Andrew Leigh

TELEVISION INTERVIEW
BREAKING POLITICS - FAIRFAX MEDIA 
MONDAY, 12 MAY 2014

SUBJECT/S:  Budget to axe or privatise Commonwealth agencies; Deficit levy.

CHRIS HAMMER: Well, the federal budget is now just one day away and you have to wonder what's left to announce, so comprehensively has features of it been leaked during the past week or more. Joining me to discuss it is Andrew Leigh, the member for Fraser here in the ACT, the Labor member.  

SHADOW ASSISTANT TREASURER, ANDREW LEIGH: Morning Chris. 

HAMMER: Also Shadow Assistant Treasurer. So a big week for you. And from Brisbane, Andrew Laming, the Federal Member for Bowman. Andrew Leigh to you first, the stories in the papers today are about cutting or merging government agencies and depending on which paper you believe, somewhere between 50 and 70 government agencies are going to be either abolished or merged. If that's delivering the same services with greater efficiencies, surely that's something to be supported. 

LEIGH: That's a big ‘if’ Chris. We look at the Preventative Health Agency, an agency which is investing and making sure that we reduce of rates of obesity, rates of smoking – including cigar smoking – and other preventable health conditions. We look at Indigenous Business Australia which is aiming to increase the number of entrepreneurs in the Indigenous community. These are just some of the agencies that are on the chopping block with no clear plans to replace them. Then there's the expert agencies. [This is] a government that thinks it doesn't need experts to provide advice on climate change. Now we've seen the National Water Commission being cut into and corporate advisory groups which provide vital advice to governments on markets. You just let it all rip, guided only by your big business donors and your gut. Good governments take advice from great experts and they draw-in a wide range of views which is why these bodies were established.

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Minister for Business Services and Consumers Gail Gago today called on the Abbott Government to abandon its plans to axe the Australian Charities and Not-for-profits Commission (ACNC).

Ms Gago today joined Federal Shadow Assistant Treasurer Andrew Leigh and Uniting Communities Chief Executive Simon Schrapel to highlight the potential of the ACNC to cut red tape and support the work of local charities.

“Charities need a nationally consistent approach, which is why the ACNC is so important,” she said.

“The charities commission strengthens organisations that work with some of our most vulnerable citizens.

 

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Six years ago, as he was taking on the job of Anglicare CEO, former premier Lynn Arnold said that the job of the charity should be ‘‘to empower and leave alive the spirit of aspiration in people’’.

It’s a simple line that perfectly sums up the valuable work being done in not-for-profits across Australia.

Lynn Arnold may be an exceptional leader, but his decision to devote a significant stage of his post-political career to charitable work shows something that is common in South Australians – a commitment to a vibrant community sector.

To ensure that this sector remains strong, Federal Labor in 2012 established the Australian Charities and Not-for-Profits Commission.

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Federal Labor urges the Abbott Government to act on new research claiming supermarkets are not complying with a national unit pricing code and are therefore hurting consumers.

It’s up to the Government to verify the research and enforce unit pricing so consumers can get the benefit of competition.

Unit pricing involves retailers providing a price per unit measurement on the price tag, for example – dollars per kilogram – in addition to the sale price.

Under the code, unit pricing information must be prominent and legible, in close proximity to the selling price and unambiguous. 

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Over recent months, I've asked Canberrans to fill out my survey on attitudes to trade unions. Over 400 people answered the survey. Here's a rundown of the results.

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My Chronicle column this month offers a bit of advice to those finishing high school this year.

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In today's AFR, I have an obituary for the late Gary Becker.

The man who looked at the economics of everything, Australian Financial Review, 6 May 2014

Gary Becker began to apply economics to crime when he was running late for a meeting, and had to choose whether to spend extra time parking legally – or park illegally and risk getting a ticket. After considering the size of the fine and the chance of getting caught, he decided to take the risk and park illegally. (He didn’t get a ticket.)

