Andrew Leigh

E&OE TRANSCRIPT

TV INTERVIEW

SKY NEWS, AM AGENDA

MONDAY, 6 FEBRUARY 2017

SUBJECTS: Trumbull’s year so far; Bernexit; Clean Energy Finance Corporation investing in coal.

KIERAN GILBERT: With me now is Labor frontbencher, Andrew Leigh. There were reports over the break that Cory Bernardi will be leaving the Liberals and setting up his own Australian conservative movement and now the ABC is suggesting that is going to happen within 48 hours  Your thoughts and reaction on that story?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: We thought Tony Abbott had set the benchmark for a bad start when he knighted Prince Phillip but it seems Malcolm Turnbull is able to go one better. He has had a catastrophic start to the year, Kieran. A lack of policy direction, losing his health minister and now with Cory Bernardi and George Christensen clearly off the reservation. This is a Prime Minister who isn't even able to lead his own party let alone to tell the nation where he wants to go. Nor to answer that fundamental question: what's the point of the Turnbull Government?

Competition is the best way to fuel growth and end tacit collusion, Herald Sun, 5 February 2017

Do you know which day of the week is cheapest to buy groceries? Or which day of the week is cheapest to buy whitegoods, cars and home appliances? Spoiler alert: there isn’t one! So why is there a cheap day to buy petrol? If hundreds of petrol stations really are engaged in dog-eat-dog competition, why do they all raise prices on the same day of the week?

After decades of researchers trying to understand bowsernomics, a new study may have cracked the nut.  Economists David Byrne from the University of Melbourne and Nicolas de Roos from the University of Sydney analyse nearly 2 million daily petrol prices. Alarmingly, they find that petrol retailers have been engaged in ‘tacit collusion’, resulting in coordinated prices, less competition and higher margins for retailers.

To be clear, these experts are not alleging the type of collusion that involves secret meetings, fake moustaches and disposable mobile phones. Rather, it is ‘tacit’ collusion where, through a gradual and unspoken process, firms slowly converge on the same pricing strategy so as to maximise revenues.

Sifting through the data, the researchers produce the economic equivalent of an Agatha Christie novel. They find that the dominant firm, BP, performed the role of the price leader. BP’s prices acted as a focal point for the broader market to converge on. Through a long process of trial and error, by 2010 all petrol stations had adopted the same pricing strategy.

Here’s how the game ended up being played. Every Thursday prices went up by 15-20 cents per litre. Then, for the next six days, the price fell by 2 cents each day. Like clockwork, the cycle repeats itself week after week. The only change was in 2015, when all petrol stations switched from Thursday price jumps to Tuesday price jumps.

As the most recent Australian Taxation Office website outage enters its third day, Australians are beginning to wonder why the Turnbull Government seems incapable of that most basic of 21^st century technological functions - keeping government websites online.

After last December’s three-day outage, the Turnbull Government assured Australians that it had fixed the problem. Then the website was taken offline three more times - for “maintenance”. And now, just eight weeks later, the website is down again.

The increasing participation of Australians in the sharing economy shows no sign of slowing down, as a report today has made clear.

This is why Labor announced our National Sharing Economy Principles in October 2015 and took them to last year’s election.

However, the absence of any leadership from the Abbott-Turnbull Government on the issue has remained.

In the past couple of years, dozens of Australian companies such as Car Next Door, Parkhound, GoGet and Camplify have sprung up to help Australians make better use of our spare rooms, and unused tools, or tackle problems like traffic congestion and parking shortages by sharing resources around. 

After sweltering through the hottest year on record, many Australians would love to get a backyard pool. But who could imagine that the Turnbull Government is letting some taxpayers write their swimming pool off as a tax deduction?

According to reports today, new swimming pools installed on rural properties are being claimed as tax write-offs – if they are described as 'water storage facilities'.

Sixteen months after taking over as Prime Minister, Malcolm Turnbull has allowed net government debt to increase by nearly $40 billion – or $1600 for every Australian. And yet his government seems relaxed about allowing the pool rort to continue, with a spokesperson for Minister O’Dwyer blithely referring queries to the tax office. 

Labor supported the asset purchases deductions measure for small business when it was proposed in the 2015 budget, but we expected the government would carry-out the standard due diligence.

E&OE TRANSCRIPT

TV INTERVIEW

SKY NEWS, AM AGENDA

MONDAY, 23 JANUARY 2017

SUBJECT/S: Housing affordability; Medicare levy; Visit to refugee camp in Myanmar/Burma

TOM CONNELL: Joining me now is Labor's Shadow Assistant Treasurer, Andrew Leigh. Thanks for your time this morning on the program.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Pleasure, Tom. Happy New Year to you and your viewers.

CONNELL: And you, I hope you enjoyed a nice break before we got back into it all. What a way to start, housing affordability. I know it's something you enjoy talking about. The Government, reportedly the Treasurer is looking at this plan that has been rolled out in the UK, he is sounding out various ideas and it does look like it will be a priority for the Government in 2017. This plan could give billions in loans towards projects or agencies who are trying to build affordable housing, like the CEFC making projects that maybe would not have got finance from banks get the tick, what do you think of this plan?

