Andrew Leigh

ROBOTS, REMUNERATION AND RESTRUCTURING: HOW DO TECHNOLOGY AND INEQUALITY SHAPE ONE ANOTHER, AND WHAT SHOULD WE DO ABOUT IT?* 

Annual Sir Leslie Melville Lecture

Australian National University

Sir Leslie Galfreid Melville was a remarkable Australian. Born the year after federation. Trained in engineering and science before wisely settling on economics. Inaugural professor of economics at Adelaide University at age 27. Founder of what would become the Reserve Bank’s research department. Leader of Australia’s delegation to Bretton Woods. ANU Vice-Chancellor for most of the 1950s. Appointed to chair the Tariff Board by McEwen, it is to Melville’s enduring credit that he quit the post rather than succumb to McEwenism. 

Having been born at the dawn of the twentieth century, Leslie Melville lived to see the start of the twenty-first. As one obituary noted, ‘there has not been another Australian economist to hold the range of jobs that Melville did’.[1]

It is virtually impossible to think about Melville’s life without being conscious of the technological changes that took place during it. The twentieth century – or the ‘Melville Era’, as Australian economists might call it – saw an explosion in technologies. In transport: planes, helicopters, mass-market cars and space shuttles. In communications, radio, television and the Internet. In health, antibiotics, sewered cities, the pill, and genetic engineering. Not to mention atomic bombs, vacuum cleaners, smartphones, radar, the bra, and plastic. And yet for most of the twentieth century, we not only saw rising living standards, but falling inequality. Melville’s working years – the 1920s to the 1970s – saw the largest reduction in inequality in Australian history. 

My focus today is on two challenges: how do we continue the pace of innovation in the twenty-first century that we saw in the twentieth? And how do we ensure that prosperity is broadly shared? By acknowledging the tendency of technological change to increase inequality, we can harness the gifts of Prometheus without suffering their destructive tendencies. As it happens, I will argue that a single policy recommendation offers the greatest promise to make us more entrepreneurial and more equal.

CLOSING THE INCOME GAP

2015 Economic and Social Outlook Conference

University of Melbourne

If you returned from work one day and found your home flooded by a gushing faucet, the first thing you’d do is turn off the tap. But once you’d stopped the water rising, could you then go about your evening as though nothing else was amiss? Only if you’re willing to overlook the rather pressing problem of everything you own being underwater.

That’s the approach some would have us take in response to the news that there has been a pause in the growing gap between the rich and the rest in Australia over the past few years. When the OECD released a report earlier this year showing that some measures of inequality had been stable in Australia between 2006 and 2012 – some newspaper columnists and political commentators welcomed this as a sign people like you and me should stop worrying about how much better Australia’s billionaires are doing than our battlers.

But to extend the analogy a little further: turning off the tap is not the same as draining out water. The fact that inequality has stopped rising for the moment does not mean that we’ve suddenly achieved an egalitarian idyll. Across the advanced world, Australia sits in the top third for our level of inequality.

HUMANS NEED NOT APPLY: WILL THE ROBOT ECONOMY PIT ENTREPRENEURSHIP AGAINST EQUALITY?

Fall 2015 Distinguished Public Policy Lecture
Institute for Policy Research
Northwestern University

In 2006, chess world champion Vladimir Kramnik was beaten by chess computer program Deep Fritz. In 2011, quiz show champions Brad Rutter and Ken Jennings were beaten on Jeopardy! by IBM’s Watson computer. Modernist composers are experimenting with singing software that can mimic a human voice box, but without its physical limitations.[1] Earlier this year, Google announced that their driverless cars had completed over 1 million road miles in Nevada, Florida, California and Michigan. Among the newlyweds who stand at the altar this year, more than one in three couples were brought together by a computer algorithm.[2]

Breakthroughs in processing power, data availability and machine learning have affected all our lives. Within the past decade, fields such as image search, voice recognition, language translation and robotics have seen huge breakthroughs. While a digital assistant might have seemed fanciful a decade ago, the advances in Apple’s Siri technology suggest that it may not be far off. Surgeons who now use computer-guidance to tell them where to cut may soon be stepping back so that a robot can do the job. Within a decade or two, Douglas Adams fans who admired the Babel Fish may be able to pop a simultaneous translation device in their ear.

For well-educated professionals earning six-figure salaries, the world of artificial intelligence seems exciting, optimistic and – well – cool. And yet I want to argue today that no serious economist should be thinking about the aggregate benefits of technology without considering its distributional implications. Since the path breaking work of Wolfgang Stolper and Paul Samuelson in 1941, trade theorists have known that cutting tariffs raises aggregate living standards, but can make some workers worse off. So too we need to intertwine our understanding of technology with recognising its impact on inequality.

