Andrew Leigh

I spoke in parliament yesterday about tax reform.

Tax Laws Amendment (2011 Measures No. 5) Bill 2011
20 June 2011

The great achievement of the Labor government has been a serious ongoing commitment to tax reform. It is with taxes that we build society and a hallmark of this Labor government has been focused and consistent attention on tax reform. We, of course, commissioned the Henry review, a root and branch tax review, which has for the first time in a generation looked across the tax system at how to make it work more effectively. As the Henry review in its opening noted:

'A 21st century tax and transfer system should meet its purposes efficiently, equitably, transparently and effectively. Critically, it would support per capita income growth rates at the upper end of developed country experience by encouraging high workforce participation, a more efficient pattern of saving, and stronger investment in education and physical capital.'

The Henry review noted that revenue raising should be concentrated on four robust and efficient tax bases: personal income; business income; private consumption through broad, simple taxes; and economic rents from natural resources and land.

The Henry review has underpinned much of what the government has done on tax reform. Commentators, I think, have missed one of the big stories about the recent budget, which is that it contains substantial tax reform, not the sort of tax measures that we saw all too frequently during mining boom mark-1—recycling revenue into badly targeted measures—but measures that focus on how to make our system more efficient and more equitable, and operate on a simpler basis. It is for that reason that this government is going about putting in place a minerals resource rent tax, a tax that will ensure that Australia's big mining companies at last pay their fair share, a tax that sits very much in the tradition of the progressive side of politics of ensuring that taxes are paid by those who can best afford them and that taxes impose a minimum deadweight cost on the economy. Growth is a Labor value. Increasing the size of the Australian economy is absolutely critical and the minerals resource rent tax will see us do that. Another substantial tax reform is carbon pricing. We are recognising, through a fixed carbon price and then an emissions trading scheme, that the best way of dealing with dangerous climate change is to go to the heart of the problem, which is dangerous carbon pollution. At the moment, polluters can put as much carbon pollution into the atmosphere as they like. They do not pay for carbon pollution. Carbon pricing has been presented as an environmental reform but it is of course also an economic reform. The most effective way of getting carbon abatement in the Australian economy is to put a price on carbon, not through the coalition's grab bag of subsidies for polluters but going straight to the issue, putting a price on pollution and bringing about a smooth transition to a cleaner, greener economy, taking Australia from its current position as the most carbon intensive country in the developed world to a position where we are able to compete effectively for the green jobs of the future.

The Gillard government is also putting in place substantial reform on fossil fuels through legislation which is finally enacting reforms originally foreshadowed by then Treasurer Peter Costello in the 2003 budget. What is tragic about these fuel reforms is that the coalition, at the last moment, have walked away. For the best part of the last eight years they have been in the cart on this fundamental economic reform but at the last moment saw a populist slogan and leapt out of the cart. I am glad to see the Assistant Treasurer here in the chamber. I am sure he would be as pleased as I am at the passage of those reforms through this House in the most recent session.

When crisis has hit, Labor has also used taxation reform exactly as economists would have us do. We put in place a modest flood levy to deal with the rebuilding cost required from the natural disasters of the most recent summer. Looking back further to the economic downturn, we used a fiscal stimulus that was timely, targeted and temporary, recognising that household payments and infrastructure investments were the most efficient way of getting the economy going again. On each of the tax reforms I have listed, Labor listened to the economic mainstream. While the coalition were listening to who knows what zealots, we were there focused on the economic mainstream and on delivering real reforms.

And it is those real reforms that lie at the heart of Tax Laws Amendment (2011 Measures No. 5) Bill—reforms recognising the importance of phasing out outdated payments. One of the key reforms in this legislation is removal of the dependent spouse tax offset. The dependent spouse tax offset existed at a state level prior to the 1930s but was first introduced at a federal level in 1936. During the second reading debate, one member justified the measure saying he felt it was the duty of a husband to maintain his wife and therefore it was right and proper that a husband would receive a deduction for it. I do not think that such a sentiment would be shared by most 30-somethings in the labour force today. Most families without children would not think feel it is the duty of a husband to maintain his wife and in an era in which we are trying to boost labour force participation, in which we hear much talk of skills shortages, it is important that we remove disincentives to work.

As the dependent spouse tax offset phases out, it imposes an effective tax rate in the phase-out range. If a dependent spouse earns more than $282, under the current program the entitlement reduces by $1 for every $4 the dependent spouse's income is above the threshold. The effect of this is to put in place another 25 per cent tax rate in addition to the current marginal tax rates for the first $10,000 earned by a so-called dependent spouse.

We are steadily phasing out this measure. It will be phased out for taxpayers born after 1971, recognising that some of those who have been recipients of this payment may now be in a position where it is not straightforward for them to enter the workforce. Taxpayers who are invalids, permanently unable to work or are carers will not lose this benefit. The phase-out is applying to able-bodied taxpayers, those aged under 40 and those who—certainly from the discussions I have had with my electors—would not have the social norms that were expressed in this place when the dependent spouse tax offset was put in place. This measure modernises the Australian tax system. It brings the Australian tax system up to speed with contemporary values and it boosts labour force participation—an absolutely critical measure.

We are also making the Australian tax system simpler and fairer for business and the community. It has long been recognised that the entrepreneurs tax offset is poorly targeted for small businesses. There is little evidence it has acted to encourage the establishment of small businesses. More than 80 per cent of small businesses were eligible for the offset. Rather than allowing a small business to grow, the entrepreneurs tax offset encourages businesses to structure affairs in a particular way, despite the market opportunities that might be present.

