MIRANDA DEVINE LIVE
WEDNESDAY, 9 MAY 2018
SUBJECTS: Resignations of Susan Lamb, Josh Wilson and Justine Keay; Budget 2018-19; Randomistas.
MIRANDA DEVINE: I am sure that Labor is not so extreme left at all when it comes to taxes. So nevertheless the opposition of course as they should, has come out swinging against Scott Morrison's budget measures and I'm glad to say that the Shadow Assistant Treasurer Andrew Leigh joins me on the line. Good afternoon Andrew.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good afternoon. Great to be with you too.
DEVINE: Now before we get onto your reaction to the budget I want to ask you about Katy Gallagher do you still support. Bill Shorten's claims all those months ago that Labor has a strict vetting process for dual citizenship candidates?
LEIGH: We certainly have a strict vetting process and it's one which I know is enormously time-consuming and expensive for many of our candidates. It was based on what the Australian Electoral Commission's candidate's handbook said which is that people needed to take reasonable steps to renounce any dual citizenship before they're nominated. Today's High Court judgment has surprised many including noted constitutional expert George Williams. So obviously it's one that we will comply with and work through. You've seen the statements to the House today from Justine Keay, Susan Lamb and Josh Wilson. But this is a surprise to many people.
DEVINE: But still I mean Labor spent a long time criticising the coalition for its handling of its dual citizenship politicians who were caught out, but they refused. You refused to send your MPs or Senators just to the High Court. In hindsight, should Bill Shorten have agreed to cooperate with Malcolm Turnbull on the issue?
LEIGH: Hindsight is a wonderful thing. We did indeed suggest to Malcolm Turnbull that there be a joint referral of a number of people on both sides of the House to the High Court. Malcolm Turnbull didn't accede to that. You know you've seen people from both sides of the house now fall foul to this. Barnaby Joyce, John Alexander on the other side just to name a couple. So this has been quite a surprise to many and I don't think many careful watchers of Australian politics such as you and I would have predicted five years ago that we would see a dozen or so Members of Parliament go. Indeed I heard someone saying section 44 was so named because it's eventually going to cost the careers of 44 parliamentarians if this keeps up.
DEVINE: It's terrible actually isn't it. And we'll have to have a whole bunch of these by elections on one Saturday when are you thinking that will happen?
LEIGH: That’s out of our hands. The resignations as we've said will take effect on Friday and that will include Tim Hammond as well and so there'll be those four Labor members who will stand down on Friday and a vacancy for Katy Gallagher's spot will just be done by a count back.
DEVINE: So the Super Saturday, don't you think that will happen before the ALP National Conference in July?
LEIGH: Look I certainly hope it's sooner rather than later Miranda. I know as a local MP, there's just a whole lot of people that behind the scenes you're quite quietly helping out. You're helping people out with immigration matters, with Centrelink matters, you're helping who are dealing with all sorts of different challenges and that all has to stop in this process. So when I think about the constituents of those four electorates, they need Members of Parliament in place as quickly as possible.
DEVINE: All right so on to the budget, will the Labor party oppose the tax cuts or vote with the Coalition for them?
LEIGH: We'll certainly support the first tranche. That's a tax cut which is targeted at average workers. The second tranche is quite a different kettle of fish. We don't know even know what that second tranche costs in itself. We haven't got a separate breakdown of what the Government calls step 2 and step 3 tax reform. So frankly, I wouldn't want to be voting for something if you couldn't tell me what the cost of it was.
DEVINE: But Scott Morrison says he's going to package them all up as a package deal and you either vote for one vote for them all or nothing.
LEIGH: That’s a ‘jump over the cliff or the kitten gets it’ argument. It’s not a sensible approach to politics. We're saying that for the tax cuts that are in the forward estimates, they've got bipartisan support. Let's go ahead and put those tax cuts into place — but let's also keep them in perspective. For somebody who's on fifty thousand dollars a year, a $500 tax cut is 1 percent of their income. But the slowdown in wage growth has been 1 1/2 percent, year after year, so the tax cut barely makes up...
DEVINE: And cost of living has skyrocketed.
