ABC News 24 Capital Hill 28 November
Lyndal Curtis hosted me and Michaelia Cash on the Capital Hill program yesterday evening. Topics discussed include Labor's plan for the Murray-Darling Basin, the Australian Labor Party national conference and how to involve party members, along with Tony Abbott's statement about only the "right kids" staying at school until year 12.
http://www.youtube.com/embed/7Cv1x4JE2XE
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Non-Parental Care
A report in today's Herald Sun returns to an economics paper that Chikako Yamauchi and I put out in the public domain in 2009, and which garnered quite a bit of coverage when I presented it to the December 2009 LSAC conference. The basic findings of the paper are:
If you're interested in the paper (or would like to see our application of the Altonji-Elder-Todd approach of using selection on observables in order to gauge the potential importance of unobservables bias), it's available here.
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- the differences in behaviour between kids in parental and non-parental care are small;
- there isn't 'one effect' of daycare - it differs across socioeconomic groups; and
- kids appear to do a smidgin better in daycare centres with smaller ratios.
If you're interested in the paper (or would like to see our application of the Altonji-Elder-Todd approach of using selection on observables in order to gauge the potential importance of unobservables bias), it's available here.
Lil tent joins big tent
Due to the popularity of the 4x6 metre 'Big Tent' among local community groups, I've now bought a second marquee. The younger sibling is a smidgin smaller at 3x3 metres, and fits in a regular sedan with the front seat down. (The bigger one requires a station wagon or similar.)
If your community organisation would like to borrow one (or both!), just email me at andrew.leigh.mp <AT> aph.gov.au, or phone 6247 4396.
Pictures of the two tents are below (small at the top, large at the bottom).
And of course, we also have a PA system for loan.
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If your community organisation would like to borrow one (or both!), just email me at andrew.leigh.mp <AT> aph.gov.au, or phone 6247 4396.
Pictures of the two tents are below (small at the top, large at the bottom).
And of course, we also have a PA system for loan.
National Memorials
I spoke in parliament today about the new national memorials report (and as it was my last speech for the year, thanked my staff, volunteers, interns and family).
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National Capital and External Territories Committee Report
24 November 2011
National memorials are a crucial part of the nation's collective memory. They bind a nation together through one of the most powerful of unifying forces—shared history. The National Memorials Ordinance 1928 came about at a time when Canberra's population was under 10,000, and Lake Burley Griffin was just lines on a map. It was instigated by Prime Minister Stanley Bruce when parliament had just moved to Canberra and rapid development was underway in the new national capital. The recommendations arising from the inquiry of the Joint Standing Committee on the National Capital and External Territories into the administration of the National Memorials Ordinance 1928 reflect Canberra's transformed milieu and how Australia's management and use of national memorials can be improved.
In seeking to improve the management of the capital's national memorials, the committee found it instructive to look at the case of Washington DC. Washington, like Canberra, is both a national capital and a planned city. Both are sites for the expression of the national aspirations of their people. Both are governed by a detailed planning regime that balances the legacies of the past with the needs of the present and the potential of the future. Part of the challenge is in choosing appropriate subjects for commemoration and choosing suitable designs and locations for new monuments and memorials. This process must balance the competing desires and interests of the different stakeholders.
We on the committee found that one of the key strengths of the Washington model is that the planning stage involves broad constituencies. Washington's National Capital Planning Commission has 12 members, representing federal and local constituencies. Each member represents a different section of the community and brings different perspectives. No one entity dominates the process.
As many Canberra residents made clear in their submissions to the inquiry, the need for local consultation and input in the development of national memorials is paramount. While memorials and monuments are of national significance, Canberrans live with the consequences of their designs and management on a daily basis.
The committee recommended, as the member for Riverina has pointed out, that the National Memorials Ordinance 1928 be repealed and replaced with an Australian commemorative works act, based on the United States model. The act would provide for a two-pass assessment process for national memorials—the first pass focused on commemorative intent, the second pass on character and locations. Time does not permit me to go into the detail of our recommendations, but I commend what is a very bipartisan report to the House.
I would like to use this opportunity to thank the committee secretariat, particularly Peter Stephens and the indefatigable William Pender, for their work on this report. To the many Canberrans and representatives of national organisations who took the time to put together submissions for the inquiry, to give evidence and to engage so deeply with this process: thank you.
As this is perhaps my last parliamentary speech for the year, I would also like to use this chance to briefly thank my hardworking staff, Louise Crossman, Gus Little, Claire Daly, Lyndell Tutty, Ruth Stanfield and Nick Terrell, as well as my team of terrific volunteers, including Ken Maher, Barbara Phi, Alex Dixon, and Gerry Lloyd. I would also like to thank the interns who have worked in my office during the year, including Hariharan Thirunavukkarasu, Louisa Detez, Angela Winkle, Jessica Woodall, Huw Pohlner and William Isdale.
