Andrew Leigh

Ten Lessons for Economic Policymakers

Economic Society of Australia Annual Dinner 2023
Commonwealth Club, Canberra

Wednesday, 1 November 2023

Introduction: The Power of Ideas

[Acknowledgements omitted]

John Maynard Keynes once wrote ‘The ideas of economists and political philosophers, both when they are right and when they are wrong are more powerful than is commonly understood. Indeed, the world is ruled by little else.’

In academia and parliament, I've certainly found that to be true. Economics is surprisingly powerful as a tool for public policy. Those of you who are established in your careers will know well the power that economics has had in terms of shaping Australia's trajectory.

Last month, we lost Max Corden, one of Australia's great economists, and somebody who, after fleeing the Nazis in 1939, became one of the great Australian pioneers of openness. Max's work on tariff reform was used by the Tariff Board, the predecessor to what is now the Productivity Commission, to make the case for Gough Whitlam’s 1973 tariff cut, in which all tariffs were cut overnight by 25%.

Max's story was one of coming to Australia, being welcomed here and becoming a great advocate for openness. He knew my grandfather, Keith Leigh, who died two years before I was born, and would tell me about how the two of them spoke of world events at Melbourne University in the 1950s and 1960s. That intellectual curiosity and global outlook reflects the very best of Australian academia and the economics profession.

You may have heard Thomas Carlyle’s put-down of economists as being ‘the dismal science’. Perhaps you know that the reason that Carlyle described our discipline as the dismal science was that we had what was in his mind the ‘dismal’ view that all human beings – whatever their skin colour – should be regarded as equal.

In that light, I proudly wear the badge of the ‘dismal science’. It is a reminder that economics has its origins in the notion of human equality; the principle that one person's wellbeing is as valuable to society as another's.

Max Corden was also a remarkably generous soul in terms of the time he spent with others. He always seemed to have time to ask junior researchers about their work. When I visited Melbourne University in 2006, I loved the chance to engage with Max, to chat with somebody who had worked on the world stage on issues of trade liberalisation.

My speech tonight proposes ten lessons for economics policymakers. When I refer to economic policymakers, I’m drawing a broad net. I'm including people who have made a contribution in consulting, those who have worked in the public service, those who are working in journalism, and those who contribute to the public debate. I'm thinking of the policy conversation writ large, not simply some narrow slice of it.

STRATEGIES FOR STRENGTHENING DEMOCRACY

ANU Crawford Leadership Forum
Australian National University, Canberra

I acknowledge the Ngunnawal people on whose lands we meet, and pay respects to all First Nations people present today.

It is a pleasure to be joining a distinguished panel, led by Professor Janine O’Flynn, and speaking alongside Dr Jeni Whalan and Ms Padma Raman.

It is only fitting that the organisers chose to hold this forum on Halloween, because the issues we face are ghoulish.

According to the Economist Intelligence Unit’s Democracy Index, the world entered a ‘democratic recession’ in 2016, and is yet to recover. Russia, Peru, Turkey and Myanmar are among the nations whose democracy scores have slumped. Pollster Afrobarometer reports that the share of Africans who prefer democracy to any other form of government has fallen from 75 percent in 2012 to 66 percent.

MULTINATIONAL TAX FAIRNESS

The Australia Institute, 2023 Revenue Summit
Parliament House, Canberra

I acknowledge the Ngunnawal people, the traditional owners of these lands, and recognise all First Nations people present today. 

My thanks to the Australia Institute for hosting the 2023 Revenue Summit. It’s a pleasure to be back with you in person, having spoken at last year’s Revenue Summit.

In the 1976 movie ‘All the President’s Men’, Washington Post reporter Bob Woodward meets his secret source – Deep Throat – in a dark underground carpark.

Woodward is investigating a break-in at the Democrat National Committee headquarters in the Watergate building in Washington DC. It’s a story that will lead to the resignation of President Richard Nixon.

‘Just follow the money,’ Deep Throat tells the journalist before merging back into the shadows.

It’s a simple but sound principle.

THE CASE TO DOUBLE PHILANTHROPIC GIVING

Philanthropy Australia: Philanthropy Meets Parliament
Parliament House, Canberra

Tuesday, 24 October 2023

I acknowledge the Ngunnawal people the Traditional Custodians of the land we are meeting on, and pay my respects to all First Nations people present.

