Climate Change

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The Unkindest Cut

Federal parliament will soon be debating how to rebuild the damage done to Australia by this summer’s cyclone, floods and fires. All Australians will have seen either first-hand or on their television screens the damage that has been done not only to homes, but also to essential infrastructure such as bridges and roads. State and federal governments must now get the rebuilding process underway quickly, so the economic and social impact of these floods ends up being as small as possible.

At the same time, we need to recognise that the economic environment is strong. The latest labour force figures show that 62 percent of the adult population have a job (by contrast, the US employment to population ratio has fallen from 63 to 58 percent). A few months ago, when I asked Reserve Bank Governor Glenn Stevens about the Australian economy, he replied: ‘I sit around the table with my counterparts from 40 or 50 countries a number of times a year, and I have not yet found one whom I would want to swap places with.’

Yet despite the powerful performance of the Australian economy and the fact that our public debt share is less than one-tenth the average for most other developed economies, the Coalition seem unable to acknowledge that fiscal stimulus worked.

As though that wasn’t enough, the Coalition have now decided to oppose a progressive flood levy that would cost less than $1 a week for most taxpayers. Instead, they have offered up a series of budget cuts that would damage to Australia’s economic wellbeing and national standing. These include:

  • Scrapping aid to Indonesian schools, a policy that boosts the life chances of thousands of Indonesian children, as well as helping to combat extremism.

  • Delaying water buybacks in the Murray Darling basin – a fundamental microeconomic reform that will help move employment in the basin onto a more sustainable footing.

  • Scrapping the ‘Helping Our Kids Understand Finance’ program. (You have to wonder whether any Liberal Party advisor thought to mention the irony of cutting financial literacy program just months after their election costings had been shown to be out by $11 billion.)

I guess there must be people in the Coalition who believe in generous engagement with Asia, microeconomic reform, and financial literacy. It’s just a pity that they don’t appear to be the ones in charge.

Always saying no may be good short-term politics for Mr Abbott, but surely he also recognises the risk that it poses to his credibility over the long-run. The more often Tony Abbott reaches for the glib one-liner instead of a sound policy choice, the less likely the Australian people are to believe that he has the skills and temperament to govern the country.
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Shake your family tree

I put out a press release today on the beaut 'Shake Your Family Tree' events that the National Archives are running. In the process, I couldn't resist mentioning one member of the family you mightn't expect - my great-great-uncle Robert Beckett (pictured), who served as a non-Labor MLC in the Victorian Parliament 1913-17.

Time To Shake Your Family Tree

Federal Member for Fraser, Andrew Leigh, has called on Canberrans to shake their family tree on 25 February 2011 and discover their family history.

The National Archives is holding the fourth Shake Your Family Tree day on 25 February 2011. All of the National Archives offices around the country- Canberra, Sydney, Melbourne, Brisbane, Adelaide, Hobart, Perth and Darwin-are providing interesting activities to assist people in tracing their family histories.

Shake Your Family Tree is a major event on the National Archives calendar, drawing around 2500 people to the Archives’ offices around the country. The theme for 2011 is Unexpected Discoveries – Amazing stories you can find in the Archives.

Andrew Leigh said the National Archives plays an important role in family history research.

“The National Archives holds a vast collection of information about people, from the ordinary to the famous, and their diverse interactions with the Australian government,” said Mr Leigh.

The National Archives holds Australian government records since Federation – on men and women who served Australia in wartime, who settled in Australia in the twentieth century or who were employed on public projects.

“People are always amazed to discover what is held in the Archives,” said Mr Leigh.

“Family historians find letters, photographs, immigration and citizenship applications, employment records and copyright registrations that help to build a picture of their past. The search is even easier now, as many of these documents are available online.

“Many of these records are about people – individuals who migrated here, who served in our armed forces, who were interned or investigated by the government, who were Indigenous, who applied for a copyright... the list goes on.

“In my own family tree, we’ve discovered a great-great-uncle of mine, Robert Beckett, who was a non-Labor member of the Victorian Legislative Council from 1913-1917.

“I encourage all Canberrans to access the valuable resources and records held by the National Archives,” concluded Mr Leigh.

Shake Your Family Tree day events include free seminars, workshops, demonstrations and guided tours, all relating to finding family history.

To access more information on the National Archives Australia, visit
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ABC24 with Senator Scott Ryan

Scott has prepared a transcript, which is here.
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An Age Old Topic

My Australian Financial Review opinion piece today is on ageing (remembering, as usual, that authors don't choose their headlines).

Coping with the grey masses, Australian Financial Review, 15 February 2011

How long do you expect to live? If you immediately thought about the official life expectancy figures (79 for men, 84 for women), you’re probably underestimating. Not only have you made it past the two risky periods of infancy and (I’m guessing) young adulthood. You also stand to benefit from medical advances in the future.

If there’s one thing you can expect about life expectancy, it’s that it will continue to rise. In the first half of the twentieth century, lifespans rose mainly due to improvements in the lives of the young. But since World War II, rising life expectancy has been driven mostly by improvements in the lives of older Australians.