I am pretty sure that after our 3 am finish on Wednesday I was the only MP who was woken at 6 am by a four-year-old entering the bedroom. My two wonderful boys, Theodore and Sebastian, are more than a full-time job, and I would like to acknowledge my extraordinary wife, Gweneth, as well as my parents, Barbara and Michael, for all their help during the year. Our families bear much of the burden of this job, and I could not do it without them.
Promoting Cancer Research and Treatment
I spoke in parliament today about cancer research and the Ben Donohoe Run and Walk for Fun.
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Ben Donohoe Fun Run, Capital Region Cancer Centre
24 November 2011
Ben Donohoe was a sports-loving, caring and intelligent nine-year-old boy who lived with his parents, Robyn and Peter, and siblings, Luke, Lauren and Kate. An active boy who particularly loved cricket and soccer, he played every sport. He also loved his music and would sing and dance around his bedroom to the sounds of Shrek, Robbie Williams and Shannon Noll. Ben attended Latham Primary School and was in year 4 when he was diagnosed with a brain tumour on 10 June 2005. When he became sick, his mother Robyn would often ask him if there was anything she could get for him and Ben would simply say, 'Just a cuddle.' That is a testament to his caring nature. Despite an operation to remove the tumour and despite Ben's determination, the tumour was too aggressive. Ben passed away on 2 August 2005, less than eight weeks after being diagnosed.
Now in its seventh year, the Ben Donohoe Run and Walk for Fun has raised over $220,000 for the ACT Eden Monaro Cancer Support Group, Make-A-Wish Australia and Brain Tumour Australia. This has greatly helped in supporting families affected by cancer and bringing hope and joy to the lives of seriously ill children. The Ben Donohoe Run and Walk for Fun is now one of the largest fun runs in the region. On 6 November, a team from my office ran the six-kilometre circuit around Lake Ginninderra with almost 2½ thousand others who helped raise over $65,000.
Cancer patients in the ACT and surrounding region will also benefit from a new Capital Region Cancer Centre. When completed in late 2013, the new centre will improve cancer treatment by drawing together and integrating cancer services including chemotherapy, radiation therapy, haematology, immunology, research and teaching programs, within a single five-storey building on the Canberra Hospital campus. The Capital Region Cancer Centre is part of a $2 billion Australian government initiative to build a world-class cancer care system. It was my pleasure on 2 November to be part of a sod-turning with the Minister for Health and Ageing; Katy Gallagher, the Chief Minister of the ACT; the member for Canberra and Senator Lundy. The Capital Region Cancer Centre will service around half a million people across the ACT and surrounding regions by providing access to screening, assessment, diagnostic treatment and palliative care services.
I would like to thank the organisers of the Ben Donohoe run, and members of the 'Leigh team', who wore T-shirts emblazoned with my name and joined me on the day—Damien Hickman, Gus Little, Claire Daly, Jules Zanetti, Angela Winkle, Karina Leys, Jess Woodall, Alex Cubis and Eleanor Cubis. Next year's Run and Walk for Fun will be on Sunday, 4 November 2012. I look forward to doing another lap of the lake and encourage all Canberrans to take part.
Time to Simplify Phone Plans
I spoke in parliament yesterday, arguing that Australian mobile phone plans are too complex, and phone companies should make them simpler.
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Complex Mobile Phone Plans
23 November 2011
I rise to speak on the unnecessary complexity of mobile phone plans in Australia. According to the 2009-10 report of the Australian Communications and Media Authority, 15 million Australians use a mobile phone. Thirty-seven per cent of Australian adults use a mobile phone as their main form of communication. Mobile phones are an integral part of life for many of us. They help us stay connected while travelling, simplify the process of meeting a friend on the weekend, make it easier for tradespeople to do their jobs and allow parents to keep tabs on their teenagers. The mobile phone is a great piece of technology, yet the process of choosing a mobile phone plan is currently Byzantine.