But putting yourself in the shoes of others isn’t easy. So I want to scare you a little, by drawing on an idea that’s increasingly coming out of science fiction and into the newspapers. Perhaps then, when you realise that the monster might in fact be living under your bed, we can talk about what to do about it.

INVISIBLE AUSTRALIANS: PUTTING A SPOTLIGHT ON POVERTY

Address to the Anglicare National Congress

Every Thursday and Friday morning, Reverend Doug Newman and his team of volunteers at St Paul’s Church in Spence run the Helping Hand Food Pantry. Since 2007, the pantry has helped people in need access staple foods as well as fresh fruit and vegetables at low cost. Anyone who is struggling to afford their weekly grocery bill can stop by and stock up on food donated by local businesses and community groups. If you stop by one morning, you’ll see all sorts of people using the service. Single men in need of a shave, with their socks showing through the holes in their shoes. Neatly dressed mums with three kids in tow, carefully counting out their grocery budget. Seniors who’ve travelled an hour on the bus to get there and so make their pension stretch a bit further.  

What’s striking about the Helping Hand Food Pantry is not that Reverend Newman and his team turn up rain, hail or shine to run it, or that Canberrans give so generously to support it – although both of these things are very laudable.

What’s really striking about this service is that it operates in a middle class suburb in one of the wealthiest cities in Australia. Even in a prosperous, white-collar place such as Canberra there are people who find it so hard to make ends meet that they rely on the Helping Hand Food Pantry to stretch their finances through the week.  

These people have become almost invisible in our public debates. So today, I want to talk about the ‘invisible people’ in Australian public life – those living in poverty.

After a quarter of a century of economic growth in this country, there’s a sense that poverty isn’t a problem anymore in Australia. Or at least, we have come to believe that being poor is something that happens through catastrophe – like a debilitating accident or an all-encompassing addiction. We’re loath to admit that there are still structural inequalities in our society – inequalities which see some people struggle from their first day to their last simply because of the family they were born into. 

Our complacency about this problem is partly explained by the fact that for many of us, poverty exists in our blind spots. Unlike in North American cities such as Chicago and Los Angeles, our poorest communities ring the edges of our major cities instead of living in the centre. So you and I don’t have to drive through Struggle Street to get to the GPO. The poorest Australians can also be found in regional and remote Australia, in run-down places where industry long ago left town and tourism rarely reaches.   

There’s also the fact that Australia has an extensive and well-targeted social safety net. With pensions, NewStart, family tax benefits and the other forms of support available through our welfare system, some people can’t quite understand how poverty can still be a problem.   

But those of you here today know that poverty is still with us. People who struggle to keep themselves and their families fed, housed and clothed can be found across our cities, in big and small towns, and especially out bush. You work with them, you support them, you minister to them in hard times. 

The theme of this conference is leaving no-one behind. If we are committed to that goal; if we believe all Australians can and should share in this nation’s prosperity, our good work must be backed up by policies and programs which aim to lift Australians out of poverty in a systematic way.

Later on in this speech I’ll have more to say about what some of those interventions might look like. But first I want to spend a few moments bringing the experiences of those living in poverty from our blind spot out into the spotlight.

PARTNERING WITH PHILANTHROPY AND CIVIL SOCIETY – A LABOR VIEW

SPEECH TO THE INAUGURAL PHILANTHROPY MEETS PARLIAMENT SUMMIT

PARLIAMENT HOUSE, CANBERRA

Thank you to Alan Schwartz for that kind introduction, and to Philanthropy Australia for bringing you all into the nation’s Parliament. I would also like to congratulate Tony Stuart on his appointment as the newest member of the government’s Community Business Partnership.

I come bearing apologies from the Leader of the Opposition, Bill Shorten, who would very much like to have been with you today. As many of you would know, it was Bill who developed and delivered the Australian Charities and Not-for-profits Commission when he was Minister for Financial Services back in 2012. He has an abiding interest in the community sector.

For centuries, people have given to help others. Many people give from a sense of religious duty. Whether it’s the Jewish tradition of tzedakah, the Muslim notion of zakat or the Christian tradition of tithing, the faithful have always seen an obligation to give.

Philanthropy is an important form of social capital in Australia. Five years ago, I wrote Disconnected, a book that tracked various metrics of community spirit over the decades. Based on charitable deductions data from the Australian Taxation Office, I estimated that the share of Australians who donate to charity had not risen much since the late-1970s. Other donations data showed the same pattern – the share of people who give blood slipped slightly over the period from 1980 to 2010.

