having a conversation about it, and you find out what peoples definition of rich is, aside from the actual dollar value, because to me the definition of rich is being able to pay all of your bills-without stress, eating good food, and having a holiday every now and then. As far as I’m concerned, you got that, you’re rich.



ANDREW LEIGH: But of course Mark you could always have bills that exceed your income, any of us, regardless of our income, you know, you take that three-quarters of a million, I’m sure you could rack up enough bills that that salary wouldn’t cover it.

MARK PARTON:                And that goes back to that original definition that I said right at the start of the interview and I think it pretty much always applies; the definition of rich for most people is anyone who earns about three times as much as you do.



ANDREW LEIGH: Exactly, exactly, so it’s very much from the perspective you’re looking from and you know; I think in some sense, the bill thing comes back to that old Dickens’ quote that if your income is 19 shillings and your expenditure is 20 shillings, you’ll be miserable, if your income is 19 shillings and your spend is 18 shillings then you’ll be happy.

MARK PARTON:                Okay, what evil policy directions do you think you could come up with out of these figures, Andrew?



ANDREW LEIGH: Well, this is really just describing the world. Tony Atkinson and I did the original study a decade ago and each year as the tax data comes out I update it. I’m really keen as to see if we can have more of a discussion around inequality,

MARK PARTON:                Yep



ANDREW LEIGH: I think talking about how much the gap between rich and poor we want is pretty fundamental to the kind of nation we want to live in.

MARK PARTON:                Is it a bit silly though talking about equality, I mean, no-one’s ever going to have the same, there’s always going to be people who have more than others, there are going to be people who are luckier than others, or have worked harder than others, you know, what’s the point in talking about equality?



ANDREW LEIGH: Well of course we’re never going to have perfect equality Mark,

MARK PARTON:                That would be a complete communist structure wouldn’t it?



ANDREW LEIGH: Exactly, and we have good evidence as to what a disaster that would be, but just because we don’t want everyone to have exactly the same incomes doesn’t mean we can’t have a conversation about how the gap between rich and poor has grown over recent  years. We’re still a much more equal country than say the United States, but inequality has risen a lot over the course of my life time and I think having a national conversation about that is a productive use of time.

MARK PARTON:                You seen the headless chook ad, Andrew?



ANDREW LEIGH: I haven’t Mark, no.

MARK PARTON:                Look irrespective of the political message, and I know you won’t agree with me on this; it’s as funny as hell.



ANDREW LEIGH: Well humour is sadly lacking in politics Mark so maybe that’s the only reason to like it. But I tend to think there’s enough nastiness around in modern-day politics.

I chatted with Kieran Gilbert and Senator Mitch Fifield about the Coalition's divided stance on Paid Parental Leave, and about my research on inequality in Australia.

TRANSCRIPT – SKY AM AGENDA

Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
30 April 2013

TOPICS:                                Paid Parental Leave, government revenue and spending, inequality.

Kieran Gilbert:                   This is AM Agenda, thanks for your company this Monday morning. With me now, Liberal frontbencher Senator Mitch Fifield joining me from Melbourne and here in the Canberra studio Labor MP Andrew Leigh. You’ve heard the discussion with Christopher Pyne this morning Andrew Leigh. It’s healthy for parties to have internal debates about the merits or otherwise of policies, but from the front bench, it’s a very clear message isn’t it?

Andrew Leigh: Well Kieran, I’m very different ideologically from Alex Hawke, but I do appreciate that fact that he enjoys a good intellectual argument. And what he’s been saying here over paid parental leave, this is isn’t just an inequitable scheme, as Labor has been arguing – someone on $200 000 gets $100 000 of government support – but it’s also an illiberal scheme. And Alex is concerned that it represents a slide into illiberalism from the Coalition. It’s a Coles and Woolies tax funding a scheme which is much more European-style. I think even Christopher Pyne –

Kieran Gilbert:                   Most of the OECD does have more generous paid parental schemes. As an economist, don’t you think that it is a productivity measure to get women back in, to provide the encouragement to get women back in the workforce?

Andrew Leigh: I think you should always look internationally, Kieran, but the thing that marks out the Australian social safety net is that traditionally it has been much more targeted to those most in need. This is the opposite. This is a scheme that is most generous to someone on a six or seven figure income.

Kieran Gilbert:                   But doesn’t it make sense as a productivity measure to encourage those women back into the workforce? You don’t see the merits of that?

