Andrew Leigh

I spoke in parliament yesterday about Brendon Morrison, an ACT Labor stalwart who passed away recently.

Brendon Morrison, Members' Statements, 24 February 2014

I rise to pay tribute to Brendon Morrison, a life member of the ACT Labor Party, who unexpectedly passed away last week. Brendon was a regular fixture at so many of our community events. He was an amputee and somebody whose presence was immediately apparent. I remember chatting away to Brendon with my son Sebastian there, and Brendon very happily talking with Sebastian about what it was like to be an amputee. I remember standing by the stone that sits out the front of the building commemorating the founding in 1913 of Canberra, and Brendon there talking about his long links to the region.

Brendon was an active member of the Weston Creek sub branch and had been a member of the Labor Party for 20 years. He supported candidates in ACT and federal elections and was involved with a number of unions including the CPSU and the Plumbers Union in the ACT.

He was involved with children's groups and the Rural Fire Brigade and had argued for greater support for ACT amputees from government. He heckled with great wit and was somebody whose sense of warmth was palpable to all of us around him. I pass on my condolences to his wife, Diane Jackson, and other family and friends. There will be a mass for him this week, which I am sure will be well attended.

I wrote the foreword to Peter Dawson's terrific new book on innovation in Canberra. If you'd like to buy a copy, contact [email protected].

Foreword to Peter Dawson, Creative Capital: Bureaucrats, Boffins, Businessmen, Haldstead Press, 2014
Andrew Leigh

Ask a non-Canberran what words they associate with ‘Canberra’, and it’s London to a brick that they’ll come back with ‘politics’ or ‘government’. Yet as those of us who live here know, this is a city that’s considerably more than the seat of government. If I had to devise a single notion that sums up smart bureaucrats, connected academics and innovative start-ups, it would be that Canberra is an ‘ideas city’.

Peter Dawson’s account of creativity in Canberra is informed, modest and connected – a little like the city itself. You’ll read about the Australian National University’s role in dating rocks from Apollo 11, Vikram Sharma’s work on quantum cryptography and Alex Zelinsky’s machines that prevent drivers from falling asleep. You’ll learn about Chris Parish’s cancer research, Peter Gage’s HIV research, Charmaine Simeonovic’s work on diabetes and Tim Hirst’s breakthroughs on influenza. And you’ll find out about environmental breakthroughs: Andrew Blakers on solar photovoltaic cells; Stephen Kaneff, Peter Carden and others on concentrating solar.

But the book is much more than an absorbing collection of stories – it also draws out broader themes. One of these is to think carefully about our city’s place in the world. Some argue that in a ‘hub and spoke’ world, Canberra may aspire to be a hub. But the book also quotes Alex Zelinsky’s observation that it may be no bad thing to be a ‘spoke of Silicon Valley’. After all, Canberrans tend to have a bevy of international linkages. I also appreciated the fact that Peter Dawson resisted using the term ‘world class’, a cliché most often used to describe things that are not.

Flattery, the psychologists tell us, works best when it appeals to the fragile side of a person’s character. We’re told to compliment the intellect of the handsome, and praise the grooming of the nerd. In the case of Canberra, many of us are used to thinking of it as a city of government. So it’s particularly flattering for locals to have Peter Dawson praising Canberra’s entrepreneurial flair.

The typical Canberran might well know about CSIRO’s success in developing wi-fi, a bestselling diet book, printable solar cells and a vaccine for the Hendra virus. But Peter Dawson goes beyond this to tell the stories of commercial entrepreneurs Adrian Faccioni, who developed GPS devices for sportspeople; and Glenn Keys, who created a medical practice that helped save the life of former Timorese President José Ramos-Horta. He describes Scott Rashleigh’s development of optical fibre, Ben Greene’s work on tracking space junk, and Marcus Daw’s work on carbon capture. In the military arena, we learn about Peter Moran (wearable computers), David Gaul and Ian Croser (radar) and Canberra firm X-Tek (body armour). The only thing missing are stories of a plethora of innovative Canberra women – perhaps something that can be redressed in the next edition.

Peter Dawson’s book made me proud to be a Canberran. But it isn’t just a puff-piece for the city. The book also raises the question of how policymakers should seek to foster innovation. Without advocating either model, it raises the question: should we follow Richard Florida’s advice, and create funky artistic precincts? Or is it better to do as Canberra entrepreneur Ben Greene suggests, which he says to government, ‘you take care of the schools and hospitals and I will take care of the rest’?

Much as I love hip downtown areas, the work of urban economists like Ed Glaeser has led me to doubt the claimed connection from Bohemian places to innovation. That’s not to say we shouldn’t encourage a groovy Braddon and a hip New Acton. But we should primarily encourage such developments because they make our city more enjoyable – not in the hope that they will make us richer.

To create more start-up firms in Canberra, it’s vital to boost educational outcomes. As the 2012 OECD PISA results show, ACT school performance has fallen in maths, reading and science over the past decade. Moreover, the drop has been at least as large as the average decline across Australia. Making Canberra schools work better must be a top innovation priority. It would also be terrific to see more students studying high-level maths and science at school, and taking on engineering and technology courses at university.

Canberra’s universities are already doing some fascinating work, but there are valuable lessons in Peter Dawson’s accounts of the early days the Australian National University: for example the focus on personnel over architectural blueprints. And as the stories of Howard Florey, H.C. Coombs, W.K. Hancock and Mark Oliphant illustrate, Canberra’s universities – at their best – can perfect the balance between theory and practice; between policy work and pure research.

