Getting on with the Job

The recent floods and cyclone have had a devastating impact on Queensland and Victoria, with major infrastructure now needing to be rebuilt. In order to fund this rebuilding effort, Labor has proposed a $5.6 billion package. Two dollars out of three of this package will be funded by savings measures from the budget, while the remainder will be funded by a one-off levy in 2011-12. The levy will be progressive, so that flood victims and taxpayers earning less than $50,000 will pay nothing. For most of those who do pay the levy, the cost will be less than a cup of coffee per week.

Yet although he was part of a government that used special levies to fund extraordinary costs such as the Gun Buyback or the East Timor reconstruction effort, Tony Abbott has opted to oppose the flood levy. Dragging out his tired old ‘big new tax’ line, the Liberal-National Coalition has argued that the circumstances are inappropriate to impose a levy. This is despite the fact that during the election campaign Abbott proposed a company tax levy. Not only would that levy have been effectively imposed on all taxpayers (for the most part, company taxes end up being paid by consumers and workers), but it would have been permanent, not temporary.

What has Abbott proposed instead of a levy? His favoured solution seems to be savings cuts. The trouble is, he can’t identify reasonable programs that could be cut. He keeps talking about scrapping infrastructure funding, but does the Coalition really want half-built school libraries? And in a sign that Coalition maths are just as fuzzy as they were last year, Abbott has tried to go back to several ‘savings’ measures that were identified by Treasury as dodgy in the last election, when they found an $11 billion hole in Coalition election costings. (It’s not clear why he thinks that a spending cut that was shown to be fake last August will fool anyone today.)

Being the man who just says no might be good short-term politics for Abbott, but surely he also recognises the risk that it poses to his credibility over the long-run. The more often Abbott reaches for the glib one-liner instead of a sound policy choice, the less likely the Australian people are to believe that he has the skills and temperament to govern the country.

(cross-posted at the ALP website)
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Mobile Offices and Community Forums

Mobile Offices

In the last quarter of last year, I ran 15 mobile offices, and met a wide variety of Canberra residents to talk about local and national issues.

Over the coming months, I'll be holding more mobile offices. These are a good opportunity to raise issues that are specific to you or your family. Here are the first dates for 2011.

  • Sat 26 February - Canberra Show, EPIC – 9.00 to 11.00 am

  • Sat 19 March - Jamison Shops – 10.00 to 11.00 am & Lyneham Shops – 11.30 am to 12.30 pm

  • Wed 30 March - Bus Interchange, Civic – 8.00-9.00am

  • Wed 6 April - Garema Place, Civic – 12.30 to 1.30 pm

  • Sat 9 April - Gungahlin Marketplace – 10.00 to 11.00 am & Dickson Woolies – 11.30 am to 12.30 pm

Community Forums

In addition to my mobile offices, I'll be taking a leaf from my predecessor Bob McMullan's book, and running a series of community meetings. As part of these, I'll be delivering a speech on an issue that I thought might be of interest to Fraser residents. You're welcome to come to just the speech, just the community forum, or both.

The first four forums will be scheduled at different times of the day, and in different parts of the electorate. I hope as many residents as possible can come along.

  • Wed 16 March – Gungahlin Lakes Club
    6.30 to 7.00 pm: ‘Revenge of the Nerds: Improving Australia’s Education System’
    7.00 to 8.30 pm: Community Forum

  • Wed 20 April – Belconnen Labor Club
    1.30 to 2.00 pm: ‘Better Together: Ten Ways to Revitalise Community’
    2.00 to 3.30 pm: Community Forum

  • Wed 18 May – Ginninderra Labor Club
    6.30 to 7.00 pm: ‘The Pro-Growth Progressive: How Economic Reform Can Make Us Happier’
    7.00 to 8.30 pm: Community Forum

  • Sat 2 July – Downer Community Hall
    10.00 to 10.30 am: ‘Too Hot to Handle? The Challenge of Climate Change’
    10.30 am to 12.00 pm: Community Forum

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Canberra International Walking Weekend

I've just signed up for the Canberra International Walking Weekend on 2-3 April. If you're after a relaxed non-competitive walking event, it's well worth checking out their website.
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Jobless in America

My AFR op-ed today is on the US economy, and why the labour market numbers are so much worse than the growth figures.

Down and Out in the USA, Australian Financial Review, 1 February 2011

Ten years ago, I wrote an opinion piece with Justin Wolfers. Titled ‘A jobs miracle that has baffled the experts’, our goal was to try to understand the ‘miracle’ US labour market, and what lessons could be learned by Australian policymakers as they strove to get our unemployment rate (then 6%) down to US levels (then 4%).

Today, the dole cheque is in the other hand. Australia’s unemployment rate is 5% (ranging up to 6% in Queensland), while US unemployment is 9% (ranging up to 15% in Nevada). But those figures understate the magnitude of America’s unemployment problem. Many US adults have now given up looking for work, and so do not show up in the unemployment statistics. In addition, 1% of US adults are in jail, and are not counted in the jobless numbers.

For the most part, the picture Australians get of the US is an economy steadily recovering from recession. The National Bureau of Economic Research formally dates the end of the US recession as June 2009. Yet growth statistics show only part of the story. Far more disturbing are the labour force figures.

The magnitude of the US jobless problem was brought home to me when I attended the annual meetings of the American Economic Association in Denver in early-January. In a session titled ‘Lessons for Economics from the Great Recession’, Princeton’s Alan Krueger pointed out that the magnitude of the job loss was about one-third larger than would be expected given the fall in GDP. Compared with past recessions, US firms were quicker to fire employees in the latest downturn.