I recall moving back from the United States to Australia in 2004. In the US, choosing a mobile phone plan is simple: you pick a handset and choose the number of minutes per month—500, 1,000 or unlimited minutes each month. The choice is simple, and you can readily compare across mobile phone carriers. Having lived in the US for four years, nothing had prepared me for the complexity of Australian mobile phone plans. First, you have to choose from among a plethora of handsets. Then you have to choose your cap. The cap is expressed in dollars, but of course that does not mean anything because it depends on how much each call costs. If you tell me that I have $50 for calls, that is twice as much calling time if calls cost 50c a minute as if they cost a dollar a minute
Again, it is not easy to figure out how much a call costs. With many carriers there is a flag-fall charge, meaning that the first minute carries a different price from subsequent minutes. Sometimes it is cheaper to call people whose mobile phones are on the same network. Some carriers have lower off-peak charges. Calls to landlines are often priced differently from calls made to other mobiles. For voicemail, some plans charge for leaving messages, some for retrieving messages and some for neither. So, if you want to know how much your month's calls will cost, you need to be thinking about how often you call landlines, how often you call mobiles, which carriers your friends use, what time of day you make your calls and how many voicemail messages you expect to receive. Are you confused? I know I am. If you have an ABN, you are eligible to buy a phone on a business plan, which for many people just introduces another layer of complexity. If you are a tradesperson, you now have to compare the personal plans and the business plans. And did I mention that you can choose a prepaid or a postpaid plan?
So in 2004, when my wife arrived here a couple of weeks after me, she could not work out why, although I had been in the country for two weeks, I still had not been able to choose a mobile phone plan. But it has only gotten more complicated since then. Many US mobile phone contracts provide unlimited data downloads. But an Australian mobile phone buyer has to decide how much data they want to download. Then they have to look at the excess fees for going over that cap. Sometimes products such as Twitter, Facebook or Myspace will be excluded, or off-peak data charges will be lower. Text messages are charged differently again. And don't get me started on the exorbitant cost of data roaming if you decide to use your mobile phone to check email overseas.
I defy anyone to sit down with the contracts for half a dozen mobile phone carriers, each offering a handful of plans, and choose the one that best suits their needs. The complexity of Australian mobile phone plans most harms people with low levels of financial literacy. Complexity hurts the poor, new migrants and the elderly. In this sense, unnecessary complexity operates like a regressive tax.
Labor has always stood on the side of consumers. The Gillard government has taken steps to improve consumer rights—providing simpler information to credit card and home loan customers, and standardising terms in insurance contracts. Under the new Australian Consumer Law, consumer guarantees are enforceable as statutory rights, while unfair contract terms can be declared void if they cause a significant imbalance. This allows the regulator potentially to work with mobile phone carriers to deal with unfair contract terms. I pay tribute to the Parliamentary Secretary to the Treasurer, David Bradbury, for his work on improving consumer protection in Australia. But I think it is also important that mobile phone companies recognise their responsibility to customers and start offering a simpler product.
Breaking the intergenerational poverty cycle
I spoke in parliament yesterday about policies to break the intergenerational poverty cycle through education.
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Social Security Legislation Amendment (Family Participation Measures) Bill 2011
23 November 2011
In 1981 a young woman found that she was pregnant at 16. After confirming the pregnancy and breaking the news to her mum, she attended school until the baby was nearly due. Although her mother was supportive and encouraged her to go back to school, the young woman decided it was too hard to commence year 12 with a young infant. Having already completed her year 11 studies, she eventually enrolled in a TAFE course and began a diploma in child care, part time. Now 45, with two children, she has a successful career in the early childhood sector running childcare centres in Melbourne. She also helps pregnant women who are not so lucky, in particular teenage mothers. Her daughter, now 29, is married with two children of her own. This story was told anonymously online by the woman herself to encourage teenage mothers never to give up. It shows why attaining year 12 or its equivalent is so important for teenage parents.
The number of teenage mothers in Australia has dropped significantly over recent decades. The most recent ABS data shows just four per cent of births were to teen mothers. But the outcomes of this small group are still worrying. In the 2006 census only 17 per cent of teenage mothers completed year 12. Over 1,500 females aged 15 to 19 years were not gaining the level of education that is increasingly essential for the demands of a 21st century workforce.
In June of this year the National Centre for Vocational Education Research released a report titled From education to employment: how long does it take? The centre found that young people who do not finish year 12 take significantly longer to move into employment. The prime factor influencing the speed at which a young person obtains work after they leave the education sector was their level of education. The report also found strong gender differences. For men, those with a degree obtained work five times faster than those who did not complete year 12. For women, those with a degree obtained work eight times faster. The unequivocal message from this report is that education is vital. For a young person entering the labour market, higher levels of education lead to better wages and to getting a job faster. In a worrying statistic, about one-quarter of the young people sampled with less than a year 12 education had not obtained any work by the end of the observation period. This is a serious warning for the long-term prospects of younger Australians who do not have year 12 or its equivalent. This prognosis for the career development and income levels of those young people is grim. This bill heeds that warning and puts in place a program for teenage parents to work towards attaining year 12 or its equivalent. From 1 January 2012, teenage parents in 10 disadvantaged locations with a youngest child under six who receive parenting payment and have not completed year 12 or an equivalent qualification will be required to attend Centrelink to develop a participation plan. Under the teenage parents trial, participants will be required to undertake compulsory activities from when their child is one year old. This will give them time to settle into life with a new baby; but, equally important, they will be able to develop a plan towards gaining a good education.
