Andrew Leigh

Introducing Robert Putnam’s public lecture on American Grace: How Religion Divides and Unites America
Australian National University
5 April 2011

I want to begin by acknowledging the traditional owners whose lands we meet upon today, and thanking the Crawford School, the HC Coombs Policy Forum, and the US Studies Centre for making today’s event possible.

The first thing I need to tell you is that there are three Robert Putnams.

• The first Robert Putnam is a major figure in international relations. After working in the Carter White House, Bob developed two-level game theory, a model suggesting that international agreements will only be struck if they satisfy domestic constituencies. Putnam’s theory of two-level games, published in the journal International Organization, and in several influential books, revamped how many scholars thought about issues like global arms control agreements.


• The second Robert Putnam is the world’s most influential scholar of social capital. In Making Democracy Work and Bowling Alone, he has shown that community life in America collapsed during the last forty years of the twentieth century. In Democracies in Flux, he shows that this is true in most developed nations around the world. And in Better Together, he has suggested a few ideas for revitalising community. Putnam’s work on social capital has earned him the Johan Skytte Prize (sometimes called the ‘Nobel Prize in Political Science’). It has influenced thousands of scholars, including my own slim volume, Disconnected, which looked at community life in Australia.


• But it’s the third Robert Putnam that we’re here today to listen to. This is the Robert Putnam who has – with David Campbell – produced a 700-page book on religion in the US: American Grace.

How do these three Robert Putnams – this trinity of Robert Putnams – manage to produce such a volume of high quality output? The secret is that while most social scientists use an artisan model, Professor Putnam’s research model looks more like a well-run factory than a craft workshop. A team of research assistants craft memos that summarise research findings on a particular narrow issue. Before your memo is finalised, you must present it to the full team, chaired by Bob, and comprising graduate students in politics, economics and sociology. Only then does it make it through to the man himself, who digests the findings, and then uses it to churn out beautifully readable prose – usually at around 3 in the morning. Being part of Bob’s research team was a highlight of my time at Harvard – and I learned why one of my predecessors described him as ‘the General Motors of American academia’.

He is also famously good at multitasking. When I visited the US last April, I arranged to see Bob at his home in Cambridge. He met me with a warm smile, and said ‘my students arrive here in an hour, and I’ve promised them dinner – how do you feel about coming with me to help me shop?’. An hour later, we’d enjoyed a thoroughly enjoyable conversation about David Cameron, Barack Obama and Australian politics, and returned to the house with a carload of food just as the first students arrived. I know few people in the world who work harder than Bob – or have more fun doing it.

Bob’s talk today is about religion in America. The US holds a central fascination for many of us, a fascination aptly summed up by WH Auden:

'God bless the USA, so large, so friendly, and so rich'

But I’m sure we’ll also be looking to draw comparisons with Australia, so let me make a few.

In one sense, Australia is less religious than the US. Many Australians are comfortable describing themselves as atheists – yet only about 1 in 1000 Americans call themselves atheists. Weekly churchgoing in Australia has fallen from 1 in 3 in the 1940s to 1 in 8 today.[1] In the US, it has slipped only slightly, and still remains around 1 in 3.

Both countries’ Constitutions prohibit laws establishing any religion.[2] Yet the US Supreme Court has interpreted this to mean that religious schools cannot receive government money, while the Australian High Court has decided that religious schools can receive substantial government funding. Even as a student at Pennant Hills Public School, my sixth grade teacher Mrs Clements had us recite the Lord’s Prayer each morning. My US-born wife Gweneth gasped when I told her that.

And yet similarities exist too. In both countries, churchgoers are far more likely to vote for the party of the right. Like the US Democrats, we in the Australian Labor Party are sometimes tongue-tied in conversations about religion, too ready to vacate the pulpit. For every Biblical passage about sex, there are many more about social justice. We need to get better at engaging in honest and robust conversations with religious Australians.

It is now my enormous pleasure to introduce to you (the third) Robert Putnam. The world’s best known political scientist. A rockstar in the research world. A superb teacher. And a generous mentor.  Bob, the floor is yours.

---

[1] See Robert Putnam and David Campbell, American Grace, Ch 3 and Andrew Leigh, Disconnected, Ch 3. Since Christianity is the main religion in both countries, I use the simple term ‘churchgoing’ to cover all forms of religious attendance.

[2] See the First Amendment to the US Constitution, and section 116 of the Australian Constitution.

Having heard you talk about street parties ('By Design' I think?) and talked to older residents in our small Melbourne street about 'once-upon-a-time street parties', we decided to go with it - simple, no alternatives for rain, no  suggestions or prescriptions about morning tea.  To our delight about 60 people wandered up and mingled.  What a feeling to know that most of the people in our street want to know others in the street.