Beyond getting education right, government should be modest about its ability to redress problems such as Australia’s comparatively low patenting rates (by OECD standards). To the credit of the Gallagher Government, it has trialled a variety of solutions, including the newly formed innovation space Entry 29. Like a good start-up in the private sector, it’s wise for governments not to think they have all the answers in solving a challenging problem such as the disconnect between Canberra’s universities and local businesses. Experiment, experiment, experiment.

Peter Dawson – and his wife Elizabeth – are immersed in Canberra’s social and intellectual life. But the story he tells has relevance outside the 2300 square kilometres that make up the ACT. Canberra isn’t perfect, but it’s a beautiful city in which to live. And as Peter Dawson teaches us, it has produced not just clever bureaucrats, but innovative boffins and creative businesspeople too.

Andrew Leigh is the Federal Member for Fraser and a former professor of economics at the Australian National University. His books include Disconnected (2010) and Battlers and Billionaires: The Story of Inequality in Australia (2013).

Breaking Politics host, Chris Hammer, invited me and regular sparring partner Liberal MP Andrew Laming into the Fairfax Media studio to discuss this morning's news.  Today's agenda includes worrying reports that the Abbott Government may weaken legislation requiring companies to report on the gender of employees and progress of workplace gender equality measures.

INTERVIEW TRANSCRIPT

BREAKING POLITICS – FAIRFAX MEDIA

MONDAY, 24 FEBRUARY 2014



SUBJECT/S: Manus Island; Cambodia and the Refugee Resettlement Agreement; G20 growth target and multinational profit shifting; Qantas future and jobs; Company gender reporting.

CHRIS HAMMER: One week after an Iranian asylum seeker died on Manus Island the story is still front page news. That's largely because of Saturday, Border Protection Minister Scott Morrison that he had been misinformed and in turn had misinformed the public about what had happened last Monday night on Manus Island. Well, to discuss that and other issues, I'm joined by Andrew Leigh, the Labor Member for Fraser in the ACT and also Assistant Shadow Treasurer and Andrew Laming, the Liberal Member for Bowman in Brisbane.

Andrew Laming, to you first, it now seems highly likely that the Iranian asylum seeker died within the detention centre on Manus Island. Doesn't that make his death wholly the responsibility of the Australian Government?

ANDREW LAMING: If that information's correct it's extremely alarming. Everyone would regret this occurrence from last week. Look, Scott Morrison's a star minister. He's provided information as soon as he reliably could. They'll try and work out why he was potentially given incorrect information. Everyone will want absolute safety for those that are detained on Manus. I'm confident that that centre can achieve that and continue to be an important part of our border protection.

HAMMER: So, you'd concede that it is the Australian Government's responsibility, the death in a sense -

LAMING: We'll be a key player in getting to the bottom of that matter. And we are obviously responsible because we hire the contractors who run that camp.

HAMMER: And the matter that the Minister was misinformed initially, that's also the responsibility of the Australian Government, isn't it, because it sets up he mechanisms and management of the detention centre?

LAMING: I'm sure the ministry will be getting to the bottom of those, what actually happened.

HAMMER: Andrew Leigh, Labor cannot be too critical because it was the Labor Government that set up this arrangement with Papua New Guinea, reopened the Manus camp, hired the contractors etc.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Manus Island is fundamental to the Refugee Resettlement Agreement, which saw asylum seeker boat inflows drop 90 per cent prior to the election. But I'm concerned that the Australian people in Scott Morrison aren't getting a minister who's willing to front up. We've gone through his Sergeant Schultz routines of being unwilling to speak about on-water matters, to now this kind of Get Smart routine, where he's bumbled over the extent to which his policy has caused incursions into Indonesian waters and gotten fundamental facts wrong over this asylum seeker tragedy.

HAMMER: If he's misinformed, you're not claiming that he deliberately missed informed the Australian public are you?

LEIGH: I'm not but there are many issues on which Scott Morrison has underperformed. Don't just take it from me, take it from Liberal Party elder John Fahey who expressed his deep concerns to the Fairfax Press. The performance of Scott Morrison and this Government has been subpar and we need an independent investigation that will report back as quickly as it's able to do so.

HAMMER: Well, The Greens are calling for his resignation. Is that something Labor supports. I'd like to see the results of an independent investigation. I certainly don't think though that any reasonable observer of Australian politics would be ranking Scott Morrison's performance as among the best we've seen from ministers of the crown over the last couple of decades.

HAMMER: Well, what's the test? When are ministers required to resign?

LEIGH: I certainly think people are raising reasonable concerns about Scott Morrison's performance: being unwilling to answer questions in parliament about how naval vessels are being used, is, I believe, inappropriate. I think it's inappropriate he's pursued a policy that's caused half a dozen incursions into Indonesian territorial waters and I'm troubled that he made claims which later turned out to be false about the circumstances of the death of this Iranian asylum seeker.

HAMMER: Okay. Andrew Laming, both sides of politics are committed to off-shore processing of asylum seekers. It's now reported the Government has approached Cambodia as a possible site for off-shore processing. Do we need to be doing deals with countries like Cambodia that have a rather ineffective history on human rights, rule of law, etc.?