Education is the best antipoverty vaccine we have yet invented. It provides the foundations from which a young person can build a life of their choosing from the career opportunities and skills development that it brings. This government gets it. We understand that education is good social policy, that unemployment is the best predictor of disadvantage and that having the skills for the jobs of the future is essential to staying out of poverty. Although it was based on children and families in the United Kingdom, a recent Four Corners program made this point. It showed the human face, the cost and devastating impact of poverty on children.
One story was of Sam, who is 11 years old and lives in Leicester with his dad and older sister. Sam's dad is unemployed and struggles with finding enough money to buy food or to operate the electricity. Their income is £70 to £80 a week, which is barely enough to buy them the basics. Often the electricity and gas run out, leaving them cold and miserable. Sam has problems with bullying and suffers from low self-esteem. He has to be careful about what he says to other students for fear he will be judged and ridiculed. As Sam said, 'People don't like you if you're poor.'
This bill puts supports in place to cut the cycle of unemployment and poverty through education. I am sure that no-one in this place wants to see any child suffer, like Sam, the indignity of poverty. A great education in Australia can see a child from Cape York go to university, become a leader in her community and eventually become Young Australian of the Year. A great education means that a child from Ilfracombe can become the first female member of the Queensland bar and our first female Governor-General. This national parliament is itself a showcase of the opportunities that education provides to children from all corners of the nation. So many members of this House acknowledged in their first speeches that they would not be here today were it not for a great education.
The Brotherhood of St Laurence tells the story of another Sam. Forty years old, Sam has been working with the local council's road services department for the past 18 months. Now Sam's life is settled, he has safe, stable accommodation and is working towards future employment goals—but it has not always been that way. In 2009 Sam was living in a rooming house where violence was commonplace and the environment unsanitary. Through the Centre for Work and Learning at the Brotherhood of St Laurence, he was chosen to join a pre-employment training program. Sam successfully completed the training and was picked up as a trainee street cleaner with the local council. Having a steady income and taking control of his finances meant that Sam was finally able to renew his drivers licence. After he completed his traineeship he was linked to a recruitment agency used by the local council, and now enjoys a regular job. 'I really want to use my brain,' says Sam, when he is asked about his plans to work with youth and when he talks about becoming a teacher.
The other part of this bill focuses on families at risk of long-term unemployment. The aim of the jobless families trial is to break cycles of unemployment. For parents with children under school age, they will be required to develop a plan for re-entering the workforce once their youngest child starts school. Their Employment Pathway Plan can also include activities focusing on the health, wellbeing and education of their children. Because this government gets it, we are making sure children in families of risk are 'school ready' to make the most of their educational opportunities.
On a definition of poverty as households with less than 50 per cent of the median income, the OECD Family Database finds that 14 per cent of Australian children live in poverty. That is too many. This is why we are taking action with this bill and trialling these programs to support those at risk of long periods of unemployment and its lasting effects.
Recently the Economist magazine reported on the impact of unemployment in Western nations. Noting the scale of joblessness in the West, it pointed out that if all unemployed people lived in one country, it would have a population similar to that of Spain. By comparison, Australia's economy and our low levels of unemployment are the envy of other Western nations. We still have our own areas of stubbornly high unemployment, those pockets of disadvantage and of generational cycles of joblessness. For those Australians caught in those cycles of unemployment and disadvantage, or at risk of falling into those cycles, the human cost is all too real. Joblessness can lead to increases in depression, divorce, substance abuse, family breakdown and life's other troubles.
A 2007 study, 'Unemployment and Psychological Well-being', by Nick Carroll of the ANU, found that the adverse effects of unemployment on life satisfaction was large and significant. Not having a job was a much better predictor of having low life satisfaction than simply having a low income. Past unemployment also had a similar adverse effect, suggesting that unemployment had left long-term scars.
Internationally, there is substantial joblessness around the world, and we know that the longer a young person spends being unemployed, the greater that scarring effect is. In the United States, the average period of joblessness is now up to 40 weeks—an increase from only 17 weeks four years ago. In Italy, a person who is unemployed has, on average, been jobless for more than a year. The more detached people become from the workforce, the more their skills atrophy, the more their self-esteem drops, making it harder to re-enter the labour force, particularly a labour force that is moving on. That leaves countries with lower growth rates, putting strains on public finances and on the social fabric.
