Talking Battlers & Billionaires with Alex Sloan

Andrew Leigh MP
Member for Fraser
1 July 2013

TOPICS:                                Battlers and Billionaires, Cabinet reshuffle

Alex Sloan:                          Joining me in the studio is Andrew Leigh who of course is the Parliamentary Member for Fraser, the Labor Member for Fraser  and he has launched his book today which is called ‘Battlers and Billionaires: The Story of Inequality in Australia’. Andrew Leigh lovely to see you.

Andrew Leigh:                  Likewise Alex.

Alex Sloan:                          Now first of all just on the politics and it is reported that you have been, I will just read it now, Kate Lundy is disappointed to lose the Sports portfolio while Andrew Leigh has been dropped all together.

Andrew Leigh:                  After supporting the former Prime Minister in the caucus ballot last week, Alex, I thought it was the honourable thing to do to tell Kevin Rudd I was willing to serve but that I was also willing to step down if he wanted me to do that, and so he’s asked me to step down but has asked me to advise him on economic issues which I am certainly happy to do.

Alex Sloan:                          So it is Ed Husic and Allan Griffin from Melbourne go into your position. Is that correct?

Andrew Leigh:                  Absolutely and Doug Cameron is also stepping up as a Parliamentary Secretary. There is just a range of talented people across the Labor caucus. I mean, it’s a real privilege to sit there are look at the quality that Kevin wants to draw on–

Alex Sloan:                          Tony Abbott is calling it the ‘C Team’.

Andrew Leigh:                  I think this is a fabulous team of Ministers that are going forward; I look at somebody like Melissa Parke that understands international economic issues deeply, people like Kim Carr, Jacinta Collins, Julie Collins moving into Cabinet. These are seriously impressive people who will hit the ground running.

Alex Sloan:                          Andrew Leigh good to see you. Now let’s get onto your book and of course you are former economics professor from the ANU and this book ‘Battlers and Billionaires: The Story of Inequality in Australia’ – how long have you been writing this for? And it will be launched tonight actually by Professor Bob Gregory

Andrew Leigh:                  It will and – well it is a funny question Alex, I guess a lot of my research was on inequality at ANU so in some sense the ideas have been percolating in my head for a decade but the real writing has been done mostly in the last couple of years. My last book came out in 2010 just after the election, so it’s since then that I have been working on Battlers and Billionaires.

Alex Sloane:                       We have a bit of a theme, I’ve talking with Bernard Salt about the middle class but you say in the book that our language has egalitarian cues, the word mate is a universal leveller – and I’ll say thanks mate to a Cabinet Minister and a bus driver sometimes in the same day.

Andrew Leigh:                  Indeed, Australians don’t much like tipping, we sit in the front seat of taxis, we don’t stand up when the Prime Minister enters the room by in large and we’ve got former central bank governors called ‘nugget’ and ‘nobby’. So there is a sense in which Australians don’t like to take class differences too seriously.

Alex Sloan:                          But they are there because you then write the egalitarian spirit is no guarantee of true equality.

Andrew Leigh:                  That’s the concern Alex that those egalitarian ideals don’t necessarily lock in an even distribution of income. Obviously, you don’t want perfect equality but we’ve seen a big rise in the gap between rich and poor over recent decades, so if you are in the bottom 10 per cent of the labour market then your incomes have gone up 15 per cent after inflation since the mid-70s. If you are in the top 10 per cent your income’s gone up by 59 per cent after inflation, so the gap in the labour market’s increased, we’ve seen an increase share in the top 1 per cent, the top 0.1 per cent, indeed we’ve even seen an increased wealth share of the top 0.001 per cent which is basically those in the BRW magazine. CEO salaries are rising, the top 100 CEOs in the mid-90s earned around a million dollars, now they earn around 3 million dollars and you’ve seen –

Alex Sloan:                          And that hits the political spotlight every now and then, the CEO salary issue –

Andrew Leigh:                  It does indeed and so, you know, we’ve looked –

Alex Sloan:                          Should it? Is it –

Andrew Leigh:                  It’s a function, Alex, of the fact that in early 90s we began to carry out international CEO searches, so before that a big Australian company would look for the best Australian to do the job. Now they do a global search and they pay a global salary. I don’t think we ought to cap CEO salaries but I think it is important to give shareholders more say over CEO salaries and the executive remuneration reforms that the government’s put in place hopefully provide a better check and balance for shareholders on excessive executive remuneration.