LAMING: Australia needs to be working with all its near neighbours. I don't know about an approach. There's been reports about a discussion of foreign ministers. Potentially Cambodia has actually said they're ready to start assisting in the process and the more partners that are involved the better. You need to remember that there are minority groups from those parts of southern and central Asia, which are only a couple of borders away from each other. So, the Rohingya minority for instance are already located in parts of Indochina and they may be an important part of the puzzle. These are just early discussion and I'm glad that they're being had.

HAMMER: But if we can't guarantee that the safety and security of asylum seekers in PNG and Nauru, how could we do in Cambodia?

LAMING: Well in every nation we know that we're doing absolutely everything they can to guarantee that safety. The word guarantee is thrown around a lot and we know that different countries do things in different ways. I think what's important is that they're doing everything possible, everything within their power to resettle these populations. Otherwise, we have the ridiculous alternative where there's nowhere safe for anyone to go.

HAMMER: Andrew Leigh, Labor was happy to do a deal with Malaysia, so it'll have no problem doing a deal with Cambodia?

LEIGH: The Refugee Resettlement Agreement was always designed to encompass a regional solution to what is a global problem. Seventeen million refugees and 42 million internally displaced people in the world means that we need to work with other countries. We won't be responding to every thought bubble that gets floated in the paper without quotes from the Government, but certainly we will scrutinise any proposal that comes up and we'll be taking human rights concerns into consideration as we do so.

HAMMER: If we can change subjects, the G20 meeting in Sydney over the weekend. Andrew Laming, this growth target. Isn't this merely a motherhood statement? You'd be surprised if finance ministers were saying 'oh, we don't want growth'. What's the point of it?

LAMING: Well to talk about two per cent extra growth over five years, which obviously is just under half a per cent per year, it's good that our major trading partners are committed to building respective economies and the trillion dollar dividends that could potentially flow. So, they're on the same page. Don't forget, this was a Coalition election commitment to get our economy going again. I'm pretty glad that the other G20 nations hold a similar view. That's a big tick for Joe Hockey.

HAMMER: But since when as any government said 'we don't want growth'?

LAMING: Well it makes you wonder how you achieve targets apart from supportive policy to make it happen. It simply means that, I think, we’re dealing with like-minded economies around the G20 table. That’s good news.

HAMMER: And Andrew Leigh you must congratulate the Treasurer for pushing the issue of clamping down on international tax avoidance.

LEIGH: I’d certainly congratulate him for dealing with the issue Chris, but I’m concerned that he hasn’t come forward with a full suite of proposals. Labor took a $4 billion dollar package to last year’s G20 on multinational profit shifting. Joe Hockey has come back this year with a $3 1/4 billion package. He’s decided not to pursue three-quarters of a billion dollars of crackdown on multinational profit shifting and he’s decided not to pursue the transparency measures which would have seen the biggest 200 companies report the tax that they’d paid as a way of prompting them to do the right thing.

HAMMER: But isn’t some movement better than none?

LEIGH: Some is good but if he’s going to make this a signature issue let's see him implementing the entire reform package. It’s a bit like the growth target: great aspirations but we’d like to see the Government actually walking the talk.

HAMMER: Okay, the economy locally in Australia, Qantas’s results are out later this week. There are reports that it considering job cuts between 1000 and 3000. Andrew Laming, does Qantas deserve government support or is the age of entitlement over?

LAMING: Well I’d like to see some of the restrictions around ownership and board directorships reviewed. I think there’s a national conversation about that at the moment which is important. Many of Qantas’ competitors are saying that not being the national airline is some form of disadvantage. So what do we want? We want a thriving aircraft sector in this country where airlines can compete globally. We know it's one of the toughest sectors in the world and so sustainability, if it's not founded upon direct transfers by government is probably the important target.

HAMMER: Well what are the limits here? What are the sorts of things that government can consider, assistance it can consider giving to Qantas and support you'd have to rule out straight right away?

LAMING: There’s nothing we’ve ruled in our ruled out but there a conversation around the restrictions around current legislation of Qantas. But we do know that the other major competitors for Qantas do have significant advantages in their own hubs. So effectively being an outlying-based airline like Qantas we’re always going to be disadvantage over the large hubs operating out of Asia. If they’re also getting favourable government treatment in their own airports then that’s a real challenge for us. Qantas operates in that space with great difficulty and we’re going to have to consider that fine balance very carefully.

HAMMER: Andrew Leigh, if the government does extent some type of assistance to Qantas must is also extend it to virgin and other competitors of Qantas?

LEIGH: Let's see what type of proposal comes out of the Government. Andrew has summed up, I think very nicely the strategic dilemma the government faces. But the Opposition aren’t going to be responding to every thought bubble that Joe Hockey throws out to tables of multinational investors. We’re concerned about jobs at Qantas and were concerned about jobs across the board. I mean this is a Government that came to office with a target to generate a million jobs but since then we’ve seen 63,000 full time jobs go, some small growth in part time jobs but still they’re down 7000 jobs. So their million job target is now a one million and seven thousand job target. It's receding rather than getting closer.

HAMMER: Okay, well what should be on that table what assistance should an Australian Government be extending to a big iconic company like Qantas?

LEIGH: It’s a matter for the Government and I will leave it to the Government to put concrete proposals forward and we will respond to those. But this is just one part of the economy the Government ought to be focused on. At the moment it’s looking at making some savage cuts to spending which will hit those who have the highest what we call in economics ‘propensity to consume’. So if you cut back the SchoolKids Bonus then that’s less money that goes straight into consumption, into boosting the economy. And if you cut back on long term investments such as great schools, training centres, the National Broadband Network, then ultimately you sap the economy’s long term potential. So the talk about jobs and growth is great but the action seems to be in exactly the wrong direction.