• Should academics join the government? (and Cicero's acerbic comment on those who refuse)


• UK Fabians on boosting party activism


• Saul Eslake on negative gearing (and homeowner grants)


• A new suburban trends app


• Ambassador Bleich on Wikileaks (a speech that took a suspiciously long time to get posted on his website!)


• Probabilities of alien life


• Using wellbeing data to estimate the subjective cost of unemployment


• What teaching techniques work best in the classroom?


• A special journal issue on teacher performance pay


• New ideas on foreign aid financing


• Do free school lunches change eating habits?


• NZ work on the economics of migration - a summary

Does ‘Work for the Dole’ work?

Jeff Borland  & Yi-Ping Tseng

This study examines the effect of a community-based work experience program - Work for the Dole (WfD) - on transitions out of unemployment in Australia.   To evaluate the WfD program a quasi-experimental exact matching approach is applied. Justification for the matching approach is a ‘natural experiment’ - limits on WfD project funding - that it is argued constituted a source of random assignment to the program.  Participation in the WfD program is found to be associated with a large and significant adverse effect on the likelihood of exiting unemployment payments.  The main potential explanation is existence of a ‘lock-in’ effect whereby program participants reduce job search activity.

Questions without Notice, 27 May 2004

Mr ALBANESE (Grayndler) (3:09 PM) —Is the minister aware that Work for the Dole participants are painting murals, making candles and putting on puppet shows? Is the minister also aware of the Borland and Tseng report commissioned by the government, which concluded the Work for the Dole program's `effect on exit from unemployment payments becomes progressively more negative'? When will the government get serious about preparing the unemployed for real jobs by adopting policies like Labor's Youth Guarantee: Learn or Earn policy? Why did the minister yesterday announce more `play for the dole' projects, including kite making?

Mr BROUGH (Longman) (Minister for Employment Services and Minister Assisting the Minister for Defence) —This is not an unexpected attack from the member for Grayndler. He is a member who just cannot say anything positive, does not understand or appreciate the positive nature of Work for the Dole—what it does for individual self-esteem and employability and what it does for the community. I invite the member for Grayndler to actually sit down with some of these purposeful individuals, who are trying to do something for themselves and their community and build a better self-esteem and a better opportunity for themselves. That is what Work for the Dole does.

I am very well aware of the report in today's Melbourne press, which went on to be on 3AW today. And it was interesting, because a number of personnel that are participating in those particular programs rang the program. I have got some of them here. One was a 58-year-old. As a 58-year-old she, or this person, volunteered. Now she or `Dale'—I don't know whether Dale is male or female; I did not actually hear, I am just reading from the Media Monitors report—says: `I am 58 and I don't have many qualifications.' She, oh it is she, says she is unemployable and is defending Work for the Dole. This is the person that we are here to help—a 58-year-old, mature worker who wants a hand. We make no apologies for helping these people and for what they are doing.

Clean Environment, Dirty Politics
Speech delivered to the ‘Australia’s Climate Policy Options’ Conference
Australian National University
31 March 2011
Andrew Leigh MP
Federal Member for Fraser

I acknowledge the traditional owners of the lands on which we meet today, the Ngunnawal peoples, and pay my respects to their elders past and present.

As the federal member representing the northern half of the ACT, I’m pretty proud of this city. In fact, last year, I gave a speech at the Sydney Opera House arguing that ‘Canberra is the Best City in Australia’.

But one of the things that makes this city so extraordinary – the close connection between city and natural environment – is also what makes the Bush Capital particularly vulnerable to climate change. Over the next five decades, climate models suggest that dangerous climate change could subject Canberra to:

• a 50% increase in high or extreme fire danger days;


• more frequent droughts;


• more hot days; and


• less water in our dams.

Each prediction is necessarily imprecise, but together they add up to a degraded natural environment, and greater costs to households. Canberra’s devastating bushfires in 2003 delivered a damage bill of a third of a billion dollars to what was then just a $16 billion dollar economy. Increase the probability of extreme fire danger days and you increase the expected cost of bushfires.

One way of regarding climate change mitigation is as a form of insurance. As Rupert Murdoch has noted:

‘Climate change poses clear, catastrophic threats. We may not agree on the extent, but we certainly can’t afford the risk of inaction.’

Just as we know that asbestos is very likely to cause malignant mesothelioma and bad cholesterol is very likely to increase the risk of a heart attack, we know that society’s greenhouse gas emissions are very likely causing global warming.

Will Steffen has pointed out that we know with 100% certainty that climate change is occurring and 95% certainty that it is human induced.

The science is slightly less confident is the extent of risk for individual regions. Yet if carbon emissions continue unabated and we reach ‘tipping points’, the risks are high.

When speaking with sceptical electors, I often use the medical analogy. If your child was sick, and 95 out of 100 doctors told you that the child needed a life-saving drug. Would you follow the advice of the other five doctors?