In the 1960s, applying economics to crime was a radical thing to do. Economics then was focused around a narrower set of questions, such as trade, inflation, wages, competition and savings. Crime was the domain of other social sciences, such as psychology and sociology, which saw criminals as having quite different motivations from the law-abiding.

Becker didn’t dismiss morality, but also argued that it was important to see criminals as being affected by the chance of being caught and the size of the punishment. His work led economists to study how crime might be affected by prison terms and police numbers, as well as by unemployment rates and inequality.

In 1976, Becker summed up his style of economics as ‘maximizing behaviour, market equilibrium and stable preferences, used relentlessly and unflinchingly’. It was an approach that he began in his 1955 PhD thesis, which was on the economics of discrimination. Becker argued that the level of discrimination we observe depends not only on people’s prejudices, but also on the market.

For example, suppose prejudiced employers are refusing to hire members of a particular group. In a competitive market, what is to stop a new firm from employing the most productive members of that group, and making more profit? Subsequent studies validated Becker’s theory by showing that as industries became more competitive, the level of racial and gender discrimination fell.

Becker’s work not only won him the Nobel Prize – it encouraged other economists to embark on what its proponents called ‘the economics of everything’ and its critics dubbed ‘economic imperialism’. Popularised in Steven Levitt and Stephen Dubner’s Freakonomics books, the economics of everything has seen economics confidently pushing into topics that were formerly the exclusive domain of sociologists, education researchers, and political scientists.

In my own work as an economist at the Australian National University, Becker’s example was extraordinarily influential. During that time, I wrote papers that looked at the impact of child gender on divorce, the Baby Bonus on birth timing, and obesity on wages. With a suite of co-authors, I looked at trust, media bias, political betting markets and ethnically-identifiable names. Indeed, I even analysed whether beauty affected the electability of federal politicians, a study that makes me uneasy now that I’m a datapoint rather than a datacruncher.

The strength of modern microeconomics as a discipline comes from a marriage of two things: a Becker-like willingness to apply theory to new areas, and the explosion in new data. Chat to empirical researchers in the world’s top economics departments, and they’ll tell you how they’re coding up uncommon surnames to look at social mobility, satellite imagery to look at growth in Africa, or wine magazines to see whether those who advertise get better reviews.

Becker won his Nobel Prize in 1992 not merely for providing insights into the discipline, but for expanding its scope. As well as crime and discrimination, he peered into the family – using economic analysis to consider how families share the work, choose how many children to have, and decide how much to invest in their children. In 1964, he posited the then-controversial notion that we should think of education and skills as a form of capital, productive in the same way as factories and tools. If you’ve ever used the term ‘human capital’, you’re channelling Gary Becker.

As a pivotal member of the University of Chicago’s economics department, Becker’s political preferences were a touch to the right of mine. But only a fool listens solely to people on his side of politics. I found it hard to read anything by Becker without gaining new insights – even where I disagreed.

For the past decade, Becker co-wrote a public policy blog with a fellow economist, judge Richard Posner. In his final three entries (written in February and March of this year), Becker argued that the US should end its embargo on Cuba, that America should adopt a HECS-style system of income-contingent university loans, and that marijuana should be decriminalized. Each bears the trademark Becker approach: big issues, lucidly articulated, with a controversial conclusion.

Andrew Leigh is the federal member for Fraser, and a former professor of economics at the Australian National University. He is the author of The Economics of Just About Everything (forthcoming, Aug 2014).

My op-ed in today's Telegraph looks at what Charlie Sheen and Joe Hockey have in common.

Committed to dividing society by eroding basic principles, Daily Telegraph, 6 May 2014

A few years ago, after trashing yet another hotel room so badly that he was barred from the hotel, actor Charlie Sheen simply got his publicist to do the talking. There’s nothing to see here – he told the newspapers – just a quiet night out with some friends.

Perhaps Joe Hockey has been watching too many re-runs of Two and a Half Men, because his fiscal strategy since the election has a touch of Sheen about it. After winning office, the Coalition manufactured a budget crisis, doubling the budget deficit by rejecting 55 Labor tax measures. Going soft on multinationals. Scrapping the mining tax. Ending the carbon price. A billion here, a billion there – and soon you’re talking real money.

