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COUNTING THE COST OF INEQUALITY - Speech

COUNTING THE COST OF INEQUALITY

‘JUST IDEAS’ TALK #1

 

UNIVERSITY OF SYDNEY

FRIDAY, 18 NOVEMBER 2016

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One of the many things I love about Australia is our egalitarian ethos. We’re a nation that doesn’t have private areas on our beaches, and likes using the word mate. We rarely stand up when the Prime Minister enters the room, and prefer to pay a decent wage than have people relying on tips. Since the 1800s, when European migrants alighting from boats said that they felt they had entered a ‘workers paradise’, the spirit of Australian egalitarianism has burned bright.

Unfortunately, when there’s a bright light shining in your eyes, it can be hard to see anything else. Sometimes, I fear that we think that equality is merely about battlers and billionaires sharing the showers at Bondi Beach. An equality of manners is a lovely thing, but as many a homeless person has observed, you can’t eat politeness.

How much equality is there in Australia? One way of answering that question is to imagine that we divided up the population into five groups of about five million people each, and allocated the Australian land mass to them in the same way that wealth is distributed in Australia. For simplicity, let’s start from the bottom, and just draw lines of latitude across the nation that match the current distribution of wealth, as measured by the Australian Bureau of Statistics.

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Making innovation work for ag - The Land

Bend back Ag's U-shaped employment curve, The Land, 15 November 2016

Five years ago, a family in NSW took the plunge and started a company called Rise Above, which specialises drone technology, including precision agriculture, farming and crop management. This technology is an example of where innovation in agriculture has made it in practice, cutting the cost of jobs such as spraying and data collection. Taking innovation through to implementation, including as new businesses, is an area in which Australian agriculture can perform much better.

However, one innovator’s disruption is another person’s job loss. One of the most common questions politicians like us are asked is “where will the jobs of the future come from?” While all of us welcome the prospect of increased crop yields, greater productivity and improved efficiency in our agricultural sector, they create inevitable pressures on farm employment.

As a share of total employment, agricultural work has halved during the past 20 years. Not only is this a worse result than manufacturing, it also bucks the trend that we normally see across the Australian economy. A recent study by economists Roger Wilkins and Mark Wooden looked at employment changes across 43 Australian occupations and found a ‘U-shaped’ outcome: employment has grown in the low-paid and high-professions, but contracted in the middle-paid professions. Not only are farm workers relatively poorly paid – the number of these jobs on offer is shrinking rapidly.

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Why is imprisonment rising when crime is falling? - The Canberra Times

LOCKING SOMEONE UP COSTS AROUND $300 A DAY OR ABOUT $110,000 A YEAR,         The Canberra Times, 14 November 2016

You might not know it to watch the news, but on many measures, Australia is becoming safer. In the past two decades, the murder rate has fallen by one-third. The rate of armed robberies has dropped by one-third. Car theft is down by two-thirds.

And yet while crime is falling, our prison population is rising at an alarming rate. In June, 38,685 people were in jail. At the current pace, the prison population will soon pass 40,000. If our jail population were a city, it would be the 36th-largest city in Australia – larger than Albany, Bathurst or Devonport.

As a share of population, I estimate that Australia now jails 207 in every 100,000 adults. That's a higher incarceration rate than in most other nations. To take just a few examples, imprisonment rates in Australia are higher than those in Canada, Japan, France, India, Germany, Indonesia or Britain.

Curious to know how the current lock-up rate compares with Australia's past, I dusted off some old statistical volumes and started comparing the figures. I was shocked to discover that the last time our incarceration rate was this high was 1901. 

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There's Too Much Bull In The Cattle Industry - Huffington Post

IF WE WANT TO HELP FARMERS AND SMALL BUSINESSES, WE MUST GIVE THE COMPETITION WATCHDOG MORE TEETH, Huffington Post, 4 November 2016

This week, the Australian Competition and Consumer Commission's found that there's too much bull in the cattle industry. Buyers colluding to keep prices down, saleyards altering cattle weights, agents who act for both buyers and sellers.