HAMMER: Okay, well one area where the Government is trying to boost economic growth is by cutting red tape. It seems that it's going to relax gender reporting requirements. At the moment companies with a hundred or more employees need to report on the gender balance of their employees. The government is thinking about increasing that to a thousand employees. That’s a good move isn’t it? It's cutting red tape. It’s going to encourage investment and employment?

LEIGH: This is not a serious piece of red tape Chris. This is a requirement which allows us to make sure that firms are making the most productive use of both genders in the economy. We know that in corporate Australia, at the board level, women are badly under-represented but that has improved over recent years quite markedly, largely because of public reporting. To instead say let’s throw the cloak of secrecy back over the representation of women in large Australian firms, is I think, taking us back to the 1950s, rather than the  mark of a progressive Australia. Perhaps that's what you get when you have a Government without a dedicated minister for women.

HAMMER: Andrew Laming, why make this move? It's hardly a massive administrative burden for a company that employs more than a 100 people.

LAMING: Companies with a hundred employees that I know would differ. These are significant burdens of reporting. They are very rigorously enforced. A number of companies are very disappointed that this burden remains on them to this day, particularly when they're doing the right thing any way. True, they might not have anything to fear, but many of them operate in a space where the number of females working in the technically component of their firm is almost impossible to compare reasonably with other firms next door. Many would just say, look if you want to know what we're doing with female employees, you can always ask, but the mandatory reporting I think is the problem. So, we have a decision to be made by regulation by April of this year and I'm glad that we're having this discussion. The best thing you can do is have paid parental leave for young women. I think that's the best move that the Abbott Government has made. This extra reporting and red tape I don't see any great benefit in.

LEIGH: Let's be honest, we've got a paid parental leave scheme. It's a flat rate paid parental leave scheme that gives the same to everyone. I'm unpersuaded Andrew that if we move to a system which gave five times as much to the most affluent as to the worst paid workers, that we'd get a big productivity gain. Certainly someone like Saul Eslake says the same.

LAMING: Sure. And I would say that most high income earning women already have their income replacement through their corporations and public service. This legislation is about looking after mostly low to middle income earning women, who at the moment in the private sector have nothing. So the legislation picks up that sector.

HAMMER: Okay, gentlemen, I think that debate is one we are going to cover again before this year is out. In the meantime, Andrew Leigh and Andrew Laming, thanks so much for joining us.

LEIGH: Thanks Chris. Thanks Andrew.

LAMING: Thank you.

ENDS

MEDIA CONTACT: Toni Hassan 0426 207 726

Joining a cycle of doorstops at Parliament House this morning, I spoke to reporters about the Group 20 Financial Ministers Communique that commits leaders to boosting GDP. Ultimately the success of the G20 in Australia will be judged around tangible results including job creation.

TRANSCRIPT, DOORSTOP INTERVIEW

AUSTRALIAN PARLIAMENT HOUSE

MONDAY, 24 FEBRUARY 2014

SUBJECT/S: G20 growth target; multinational profit shifting and tax; Manus Island; Craig Thomson; Sydney’s second airport

ANDREW LEIGH, SHADOW ASSISTANT TREASURER AND SHADOW MINISTER FOR COMPETITION: We've seen the headline recommendation coming out of the weekend G20 meetings as being a two per cent growth boost. Now, no one can object to that. Two per cent more growth is of course a good thing. But, an aspiration is not a plan. And from Joe Hockey, what we're getting is hints of a set of policies that are going to cut into growth at the same time that he aspires to more growth. If I came out here and told you that I'd like my running times to be two per cent faster, but I was going to sell my jogging shoes and sack my jogging partner, you'd have reason to doubt me. So, when Joe Hockey tells you that he's going to boost Australia's growth rate but he's not going to build the NBN, not build urban rail, hacking into school funding and Trades Training Centres - and potentially demand driven universities - Australians have a right to ask 'well, how serious are you are you about this growth target?'

The other thing we saw out of the G20 was a proposal to move on multinational profit-shifting. It's essentially the same proposal that Wayne Swan and David Bradbury took to last year's G20. But three-quarters of a billion dollars has been dropped from it because the Government wasn't willing to go hard on multinational profit-shifting. So that's $700 million, around the cost of a new hospital, which has got to be made up for in service cuts or tax increases. The Government is walking away from good moves on multinational profit shifting and they're walking back on transparency of multinational tax paid, which has really got to leave you asking the question, ‘how serious are they about making sure that all companies pay their fair share of tax?’

JOURNALIST: Do you think Scott Morrison should be sacked?

LEIGH: I think we need a proper investigation on what's occurred on Manus Island. It's a location that is integral to maintaining the refugee policy which Labor put in place and which saw a 90 per cent decrease in boat arrivals before the election. And that investigation needs to happen quickly. It needs to be independent and not in a matter of a year or so, but happen speedily.

JOURNALIST: Would you agree with the Greens calling for a royal commission?

LEIGH: I sometimes feel as though this parliament is doing nothing but calling for royal commissions. I think a quick acting independent investigation can allow us to get to the bottom of exactly what happened. When you've got the Minister coming out at nine o'clock on a Saturday night admitting that he misled the Australian people, we need a quick and independent investigation.