If you plot the increase in Australian life expectancy over the past century, it is almost perfectly linear, right up to the present day. Even since 1990, life expectancy at birth has risen by 3 years for men, and 2 years for women. It’s possible that risk factors such as obesity will knock us off track, but if not, then current trends predict that life expectancy by 2050 will be 85 for men and 88 for women.

In Long for This World: The Strange Science of Immortality, Jonathan Weiner asks whether these trends will abate or accelerate. The pessimistic view is that gerontology is unlikely to ever solve some of the fundamental problems that cause ageing: cross-links that weaken our skin and damage our arteries, mutations that occur in our mitochondria, and ‘junk’ that builds up between nerve cells in the brain. An alternative view – proposed by advocates such as the eccentric Aubrey de Grey – is that these are solvable problems, and that death is just another preventable disease. (In the meantime, there’s reasonable evidence suggesting that extreme calorie restriction will give you a few extra years.)

But you don’t have to believe in immortality to recognise that population ageing is likely to have a significant impact on Australian society. In the labour market, we are likely to see a growing gap between ‘knowledge’ workers whose productivity steadily increases over time – and manual workers whose output depends on stamina and agility. Public debate tends to focus on the gap between the earnings of these two groups at a point in time, but it may be just as important to consider the disparity in career lengths. One of the reasons that the Gillard Government has been so keen to invest in trades training is to ensure that today’s tradespeople are able to enjoy careers that are both long and productive.

In the political arena, rising lifespans could have an impact on several debates. Because victims are typically older than criminals, an ageing society may have less sympathy for offenders. Because those who pay for education are generally older than those who receive it, demands for pay-as-you-go education schemes might grow over time. And because migrants tend to be relatively young, an ongoing skilled migration program will play a valuable role in replenishing the Australian labour market.

In the health sphere, expenditures are strongly skewed towards older Australians. So with health spending projected to take an increasing share of our incomes over coming years, it is critical to get proper incentives in place. (Alas, reportage of this weekend’s COAG health deal focused too much on power-plays and not enough on fundamental reforms such as the shift to activity-based funding of hospitals.)

Lastly, work on the economics of information is increasingly recognising the importance of presenting statistics and choices in the most straightforward manner possible. Underlying the federal government’s new MySchool, MyChild and MyHospitals websites is a desire to present Australians with the information they need, but without overwhelming detail. Transparency works best when information is also presented as simply as possible.

This is particularly challenging in the case of superannuation, given that we know financial literacy tends to peak when people are in their early-50s. One of the aims of the MySuper reforms is to ensure that you don’t need a PhD in finance (or the money to hire one) in order to maximise your superannuation returns.

In 1971, there were only about 200 centenarians in Australia. Now, there are nearly 4000. Though I still get a thrill from signing congratulatory letters to people celebrating their 100th birthday, it is becoming an increasingly common milestone. Longevity is a hallmark of success for our public health system, and represents a boost to wellbeing perhaps as important as economic growth. But we shouldn’t ignore the challenges – and opportunities – for policymaking in the future.

Andrew Leigh is the federal member for Fraser.
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Sky AM Agenda this morning

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Social Impact Bonds

Justin Wolfers draws my attention to an intriguing new idea afoot in the US and UK.
Lately, both American and British policy makers have been thinking about how to bring some of the competitive discipline of the market to government programs, and they have hit on an intriguing idea.

David Cameron’s Conservative government in Britain is already testing it, at a prison 75 miles north of London. The Bloomberg administration in New York is also considering the idea, as is the State of Massachusetts. Perhaps most notably, President Obama next week will propose setting aside $100 million for seven such pilot programs, according to an administration official.

The idea goes by one of two names: pay for success bonds or social impact bonds. Either way, nonprofit groups like foundations pay the initial money for a new program and also oversee it, with government approval. The government will reimburse them several years later, possibly with a bonus — but only if agreed-upon benchmarks show that the program is working.

If it falls short, taxpayers owe nothing.

The first British test is happening at Her Majesty’s Prison Peterborough, where 60 percent of the prisoners are convicted of another crime within one year of release. Depressingly enough, that recidivism rate is typical for a British prison.

To reduce the rate, a nonprofit group named Social Finance is playing a role akin to venture capitalist. It has raised about $8 million from investors, including the Rockefeller Foundation. Social Finance also oversees three social service groups helping former prisoners find work, stay healthy and the like. If any of those groups starts to miss its performance goals, it can be replaced.

For the investors to get their money back starting in 2014 — with interest — the recidivism rate must fall at least 7.5 percent, relative to a control group. If the rate falls 10 percent, the investors will receive the sort of return that the stock market historically delivers. “It’s been only a few months,” says Tracy Palandjian, who recently opened a new Social Finance office in Boston, “but the numbers are coming in O.K.” ...

The Obama administration’s seven pilot programs would create bonds for, among other areas, job training, education, juvenile justice and care of children’s disabilities. Nonprofit groups like Social Finance could apply. So could for-profit companies
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What I'm Reading

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At the Canberra Multicultural Festival

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Do you have to drink each time you mention the Beveridge Curve?

I copped some gentle flack yesterday for asking the RBA Governor about the Beveridge Curve. Here's an illustration of the data that concerned me (thanks to Scott Kompo-Harms at the Parliamentary Library for compiling it).

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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.