The report discusses bid-rigging, physical intimidation and intense social pressure on rural families. The competition watchdog is so concerned that it is now undertaking multiple investigations of cartel conduct in the industry: an offence which carries a potential jail term.

The Australian cattle and beef industry is vital to our economy and our society. It contributes $11 billion a year to the Australian economy. It is the largest contributor to the Australian agricultural sector. Half of our 123,000 farms are engaged in cattle production. In the list of industries you want to make sure are functioning well, Australia's cattle industry is surely near the top.

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SLOW PAYING FIRMS ARE HURTING OUR ECONOMY - The Daily Telegraph

WHEN BUSINESS DOESN'T PAY ITS BILLS, The Daily Telegraph, 3 November 2016

Yesterday, I rang my supermarket. It was just a courtesy call, letting them know that from now on I would be paying for my groceries 60 days after scanning them at the checkout. I assured them it was nothing personal – simply a matter of improving my cash flow.

Alright, I’m pulling your leg. But you can only imagine a company’s reaction to getting such a call from a regular consumer. Yet this is exactly what many large Australian companies are doing to their suppliers right now.

Earlier this year Rio Tinto told many of its suppliers that, with no compensation, it would now pay its bills after 90 days instead of 45 days (in 2014  it was 30 days). This followed BHP’s decision last year to pay its suppliers after 60 days instead of 30 days. Woolworths is also reportedly increasing its payment terms from 30 days to 60 days. Mars, Kellogg, Procter & Gamble and Heinz are also pushing for more generous payment terms. In April, Murray Goulburn retrospectively cut the price it paid to farmers, then asked them to pay back the difference.

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What price a beer? Inequality and market concentration - The Australian

Weaker competition widening the wealth gapThe Australian, 21 October 2016

Paying more for your pint? You’re not alone. Lately, beer prices have risen significantly faster than most other prices. Over the past decade, the cost of a beer has gone up 42 percent, meaning we’re paying as much for a middy today as a schooner ten years ago.

So naturally my ears pricked-up when I recently heard of a merger between the company that makes Carlton, Fat Yak and VB (SABMiller) and the company that makes Corona, Budweiser and Stella Artois (Anheuser-Busch InBev). If it goes ahead, the merger will create the world’s largest beer manufacturer.

There are many reasons why beer might have become more expensive, including taxes, the rise of craft brewing, and an increased appetite for premium beers. But one factor could be a lack of competition. Beer is one of the most concentrated markets in Australia. The four largest beer manufacturers control a whopping 90 per cent of the market. This has increased significantly over the last decade when the largest manufacturer (SABMiller) bought Fosters in 2011 and the second largest manufacturer (Lion) bought James Boag in 2007.

Wait, I hear you shout. Having fewer competitors doesn’t necessarily mean reduced competition. True, but it certainly doesn’t help, either. As any economics textbook will show, reduced competition means higher prices, less production, less innovation and ultimately less growth and fewer jobs. It might also be worsening inequality. 

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The Age of Ambition - New Matilda

The Age of Ambition, New Matilda, 20 October 2016

Globally, these are tough times to be a social democrat. The cumulative social democratic vote share in Western Europe has fallen by one-third, to its lowest in 70 years. Angry politics is alive and well in the person of Trump and Le Pen, Farage and Wilders. It’s a politics that emphasises differences within the community, and urges citizens to jump at the shadows of trade, immigration and foreign investment.

Amidst secular stagnation, fear of terrorism, and a hate-filled politics, a message of inclusion, egalitarianism and multiculturalism doesn’t always resonate. In that environment, what is the best approach for the left’s party of government, the Australian Labor Party?

Labor is now in our 125th year – the seventh age for Australia’s oldest political party. Some have argued that we need to defend the status quo, and tweak our way to a better world. There’s nothing inherently wrong with any of this. Indeed, there’s a bit of me that’s temperamentally technocratic – desiring to defend against cuts, and fight for better indexation.