The best way of achieving action on climate change would be through a broad consensus across the political spectrum. Yet as one premier noted on World Earth Day 1990:

‘Regrettably, too many people on the conservative side of politics still view environmental consciousness as some sort of left wing conspiracy. Amongst both the Liberal and National Parties there is still a cringe when the environment is mentioned from a subconsciousness aversion that arises, I believe from a misconception that there is some fundamental philosophical inconsistency between environmental consciousness and democratic capitalism.’

That was Liberal Premier Nick Greiner. I hope that Premier O’Farrell can follow this advice and lead the Liberals down the path of action – accepting the advice of both mainstream scientists and mainstream economists.

In teaching environmental economics, the case study we often use to support market-based mechanisms is acid rain. When US President George HW Bush proposed the use of market-based mechanisms to deal with acid rain, electricity generators warned that costs would skyrocket. Today, the program is regarded as a success, having achieved its emissions targets at around one-third of the projected costs.

One reason the costs were lower than expected is that firms used a variety of approaches to reduce emissions. Some retrofitted emissions control equipment. A number switched to cleaner fuels. Others retired their dirtiest generators. Because each firm took the lowest-cost approach, the social cost was minimised.

For environmental economists, this result merely reaffirmed theoretical work going back to Arthur Pigou in the 1930s and Ronald Coase in the 1960s. By the time Coalition climate change spokesman Greg Hunt penned his 1990 university thesis (‘A tax to make the polluter pay’), the economic theory was widely recognised.

Hunt pointed out that ‘An attraction of a pollution tax regime is that it produces a strong incentive for firms to engage in research and development’. For consumers, ‘goods which do not generate [pollution] in their production will become relatively cheaper and therefore more attractive’.

Discussing the politics surrounding pollution taxes, Hunt argued out that ‘a pollution tax is both desirable, and, in some form, is inevitable’. He also suggested ‘even if some of the Liberals’ constituents do respond negatively, a pollution tax does need to be introduced to properly serve the public interest’.

Hunt’s thesis represents the view that most small-l liberals held for decades. The UK Conservatives are proud champions of their nation’s emissions trading scheme. As recently as 2007, the Liberal Party of Australia’s election platform promised: ‘To reduce domestic emissions at least economic cost, we will establish a world-class domestic emissions trading scheme in Australia (planned to commence in 2011).’

Scientists like to point out that climate change is dominated by tipping points. Tony Abbott’s one-vote ousting of Malcolm Turnbull as Liberal Party leader in 2009 is perhaps the best example of such a tipping point. Some of us still hope that the climate in the Coalition party room might experience another change in the future.

The benefits of market-based mechanisms over command-and-control is that by pricing carbon, we can unleash the creativity of the market.

This is already happening in Europe. For example:

• Tesco (the world’s third-largest retailer) has opened its first zero-carbon store, and is aiming to be carbon-neutral by 2050.


• Sorption Energy has developed an absorption heat pump for use in houses and in cars.


• Ecobutton has developed a software program that allows computers to hibernate more efficiently (and tells the user the amount of CO₂ emissions saved).


• Ecogen technology will generate electricity while generating heat and hot water, thus significantly reducing the carbon emissions of the household.


• Cement manufacture is an emissions intensive industry. So Novacem has developed a cement that it claims is actually carbon-negative. That means it absorbs more carbon than it emits, because it is based on non-carbonate raw material.


• Airline travel is something that people demand more of as their incomes rise – yet it is highly emissions-intensive. Airbus recently developed ‘Sharklets’ - specialised wing-tips which are designed to reduce fuel consumption, emissions and engine maintenance, while improving the range, take-off performance and rate of climb of the plane and assist in achieving a higher altitude.

Under a market based mechanisms it is entrepreneurs and households who decide the best path to reducing emissions. Because even the best-intentioned governments are unlikely to anticipate all the possible channels for abatement.

For all the scepticism of science and economics in the Coalition, it’s easy to miss the fact that they have actually signed up to the same emissions reductions targets as the Government. But they have committed to achieving those targets using an extremely inefficient policy. On our calculations, the Coalition would need to spend an additional $20 billion buying permits on the international markets in order to meet the 5% emissions reductions goal.

The only way of raising that $20 billion is through taxation. If the Coalition didn’t raise consumption or company taxes, they would probably need to get the revenue from personal income taxation. That means that under the Opposition’s plan, income taxes would need to go up to pay for the Opposition’s various subsidies. Put simply, while the Government is proposing to price carbon pollution, the Opposition’s scheme will most likely raise the price of work. While we want to tax polluters, they want higher taxes on workers.