Alex Sloan:                          When it comes to wealth equality around the Western world how does Australia shape up?

Andrew Leigh:                  So Australia is in about the top third of the OECD pack of developed countries. We’re about where you would expect us to be at as an English speaking country. The US, Chile are towards the top, the Scandinavian countries are among the most equal. Interestingly that’s if we take national inequality, if we take inequality by state and territory, Western Australia has a US level of inequality, the ACT has a Swedish level of inequality – we are the most equal jurisdiction in Australia.

Alex Sloan:                          (laughing )I’ve heard that before – so when it comes to, I believe, female heads of departments and things like that, we’re not doing so well in the ACT. Is that right?

Andrew Leigh:                  I haven’t looked at the gender stats. But, yeah I’d-

Alex Sloan:                          I think this a fairly shocking stat because yes we were described on one hand as the ACT being the Sweden of Australia but then there is inequities when it comes to, I think, female employment, as I understand it, was some NATSEM figures that I was attending a function at and I meant to write them down

Andrew Leigh:                  There you go – No, no, no; if it is ACT public service heads then I don’t have the numbers in front of me.

Alex Sloan:                          I think it was just across the board but I wish I had written it down. But moving on-

Andrew Leigh:                  Well the two intersect. You are quite right to raise it because I think one of the reasons why the gender pay gap stubbornly failed to close is because inequality has risen. More women tend to be in the bottom end of the labour distribution, so you increase inequality and that widens the gender pay gaps the two are intertwined.

Alex Sloan:                          Andrew Leigh is with me and Andrew Leigh is, of course, the Member for Fraser, the Labor Member for Fraser and as he opened when I asked him how long he has been writing this book, probably his whole economics life, called Battlers and Billionaires: The Story of Inequality in Australia. Actually, I love the story, Andrew Leigh, the anecdote about the POW, Japanese prisoner of war camp because I suppose if we do say, oh we’re the land of the ‘fair go’ and we have this kind of egalitarian kind of look at life. Just tell me that little story and what you think that illustrates. First of all, tell us-

Andrew Leigh:                  In WWII in the Japanese prisoner of war camp, The Japanese provided rations more generously to the officers than the enlisted me. They provided fewer tents than there were people to go around. And the British dealt with that by allowing the officers to eat more and have the best tents. The Australians pooled everything and made sure those who were unwell good a little more thanks to the leadership of Weary Dunlop. As Tom Uren said in his first speech to Parliament, only a creek separated the two camps but on the British side the law of the jungle prevailed and on the Australian side, egalitarianism was the order of the day. The British saw only about 25 of the 400 men walk out because cholera ripped through the camps and killed so many of their troops. The Australian egalitarian ethos held the men together and allowed so many more of them to survive.

Alex Sloan:                          What do you think that illustrates?

Andrew Leigh:                  I think it does illustrate this powerful egalitarian sentiment, even in a very hierarchical institution like the military. Peter Cosgrove talks, even in Somalia, about the Australian willingness to carry out foot patrols contrasted with the Americans and the French sitting behind sandbags. And that meant that the Australian soldiers were out there, interacting with common folk in Somalia while the other militaries just heard the stories of the elites. And Peter Cosgrove argues that made the Australians much more effective soldiers on the ground. Then you see this egalitarianism in how we do our sport as well. The Americans’ favourite race is the Kentucky Derby. That’s a race without handicapping. Our favourite race is the Melbourne Cup. That’s a race that literally puts lead in the saddlebags of the horses, and we do that because it makes a more interesting race. The British have English Premier League in which Manchester United has won 12 out of the last 20 seasons, can you think of a more boring sport? We have AFL where no team has won more than 3 out of the last 20 seasons largely because we do a whole lot of redistribution, you know, we share out the TV revenue, we have a salary cap, we have a draft, and it ends up making the game more interesting. AFL is a more interesting game than English Premier League because it’s got more redistribution.