But it’s not a whole program. Labor’s story has always had a touch of élan, a bit of vision, a sense of excitement. Ours has always been the party of ambition. 

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TALKING POINT: AUSSIE ECONOMY STARTING TO LOOK LIKE A GAME SHOW - Opinion Piece

Brian Mitchell & Andrew Leigh, "Aussie Economy Starting to Look Like a Game Show", Hobart Mercury, 19 October 2016

Growing up, we were both fans of the television show Sale of the Century. Throughout the 1980s and 1990s, millions of Australians tuned in to the quiz show, to see contestants try their hand at winning cars, holidays and cash. Guided by hosts like Tony Barber, Glenn Ridge, Delvene Delaney and Jo Bailey, some contestants won big. In 1992, Robert Kusmierski took home cash and prizes worth $676,790. But most who chanced their hand went home with next to nothing.

It made for a terrific gameshow, but today, as Labor parliamentarians, we’re worried that our society is starting to look too much like a gameshow. If you compare wages in 1980 (when the first episode of Sale of the Century went to air) with today, then you see a labour market where earnings have growth three times as fast for the top tenth as for the bottom tenth. It’s been a great generation for lawyers and landlords – not so much for retail workers and renters.

To some extent, success in life is determined by hard work, but luck matters too. Billionaire Warren Buffett likes to reflect on his good fortune at being born in an era when his investing skills can be put to work. For most of human history, those skills wouldn’t have been much use. We also know that the labour market pays more to men, tall people and right-handers. That’s luck, not skill.

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Agile Aid For Fragile States - submission to "Australia Ahead of the Curve: An Agenda for International Development to 2025”

Andrew Leigh, Shadow Assistant Treasurer, and Senator Claire Moore, Shadow Minister for
International Development and the Pacific.

In 1970, countries from across the globe agreed to a common aid goal: that for every hundred dollars of national income, they would give 70 cents of aid to developing countries.

In almost half a century since then, Australia has repeatedly reaffirmed our commitment to the international aid target. Other nations have gotten there. Unlike Sweden, Denmark and the United Kingdom, Australia has never met the 70 cent goal.

But like any target, we can still judge Australian governments on how close or far they have come to meeting this commitment to the world's poorest.

When Labor was in government, overseas foreign aid increased from 28 cents in every hundred dollars) in 2007-08 to 37 cents in 2013-14. Had Labor been returned, aid was budgeted to rise to 50 cents in every hundred dollars in 2017-18.

Then the Coalition won office with an aid commitment that matched Labor’s, but then put us on a very different path. Today, Australia spends just 23 cents per hundred dollars on overseas aid. Under Labor, our aid contribution exceeded the average for the rich country OECD grouping (30 cents per hundred dollars). Now, we are not only below the OECD average, our aid share is the lowest since comparable records began in the 1970s. When aid was headed to 50 cents in every hundred dollars, we were on the path to meet our promised aid goal. With aid at 23 cents, we have literally shrunk from the task to which our nation once committed.

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LET'S CAMPAIGN FOR MORE LOVE IN THE HOUSE - Opinion Piece

The politics of hate is on the rise. A week before the Brexit vote, UK Labour MP Jo Cox was shot by a man shouting “death to traitors, freedom for Britain”. In France, Marine Le Pen draws parallels between Muslim migrants and the occupation of her country during World War II. In the US, Donald Trump wants to bring back torture, has called women “pigs” and made fun of a reporter with a disability.

In Australia, the share of voters who hate their opponents has risen from under one in six in the late 1990s to over one in four voters today. In the US, the share of people who say they would be unhappy if their child married someone from another political party has risen from 5 per cent to 41 per cent.

You can imagine the scene here in Australia. “Oh, thank goodness, sweetheart — when you said your girlfriend was a lesbian, I thought you said a Liberal.”

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