As a Canberra, I'd like to welcome you here to the nation's capital, to the bush capital and to the social capital of Australia. Canberra does strikingly well on a range of social capital metrics. And I hope while you're in town, you'll have a chance to get out and about and enjoy some of that Canberra community spirit.

I’ve been asked today to talk about the case for double giving. One way to start is to think about what Australia would look like without charities and not-for-profits.

What if there were no charities or not-for-profits in Australia? Immediately many people who are disadvantaged, who are homeless or struggling with family violence would have nowhere to turn to. Aged care centres and childcare centres would close down. We'd see an immediate collapse of the arts: music, dance and theatre.

Suddenly, on a Saturday morning, a whole lot of parents would be wondering what to do with their kids, because there wouldn't be those sporting activities that are being run by Australia's charities. Our local environment would be worse off without the community groups that support local bush regeneration projects. Medical research would be slowed. In the case that disaster struck, Australia would be less resilient without charities and not-for-profits.

HELPING HOUSEHOLDS

Matter of Public Importance
House of Representatives, 18 October 2023

Today's matter of public importance is on the cost of living, and I could take the House through some of the statistics that reflect what the Albanese government is doing to tackle the effect in Australia of the global cost-of-living crisis. But instead I want to start by talking about some of the stories of ordinary Australians whose lives have benefited from cost-of-living measures that the Albanese government has put into place.

Our cheaper childcare measures were welcomed by Blanca Ramirez, a woman in Canberra whose daughter, Paloma, is at daycare. As a result of the increase to the childcare subsidy, Blanca has moved to working four days a week. That ensures that her productivity is up, that their household budget is improved and that Paloma has a little bit more support. As Blanca puts it, 'I can run around and I'm not like dead tired after work.' There are 1.2 million families across Australia benefiting from Labor's cheaper childcare measures.

Statement on Israel and Hamas
Federation Chamber, 17th October 2023

On the weekend, Hamas terrorists committed mass murder on a shocking scale. People at a music festival were gunned down. Babies were killed in their beds. Defenceless elderly people were murdered. Over 100 hostages were taken into Gaza. The scale of the attack was so large that it was the greatest loss of life among Jewish people since the Holocaust. This is a murderous, barbarous terrorist group whose objective was not just to kill Jewish people but to kill the peace process itself. Hamas has as its goal the destruction of the Israeli state. It wants to ensure that the peace process is derailed.

NON-COMPETE CLAUSES: PREVALENCE, IMPACT, AND POLICY IMPLICATIONS

Joint Treasury – e61 Institute Webinar, Sydney

Wednesday, 18 October 2023

I acknowledge that I am attending this webinar from the lands of the Ngunnawal People who are the traditional owners and custodians of the Canberra region. I also acknowledge the traditional custodians of the various lands across Australia on which others in this webinar are joining from, and any Aboriginal and Torres Strait Islander people participating in this webinar.

Thank you Dan for your introduction. In opening today’s webinar, I want to thank the excellent line up of speakers and welcome our international guests. I also want to acknowledge Australia’s e61 Institute for jointly hosting this event with Treasury. E61 has done a great job shining a light on the prevalence of non-compete clauses which has really kick started the debate here in Australia.

CHANGING THE WORLD, ONE COIN TOSS AT A TIME

Evidence and Implementation Summit, Melbourne
Wednesday, 11 October 2023

I acknowledge the people of the Kulin Nations as traditional custodians of the land and pay my respects to their Elders past and present. I commit myself to the implementation of the Uluru Statement from the Heart, which starts with voting Yes this Saturday.

I thank the Monash University, the National University of Singapore and the Centre for Evidence and Implementation for hosting today’s Summit. It’s terrific to see so many of you dedicated to closing the ‘know-do gap’– the gap between what we know and what we do.

The title of my presentation is ‘Changing the World, One Coin Toss at a Time’. I chose this title because the simple act of tossing a coin can help us get the evidence we need to address our most difficult problems. Heads, they receive the intervention. Tails, they’re in the control group. From there, we can establish a counterfactual and begin to evaluate what works and what doesn’t work.

Recently, at the National Press Club and the Australian Evaluation Society Conference, I’ve spoken about randomised trials, its origins in medicine and the need to embed evaluation in the work of government. I’ve spoken about social impact and how rigorous evidence can give us an accurate picture of program effectiveness. I’ve also spoken about how the increased availability of large, integrated administrative datasets can help us conduct evaluations more quickly and cheaply, making data and evaluation a match made in policy heaven. Today, I want to zoom out a little and discuss what best practice use of evidence looks like.