It is a grim picture, but it is important to understand the full impact that long-term unemployment has on individuals, communities and nations. That is why education is so important to prepare and equip people for the workforce of tomorrow, to safeguard them against the detrimental effects of unemployment. I know the power of education and the dignity of work have been at the heart of the agenda of the Rudd and Gillard governments. This is one of the reasons that I ran for parliament and it is central to what we on this side of the House believe in. There are still too many Australians who live in circumstances of entrenched disadvantage. Too many Australian children are in families where their parents and grandparents have not known regular employment. They deserve to know the dignity of work, and they can benefit from the habits that arise from growing up in a household where an alarm clock goes off in the morning and someone goes off to a dignified job.
As the Prime Minister said in her address to the Sydney Institute earlier this year:
'The party I lead is—politically, spiritually, even literally—the party of work … the party of opportunity not exclusion.
'Welfare reform and workforce participation is where progressive policy and Labor values come together.'
Not everyone can make it on their own. Sometimes the odds are stacked against people. We on this side of the House are committed to putting the odds back in their favour. This bill harnesses the transformative power of education to provide opportunities for some our most disadvantaged communities. This is what a government should do and this is what this Labor government is doing.
Recently the Australian Bureau of Statistics released figures showing that in June this year there were 96,000 jobless couple families and 210,000 jobless single parent families. Of these single parent families looking for work, 23 per cent had been jobless for more than a year. For those teenage parents and families experiencing long-term unemployment in Playford, Hume, Shepparton, Burnie, Bankstown, Wyong and the other trial regions, this government knows that in this place we have a responsibility to ensure that they are part of Australia's productivity, our economic fabric and our social wellbeing now and into the future. I commend the bill to the House.
Economic Management
I spoke in parliament on Tuesday about the importance of good economic management.
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MATTERS OF PUBLIC IMPORTANCE - Mid-Year Economic and Fiscal Outlook
22 November 2011
If I were sitting on the opposition's tactics committee, choosing an MPI for today, it certainly would not be the topic of economics. I would be thinking about dog whistles, about some sort of safe ground to talk about, but surely not the topic of economics, because those opposite have lost all credibility when it comes to economic reform. On economics, ours is the party of Hawke and Keating, theirs the party of McMahon and Fraser.
In its fundamentals, the Australian economy today is the product of economic reforms that were put in place by Labor governments and opposed by those opposite. Under the Rudd and Gillard governments, we have seen very clear contrasts. When the global financial crisis hit, it was our side of politics that put in place timely, targeted and temporary fiscal stimulus that 200,000 saved jobs. Their side of politics would have let tens of thousands of small businesses go to the wall.
When we had to deal with climate change, we listened to economists and we put in place a carbon price, a price on the negative externality that is carbon pollution. They went for command and control, a scheme which they could not find a single economist to back. With minerals prices at 140-year highs—BHP posting a record $23 billion profit and Fortescue telling the House economics committee they have never paid a cent of company tax—we on this side of the House think it might be fair to ask the mining companies to pay a bit more tax. Those on that side of the House think that mining companies are paying too much tax.
At the last election we on this side of the House went to the Australian people with costings that added up. Those on the other side of the House went with costings that were $11 billion short, done by a private accounting firm. When Treasury had the temerity to say, 'You're out by $11 billion or so', they immediately came into this place and started attacking Treasury officials. They even walked into this place and started attacking Ken Henry, the man that Peter Costello appointed in 2001 to head the Department of Treasury. As soon as they did not like what Treasury had to say, they were out there shooting the messenger.
When the member for Lyne proposed a Parliamentary Budget Office, we accepted it. We put in place a parliamentary inquiry, which reported back unanimously—including the member for Higgins—with a model for a Parliamentary Budget Office. But as soon as those opposite realised that that would mean the Australian people could actually see their costings, they moved to gut it. They walked away from the report that the member for Higgins had signed on to. At the next election those opposite will again be going to the Australian people with numbers produced by a private accounting firm.
When it came to the fuel tax reforms that Peter Costello introduced into this parliament as Treasurer in 2003, after an eight-year lead time—an implementation period unprecedented in modern policy making—those opposite said they would not support them. They were willing to back away from these reforms at the last minute. We on this side of the House believe in economic reform. In this case we believed in a Peter Costello economic reform, while those on that side of the House decided that cheap political opportunism beats consistency any day.
