Andrew Leigh

The Cost Of Inequality Can't Be Priced In Dollar Terms, Huffington Post, Monday, 28 November 2016

Why should we care about inequality? The starting point is to acknowledge what economics lecturers everywhere teach their first years. Economics is about maximising wellbeing, not money. If one person had all the money in Australia, we’d be just as wealthy, but much less happy.

Globally, there are about one billion people who live on less than a dollar a day. Most of it goes on keeping hunger at bay. But then there are about 1800 people who have more than a billion dollars. For them, more money means a faster jet, fancier jewellery or another holiday home. If you believe that moving a person from $1 a day to $2 a day brings more happiness than giving a billionaire another dollar, then you’ve accepted the idea of diminishing marginal utility of money. There is no better argument for caring about inequality.

Putting numbers around this can be tricky, but an analysis by Lateral Economics finds that to get the same increase in life satisfaction, you either have to give someone on $15,000 another $6000, or someone on $100,000 another $100,000. Lateral Economics estimates that the cost of inequality to national wellbeing is the equivalent of $54 billion, making it a bigger problem than mental illness, obesity or long-term unemployment. 

E&OE TRANSCRIPT

TV INTERVIEW

SKY AM AGENDA WITH KIERAN GILBERT

MONDAY, 28 NOVEMBER 2016

SUBJECT/S: Education funding; Senator Brandis’ shonky deals; Ipsos poll

KIERAN GILBERT: Joining me now the Shadow Assistant Treasurer, Andrew Leigh. This Grattan Report, I want to start with your thoughts on that. It seems to me to be a no-brainer – that you can have the same funding envelope, achieve the aims that the Gonski reforms intended without all of the additional costs simply by reining in some of the over-funding of just three per cent of schools?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Kieran, Pete Goss has done a lot of careful work on this report – it's certainly something that Labor will be engaging with. I had the privilege of seeing a draft copy of the report last week and I think it’s a thoughtful contribution. Obviously we'll work through it methodically. We need to make sure that the schools that need the resources get them, and that was what a good part of the last election was fought over. Labor's plan for funding schools where they needed it versus the Coalition's plan for a $50,000,000,000 corporate tax giveaway. 

GILBERT: But the government's also taking it seriously as we heard from Minister Birmingham there. If you've got some schools with 280 per cent of the funding required per student, surely there needs a re-think in that regard? 

Companies that lie must be hit harder, Herald Sun, 28 November 2016

When it comes to household brands, who do you trust? That’s the question Australians were asked earlier this year as part of a Reader’s Digest survey. The top three were vacuum cleaner manufacturer Dyson, and battery makers Energizer and Duracell. But what’s more interesting is who came in at number four: paint manufacturer, Dulux.

Unfortunately, Dulux’s time atop the trust list might be short-lived. Earlier this month, the company was fined $400,000 by the Federal Court for misleading its customers. Dulux claimed that its outdoor paint could reduce the temperature of a house by up to 10 degrees.

If true, Dulux’s outdoor paint would’ve been a cool product indeed. Unfortunately, as soon as the temperature rose on Dulux, their claims began to peel away. When they couldn’t brush off the criticisms any longer, Dulux admitted that they didn’t have the evidence.  

Alas, Dulux is not the first coat in Australian false advertising. Every year the Australian Competition and Consumer Commission receives 14,000 complaints of misleading and deceptive conduct. The competition watchdog can only take a small share of these complaints to court. The list of companies that have been reprimanded by the competition watchdog or the Federal Court over the last 12 months reads like the ‘who’s who’ of big companies, including Jetstar, Virgin, Arnott’s, Uncle Tobys, Optus, Harvey Norman franchisees, Kogan, Nurofen, Unilever and Volkswagen.

What would modern Australia look like without China? The Australian Financial Review, 25 November 2016

Over recent years, there’s been no shortage of commentary on China from the glass-half-empty brigade. So it’s sometimes useful to ask the basic question: what would Australia be like today had China not opened its economy in 1978?

Based just on merchandise exports, Australia’s economy would be almost 5 per cent smaller. That’s $8,000 less for every Australian household every year.

Prices would be higher. Since 2007, the price of goods we import from China has fallen 20 per cent while the price of goods we produce at home has increased by 20 per cent.

Our universities would be nearly $6 billion poorer each year. They would educate almost 100,000 fewer students.

Our tourism sector would earn $6 billion less each year with 1.2 million fewer visitors visiting our attractions, eating in our restaurants and buying our souvenirs. 

Today the Senate Economics References Committee tabled its report into Malcolm Turnbull’s stuff-up of the 2016 Census.