Looking to the future, Northwestern University’s Robert Gordon showed that merely to keep pace with steady increases in the working-age population, substantial job growth is needed. He painted one scenario: what if the US economy was to regain the employment rate it had before the crisis, and it was to reach that goal by 2016? To achieve this, Gordon calculated, it would be necessary to create nearly 300,000 jobs per month. Yet the current rate of job creation is just 100,000 per month.

Even if Gordon’s over-optimistic scenario was to be realised, the impact on the US workforce would be severe. Using the fact that every one-point fall in the employment/population ratio equates to 2.4 million people, he estimates the number of ‘job-years’ sacrificed as a result of the recession. In total, Gordon estimates that the US recession has led to 54 million lost job-years.

And if that picture wasn’t bleak enough, MIT’s David Autor presented historical data showing increased polarisation of the US labour market over the past three decades. Adjusted for inflation, US males without a university degree have gone backwards. Indeed, these men now have lower hourly wages today than their counterparts at the end of the 1970s. Yet for university graduates, earnings are one-third higher than they were a generation ago. The gap between rich and poor in America is higher than at any time since the 1930s.

The worrying labour market outcomes for less educated US men can be seen in declining marriage rates (particularly for black men), with potential adverse implications for future generations. One-tenth of African-American children have a parent in jail, while two-thirds are living with one parent.

The underperforming US labour market is likely to have three impacts on Australia. First, many migrants who might otherwise have looked to the US or Europe will now be likely to apply to enter Australia. This means that it’s a buyers’ market for skilled migrants.

Second, US politics is likely to be even more inward-looking than usual. With the rise of Tea Party Republicans (the modern-day version of the nineteenth-century ‘Know Nothing’ movement), US politicians who speak honestly about global challenges risk being attacked for being ‘out of touch’ with the concerns of Kansas City and Cincinnati. This will make it tougher than ever to strike international deals on issues such as trade and climate change.

Third, it ought to give pause to those who have argued that Australia’s industrial relations system requires a burst of US-style deregulation. The ability of US employers to fire workers with few legal impediments probably helped fuel the mass layoffs of 2008 and 2009. And while policymakers should always do everything we can to reduce the Australian unemployment rate, it remains a fact that our labour market is one of the best-performing in the developed world.

Andrew Leigh is the federal member for Fraser.
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Mitch Fifield and I kick off Sky's AM Agenda show for 2011

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What I'm Reading

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Tax Expenditures Tabled

The Treasury's annual statement on tax expenditures* has just been issued. Here are the biggies:
The largest measured tax expenditures are the concessional capital gains taxation of owner-occupied housing (E4 and E5) which is estimated to provide a benefit to taxpayers of around $40 billion in 2010-11. Together, these tax expenditures represent the exemption of owner-occupied housing from CGT. After the owner-occupied housing exemption, the next largest tax expenditure is the concessional taxation of employer contributions to superannuation (C5) of around $14.3 billion in 2010-11. This is followed by the concessional taxation of superannuation entity earnings (C6) and the GST-free status of food (H28). These tax expenditures are estimated to provide benefits to taxpayers in 2010-11 of around $12.2 billion and $5.9 billion respectively. ...
There are a number of tax expenditures for which an estimate is not available but which have been assigned an order of magnitude classification (for details refer to Chapter 3). The largest such tax expenditures are as follows: philanthropy — income tax exemption for charitable, religious, scientific, and community service entities (B72); income tax exemption for Commonwealth, State and Territory public authorities, and State and Territory entities (B3); and quarantining of capital losses (E31).

* As the report puts it, "A tax expenditure is a provision of the tax law that provides a benefit to a specified activity or class of taxpayer that is concessional when compared to the ‘normal’ tax treatment that would apply. ... Tax expenditures can be provided in many forms, including tax exemptions, tax deductions, tax offsets, concessional tax rates or deferrals of tax liability."
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Social Capital, By Design

As a fan of ABC Radio National's By Design program, I was chuffed on Wednesday to be invited by host Alan Saunders to discuss social capital and the findings of my book "Disconnected". A podcast is available here.
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What I'm Reading

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Blue Sky Mining

I'm  looking for an office manager, with an ad today in the Canberra Times, The Australian, and on Seek. If you know anyone who might fit the bill, please encourage them to apply by Feb 1.

Dr Andrew Leigh MP

Member for Fraser


Applications are invited for the above position based in Canberra.

The duties of the positions include: managing a team of four other staff (plus volunteers), community engagement, liaising with government departments, preparing and coordinating correspondence, organising events and meetings.

Applicants should possess the following skills and experience:

  • Experience in managing a medium-sized team in a high-pressure environment

  • Passionate about community engagement

  • Hard working and enthusiastic about addressing local issues

  • Excellent oral and written communication skills

  • Well developed office IT skills

  • Extensive understanding of government and parliamentary processes

A commencing salary of up to $66,868 will be paid (plus allowances).

A probationary period of 3 months will apply.

Applications setting out details of experience and the names of two referees should be forwarded to

Applications close on 1 February 2011. For further information please contact Shobaz Kandola, acting office manager, on 02 6247 4396.

My previous office manager, Rick Youssef, has alas taken a job with Peter Garrett. So as well as having the chance to work with me and my talented team, I can claim that my alumni place exceedingly well!
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