LEIGH: Tom, housing affordability is a first order issue. The home ownership rate is now the lowest in Australia it has been in 60 years. For young people, the share of them owning their home is way down on where it was just a couple of decades back. You've got to distinguish between a policy which builds a small number of homes at the bottom end of the market and one which could make a difference right across the wide swath of the market. So sure, we should look at innovative financing solutions but let's not pretend that that's going to make it easier for middle Australia to buy a house. Here you need to look at something else the Conservatives have been doing over in the UK. In the 2015 budget the British Conservatives decided to make changes to negative gearing. The British Conservatives, against a scare campaign in which some of the tabloids said it was going to drive down house prices saw through significant changes to negative gearing of the kind that Labor has been proposing in Australia.

Why the battle over hiring rival employees could be the next big challenge for Australian workplaces, Business Insider, 19 January 2019

In 2006, Michael Devine worked as a computer scientist for the tech-giant Adobe in Seattle, Washington. Like most, he was always on the lookout for new and exciting job opportunities. But strangely, for a reputable computer scientist in the heart of Silicon Valley, the offers weren’t flooding in.

Four years later, Michael found out why. It turned out that his company had entered into a secret agreement with five other tech-giants – Apple, Google, Intel, Intuit and Pixar – not to hire each other’s workers. In an angry phone call, Apple’s Steve Jobs had warned Google’s Sergey Brin: ‘If you hire a single one of these people, that means war’.

When he realised how the firms had colluded, Michael Devine wasn’t happy. He and 64,000 other employees filed a class action and ultimately received a settlement. Unfortunately, it was only the tip of the iceberg. Soon after, the online retailers Ebay and Ituit were caught doing the same thing. So were the film producers Lucasfilm and Pixar. It wasn’t just the tech-giants, either. Hospitals had agreements to fix the pay and conditions for temporary nurses. Fashion designers were caught trying to reduce the pay and conditions for models. The list goes on.

What’s most alarming was just how widespread this conduct was once US regulators started looking. It made me worry: is this happening in Australia?

Baby Steps Lead to Big Achievements, The Chronicle, 10 January 2017

Fifty days into his walk across Africa, Canberran Matt Napier had braved the lion-filled ‘danger zone’ in Botswana, experienced the pain of blisters-on-blisters, and lost 15 kilograms. Not only was he distributing soccer balls to needy community groups, but he was doing so while living below the poverty line. He spent less than US$1.50 a day of food, which meant ‘the hunger pains are so bad I feel like I am going to faint’.

Yet when I interviewed Matt on my podcast last month, he was full of enthusiasm for his next challenge, and constantly thinking about innovative ways of raising money to reduce global poverty. In fact, I’d challenge anyone who meets him not to come away feeling more energised about Australians’ ability to do good in the world.

New Year’s resolutions are a great way to shake us out of our habits, and encourage us to try something new. The problem comes when we pick challenges that don’t have a path to get there. The major goal of ‘Walk the Kokoda Track’ is a whole lot more achievable if it comes with a minor goal of regularly walking up Mt Ainslie. The big aim of mental calmness may be easier to reach if it goes with using the Headspace meditation app for ten minutes a day.

So whether your goal is walking across Africa or being a better friend, I hope 2017 is a good year for taking baby steps to make big changes.

Andrew Leigh is the Federal Member for Fenner and this resolution was first published in The Chronicle, Tuesday 10 January, 2017. His ‘Good Life’ podcast is available via iTunes and other podcast apps.

Banking on a Fairer System for All, Daily Telegraph, 16 January 2017

Seventy-one years ago, economist John Maynard Keynes quipped ‘if you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy’.

It’s a cracker line – but it isn’t true anymore. In today’s money, Keynes’s million pound debt would be about 1/2000^th of the loan book for one of the Australian big four banks. In the ‘too big to fail’ era, banks are rarely at their customers’ mercy.

Banking is one of Australia’s most concentrated industries. A new analysis from the Australian Securities and Investments Commission looks at the market share of our largest four banks: the Commonwealth Bank, Westpac, ANZ and NAB. It finds that they control 77 per cent of all banking assets, 80 per cent of mortgages, 75 per cent of credit card transactions and 80 per cent of household deposits.

Australia’s banks are big by international standards. Our banking sector is more than twice as concentrated as that of the United States, and more concentrated than banking in the major advanced economies.

Australian banking is becoming more concentrated. In 2007 the big four controlled 65 per cent of Australia’s banking assets. Today they control 77 per cent. They are also expanding into other markets such as funds management, financial advice, wealth management and mortgage broking.

It's Time To Put Markets Ahead Of Monopolies, Huffington Post, 6 January 2017

If you're looking for a good economics game to play this summer (and let's face it, who isn't?), then here's one of our favourites. Try seeing how many industries your family can name that are not dominated by a few large players. We guarantee that this isn't a game that will tie up the conversation all night.

In our recent study, published in the December issue of the Australian Economic Review, we calculated market concentration across the Australian economy. Unlike other countries, Australia's government statistician doesn't compile data on market share, so we instead used data drawn from a private firm: IBISWorld Industry Reports. For each of 481 industries, we measured the market share held by the four largest firms, a standard measure of market concentration.

Applying the rule of thumb that a market is concentrated if the largest four firms control one third or more, we find that more than half of Australia's industries are concentrated. For some industries concentration is higher still. In department stores, newspapers, banking, health insurance, supermarkets, domestic airlines, internet service providers, baby food and beer, the biggest four firms control more than 80 percent of the market.