Andrew Leigh: I don’t think there’s going to be any tangible productivity lift compared to Labor’s paid parental leave, which is a much more equitable scheme, and I think a much more economically liberal scheme. I mean, if Tony Abbott is concerned about gender equity, he might think about the fact that his raising of superannuation taxes on low income earners will disproportionately impact low income women. He might think about the fact that his IR policy will take away penalty rates disproportionately from women. These are the kinds of gender issues that matter.

Kieran Gilbert:                   To be honest we don’t know what the workplace policy is, so that’s a bit presumptuous. Let me go to Senator Fifield and ask you about this, because Alex Hawke, I get the sense hasn’t done this – well he’s written this piece on his own, but it reflects a broader sentiment within the Coalition.

Mitch Fifield:                      Kieran, Alex is a good guy, he’s a friend of mine and he’s a thoughtful contributor to public policy debate. He’s put forward the view that the PPL should be reviewed. That’s not a view that I share. We have a good paid parental leave scheme policy, we will take it to the next election, and should we be fortunate to form government we will legislate it in the parliament and if I’m manager of government business it will be my job to see that that gets through. And that will be a good thing for women in Australia. It’s 26 weeks at your own salary up to a maximum of $150 000 and as anyone who has had kids knows, it is when you have kids that you can least afford to lose that money so this will be important for Australian families, and I’m a strong supporter of Tony Abbott’s policy.

Kieran Gilbert:                   But is this a battle over where the Liberal Party is headed, the presumption that you will win in September, and the economic dries are trying to pre-empt or preclude a big tax and spend policy like this?

Mitch Fifield:                      I don’t think so Kieran. I think it reflects the fact that we, unlike the Labor Party, have a vigorous party room that is used to having debates, that is used to having discussions. We don’t shy away from individual members in our party room having views and expressing them. Alex doesn’t have shadow executive responsibilities so he is perfectly at liberty to put his views. There’re not ones that I share, I think that we have policy that we should take to the next election which will make a real difference to many families when they have kids.

Kieran Gilbert:                   Just finally Senator Fifield, you heard what Christopher Pyne had to say: reminding colleagues that there are only 131 days left until the election. I suppose it was a pretty clear warning to them to pull their heads in. He didn’t say it in those words, but discipline has been strong to this point, do your colleagues need to avoid complacency or hubris?

Mitch Fifield:                      The Australian Labor Party can win this election. Australian federal elections are always competitive and every member of the party room is very much aware of that. But that’s not at odds with colleagues having views and expressing them, but it’s incumbent upon all of us to recognise that this election could go either way, Kieran.

Kieran Gilbert:                   Ok, let’s move on. The Financial Review reporting today, Andrew Leigh, that Treasury is now working on the basis that economic growth this financial year and next is at 2.75 per cent, that’s down a quarter of a per cent on the mid-year budget update. Does that make sense to you, given where the broader parameters are at?

Andrew Leigh: It struck me as an odd story actually, to be honest Kieran. I find that, as we know, economic growth is one of those parameters that you want to estimate based on everything, all the available data. We’ve got a number of data releases coming out this week, we’ve got an RBA decision. I’d actually be pretty surprised if that forecast has been locked down at this stage. But you know, the fact that Australia is talking about growth somewhere around 3 per cent would to many countries in the world be an extraordinary luxury. We’ve grown 13 per cent since 2007. Europe has shrunk, the US has enjoyed only a couple of percentage points of growth.

Kieran Gilbert:                   But things are looking a bit more sluggish now and there is a sense that the outlook is not as good as it has been. Do you think that the RBA is being too cautious? Because many economists do: Ross Garnaut, Bob Gregory, John Hewson.

Andrew Leigh: The RBA makes its own decisions and I don’t think there’s an advantage in me putting my oar in in that, but we’ve got a cash rate now sitting at 3 per cent, and that’s –

Kieran Gilbert:                   But there’s room to move, isn’t there? A lot of room to move.

Andrew Leigh: Well there’s certainly, and again compared to other countries who’ve hit that lower bound and then need to engage in more unconventional practices like quantitative easing, that’s an advantage. Yes, the high dollar has posed challenges for some sectors of the economy. The Prime Minister talked about that from the revenue standpoint last week. But let’s look around the world and let’s realise that most economic policy makers would love to have the set of numbers that Australia has today.

Kieran Gilbert:                   So despite the criticism that the Coalition has had on government spending, of course it’s a very contestable space whether the government has spent too much or enough to keep jobs and growth going. What’s your view then though when you look at the broader picture as Andrew Leigh put it there. Global growth has been sluggish, we’re doing very well compared to other nations, aren’t we?