LEIGH: Yes, that’s certainly true of particular aspects of the cost of living. If you're renting then it's gotten much more expensive. Same if you're trying to break into the home market. I’ll often speak to young couples, people like a builder and a teacher who say to me on street stalls, "look it used to be that a couple like us could get in the housing market with the knowledge that if we want to have kids and one of us take a break from the workforce we could still pay the mortgage". And they say now "it's kids or a house". They say they can't do both. That's no way to run a country.
DEVINE: And also skyrocketing electricity prices.
LEIGH: We have certainly seen increases there and the strike on renewables investment has meant that while we've seen this boom in solar around the world which is driving down prices. We haven't got a lot of the benefits of that in Australia because we haven't got the investment in place.
DEVINE: So now technically though when we talk about abolishing that 37 per cent tax bracket do you think that is a good idea?
LEIGH: I've always supported progressive taxes and I thought it was interesting listening to you before on this issue. As somebody myself who's in the top 1 or 2 per cent of the income distribution, I've got the capacity to pay not just a higher dollar amount of tax but a higher percentage of my income. As an economist, I think of that as being grounded in the notion of ‘diminishing marginal utility of income’ - that a dollar brings more happiness to a battler than it does to a billionaire. And if you believe that you should believe in progressive taxes. The Turnbull Government’s proposed second tranche of personal income tax changes really does take us to a much less progressive tax system.
DEVINE: But aren't you concerned that you're killing off aspiration? That people think that they won't do that extra work, they won't take that extra contract because they're going to be pushed up into a higher tax bracket and of course, I mean almost half of Australians receive more in welfare and handouts than they pay tax and so the tax burden is really falling on those people who earn between eighty seven thousand one hundred eighty thousand dollars. They pay 35 per cent of all personal income tax, and you know half of the Government's receipts come from personal income tax from the average wage and salary earner that Peter Costello is calling the forgotten people. Don't you think that they've shouldered enough of the burden?
LEIGH: You’re certainly right that as a percentage of total taxes, we get more from personal income tax than the typical advanced country. Of course if you put in place an $80 billion corporate tax cut, then that accentuates that problem. But I think that we ought to encourage aspiration. I'm particularly concerned about people moving from unemployment into work. That's where I see as an economist the greatest disincentive effect — what what economists call the deadweight cost of taxation. Those deadweight costs don't appear to be as large if you're talking about middle-aged blokes in the top tax bracket. The degree to which they that cohort responds to tax rates seems to be much smaller. Women are more responsive to tax rates, particularly women with children. So we need to think about this in a pretty fine-grained sense if we're going to make sure that taxes have the least economic drag on the economy. Which is something as I as an economist would strongly support.
DEVINE: So how do you win the next election if the Government is promising these traditional Labor voters, particularly these immediate tax cuts?
LEIGH: They're being offered off in the never-never. I mean you have to have Malcolm Turnbull re-elected twice before these tax cuts take effect.
DEVINE: Not the lower middle income, the immediate ones that will come into play. They'll get up to five hundred thirty dollars - a thousand dollars more, for a family, that'll kick in in the next financial year.
LEIGH: Indeed, and that will kick in in a couple of a couple of months so long as the Government isn't silly about it. It's got bipartisan support. It wouldn't be an issue in the election because both sides support it.
DEVINE: So are you going to be offering tax cuts yourself?
LEIGH: We'll have more to say on that whole set of policies. But certainly what people get from the Labor Party is better funded schools, better funded hospitals. They won't see us pushing up the pension age to the highest in the advanced world. They'll see better broadband which I know matters just to so many local small businesses. I've got a pharmacy in my electorate who had to hang an internet dongle out the window in order to get a connection. It's just no way to run a small business these days if you're not connected up to the National Broadband Network. NBN complaints are through the roof.
DEVINE: So can you give me a sneak preview of what will be in the budget reply speech tomorrow night?
LEIGH: Bill will be talking about fairness but also about our agenda for growth. It is absolutely wrong when Malcolm Turnbull stands up and says we don't have a single policy to create a single job. Labor is committed to making sure that we're laying the foundations for a more prosperous society. I'm the Shadow Assistant Treasurer as you said in your intro, but also the Shadow Minister for Productivity. And I expect Bill Shorten will be talking about how better investment in infrastructure and the National Broadband Network and in education can help Australia to win in the 21st Century.