If we are successful in legislating a carbon pricing scheme this year, this difference will come into stark relief. The Opposition has pledged to scrap a market-based mechanism, and replace it with their much less efficient way of reaching the 5% emissions target. In addition, they will also need to reverse the government’s assistance package. If our assistance package includes an increase in the pension, the Opposition will cut the pension. If our assistance package includes income tax cuts, the Opposition will raise income taxes.  If our assistance package improves incentives to move from welfare to work, the Opposition will reverse those improvements.

The Government’s scheme is based on an essential lesson from first year economics: the best way of addressing a negative externality is to put a price on it. But as many speakers today have discussed – the design details are critical. For households, we need to craft an appropriate assistance package. For businesses, it will be vital to ensure that emissions-intensive trade exposed industries remain competitive. And for energy generators, it will be important to provide certainty as they go about transforming themselves into cleaner producers.

The politics of climate change is never easy. But as an economist-turned-politician, I have to say that arguing for good economic policy in the face of a ferocious scare campaign is exactly why I ran for parliament. If we can make this reform, Australia’s economy will be better off. Our environment will be better off. And, as a result of engaging with citizens in an honest debate about our nation’s future, our politics will be better off.

Because of that, conversations like this one are a vital investment in a better polity. Thank you all for being part of it.

Carbon Pricing
22 March 2011

Tonight I rise to speak about the Liberal Party’s backflip on using market mechanisms to deal with dangerous climate change. We have heard in parliament today quotes from the honours thesis of the member for Flinders, Greg Hunt—a work titled ‘A Tax to Make the Polluter Pay’. We have heard in the media from the member for Wentworth, Malcolm Turnbull, who articulately argued that the most cost-effective way of reducing Australia’s greenhouse gas emissions is through a market based mechanism. The Liberal Party in their 2007 election policy document informed us:

Climate change means we must undergo a fundamental transformation to a low-carbon economic future.

A re-elected coalition government will establish an emissions trading system, the most comprehensive in the world, to enable the market to determine the most efficient means of lowering greenhouse gas emissions.

These views were held by Liberal Party representatives as recently as 16 months ago. Senator Alan Eggleston on 30 November 2009 said:

One way of avoiding the volatility of an emissions trading scheme would be to have a carbon tax. A carbon tax provides a very steady and known price for carbon, if you like, which is only varied by varying the tax. That tax can be set at a level that allows renewable energy systems to be competitive.

Senator Sue Boyce said on 30 November 2009:

My own background is as a manufacturer. In that sphere, I know the benefits of early adoption. I would just like to point out to the Senate that it was the Shergold task force, commissioned by the Howard government, who said, long before we got to this place, that Australia should not wait until a genuinely global agreement has been negotiated, because there are benefits which outweigh the costs in early adoption by Australia of an appropriate emissions constraint.

Senator Judith Troeth said on 30 November 2009:

By having a price on carbon, people can decide whether they really want to use these carbon-intensive products. It is an effort to move people away from carbon towards other alternatives, and the most effective and efficient way to do this is through a price signal.

The member for Dunkley, Mr Bruce Billson, claimed credit for the last market based mechanism, saying on 29 October 2009:

It was actually the coalition that instigated work on the emissions trading scheme. In fact, I have in my hand a report that I helped author back in 1998 which talks about regulatory arrangements for trading in greenhouse gas emissions—1998!

The member for Mayo, Mr Jamie Briggs, said on 3 June 2009:

I believe an emissions trading scheme is one of the policy levers that can be used to change the energy mix in Australia. An ETS will be, by definition, a price on carbon.

The member for Cook, Mr Scott Morrison, said on 3 June 2009:

There are a suite of tools we need to embrace to reduce emissions. I believe an emissions trading scheme is one of those tools in one form or another. Placing a price on carbon, as the Leader of the Opposition has said, is inevitable.

The member for Paterson, Mr Bob Baldwin, said on 3 June 2009:

I would like to make it clear: the coalition will support an emissions trading scheme …

We know the Liberal Party used to stand up for the market. Former Prime Minister John Howard told Tony Jones on 5 February 2007:

That doesn’t sound very much to me like a market mechanism, when you compel somebody to apply a particular technology. It is far better, if you want to keep faith with the market approach, to develop a carbon pricing or carbon trading system …

The member for North Sydney, Joe Hockey, was quoted in the Sydney Morning Herald on 17 April 2010 as saying:

There has been a distortion … There’s an argument that over time we haven’t paid a proper price for water. We haven’t paid a proper price for fossil fuels. We haven’t paid a proper price for land, etc. You would hope you can remove the distortions.

Climate change is real and it is not only happening in the environment but also happening in the Liberal Party room. A party that once had a proud tradition of supporting markets has now fallen victim of the populism of direct action. As the temperature goes up on the Leader of the Opposition, let us see whether the Liberal Party can again find its faith in markets.