Recently, we have been moving to close a tax loophole on the petroleum resource rent tax, a tax loophole that the Howard government had fought against in the courts, as did we when we came to power. But those opposite have decided that they want to keep the loophole open—to the benefit of Esso and the detriment of the Australian taxpayer.
In the world of international trade, we are pursuing free trade. It is good to see the Minister for Trade here in the chamber—a passionate advocate of boosting free trade—because he knows, as do we on this side, that it is free trade that benefits Australian families. Those on that side of the House would start a trade war with New Zealand. They would support anti-dumping rules that are not World Trade Organisation compliant, anti-dumping rules that would see retaliatory tariffs hurting Australian companies.
The old party of Hewson and Costello is dead, buried and cremated. What we have instead is the Tea Party of Australian politics. You do not have to believe me on this; let us hear from some prominent Liberals about the economic policy nous of the Leader of the Opposition.
In the Costello Memoirs, the former Treasurer wrote about the Leader of the Opposition:
'Never one to be held back by the financial consequences of decisions, he had grandiose plans for public expenditure. At one point when we were in government he asked for funding to pay for telephone and electricity wires to be put underground throughout the whole of his Northern Sydney electorate to improve the amenity of the area. He also wanted the Commonwealth to take over the building of local roads and bridges in his electorate.'
That is the economic policymaking giant who is leading the current opposition. We can also hear from John Hewson, a former Leader of the Opposition, writing in the AustralianFinancial Review on 24 May 2010:
'Tony is genuinely innumerate. He has no interest in economics and he has no feeling for it.'
We on this side of the House commissioned the Henry tax review, the biggest tax review in a generation. We have set about implementing recommendations flowing out of that review, as you would expect. We are cutting the company tax rate. We are abolishing the inefficient dependent spouse tax offset with its old-fashioned notion that the bloke works and the woman stays at home. We are scrapping the environmentally disastrous fringe benefits tax rules for cars. We are getting rid of the inefficient entrepreneurs tax offset and replacing it with a more appropriate instant asset write-off for small businesses. We are introducing a minerals resource rent tax that is both efficient and fair.
This country's economic position is strong. You do not have to take just the Gillard government's word for this; let me quote a few overseas sources. One source said:
'Australia's economy is one of the strongest in the developed world.'
That was the Financial Times on 1 November 2011. Another source said:
'Australia's economy is booming … Even during the GFC, Australia, unlike many Western economies, registered modest growth.'
That was the International Herald Tribune on 31 May 2011. Another overseas source said:
'On the face of this comparative performance, Australia has serious bragging rights. Compared to most developed countries, our economic circumstances are enviable.'
That was a London source—here we go: the Leader of the Opposition was in London on 11 November 2011. That goes to show that you have to take the Leader of the Opposition to London before you get some economic sense out of him.
The Leader of the Opposition now promises repeal. He wants to repeal the carbon price; that means cutting pensions and raising taxes. He wants to repeal the mining tax; that will involve reversing the instant asset write-off. He wants to stop superfast broadband in its tracks. After a bit of flip-flopping, he has decided that he will not repeal this government's superannuation increase in the event he were to come into office. That superannuation increase, as members are aware, is from nine to 12 per cent, but gradually, from 2013-14 to 2019-20. At the time of the next election, superannuation will have gone up from nine to 9.25 per cent.
The Leader of the Opposition will repeal a carbon price for which future permits have been purchased and a mining tax that will have far-reaching consequences on investments, but he will let go the superannuation increase that will have only gone one-twelfth of its way. He will let it run until 2020. I think it is a good decision by the Leader of the Opposition, but it is frankly bizarre given his position on other policies. He said he is doing that because that is what the Howard government did in 1996, but it is not. They actually froze the Keating government's superannuation increases; they did not increase them as planned. Is it because the Leader of the Opposition believes in superannuation? Probably not, given that he told this place on 25 September 1995:
'Compulsory superannuation is one of the biggest con jobs ever foisted by government on the Australian people.'
The fact is that those opposite are against taxes and they are in favour of revenue measures. What they do not realise is that the budget has to balance. If they are repealing a law, that law should be the law of mathematics—that is the law they really need to abolish. If you are a polluter, a tobacco company, a big miner or someone who thinks they have found a loophole, the coalition will give you a hearing. Their policy is no special interest left behind.
Minerals Resource Rent Tax
I spoke in parliament today about the government's Minerals Resource Rent Tax package.