The report details the damning evidence heard by the Committee about how the ABS was underfunded to meet its objectives for the Census and that current levels of funding for other ABS functions are inadequate.

An effective government could have delivered the 2016 Census, but the chaos and dysfunction at the heart of the Turnbull Government means it mismanages everything it touches.

E&EO TRANSCRIPT

RADIO INTERVIEW

ABC NEWSRADIO WITH MARIUS BENSON

WEDNESDAY, 23 NOVEMBER 2016

SUBJECT/S: “Trumponomics”; Trans-Pacific Partnership; Sugar Tax

MARIUS BENSON: Andrew Leigh, good morning.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good Morning Marius, how are you?

BENSON: I'm well. "Trumponomics" – entirely unknown in practice obviously at this early stage – but people are seeing and Kim Beazley saw Donald Trump as a very left Republican and particularly they are pointing to this proposal to use the government as the agency to revive the American economy and particularly those rust-belt states. Just on that specific proposal – big government spending – what do you think of the virtue of that for the United  States and for Australia?

LEIGH: The United States clearly has infrastructure challenges, particularly around its airports, but the challenge for them naturally is to make sure that they do that within a reasonable budget envelope. Some of the estimates that I've seen from independent experts put the impact of Mr Trump's tax plan as being between $5,000,000,000,000 and $10,000,000,000,000 additional debt. And that would be a big challenge for the United States going forward.

BENSON: I've seen figures of $5,000,000,000,000, in particular when you add together the proposals for big government initiatives in spending and to reduce taxation, and he's promising at the same time to reduce debt?

LEIGH: Naturally you want to make decisions for the long-term, but the challenges for the United States include dealing with climate change, tackling this huge inequality gap which has been rising and which has seen so many Americans suffering real wage losses over recent years. Many business people have this notion that they'd like lower-paid workers and higher-paid consumers. The problem is that when you move from running a business to running an economy, workers and consumers are actually the same thing.

The United States will benefit Australia most if it's engaged with the world. My real fear with Trumponomics is that these threatened tariffs could well see the United States retreat into protectionism, as it did indeed in the 1920s and 30s, with adverse impacts for Australia.

E&OE TRANSCRIPT

TV INTERVIEW

SKY NEWS WITH BEATTIE & REITH

MONDAY, 21 NOVEMBER 2016

SUBJECT/S: AAA credit rating at risk; Deloitte economic report; fixing the Howard Government’s mistakes; World trade outlook

PETER BEATTIE: Dr Andrew Leigh is the Shadow Assistant Treasurer. Andrew, thank-you for joining us.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: It’s a pleasure gentlemen – good to be with you.

BEATTIE: We want to talk about the economy.

LEIGH: Excellent.

BEATTIE: The issue about the country's AAA credit rating. There's been speculation that it may be in danger. Can I ask you this; do you think – because you've been a professor of economics – that the AAA credit rating is in danger, and if it is, what do we need to do about protecting it?

LEIGH: It's certainly at risk, Peter. You've seen today analysis from Stephen Koukoulas- 

BEATTIE: Yes.

Labor’s reforms to promote inclusive ownership and inclusive growth, Business Insider,       18 November 2016

In history’s page not much is recorded about events in the Scottish village of Fenwick, except in 1769 – when some members of the Fenwick Weavers Society, so their story goes, lugged “victuals” they’d purchased with Society funds to the front room of a small cottage.

From here the items were sold at a discount to fellow Society members while the profits went into the Society’s funds (deposited – literally – in a box).

This small community enterprise appears to be the first consumer cooperative of which there are records, while the fund the Society established to lend money for members to “purchase high cost items” seems very much like a primitive credit union.

However, equally important as these profit-orientated activities was the motivation of the Society’s members and their objectives.

COUNTING THE COST OF INEQUALITY

‘JUST IDEAS’ TALK #1

UNIVERSITY OF SYDNEY

FRIDAY, 18 NOVEMBER 2016

***CHECK AGAINST DELIVERY***

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.

Labor understands that Australians want more competition in the banking sector, and we know that stronger credit unions and building societies will open up more choice for customers.

That’s why we welcome KPMG’s annual review of Australia’s credit unions, building societies and mutual banks (“mutuals”) released today.

The review demonstrates the mutuals industry is flourishing in an environment of low economic growth with an asset growth of 7.8 per cent, compared to 5.1 per cent for the wider banking industry.

The review also called on the Turnbull Government to respond, as a priority, to the Senate Economics References Committee’s March 2016 report into the industry.