In the election campaign, Mr Abbott promised that he would not raise taxes, and that his government would keep its word.  ‘There should’, he said, ‘be no new tax collection without an election.’

At election time, a report from the public servants who head the departments of Treasury and Finance made clear that Labor would have had the budget back in surplus in 2016. After Joe Hockey’s first budget update, we had red ink as far as the eye could see.

The Commission of Audit recommendations are what you might expect from a report that asks big business to write our social policies. Higher fees to see a doctor will – as the Australian Medical Association and the Doctors’ Reform Society have said – make us a sicker society. The Commission wants bricklayers and nurses to wait until 70 to get the basic pension.

If the government must break a promise, it could start with its unfair parental leave scheme, which gives the most to those who have the most. Australia currently has a scheme, which recognises that a baby born into a poor family is worth as much as a baby born into a rich family.

Since the early-1990s, CEO pay has risen three times as fast as the minimum wage, but the Commission of Audit thinks the ‘wage problem’ is at the bottom. It’s hard to see the fair go from the fairway.

The question for Australia is whether we let this continue. With a government as committed to cuts at the bottom as it is to giveaways at the top, Australian egalitarianism is under threat like never before.

Andrew Leigh is the Shadow Assistant Treasurer.

 

MEDIA RELEASE

No support for Government’s regressive ACNC repeal

Public submissions to the Senate inquiry into the abolition of the Australian Charities and Not for Profits Commission (ACNC) have been clear in sending a message to the Abbott Government not to scrap the Commission.

In March, the Senate referred the ACNC (Repeal) (No. 1) Bill 2014 to the Senate Economics Legislation Committee for inquiry and report. Submissions closed on Friday with a range of organisations including The Shepherd Centre, Australian Women’s Health Network and Associated Christian Schools having their say about the important role the Commission has played for the sector.

Organisations have labelled the repeal legislation a backward step and criticized the lack of consultation with the sector about the changes.

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On 5 May 2014, I joined Kieran Gilbert on Sky AM Agenda to discuss Treasurer Joe Hockey's strategies for fundraising from big business, and government decisions that have allowed multinationals to shift profits offshore.

E&OE TRANSCRIPT

TELEVISION INTERVIEW - SKY AM AGENDA

SUBJECT/S: Federal Budget; Debt tax; Political donations

KIEREN GILBERT: This is AM Agenda. Thanks for your company this Monday morning. With me now, the Shadow Assistant Treasurer, Andrew Leigh.

Andrew Leigh, you've heard a lot of what Josh Frydenberg has had to say and the Liberal Party of the last couple of days about getting the budget back. This is normal for pre-budget season, that ideas are floated and if it's going to be a tough budget of course, it's not going to be that popular.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Kieran, what's normal at this stage is that the budget is off at the printers and what's extraordinary is that the Government is still clearly trying to work out what's in the budget. I mean, the idea that Mr Abbott couldn't go to Indonesia at the personal invitation of the Indonesian President does indicate that there's a real sense of crisis in the Government about the budget. And, they're engaging in what troubles me, because it's such a misleading campaign about the true state of nation's finances when the Coalition took over. Since then, the Government's added $68 billion to the four year deficit, doubling that deficit and as Josh Frydenberg noted, getting the IMF to blow the whistle on rampant spending. But that's the IMF blowing the whistle on Joe Hockey who has now taken off the spending cap that existed when Labor was in government.

GILBERT: You've watched politics and been close to it for a long time now. You know full well that budgets are deliberated on, worked on, until the last days. It's very rare that you would have a budget go a week out to the printers. That's not accurate is it?

LEIGH: It ought to be done and dusted at this stage Kieran and the notion that the Government’s still trying to decide whether or not it's going to break its promise on the debt tax, whether it's going to break a promise on a GP tax, whether it's going to break a whole range of range of promises to pensioners and vulnerable Australians really ought to be concerning to anyone who wants to see good public policy done in Australia.

