ABC CANBERRA BREAKFAST WITH ADAM SHIRLEY
WEDNESDAY 8 NOVEMBER 2023
SUBJECTS: Effect of smartphones on mental health; Impact of latest interest rate rises; Measures to curb inflation; Mortgage switch fees; Superannuation increase.
ADAM SHIRLEY (HOST): And on phones and having a smartphone, ubiquitous, in your pocket right now, no doubt. Andrew Leigh, Member for Fenner and Federal Assistant Minister for Treasury, stated this at the start of the month: “Our family rule is no smartphone until you turn 15, which means our boys will basically be the last in their social groups to get one. We hope they’ll thank us in a decade or two.”
Dr Andrew Leigh, Member for Fenner, good morning to you.
ASSISTANT MINISTER FOR CHARITIES, COMPETITION AND TREASURY ANDREW LEIGH: Good morning, Adam. I am acutely aware of the irony of talking about the value of not getting kids a smartphone on a day when so many Australians want to get access via their smartphones. But there you have it.
SHIRLEY: I wonder why you wanted to state that publicly?
LEIGH: Well, if you look at the mental health data since smartphones and social media arrived, Adam, they’re appalling. Among young people, rates of depression have doubled, rates of social phobia have tripled, rates of panic disorder have increased nearly four-fold. And then if we look at some of the even more serious measures – self‑harm hospitalisations are up 29 per cent for boys, up 83 per cent for girls. Youth suicide rates are up 55 per cent for boys, up 70 per cent for girls.
It's not absolutely clear that smartphones are causing this, but we certainly have evidence that when people are part of a randomised experiment, and are paid to take a break from social media, their mental wellbeing improves substantially. And you can see young people talking about the way in which smartphones and the use of social media create stress and anxiety in their social groups.
SHIRLEY: How often do your boys nag you for a smartphone, you or your wife?
LEIGH: A few times an hour. So, you know, certainly we’re aware that that is a challenge for them and their friends. But also we’re aware that this is a bit of a dynamic game that everyone’s playing. If you’re a parent who allows your kids onto social media apps before the legal age, you create a dynamic in that friendship group where the other kids are going to be nagging their parents to have them break the rules. We think that by holding off a little bit more with our kids getting smartphones they’ll have that experience of being at a party, watching everybody else sitting around on their smartphones and then getting to have a conversation. In some sense, they get to live their lives a bit in the generation that Gweneth and I grew up in – as bystanders before they get a phone.
SHIRLEY: I do find it interesting, and I no doubt believe it would be a challenge for you too. There would be a sceptic or even a cynic who might say, “Well, Minister, that is signaling a virtue of sorts that you’re merely trying to impress on others” – is that fair as well? That you would put this family situation out publicly – I don’t know – to garner goodwill or give you a tick for a personal decision?
LEIGH: I don’t care what people think about our personal circumstances, Adam. What I do think is that we need to spend more time talking about the youth mental health crisis and the role that smartphones and social media are playing in that. As Assistant Minister for Charities, community building is part of my portfolio, and the threats that smartphones pose to community are substantial. We need –
SHIRLEY: So is it your view that this is the sort of thing that other parents should consider?
LEIGH: Absolutely. I think it’s important that we have a conversation as parents and as policy makers about what we can do. I’ve been influenced by some of the work that Jonathan Haidt and his co-authors have done in the United States. These are trends that occur right across the Anglosphere, which again suggests that probably smartphones and social media are more likely to be a cause rather than, say, the pandemic or anxiety about economic opportunities, which are some of the other theories being put forward.
SHIRLEY: Let’s consider a single mum working two or three jobs with kids who walk home from school at a young age. How straightforward or realistic would it be for her to follow the family rule you’ve set down with your kids?
LEIGH: No, it can be tricky. One of the advantages is that every payphone now is free to use. Another is that dumb phones are cheaper than smartphones and have the advantage that they have much less contribution towards causing social anxiety. Every family will make their own choice. I’m certainly not preaching our view as being the only one. But I think it is useful for parents to have a conversation about the right age to move their kids on to smartphones and social media and to know that others are choosing to hold off.
LEIGH: I mean, the statistics that I just quoted before, Adam, you know, I ran through them quite quickly, but the idea that self-harm is up among girls 83 per cent since smartphones hit, this is indicative of a crisis and we do need to put our energies into thinking hard about it. Some of that will be on the treatment side but some of it, I think, also needs to be on the prevention side, encouraging our kids to spend more time outside, more time going on dates, having jobs, spending time exercising. All things that have declined over the last decade or so.