DEVINE: So what's the difference then between you and the Coalition?
LEIGH: Fairness. On our side we're very concerned about making sure that we have those investments in schools. We've had as as you well know, Miranda, these international PISA test scores have seen us go backwards in mathematics, in science, and in reading every test for the last 15 years
DEVINE: And that's shocking but it's not for want of money, we've poured an extra 10 billion dollars into the education system in the last 10 years and at the same time the marks have plummeted. So there's almost an inverse relationship between money and marks.
LEIGH: I'm not sure I'd take that argument to its logical conclusion — if you did that, you'd say the real key is to take all the money out of schools! But I think that you're right, it's how you spend it. And certainly getting policies to attract and retain great teachers would be the top of my list there. But you talk to principals and teachers, you talk to education experts and they do say more is possible when you have a larger budget envelope there. We've got to be smart about how we are how we spend it and there's a range of useful reports on that. I think there has been good work done by many groups from the Grattan Institute to Jennifer Buckingham on this. But we've also got to make sure that we're not taking money out of schools at the very time in which jobs are getting more complicated, lifelong learning is more critical. If the robots are coming for our jobs, we have to make sure we've got better educated workers.
DEVINE: Did you read the Gonski 2.0 report from a couple of weeks back?
LEIGH: I'm still working my way through it, it's 150 pages so I'm about page 40 at the moment. I think it's an interesting contribution. Clearly not the ‘be all and end all’ on education policy, but a lot of interesting ideas in there.
DEVINE: There's not a lot of meat in there. No real recommendations for how to make education better though?
LEIGH: Now you're just being cruel! I used to be an education economist, I'm used to education papers that are filled with statistics and Greek equations, incomprehensible econ-jargon. So my ideal kind of education report would probably be incomprehensible to most people!
DEVINE: I should get you to translate it for me.
LEIGH: You've got to also make certain these arguments are accessible. That's one thing David is enormously good at, is the persuasive side.
DEVINE: Now you apparently think that this budget is unfair for pensioners even though Scott Morrison is saying that they're giving them a good deal. What's your argument there?
LEIGH: The Government spruiked it's aged care places but there's actually not one more dollar for aged care in the budget. It's all a pea and thimble trick — they're moving money around within the aged care portfolio rather than putting new money in. And they want to push up the pension age to 70. It might be perfectly fine if you or I want to think about working to 70. But if you're a bricklayer who's been working for years, bad back, shoulder problems, and struggling to get out there every day. For someone like that, 70 really is a pretty high retirement age. It would be the highest in the advanced world. The Turnbull Government is still wanting to take away from pensioners the Energy Supplement, worth $1 a day to pensioners.
DEVINE: Absolutely. Now before I let you go Andrew Leigh, have a new book out called Randomistas.
LEIGH: You're well researched, Miranda.
DEVINE: Actually James Morrow who sits next to me told me that he had a good piece from you he is going to run. So tell us what it's about?
LEIGH: Randomistas is about the explosion of randomised trials across business, across medicine, across social policy. It's how we test new pharmaceuticals but now we're seeing it done in a whole host of different contexts. When Google chose the right shade of blue for its search bar it did it by running a randomised trial on its users. If you have got a Coles FlyBuy card, then you're part of a randomised trial because 1 in 100 is a control group that doesn't get the treatment. Even in surgery now, they're doing randomized trials in which some patients get the knee surgery and other patients get sham surgery. So there's all kinds of radical things going on around the world with the randomistas. I thought it was a really interesting area Miranda, since I'm fascinated with how the world works. Randomised trials are helping us understand the world a little better.
DEVINE: Sounds a bit like Malcolm Gladwell, sounds very interesting.
LEIGH: So that's always the goal! Gladwell is sitting up there on the peaks and the rest of us book writers are toiling in the valleys.
DEVINE: Terrific, thanks Andrew, thanks for joining me.
LEIGH: Thanks, Miranda.
Authorised by Noah Carroll ALP Canberra