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Minerals Resource Rent Tax and Related Bills Including Superannuation Guarantee
21 November 2011
The legislation before the House today deals with the imposition of a profits-based tax on Australian minerals. In predicting the impact of this tax on the mining industry it is useful to look back into history, to the history of the Petroleum Resource Rent Tax. Back in 1987, the Hawke government proposed that the offshore oil and gas industry shift from a royalty regime to a profits-based regime. There was outrage from the industry. Industry members took out front page ads. They said a profits-based tax was anticapitalist. Predictably, those on the coalition benches supported them.
Over the last couple of decades, we have seen a boom in precisely that sector. As the economists told us, going back to the theory of Brown Taxes, a profits based tax was good for that sector. Under the old crude oil levy and royalties, the Bass Strait partners were going to shut several of their oil fields and not develop further gas fields. Under the PRRT, there is more than 20 years of oil production and 30 years of gas production remaining in Bass Strait. As the Minister for Trade, who was then an adviser to the Hawke government, has pointed out, history is now set to repeat. The coalition are railing predictably against the Minerals Resource Rent Tax.
There is another sense in which it is Groundhog Day for the coalition. The revenue from the Minerals Resource Rent Tax will go to fund an increase in superannuation. It was again a Labor government, back in 1992, who put in place the superannuation guarantee levy, guaranteeing nine per cent superannuation for all Australians, ensuring that Australians would be able to retire with dignity. What did those opposite say at the time? Well, the member for Mackellar said that there would be firings, that businesses would be regulated out of existence. But now of course we know that under compulsory superannuation Australians have more retirement savings that see them better able to face retirement.
But we on this side of the House believe that nine per cent is not enough. It is certainly not enough for new members elected in this place, who receive 15 per cent superannuation. We believe we need to increase the superannuation contribution to 12 per cent. Yet again—another Groundhog Day moment—those opposite are saying, 'No, you can't do it.' They are saying no to the profits-based tax and no to the increase in superannuation.
The Minerals Resource Rent Tax we are putting in place today is a more modest tax than the successful Petroleum Resource Rent Tax. While the PRRT has a 40 per cent rate, this one, when you take into account the automatic deduction, has a 22.5 per cent rate. It does not kick in until you make an annual profit of $50 million. So when people refer to ‘small miners’, it is worth bearing in mind that we are talking about people making some very large profits indeed.
In the House of Representatives Standing Committee on Economics inquiry into this package of bills, the representatives from the Council of Small Business Australia made it quite clear that $50 million in profit was well above what their members would expect to earn. It has been the product of a careful consultation process, including a Policy Transition Group—led by Don Argus and the Minister for Resources and Energy —and the Resource Tax Implementation Group.
It is important to recognise the context in which we are implementing this reform. Before the last mining boom, Australians got one dollar in every three dollars of mining profits, through royalties and resource charges. By the end of that boom, it was down to one dollar in seven. Profits were over $80 billion higher in 2008-09 than they had been in 1999-2000, yet the government only collected an additional $9 billion in revenue.
A profits-based tax is a fair tax. Because it is a rent tax, it ensures that the burden does not fall on workers or communities. It falls instead on the owners of the mining companies. The incidence of a minerals tax is different from the incidence of a company tax.
Many international policymakers understand this. In fact, it is not just those of us on the progressive side of politics who get it. I draw the House's attention to Sarah Palin's time as Governor of Alaska. During that period, Sarah Palin introduced a Petroleum Profits Tax. It is unusual that those on the opposite side of the House are further to the right of Sarah Palin. Sarah Palin wants a profits-based tax; those on the other side of the House want to stick with the old, outdated, unfair royalties regime.
The Minerals Council of Australia get this. In their November 2008 submission to the Henry tax review, they argued for a shift from a royalty-based system to a profits-based system. They did so because they knew that would be a more efficient way of taxing the minerals that are the birthright of all Australians. That has been widely recognised across the political spectrum up until this nay-saying Leader of the Opposition came in.
A profits-based tax is the right thing to do. It is an equitable tax, but it is also a more efficient tax. The revenue from this tax will go to fund important investments for all Australians. It will fund a company tax cut for all companies, down to 29 per cent; a new tax break for small businesses; investment into the regions, through the Regional Infrastructure Fund and the Regional Development Australia Fund.
It will simplify the personal tax system with a standard deduction of $500, increasing to $1,000 from 2013. It will support a boost to superannuation for 8.4 million Australians. It will support expanded superannuation concessions for 3½ million low-income earners. So all of this revenue is going to put in place the building blocks for Australia's future prosperity, but we know that being 'Mr No', the Leader of the Opposition will set in place repealing it. He has already said to the Australian people he will repeal the carbon price. He said he will repeal the Minerals Resource Rent Tax. He said he will stop the NBN and he said he is going to stop these because it is absolutely critical to stop them.