JOURNALIST: Are there any merits to the [inaudible] Cambodia [inaudible]?

LEIGH: I'm not in the business of responding to thought bubbles from the Government. If the Government has a serious policy proposal they want to put to the Opposition, we're happy to entertain those.

JOURNALIST: It's more than a thought-bubble. The Foreign Affairs Minister is canvassing the option.

LEIGH: If the Government has proposals we will talk to them about those and we'll apply to those the principles that we brought to bringing about the Refugee Resettlement Agreement.

JOURNALIST: Do you have any concerns about Cambodia specifically? It's been described as an authoritarian regime.

LEIGH: If the Government has a serious proposal to put to us, we're happy to do that. But this is a Government that takes great joy in floating ideas, whether they're economic or foreign policy. We'll respond to serious policy proposals.

JOURNALIST: What about a motion to investigate whether Craig Thomson has misled parliament. Would you support that?

LEIGH: Well as Tony Burke has already said this morning, Labor supported that motion in the last parliament. And if it needs another motion of parliament to get it up, we're happy to support it.

JOURNALIST: Do you support a second Sydney airport at Badgery's Creek?

LEIGH: Certainly I think that Sydney needs a second airport and sorting out the precise location is a matter that will be nailed down by NSW colleagues. But you get a strong sense that Sydney Airport is at capacity and that that's a real brake on the productivity of the region. It's one of those infrastructure issues I spoke about before. Unless you get the infrastructure right, it's hard to see why we should take aspirational growth targets seriously.

JOURNALIST: And do you understand why Western Sydney MPs are so upset about it though?

LEIGH: There's invariably politics around the locations of airports. I do think it's important to expand the air transport capacity of our biggest city - the gateway to the region for many Australians. If you're not willing to make those tough calls, and it's not just on airline infrastructure, it's also on urban rail which the Government has walked out of, it's also about the National Broadband Network. If you're not willing to make those calls, then you're not serious about growth.

JOURNALIST: So, Bill Shorten's right in backing that then?

LEIGH: The details of location would be a matter for Anthony Albanese and Bill Shorten and my NSW colleagues but my firm view is that Sydney needs another airport. Thanks folks.

ENDS

On 24 February, I joined host David Lipson and Liberal Senator Simon Birmingham to discuss the G20 growth target, and why Joe Hockey's growth aspiration lacks a plan to back it up.http://www.youtube.com/v/IfxeZ4hNCX0?version=3&hl=en_US

International tax rules are not keeping pace with changes in the digital age and the realities of doing business in our globalised world. Rapid and dramatic shifts in global economic activity, driven largely by e-commerce, pose very real and significant risks to Australia’s corporate tax base and the tax bases of countries right around the world.

Multinational companies can take advantage of slow-moving tax laws by shifting profits to low-tax countries. This is particularly true for digital companies that don’t sell physical goods. This has obvious implications for tax revenue: companies avoiding their fair share of tax mean higher taxes or reduced services for you and me. Equally important, however, is the disadvantage incurred by local businesses which lack either the savvy or the scale to implement these complex taxation avoidance schemes.

Local Australian digital media companies such as Mi9, together with the corporate heads of websites such as ninemsn, RAE and realeastate.com.au, have called for action on multinational profit-shifting ahead of this week’s G20 Finance Minister’s meeting. With the job losses that we’ve seen at Holden, Toyota and, this week, at Alcoa, it’s vital that Australian media companies are competing on a level playing field so that they can create the jobs of the future.

Since coming to office, the Abbott government has talked a big game on multinational profit-shifting. Unfortunately, all it’s done is water down Labor’s sensible reforms to ensure that multinationals pay their fair share.

On 14 December 2013, Assistant Treasurer Arthur Sinodinos announced that the government would abandon a $700 million measure to prevent multinational firms reducing their tax bill. On 4 January 2014, Senator Sinodinos announced that the government was considering abandoning measures that required 200 of Australia’s largest firms to disclose their total income, taxable income and tax paid. That’s hundreds of millions of dollars of tax revenue lost that could go towards Australian hospitals, schools and infrastructure.

The Abbott government must walk the talk. Labor advanced a fair agenda to combat tax avoidance and evasion. It’s up to Joe Hockey and Arthur Sinodinos to take up the baton left by Wayne Swan and David Bradbury so multinationals pay their fair share of tax. Until they do Australian households and businesses will have to take on a higher tax burden. This not only means less in the pockets of Australian taxpayers, but also fewer jobs in the innovative companies that represent the future of the Australian workforce.

I'm speaking today to a business breakfast in Perth, on the theme of innovation in the Western Australian economic story.

Ideas and Engagement: The Western Australian Economic Story*

Andrew Leigh MP
Shadow Assistant Treasurer

Business Breakfast, Perth
21 February 2014

I acknowledge the Whadjuk Nyoongar people, the traditional owners of the lands on which we meet, my federal colleague Alannah MacTiernan, Western Australian Shadow Treasurer Ben Wyatt and Shadow Minister for Planning and Finance Rita Saffioti. My thanks to the Perth Writers’ Festival for flying me over to the left coast.

It’s a pleasure to have the chance to speak with you today.

When I was in my mid-twenties, I had the chance to work for the late Western Australian Senator Peter Cook. He was then the Shadow Minister for Trade – a perfect portfolio for a Western Australian.