GILBERT: But what the Government argues and what the Prime Minister has argued this morning, we played the comment at the start of the program, is that for equity basically, they're suggesting that you've got to look at the idea of a debt tax for those on higher incomes because. And I'll put it to you, that if you do target those on welfare and welfare payments at the lower income scale, why shouldn't you target those wealthier Australians to also make a contribution?

LEIGH: What the Government is doing, is basically unravelling the carbon price mechanism. So, the carbon price raised the tax on pollution and lowered the price of work at the same time. The Government is doing the reverse.  They want to raise the price of work and the want to lower the price of pollution. So, we'll get less participation and more pollution as a result of what the Government's doing. And it has to do that because it loses such a large amount of revenue in scrapping the carbon price. Scrapping the carbon price isn't just bad environmental policy, it's bad economic policy as well.

GILBERT: In terms of the equity scenario, if they are trying to reduce debt and deficit, and you're going to reign in middle class welfare and welfare for those on lower incomes, shouldn't those on higher incomes also make a contribution?

LEIGH: It's such a clear broken promise Kieran from a man who criss-crossed the country for three years saying that if people should know anything about him, it would be that he wouldn't break his promises. To take a simple example, if we have a one per cent levy on people earning over a $100,000 that raises less than $2 billion a year in an environment in which the Government has already added $68 billion to the deficit.

GILBERT: I want to look now at the front page of the Sydney Morning Herald and The Age. This is the story on Joe Hockey. 'Treasurer for sale' is the headline. The Prime Minister has responded to this story this morning. Let's play you a little of Tony Abbott on the Nine Network Today Show.

TONY ABBOTT: I haven’t actually seen the story but I do want to make the point that all political parties have to raise money. Typically you raise money by having events where senior members of the party go, and obviously they meet people at these events. The alternative  to fundraising in this time-honoured way is taxpayer funding at a time when we’re talking about a very tough budget indeed. The idea that we should scrap private fundraising and fund political parties through the taxpayer I think would be very odd.

GILBERT:Is there anything wrong here? This is something that has gone on for a long time isn't it? Peter Costello had a very similar Club 200 in his seat of Higgins for years.

LEIGH: Joe Hockey likes to give the impression that he is everyone's friend. But now we learn it costs $5,500 to be a friend of Joe's, or $11,000 if you want to be a friend with benefits. And you can see the sorts of benefits that flow. For example, one of the government's first decisions on coming to office was to go soft on the taxation of multinational companies, to take away a $700 million measure that Labor was going to put in place that would have seen those companies fairly taxed.

GILBERT: So, you're alleging that Joe Hockey has been bought by big business?

LEIGH: I'm not alleging a specific link between a specific payment but this is a Government which is clearly running schemes in which they get corporate donations from the top end of town and then run a Commission of Audit by the big end of town and then institute policies that benefit the top end of town such as going soft on multinational taxation.

GILBERT: Isn't this just donations being paid for access, and the Labor Party has functions where you have companies and other groups like the unions having to pay to attend and sit at the table of a Shadow Minister for example.

LEIGH: We worked to bring down these disclosure thresholds. Don't forget John Howard took the disclosure threshold from $1,500 to $10,000. It's now indexed up to $11,500, coincidentally, just a bit higher than the payment amount of friends of Joe Hockey club. The result of that is very large donations can be made without being disclosed.

GILBERT: He's within the rules though. That's what you're saying.

LEIGH: He is certainly within the rules from everything that we have read so far. But I don't think it's appropriate for people to be making such large donations and for them not to be publically disclosed because I think ultimately cash of that scale does cause challenges for the effective operation of our democracy. And this is a Government which is taking away the income support bonus, the Low Income Superannuation Contribution, the School Kids bonus from low and middle income families and then it's giving tax breaks to mining billionaires, tax breaks to multinationals who are profit shifting. It's refusing to even fairly tax people with super balances over $2 million. So, for the top end of town, the age of entitlement is just beginning.

GILBERT: Andrew Leigh, thanks for your time.

LEIGH: Thank you Kieran.

ENDS