SHIRLEY: Dr Andrew Leigh is our guest. He is the Federal Member for Fenner, he’s the Assistant Minister to Treasury, and it is a quarter to 9. Love to hear your views on this as well because it certainly generates a discussion about tech, at what age we’re ready for it, how much we use it, whether we need it in circumstances or not.
Andrew Leigh, onto federal matters and matters in everyone’s household, much as that previous topic was, but another interest rate rise. People are scrambling for cash to cover the mortgage, to cover the rent. What’s your view on the Reserve Bank’s action and it’s constant reliance, I suppose, on interest rate rises to try and control inflation?
LEIGH: It will be tough for many households, Adam; there’s no getting around that. People with large mortgages, who have just taken them on will really be feeling the squeeze at this latest interest rates decision as that flows through to household budgets. We know, too, though that inflation has significant costs for Australians – it erodes the value of savings, makes it harder for firms to invest. The Reserve Bank even thinks that it worsens inequality. So the best way to deal with the cost of living crisis is to get inflation down.
As a federal government we’re about putting in place fiscal measures that provide cost of living relief. The latest Australian Bureau of Statistics numbers show that electricity prices, childcare prices, rents would have been significantly higher were it not for the measures the government has put in place, which overall have taken about half a percentage point off inflation.
SHIRLEY: So I know that the independent – the independence of the Reserve Bank is sacrosanct, it’s crucial in the way the banking system works. You have an economic background though, and are you surprised, understand, are you critical to some degree that the Reserve Bank keeps doing this and doesn’t consider other methods it might use to curb inflation?
LEIGH: None of those things, Adam. I respect their independence and I respect the role that I play as a Federal Member of Parliament. But if you look to the Reserve Bank’s statements, they make very clear what their objective is – their goal is to get inflation back within the target band. The concern that they have that if inflation gets out of control it can become quite hard to rein back in.
LEIGH: So if you want –
SHIRLEY: But is this the method, when you’re hitting households, particularly more vulnerable, the hardest at that point of increasing their mortgage repayments? I guess my question is about doing the same thing over and over – it’s not having an impact. Is that the definition of insanity?
LEIGH: Inflation is coming down. Certainly the numbers that we’ve seen this year have been encouraging, and it’s projected to be back inside the target band in 2025. But what we need to do as a federal government is actions that complement and don’t push against what the Reserve Bank is doing. So delivering the first budget surplus in 15 years is effectively the federal government choosing to pay a little bit more off the mortgage rather than take an overseas holiday. And that’s a different approach than we saw under the former government where every time there was a revenue upgrade they spent the entire thing. And that sort of approach makes inflation worse.
SHIRLEY: Let’s talk about other measures you could take as a federal government. You could increase or redesign the energy bill relief to increase that relief for people who are paying for essentials, not adding to inflation. Will you consider that?
LEIGH: Well, just look at the impact of our energy rebates. In the last quarter the Australian Bureau of Statistics said without them electricity prices would have gone up 19 per cent, with them they went up 4 per cent.
SHIRLEY: So will you go further, though? If that’s where it’s hitting consumers hardest as they face these interest rate rises?
LEIGH: Some of that energy bill relief, Adam, is already flowing out now and in the coming months. So we’ve got measures that are working. We’ve got measures that are out there already. Our biggest increase in Commonwealth Rent Assistance in 30 years meant that rents increased 2.2 per cent where they would otherwise have increased by 2.5 per cent. And our massive childcare package which took effect on the 1st of July meant childcare prices went down 13 per cent rather than up 7 per cent.
SHIRLEY: So not considering any extra energy bill relief at this point?
LEIGH: We’re always looking at measures that support households. But the point I’m making is that these aren’t measures that we put in place in the past. The measures I’m discussing are measures which are having a real impact on households right now. The bulk billing incentive just took effect at the start of November. That has a big impact on sustaining bulk billing for a whole lot of families across Canberra.
SHIRLEY: Something else you could do is redesign or increase super profit taxes. You are someone who has often criticised or put on notice massive corporations for paying their fair share of tax. As a government, will you increase or redesign the super profit taxes system to get more money back into Australian hands?
LEIGH: In the last budget we redesigned the Petroleum Resource Rent Tax in a way that ensures that the gas projects on the west coast pay some Petroleum Resource Rent Tax this decade rather than leaving it off to the next decade. We’ve got measures in front of the parliament right now on multinational taxation which rein in the abuse of debt deduction measures. And we’ll have more to come in the multinational space so –
SHIRLEY: What more to come? I think that’s really important to hang on that – what more to come, Dr Leigh?