Peter taught me a great deal about politics, and about Western Australia. I enjoyed travelling with him through places like Kalgoorlie, Karratha and Carnarvon, talking with mine workers and farmers, local business leaders and politicians.

Peter was an instinctive internationalist. He took the view that you couldn’t be a social democrat without believing in an open Australia – and you couldn’t believe in openness without a proper social safety net. He was a yachtsman, with a yen for open waters.

For many Western Australians, internationalism is instinctive. The ‘Swan River Colony’ began exporting wool to Britain in the 1830s and sandalwood to Singapore in the 1840s.[1] It was open to migrants: one indicator of how many migrants flooded in is that by the 1850s, there were two men for every woman. You don’t get a gender ratio like that in a closed society!

No surprise, then, that the Free Trade League, established in 1871, is thought to have been this state’s first political organisation. And at the time of Federation, Western Australia lined up on the side of free trading New South Wales, opposing protectionist Victoria.

In more recent decades, it was Western Australian John Dawkins who was the foundation chair of the Cairns Group of agricultural free trading nations. Western Australians on both sides of politics have continued that tradition. The likes of Paul Hasluck, John Hyde and Peter Walsh are a reminder that this state produces more than its fair share of straight-talking politicians.

Today, the numbers tell the story of a transformed state. When I worked as an economics professor at the Australian National University, one of my colleagues, Bob Gregory, liked to say that if you wanted to see economic growth in action, you could either watch Australia for a century, or China for a decade. In a similar vein, economists watching Western Australia over the past decade have seen their share of eye-popping numbers.

Try these five statistics, for example.

• Western Australia accounts for one-sixth of Australia’s GDP, but nearly half our exports.


• In a few years, iron ore exports will total 25 tonnes a second (up from a third of a tonne in the late-1960s).


• The cost of the Gorgon gas project – the world’s largest LNG with geosequestration project – is approximately the size of the GDP of Lebanon.


• Hundreds of Australians now work as fly-in, fly-out workers, including some who have chosen to commute from Bali (a shorter flight from Perth than it is to Sydney).


• Historically, Western Australia has had a similar level of inequality to other states. Now, it’s the most unequal jurisdiction in the nation, with a gap between rich and poor similar to the United States.[2]

In a fast-changing business environment, you need a federal government that will be predictable, responsible and responsive.

As Federal Labor Leader Bill Shorten said when he spoke in Perth a week ago, the extent of the previous government’s dialogue did not match the size of our reform.[3]

It isn’t an error we will be repeating in Opposition – nor in government, if given the chance to serve again.

My Western Australian colleagues – Mark Bishop, Gary Gray, Sue Lines, Alannah MacTiernan, Melissa Parke, Louise Pratt and Glenn Sterle – are each thoughtful parliamentarians who understand that good governments must take the long view.

In doing so, it’s vital that we recognise the diversity in the mining sector. Over the past decade, the Reserve Bank of Australia’s commodity price index has more than doubled.

But that average hides significant differences across sectors. Iron ore prices are at least six times higher than a decade ago, yet bauxite and alumina now face challenging conditions. The gold price has dropped by a quarter in the past year.

The advances in mining technology over the past decade have in some cases been nothing short of extraordinary.

We need to keep the partnerships between public and private researchers that encourage this to continue.

Australia has the potential to take global leadership in some technologies, such as carbon sequestration and floating LNG.

The same is true in agriculture.

In the early days of Western Australia’s founding, wool dominated wheat in the export markets. Per kilogram, it was 10 to 20 times more valuable. And it required less processing.[4]

The story of Western Australian wheat isn’t a story of picking low hanging fruit.

It’s a tale of ingenuity.

CY O’Connor’s pipeline took water 600 kilometres, and was the longest pipeline in the world at the time of its opening.

The pipeline water wasn’t used to water crops, but it made inland wheat growing possible because it sustained the settlements along its length.

The rail network made it possible to get the wheat to market at a reasonable cost.

A bulk grain handling system – the nation’s largest cooperative – cut costs and boosted wheat exports.

Western Australia is one of the oldest supercontinents on earth – around 3 billion years old. But as a result, your soils are some of the least fertile in the country. They have less phosphorous, nitrogen and copper. So technologies have had to be better – using the right fertilizers and choosing the right seeds. Western Australian farmers have had to be more ingenious than farmers in other parts of the world who started with better soils. Necessity, as the saying goes, is the mother of invention.

The success of Western Australia’s mining and farming sectors aren’t just a source of pride and prosperity for Australia – they are also a key part of our engagement with the world.

In a number of speeches since entering politics, I’ve argued that Australia’s foreign aid program should focus on our comparative advantage: the things we do relatively better than other nations.[5]

Two of these advantages are mining and dryland farming.

Initiatives such as the International Mining for Development Centre and the Australian Centre for International Agricultural Research are a good start – but as I argued when I opened the ‘Mining for Development’ conference last year, we can do more.

This involves taking ideas out of Perth and into Africa. Australian mining companies’ standards of corporate social responsibility and safety can help raise living standards in the world’s poorest continent.

But Western Australia isn’t just a quarry and a farm – important as quarries and farms are.

This is also the state that produced Nobel Prize winners Barry Marshall and Robin Warren – who were willing to give themselves ulcers to transform our understanding of that condition.

It’s the state that gave us Fiona Wood, whose breakthroughs with spray-on skin have made lives of burns victims more bearable.