Mitch Fifield:                      Look Kieran, this government presents themselves as hapless victims of circumstances beyond their control. The budget is just something that happens to them in complete isolation, apparently. The problem here is that every budget that this government has delivered has been predicated on everything going right, predicated on the most optimistic revenue forecasts, predicated on the most optimistic growth forecasts, and predicated on the most unrealistic assumption of all, and that is that the Australian Labor Party could exercise some self-discipline and restraint when it comes to spending. So Kieran, Labor will point to, they will grab on to reduced growth forecasts like a lifeline as another excuse as to why their budget is in such an appalling situation. But we’ve got to keep coming back to the fact that government has about $70 billion more in revenue than in the last year of the Howard government. Revenue, even this financial year, will be $25 billion up on the previous financial year, but the big problem is that despite the fact there are growth in revenues, spending is growing by even more. Spending $100 billion a year more than in the last year of the Howard government. That’s the problem. We don’t have a growth problem, we don’t have a spending problem – sorry, we don’t have a revenue problem, it’s a spending problem.

Kieran Gilbert:                   We will have this debate, no doubt, many times over the next couple of weeks in the lead up to May the 14^th and after Wayne Swan’s sixth budget. I do want to look now to some analysis you’ve done, Andrew Leigh. You’ve got an upcoming book called Battlers and Billionaires, as a follow up from your research at university as a professor of economics. Looking at wage levels – who’s in the top 1 per cent, the top .1 per cent – and looking at inequity in the wake of the global financial crisis, what have you found?

Andrew Leigh: Well Kieran, the big story of the last generation is rising incomes at the very top, and incomes at the top outpacing the middle. The top 1 per cent share has doubled over the last generation. The top .1 per cent share has tripled. In order to get into those groups, $210 000 takes you into the top 1 per cent, nearly $700 000 in the top .1 per cent. And so it’s important, I think, to engage in a national discussion around how much inequality Australia wants and whether too much inequality is threatening to strain our social fabric.

Kieran Gilbert:                   Do you think that this is a short term phenomenon after the global financial crisis, which has exacerbated this, or do you see any sign that things were becoming more equitable?

Andrew Leigh: We actually saw a small drop in the top incomes as a result of the financial crisis, Kieran, and now we’re seeing a rise again in the post-GFC years, getting nearly up to the point where top incomes were. But it’s a picture you see around the world. It’s a challenge -

Kieran Gilbert:                   You go to a Scandinavian sort of system where people cap, where companies cap executives?

Andrew Leigh: I don’t think that would make a lot of sense in an Australian context, then you have the loss of talent as well. Really what Battlers and Billionaires is seeking to do is to spark a debate, much more in the spirit of my old job as a professor than my new job as a policy maker. I do think a national conversation about the gap between rich and poor is important. I know Mitch will have views on that and they’ll be different from mine, but what I’m keen to do is just to have more of a conversation about these matters.

Kieran Gilbert:                   You’ve heard what Andrew Leigh has had to say, Senator Fifield, any thoughts on that this morning?

Mitch Fifield:                      Well it’s good to be part of the Andrew Leigh book club this morning. Andrew makes observations about the gap between rich and poor. As important – if not more important – is the absolute level of income that people have rather than the relative gaps between the incomes that individual people have. We want to see the economy grow, we want to see incomes grow for everyone. We don’t want to be in a situation where you’re looking at someone a bit above you earns, that’s always the definition of a wealthy man, someone who earns more than you do. What we want to do is make sure that everyone is earning more.

Andrew Leigh: I certainly agree with that point, Kieran. I guess the ideal though is growth with equity, rather than having to choose between growth and equality. And in certainly in Australia we’re fortunate that incomes have grown at the bottom as well as at the top. That’s not something they see, for example, in the United States, where once you adjust for inflation where incomes in the bottom 10 per cent have barely budged in four decades. So we’ve done well in Australia. I guess what I’m flagging up is a concern that the great Australian tradition of egalitarianism might be under threat.

Kieran Gilbert:                   Senator Fifield, thanks for being with us on AM Agenda and the Andrew Leigh book club, I appreciate it. And Andrew thank you for your time as well.

Andrew Leigh: Thanks Kieran.

The SMH, Age, Canberra Times and West Australian today have reports of my updated top income inequality data. If you're curious, here's a link to the raw figures (warning: large Excel file), and here's a link to the methodology paper.

I've also done a couple of interviews today about it:

• ABC702 with Richard Glover (coming shortly)


• 2CC Canberra with Mark Parton


• ABC774 Melbourne with Red Symons

On March 6 I visited the University of Canberra for the Inaugural NATSEM Lecture. I spoke on the topic of 'Estimating Top Wealth Shares in Australia over the Past Century'.