LEIGH: So it’s the implementation of the OECD’s Two Pillar agreement, which was struck a couple of years back, which basically puts a 15 per cent floor under company taxes worldwide. It means that if another country isn’t imposing a 15 per cent tax, then Australia can take that tax so that improves our tax gain. But also, Adam, it means that the local Canberra small business that wants to get in the exporting game doesn’t find themselves going into the world with one hand tied behind their back against multinationals that are stashing profits in the Caymans.
SHIRLEY: 10 to 9. Dr Andrew Leigh is with us on ABC Radio Canberra. Dr Leigh, as a government Assistant Minister and as a government you could also make it easier to switch banks and energy providers. That would make those companies more responsive to consumer demands. It would increase competition because the speed at which you can switch is often problematic for people. Will you try and do that?
LEIGH: One of the things we did when we were last in government, Adam, over the objections of the Liberals, was to ban mortgage exit fees. That was one measure which improves your ability to switch banks. The Consumer Data Right process we’ve got on train, which Stephen Jones is capably handling, is aimed at trying to improve switching on electricity providers and banks, going to exactly the issue you talked about.
SHIRLEY: So I’ve just done it and it’s still slow and it’s still convoluted, and I have means to help me. It’s still hard, Dr Leigh. Will you make it easier?
LEIGH: Well, we also need to make sure that there’s the appropriate credit checks being done, Adam. So that’s the challenge of the Consumer Data Right project. I agree with your assessment – I’ve certainly gotten savings by calling up. Sometimes you can get savings even by staying with your own provider – you just threaten to move and they find you a better rate.
SHIRLEY: Well, that’s rare. In my experience I’ve done that, too. That is rare. It takes time and effort. A lot of people on the margins and on lower incomes simply don’t have the time, Dr Leigh. I’m not sure this holds water for them.
LEIGH: Well, my experience, Adam, is different from yours. But everyone’s personal circumstances will differ. I’ve certainly found that calling up and saying that you’d like to see if you’re getting the very best deal can often produce savings. But you’re right – that’s why we’ve got the Consumer Data Right process going on. It looks precisely at this shifting issue. And that’s part of the broader Competition Taskforce we’ve set up, a crack team of economists in Treasury which is looking to improve competition right across the economy. So that will look at everything from non-compete clauses to what’s going on in aviation to try and find practical, implementable reforms working with states and territories that will put downward pressure on cost of living and also boost wages.
SHIRLEY: A fourth issue or measure that you have the power to take – and that is to temporarily lift the amount paid into workers’ superannuation. That would put more money in people’s hands but not add to immediate inflation because they would have it in their super account. Will you consider that measure?
LEIGH: Well, the superannuation increases as legislated, and you’ll know, Adam, every time that the Liberals get into office they find an excuse to slow the pace of –
SHIRLEY: Hang on – you’re in office. Let’s stick with you being in office and whether this is a measure you would consider as a government.
LEIGH: Absolutely. So we’re committed to the legislated pathway of superannuation increases. The story of Australian politics has been Labor commits to a higher increase in superannuation contributions and the Liberals freeze it. We have had battle after battle after battle on this. My party has consistently been on the side of increasing contributions for workers into their superannuation. Stephen Jones is now working on the legislated objectives of superannuation in order to stop future governments putting in place ham-fisted plans to make people poor in retirement –
SHIRLEY: So the Greens and independents – hang on – some Greens and independents have balance of power in the Senate. If you can convince them, is it fair to say we could see that legislated in this term of parliament?
LEIGH: Well, right now we’re concerned about protecting superannuation from attempts to raid it. Don’t forget, Peter Dutton has committed to going to the next election saying that people should be ripping money out of their superannuation in order to buy a house, which will end up making them poorer in retirement. During the pandemic we saw people taking $20,000 out. We now have evidence that some of those withdrawals were highest in Indigenous communities and that much of the money was spent on gambling. So we need to make sure that the Liberals don’t put in place raids on your super that make people poorer in retirement.
SHIRLEY: I still want to stick with the now. I want to stick with the present, with respect, Dr Leigh. You could, if you can convince some independents and the Greens, get this through, this legislative change. Will we see it potentially?
LEIGH: Look, we’re committed to stronger superannuation. This is a Labor invention. Labor has fought with the Liberals time after time to make sure that superannuation is strong and sustainable. Right now getting that legislated purpose of super is a key focus of Stephen Jones, and making sure that everybody – everybody’s superannuation accounts are producing strong returns. We don’t want people defaulted into lousy super funds finding themselves getting submarket returns. So it’s not just about how much you put in; it’s also about how quickly it grows. And that’s a big focus for us.
SHIRLEY: Dr Leigh, we appreciate your time on those key issues that, in the end will affect everyday Canberrans and Australians. Thanks for your time.
LEIGH: Sure will. Thank you, Adam.