It’s the state that produced great economists like Nugget Coombs. And like Ross Garnaut, who I’ll be joining in discussion later today.

It’s the state that produced novelist Tim Winton – who regularly tops polls of Australia’s greatest author.

And it’s the state that produced singer-songwriter Tim Minchin, who is currently wreaking offence and hilarity across the United States.

Innovation is at the core of Australia’s future prosperity, and Western Australia is as well placed as any part of Australia to capture its benefits. Western Australia is a great example of innovation at work.

The Square Kilometre Array is one example of such a project. The Murchison site, 315 kilometres northeast of Geraldton, will be part of a project that will test Einstein’s theory of general relativity, search for dark matter, and assess if there are other planets out there capable of supporting life.

But innovation also happens at a more modest scale – through breakthrough architecture firms, health researchers, manufacturing exporters and the like.

It’s also about how companies make their production methods more streamlined, thereby raising overall productivity.

Better productivity isn’t like a cake that governments slice up and hand out.

But governments do play a role.

Governments need to ensure that every child gets a first rate education, which provides broad skills and critical thinking. Many of today’s graduates will finish their careers doing jobs that don’t exist today, so they need to learn to be flexible and adaptable.

Governments must provide appropriate infrastructure, such as urban rail. Look around the world, and you’ll be hard-pressed to find a highly productive city that hasn’t made the most of its city centre.

Congestion isn’t just maddening, it’s bad economics. And any government that thinks it can get away with skimping on infrastructure needs to get serious about productivity.

Finally, governments need to maintain what Lindsay Tanner once called a philosophy of ‘Open Australia’.[6] The old Australian model of tariff barriers and a White Australia policy made us poorer in wallet and spirit. Today, governments need to be willing to make the case for foreign investment, rather than merely pandering to the old canard that investment is good, except if it comes from overseas.

* * * * *

If you ever visit the headquarters of the World Trade Organisation, the leading advocate of global free trade, make sure you look at the murals on the wall. The WTO occupies the building that used to be the International Labour Organisation, so social realist friezes of happy and productive workers smile down on the trade negotiators as they go about their business.

It’s an image that Peter Cook always appreciated: the idea that prosperity and engagement can go hand-in-hand. It requires us to be optimistic about the ability of our firms to compete in the world economy. It necessitates that we make the smart investments in education and infrastructure, and resist the temptation to hunker down. It’s a vision that befits Western Australia, and one that I hope we can work towards in the Asian Century.

Peter Cook entered parliament in 1983, and within a few years had made an impact on the young and increasingly confident Hawke Government. One of the reasons he did so was that he entered the parliament without baggage. Intellectually, he brought with him an instinctive Western Australian understanding that markets – properly functioning – are a great generator of wealth, but that government has a vital role in promoting prosperity and fairness.

When you stand on one of Perth’s great beaches and look west, you can watch the sun set over the ocean. It’s a scene that always reminds me of Peter Cook. In politics – and other walks of life – fireballs rise and set. But there are a few who make big waves. That’s what Peter did. Western Australia – and the nation as a whole – is better for it. And it’s a lesson for each of us to follow today.

---

* I am grateful to several colleagues and staff for valuable comments on an earlier draft of this speech.

[1] Western Australian Department of Treasury and Finance, 2004, ‘An Economic History of Western Australia Since Colonial Settlement’, Research paper produced for the 175th Anniversary of Colonial Settlement 1829-2004.

[2] Andrew Leigh, 2013, Battlers and Billionaires: The Story of Inequality in Australia, Black Inc, Melbourne.

[3] Bill Shorten, 2014, ‘Leadership Matters’, 14 February 2014, Perth.

[4] As economic historian Ian McLean has pointed out, wool and gold shared two key characteristics: they were high value for weight, and required minimal processing before export.

[5] Andrew Leigh, 2011, ‘Fragile States and Agile Aid’, Lowy Institute, 18 May 2011, Sydney; Andrew Leigh, 2013, ‘Opening Keynote’, Mining for Development Conference, 20 May 2013, Sydney.

[6] Lindsay Tanner, 1999, Open Australia, Pluto Press, Sydney.

In a couple of speeches and articles, I've argued that Labor should be the party of both egalitarianism and social liberalism. Blue Labour fan Nick Dyrenfurth takes a different view, so Tim Watts MP organised a Google Hangout to explore the issue further. Here's a video of the event.

The business of being in Opposition is to hold the Government to account. The Guardian today published my piece on the Prime Minister's jobs target.

OPINION PIECE



Unemployment: Abbott needs 1,007,000 more jobs to keep his promise



One of the great inkblot tests of modern politics is how you think about unemployment. While progressives tend to think in terms of social forces, those on the right are more likely to see unemployment as a personal failing.

You can hear echoes of this view from conservative politicians. Social Services Minister Kevin Andrews has announced he will be ‘reining in welfare’, while Abbott Government backbencher Ken O’Dowd has argued that welfare recipients ‘don't care about the community, they care about themselves and how they can screw the system’.

To see the oddity of blaming the victim, you only have to take the argument to its logical conclusion. Since the Abbott Government was elected, more than 7000 jobs have been lost. Is this because we’ve seen a surge in laziness among Australians? Did the millions who lost their jobs worldwide in the global financial crisis just decide to put their feet up? Was the Great Depression the result of a historic collapse in the work ethic?