Connected communities: how Australia’s social capital declined, and what we can do to rebuild it

Address delivered to the Municipal Association of Victoria’s ‘Future of Communities: Power to the People’ National Conference

Melbourne

Manal Kassem had chosen the inner city of Sydney for her wedding photoshoot, but she was a little hesitant. It was Saturday 20 December 2014, and during the week a lonely gunman, brandishing an Islamic flag, had taken eighteen people hostage in a nearby café. After a lengthy standoff and a final gunfight, two were left dead.

In the wake of the Martin Place siege, Manal Kassem feared she would be judged. A Muslim bride from Punchbowl in Sydney’s West, she would be wearing a white hijab at her wedding and inner city photoshoot.

Rather than cancelling or relocating the big day, she chose to offer a gesture of respect to the country in which she hoped to raise her children.

As soon as the wedding ceremony finished, she and her groom ventured to the Martin Place memorial, where she laid her wedding bouquet alongside the other floral tributes.

As the onlooking crowd applauded, Martin Place – not long earlier the site of one of Sydney’s greatest tragedies – seemed to transform into a symbol of our connectedness. A multicultural Australia was united to collectively mourn the loss of lives in Martin Place.

But was this scene unusual? Are we always this connected? Our sense of community spirit is strengthened in moments of tragedy or triumph, but does it also exist in the trivial? 

MATTER OF PUBLIC IMPORTANCE

HOUSE OF REPRESENTATIVES,CANBERRA

THURSDAY, 20 AUGUST 2015

Recently scientists have been exploring a creature known as the sea squirt. It is a fascinating creature. It is a simple creature whose job in life is to try and locate a place on the sea floor, where it will sit and feed for the remainder of its life. It takes a little while to discover that place, but once it does, it begins absorbing parts of its body. It absorbs its tail, its eye, its spine and, finally, it eats its brain. That’s right, the sea squirt gets to where it wants to be and then eats its own brain.

I am sure I not the only one in this House who, when I hear about the sea squirt, starts to think about the history of the Abbott government. They had a brain that was devoted to getting where they needed to be and, once they gained power, they just ate their own brain. 

SPEECH TO THE AUSTRALIAN LABOR PARTY’S NATIONAL CONFERENCE

MELBOURNE EXHIBITION AND CONVENTION CENTRE, MELBOURNE

SUNDAY, 26 JULY 2015

Friends, in the past year we have seen the strongest possible demonstration of Labor’s enduring values in action.

In their first Budget, the Abbott Liberals attempted to cut pensions by $23 billion over the coming decade. They attempted a cut that would have left 3.2 million Australian pensioners worse off. They attempted to shut older Australians out from sharing in the growing prosperity of this country in the years ahead.

What did we do? We stood as one and said no. We stood as one to protect the pension, just as we have since the Fisher Labor Government first wove this enduring safety net for our old in 1909.  

Labor people – men and women – joined with communities across Australia to say no to these cuts and no the Abbott Government’s mean and meagre vision for retirement.    

DIGITAL CANBERRA iAWARDS

SKILLS FOR THE FUTURE WE CAN’T PREDICT

 Thank you to Suzanne Campbell from the Australian Information Industry Association for inviting me to be with you tonight, and to iAwards team for putting together such a great event. I’ve just come from a day up on the Hill with my parliamentary friends and foes, trying to find solutions to the very concrete and prosaic challenges that are right in front of us. Because of that, it’s very exciting and energising to be amongst a group of people who have their eyes lifted instead to the digital and technological horizon.

Predicting what lies ahead in that future is a notoriously risky business. William Preece from the British Post Office proved that back in 1876 when he confidently asserted: ‘the Americans have need of the telephone, but in England we do not. We have plenty of messenger boys.” I might try telling my sons that when they get to the age where they start asking for iPhones. 

LAUNCH OF THE FINANCIAL SERVICES COUNCIL NATIVE TITLE STANDARD

PARLIAMENT HOUSE, CANBERRA

Thank you to Aunty Matilda House for that very fitting welcome to country, and thanks to Sally Loane and the Financial Services Council for inviting me to share in today’s launch. I acknowledge the Minister for Indigenous Affairs Nigel Scullion, and also my counterpart and occasional sparring partner, Assistant Treasurer Josh Frydenberg. All political sparring gets put aside when we come together to mark worthwhile initiatives like the one the Financial Services Council is launching today, and particularly when we do so during National Reconciliation Week.  

A little while ago I was reading some research done by the Australian Institute of Aboriginal and Torres Strait Islander Studies, on the experience of Indigenous communities managing their native title rights once these have been recognised in Australian law.