It is difficult to see how some of these reforms can be undone, but what is curious over recent weeks is there is one reform that the Leader of the Opposition will not repeal, and that reform is the increase in the superannuation co-contribution from nine to 12 per cent. It is a particularly surprising reform to be saying that you are not going to repeal, given that the rate is increasing gradually from now until 2020. But the Leader of the Opposition has said, 'I'll vote against it in this place but, if I'm elected in 2013, I'll support all of the incremental increases up to 2020.'
It is good that the Leader of the Opposition has come to his senses on at least one Labor policy reform. But the problem for him is that he now has to pay for that reform. We know the opposition have some serious financial problems. They went to the last election $11 billion short in their costings—they are now $70 billion short in their costings. That means when Australians are looking at what the Leader of the Opposition has on the table, they should be aware that there is $70 billion worth of slash and burn still sitting secret. They should be aware that there is $70 billion worth of additional savings the coalition has to find. That is on top of the 12,000 public sector jobs which are going to be slashed out of towns like Canberra, Darwin and Townsville.
If the Leader of the Opposition is going to repeal any law, the one that he really needs to repeal is the law of mathematics—the law that says that he has to make his books balance, the law that says that if he is going to support a spending measure, he needs a tax measure to back that up. But of course he is unwilling to do that. The only bit of this package that he says he will support if elected is the spending measure, the superannuation side of it; not the taxing measure, the Minerals Resource Rent Tax. We know why the opposition are in such a deep hole. They are no to reform, no to economists. If they do not like what economists have to say, they go out and attack them. But they are yes to special interests. There is no special interest that fails to get a hearing from the opposition. If you are willing to make a case for cutting a hole out of a piece of legislation, the opposition would be happy to bring your case to the parliament. Theirs is a policy of ‘no special interest left behind’.
We see the opposition coming into this place and making the sovereign risk argument. I am reminded of the old rule in high school debating, which is that when you have got two teams, the first team to mention the Nazis automatically loses. There are some arguments in high school debating that, when they come out of your mouth, we know you have run out of any sensible argument to make. That is true of the sovereign risk argument as well. Those opposite cannot work out a good reason for opposing a profits-based tax. They know the PRRT model has worked well. They know there is no rational reason for opposing this tax, so they reach deep down and pull out the sovereign risk argument. They say that doom and disaster will rain down upon Australia if we are to tax mining on a profits basis rather than a royalty basis.
You can tell the lie from that simply by looking at minerals investment in Australia. It has never been higher. Investment in this sector is at record highs but, for those opposite, no scare campaign should be left unturned. They are willing to run any scare campaign no matter how unbelievable.
Those opposite are the Colonel de Groot of Australian politics: they are willing to slash, wreck and break. They are willing to come in here and do anything they can in order to break down good constructive reform. We saw this last week during the visit of the President of the United States. There was brief moment where the Leader of the Opposition had a chance to look prime ministerial, but he was not able to take it. He was not able to step out of his day-to-day attack, attack, attack mode and just for a moment focus on what is in the interests of Australia.
The Leader of the Opposition is always more interested in tearing down the Labor Party than he is in building up Australia. His political interests are what get him out of bed each morning. There used to be a proud tradition in the Liberal and National Parties of Australia of noblesse oblige but today the coalition are all noblesse and no oblige. They are willing to back away from reforms that will help low-income earners in Australia; reforms that will help small businesses in Australia; and reforms that will put fair taxation in place for the minerals that are the birthright of all Australians. That revenue will ensure that older Australians can retire in dignity, that they can retire with 12 per cent superannuation which will ensure that they are able to do the things they have wanted to spend their lives doing. They will be able to enjoy taking that grey nomad trip around Australia. They will be able to enjoy appropriate living standards.
We are going to be funding this out of an extremely efficient tax—a tax which, contrary to what some came before our House Economics Committee and argued, will be paid overwhelmingly by large miners. That is what Treasury said to us. That is what the Minerals Council of Australia said to us. Those opposite are willing to believe the claims of Fortescue, a company that has never paid a cent of company tax, has changed its position on the Minerals Resource Rent Tax and been willing to run arguments in its self-interest rather than in the national interest.
Those opposite should be very careful of this sort of special interest pleading. They should be aware that Australians have a long memory, that Australians are watching to see which political parties make decisions based on the long-term interest of Australians and which political parties focus on the right thing to do—that is, moving to a profits based mining tax, boosting the retirement incomes of Australians and cutting the company tax rate. I commend this package of bills to the House.