Realising that unemployment is driven more by the macro-economy than morality is important because it brings the focus back to where it should be. As Clinton strategist James Carville put it, ‘It’s the economy, stupid’.

Before the election, Prime Minister Abbott campaigned hard on economic growth and job creation, stating: ‘I am so confident that we can deliver a million new jobs over five years.’ Yet the target seems to be slipping away from him. Almost half a year in office, and Mr Abbott now needs to create 1,007,000 jobs to keep his promise.

Australians recognise that there are many forces in the economy that are outside the control of government. When it comes to economic policy, people aren’t looking for Moscow on the Molonglo, but for a sense that the important economic settings are right: in the short and long term.

In the short-term, getting the settings right means ensuring that the government takes account of the economic cycle when making its budget decisions. With unemployment on the rise, is this really the right time to be axing thousands of jobs in the Australian public service? From regional tax offices to AusAID, public servant job losses are adding to unemployment pressures.  And yet there’s no evidence of a ‘bloated’ public sector: after all the number of public servants per capita did not rise under Labor.

In a fragile labour market, the Abbott Government needs to rethink the impact that its decisions have on growth. Because the poor have a higher spending rate than the affluent, the hit to demand from removing the SchoolKids Bonus and cutting income support will be significant. At the same time, it’s easy to see the removal of the Mining Tax having little positive impact on demand. If the government cuts family payments on low-income families, those families will spend less. If it pays the wealthiest families $75,000 to have a child, these families may simply choose to save a bit more.

And then there’s the long-term. The progressive view of economic growth is that it depends on education, infrastructure and openness. That’s why Labor opened up university places, took us from 20^th to 1^st in the OECD for infrastructure investment, and commissioned the Australia in the Asian Century White Paper.

These decisions need to be built on if Australia is to have more good-paying jobs in the future. And yet it’s worrying to see the scrapping of Trades Training Centres, the failure to build a fibre-based NBN, and the decision to turn away US foreign investment in GrainCorp.

Wage cuts and asset sales are a poor recipe for the nation once known internationally as ‘the Workers’ paradise’. In the future, Australia must be better-educated and have speedier transport networks; we must be connected to the world’s information superhighways, and we need to be open to trade and investment from our region.

Smart investments for the future will not only help to bring down the unemployment rate; they will also help to boost productivity. Over the past decade, we’ve experienced a historic rise in the terms of trade (the ratio of the price of what we sell the world to what we buy from the world), which has helped to mask a period of sluggish productivity growth. As the terms of trade decline, we need productivity-boosting measures more than ever before.

Even amidst the Global Financial Crisis – the world’s worst downturn since the Great Depression, Australia had better labour market figures than it does today. The unemployment rate is at an 11-year high, and the participation rate is at an eight-year low. As a nation, we can do better. It’s time to get Australia working again.

Andrew Leigh is the Shadow Assistant Treasurer, and his website is www.andrewleigh.com.

ENDS

Wednesday, 19 February 2014

Published in The Guardian, Australia edition

Ahead of the G20 meeting of finance ministers and central bank chiefs from major economies in Sydney at the end of the week, I have called on the Abbott Government to get serious about tightening tax rules so that multinational corporations pay their fair share.  For the first time Australia has a decision making role at the G20 and Labor urges the  Government to use the occassion to make sure it produces concrete actions rather than a series of platitudes.

MEDIA RELEASE

IT’S TIME TO BRING INTERNATIONAL TAX RULES INTO THE 21^ST CENTURY

Shadow Assistant Treasurer, Andrew Leigh, has called on the Treasurer to show strong leadership at G20 Finance Ministers’ meeting this week to achieve global action to crack down on multinational corporations that pay little or no taxation at all.

“Since coming to office, the Abbott Government has talked a big game on multinational profit-shifting. But all it has done is to water down Labor’s sensible reforms that ensure multinationals pay their fair share,” said Dr Leigh.

“On 14 December 2013, Assistant Treasurer Arthur Sinodinos announced that it would abandon a $700 million measure to prevent multinational firms reducing their tax bill.

“On 4 January 2014, Senator Sinodinos said he was considering abandoning measures that required 200 of Australia’s largest firms to disclose their total income, taxable income and tax paid.

“The Coalition seems to favour loopholes and secrecy – not fairness and transparency.

“It’s not fair that under existing rules global firms can siphon profits earned in Australia to low-taxing countries.

“That’s hundreds of millions of dollars of tax revenue lost that could go towards Australian hospitals, schools and infrastructure,” Dr Leigh said.

“When tax rules allow businesses to shift their income away from where it was produced, it erodes that country's tax base and shifts the burden onto individual taxpayers.

“International tax rules are not keeping pace with changes in the digital age and the realities of doing business in our globalized world. Rapid and dramatic shifts in global economic activity, driven largely by e-commerce, pose very real and significant risks to Australia's corporate tax base and the tax bases of countries right around the world.”

A number of Australian media companies have come out this week to urge reform.

“There is a pressing need for action. This week’s G20 finance ministers is a potential watershed moment in international tax policy,” said Dr Leigh.

“Labor advanced a fair agenda to combat tax avoidance and evasion. It’s up Joe Hockey and Arthur Sinodinos to take up the baton left by Wayne Swan and David Bradbury so multinationals pay their fair share of tax.

“Until they do Australian households and businesses will have to take on a higher tax burden and local communities suffer.”

TUESDAY, 18 FEBRUARY 2014