Alex Sloan:                          You can start calling now: 1300 681 666. Text number 0467 922 666. Andrew Leigh is with me talking about his book Battlers and Billionaires. When it comes to wealth inequality in Australia, is the starkest point with indigenous Australians?

Andrew Leigh:                  We certainly see if you look at the statistic as to where Indigenous Australians are in the income spectrum, the richest third of households, 1.7% are indigenous, the poorest third, 4.2% are indigenous. And the gaps between indigenous and non-indigenous are a reflection of the substantial inequalities that exist in Australia. That wasn’t always true. If we go back to the early days of settlement, Indigenous Australians and the English settlers were both quite equal communities both because they were so close to the poverty line. But as inequality has grown that’s been part of why the gaps have risen.

Alex Sloan:                          Andrew Leigh, the former Treasurer, Wayne Swan, he started what, you know, was a class warfare in terms of targeting billionaires like Gina Rinehart and Twiggy Forrest, what did you make of that?

Andrew Leigh:                  It’s always perplexed me that it’s a ‘class war’ when people talk about disadvantage and about the importance of making sure we operate well as a community. I actually see the language of inequality as being a recognition that Australia is at its best when we work together rather than when we operate simply as individuals. There’s nothing about the market distribution of income that’s automatically fair. I happen to be born into a society that rewards people who are able to write and speak well. But if I’d been born into a society that rewarded people for being good hunters and good fighters as has been the case for most of human history somebody with a weedy build like me would have done terribly poorly. So there’s a lot of luck in how people are placed and I think that’s why we need a society that has some redistribution in it that ensure that everybody gets a fair go.

Alex Sloan:                          Is there a central message in this, looking back at this history of Battlers and Billionaires in Australia?

Andrew Leigh:                  Australia has a powerful egalitarian ethos and we need to make sure that the economic reality doesn’t lose touch with the egalitarian spirit that we hold so dear.

Alex Sloan:                          And do you think it is?

Andrew Leigh:                  I think it’s a risk. We’ve seen inequality rising – not to US style levels – but certainly significantly from where it’s been in the past. And for so much of the twentieth century, Australia was becoming a more equal place. That turned around somewhere in the late 70s, early 1980s, and we’re now on a course to become a country with unprecedented gaps between the rich and the rest.

Alex Sloan:                          And what do you think contributes most to that?

Andrew Leigh:                  There’s technology and globalisation that play a big part, the collapse of trade union membership is important, and it’s important to recognise the role of tax changes as well in making us a more unequal society. So the factors that have driven it I think are easier to articulate than the policy prescription for what we need to do to tackle it. But all of those issues [inaudible]

Alex Sloan:                          Simon Crean in his interview this morning with John Faine and John Faine was saying that Kevin Rudd will deal with the unions and Simon Crean hit back saying it was the unions that got through a superannuation scheme and a Medicare scheme.

Andrew Leigh:                  Unions have brought us annual leave, they’ve made sure they campaign often for dollar increases rather than percentage increases which help those at the bottom of the income spectrum more and they’ve campaigned on issues like pay differentials across occupations. So there’s no stronger equalising organisation in Australian public life than unions. So unions and education I think are important. We also need to means test our social support system so it targets to those most in need. That’s the genius of the Australian social support system ever since we means tested the pension in the 1930s. Controversial but so important in making sure the public dollar goes a long way.

Alex Sloan:                          I won’t kick you a ‘Dorothy Dixer’ about Tony Abbott’s paternity leave scheme but Andrew Leigh, lovely to see you. Have fun at your book launch tonight.

Andrew Leigh:                  Thank you, Alex

Alex Sloan:                          Thanks very much. That’s Andrew Leigh, Parliamentary Member, well he is the Member for Fraser and his book Battlers and Billionaires: The Story of Inequality in Australia will be launched this evening by Professor Bob Gregory at the ANU. And tomorrow, by Father Bob

Andrew Leigh:                  Father Bob Maguire in Melbourne tomorrow, and Annabel Crabb up in Sydney on Wednesday. This is a tour. We should have t-shirts made.

Alex Sloan:                          You’re on 666.

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.