SPEECH

How COVID Changed the World of Data

Population Symposium
Australian National University School of Demography

6 October 2023
Canberra

I acknowledge the Ngunnawal people as traditional custodians of the ACT and recognise all First Nations people present today. 

I commit myself, as a member of the Albanese Government, to the implementation in full of the Uluru Statement from the Heart, which starts with voting Yes on October 14. 

Thank you to the Australian National University for hosting today’s Symposium and thank you for focusing your efforts on understanding the impact of the COVID pandemic on demography in Australia.

I want to preface my remarks by acknowledging the remarkable ability of the Australian Bureau of Statistics (ABS) and other government agencies to rapidly shift their operational focus during the pandemic.

Demographers deserve credit for helping guide governments, policymakers and the community through the COVID pandemic.

Today, I will tell the data side of the story.

COVID might have shrunk our worlds to frequent Zoom calls in which we took it in turns to remind each other ‘You’re on mute’.

But COVID also opened up a whole new world of data.

In the space of just a couple of years, we have access to more timely and frequent updates, new sources of data and greater integration.

I welcome the opportunity to talk about this extraordinary legacy, the lessons learnt and how we can build on it.

Rocking the demographic boat

The COVID pandemic was not only a rapidly evolving health crisis but an economic crisis too – the most severe economic downturn since the Great Depression (Kennedy 2022).

Restrictions to limit the spread of COVID saw a reduction in spending, business turnover, losses in jobs and hours worked, and supply chain disruptions (ABS 2022a).

By June 2023, the level of GDP is estimated to have suffered a cumulative loss of $116 billion compared to its pre-pandemic trajectory (Figure 1).

Figure 1. Australia’s GDP, actual and pre-COVID trajectory

Source: ABS 2023a and Treasury

The COVID pandemic rocked the demographic boat.

As shown in this chart, Australia’s population growth slowed to 0.1 per cent in 2020–21 – the lowest rate in more than 100 years (Figure 2).

Figure 2. Australia’s population growth and components of growth, historical and projected

Source: ABS 2023b and Treasury

Australia’s net overseas migration fell into negative territory for the first time since the end of WWII, with a net loss of 85,000 people in 2020–21 (ABS 2023c).

There was a larger than expected increase in deaths due to COVID and other causes – 10.9 per cent above what was expected in 2022 (ABS 2023d).

Births fluctuated in interesting ways. In the December 2020 quarter, nine months after the pandemic hit, births fell. We know that crises can make couples cautious about starting a family, and this drop likely reflected the uncertainty that many couples felt in the early months of the COVID lockdowns.

But then things turned around. In the March 2021 quarter – nine months after mid-2020, births hit an all-time high (ABS 2023c). We can’t be sure as to why this occurred, but it may be that couples felt a little less anxious about the future as the year unfolded. Lockdown boredom may also have been a factor. Border closures between states and territories reduced internal mobility. The number of interstate moves in the year to March 2021 was 30.2 per cent lower than in 2018-19 (ABS 2023c).

The pandemic also influenced where people wanted to live with an increase in net moves from urban areas towards suburban and regional areas (Figure 3) (Centre for Population 2020).

COVID doubled the net number of people moving to the regions.

You can see a break in the data series on this chart. It’s due to the pandemic’s impact on Medicare address information this series relied on, which I will get to later.

Figure 3. Net internal migration to regions outside capital cities, quarterly

Source: ABS 2023c and ABS 2021d

WHAT’S THE WORST THAT COULD HAPPEN? EXISTENTIAL RISK AND EXTREME POLITICS

EAGxAustralia Conference, Effective Altruism Australia, Melbourne
Friday, 22 September 2023

I acknowledge the people of the Kulin Nations as traditional custodians of the land and pay my respects to their Elders past and present. I acknowledge any First Nations people and businesses represented here today. I commit myself to the implementation of the Uluru Statement from the Heart, which starts by voting Yes on October 14.

Much of what we focus on in politics centres on immediate challenges. This week, I’ve participated in discussions about competition policy and randomised trials, community-building and economic dynamism. These are important issues for Australia’s future.

But the EAGxAustralia conference provides an opportunity to think about existential risk – about dangers not only to our way of life, but to our lives themselves.

In a busy life, it’s easy to confuse the improbable with the impossible.

What would happen if you decided to cross the road without checking the traffic? Odds are that you’d survive unscathed. But do it enough times and you’re likely to come a cropper.

That’s where catastrophic risk comes in.