The assistance is provided at a fairly low level to very small businesses. The maximum claim is $2,500, but the average entrepreneurs tax offset claim was less than $500, with 70 per cent of claims being below $600—a fair bit of paper work for a relatively small sum of money. The entrepreneurs tax offset is difficult to administer and adds to the complexity of our current tax system. There are better ways and more effective ways to help small businesses. The $5,000 immediate deduction, which will come into place from 2012-13, is a far more efficient and effective way of helping our small businesses grow and so boosting employment in this critical sector.

The budget also puts in place important reforms to fix the current system of fringe benefits taxation for cars. This is a system which is both inequitable and inefficient. The existing statutory formula method for determining the taxable value of car fringe benefits delivers a greater tax concession the further the car is driven. Car fringe benefits arise when an employee uses salary sacrifice for an employer provided car for private use. Under the statutory formula method, the person's car fringe benefits are determined by multiplying the relevant statutory rate by the cost of the car. The current statutory rates are designed so that a person's car fringe benefit decreases as the distance travelled by their vehicle increases. People can therefore increase their tax concession by driving their vehicle further. The Henry tax review reported evidence showing that this is exactly what people do.

Anecdotally, in my electorate one hears stories that, as the end of the tax year approaches and as a taxpayer feels that they are not necessarily going to be in the most favourable mileage bracket, they will lend the keys of their car to a teenage son to drive to the coast for the weekend. Their child might otherwise have caught a bus to the coast. These sorts of environmentally unsound practices are effectively encouraged by a poorly structured tax concession. So we are reforming the statutory formula method, replacing the current statutory tax rates with a single rate of 20 per cent that applies regardless of the distance travelled. The reform will only apply to new vehicle contracts entered into after the announcement on budget night so, of course, it will not affect people who have already entered into contracts. That shift to the single standard 20 per cent rate will be phased in over four years. Naturally, people who still use their vehicle for a significant amount of work related travel will be able to use the operating cost or log book method to ensure that their car fringe benefit excludes any business use of their vehicle. Over the forward estimates this measure will result in an increase in revenue of nearly a billion dollars, and this is additional revenue which is then available for more efficient and more equitable tax reforms.

I am very proud to be part of a Labor government which is committed to good economic management and important tax reforms, tax reforms that I hope will outlive many of us in this place, tax reforms that reflect the understanding of those of us on this side of the House that it is important to draw on the best evidence available and tax reforms that recognise that the Henry review has laid down much that we can draw on in the future. I commend the bill to the House.

I spoke last week on some useful reforms to public sector superannuation.

Governance of Australian Government Superannuation Schemes Bill 2011
15 June 2011

The bills before us concern the retirement savings of people who serve our nation. The good men and women of our military, as well as those in our public service, many of whom reside in the ACT in my electorate of Fraser or in the neighbouring electorate of my good friend and colleague the member for Canberra, will benefit from the changes in this legislation. The bills seek to consolidate the main civilian and military superannuation schemes under a single trustee. The merger will see the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme, the Military Superannuation and Benefits Scheme, the Defence Force Retirement and Death Benefits Scheme and the Defence Force Retirement and Benefit Scheme all administered by a single trustee, the Commonwealth Superannuation Corporation, or CSC. The CSC will be a statutory agency, as will ComSuper.

The consolidation of these schemes will help modernise the governance arrangements. The outdated position of Commissioner for Superannuation will be replaced by a chief executive officer. A board of 11 directors will govern the CSC. The governance model is in keeping with a common model used right across the broader superannuation industry. The CSC board composition will reflect member interests as well as employer interests. There will be three nominees from the ACTU, two nominees from the Chief of the Defence Force. and five nominees from the Minister for Finance and Deregulation with input from the Minister for Defence. The government will also appoint the chair.

I note in passing that those opposite have raised the bogeyman of the ACTU having representation on the CSC board. It is sort of odd, is it not? They are quite happy to have their positions on health dictated by British American Tobacco and they are quite happy to have their positions on the mining tax dictated by a few mining magnates, but they are not happy to have workers representatives—representatives of millions of Australian workers—on a superannuation board.

I note that some in the community, particularly the ex-service person community, have raised concerns that amalgamated trustee arrangements might not recognise the uniqueness of military service. This concern was raised about the original 2010 bill. Submissions to the Senate Finance and Public Administration Legislation Committee raised this issue of ensuring that ADF personnel were adequately recompensed for the unique role they play in the defence of our nation. It is important to note that the bills before the House do not disturb, and the previous incarnations of these bills did not ever disturb, members' entitlements or benefits. No existing features or benefits of military schemes are disturbed. There is no change to scheme entitlements for ADF personnel and there is no change to scheme entitlements for Commonwealth public servants. The 2010 bill recognised the uniqueness of military service, something noted by the Senate committee report's citation of the joint submission by the departments of finance and defence. That submission concluded:

Overall, the Bills seek to recognise the special nature of military service (noting that this principle is relevant to all aspects of military conditions of service) without taking away from a superannuation trustee's essential function of managing the superannuation schemes for which it is responsible on behalf of all scheme members and safeguarding members' benefit until they retire.

The submission of the Defence Force Retirement and Death Benefits Scheme Authority, or the DFRDB Authority, to the Senate committee acknowledged that the uniqueness of military service was recognised by the relevant scheme rules and not by the composition of the board. The DFRDB Authority concluded:

In the context of the above, the DFRDB Authority accepts the assurances of the Australian Government that the interests of the DFRB and DFRDB members will appropriately represented by the CSC. Therefore it is the view of the DFRDB Authority that it is not necessary to retain a separate board to administer the military superannuation schemes.

The government recognises the unique nature of military service. I recognise that too. One of the great privileges of this job is having the opportunity to honour those who have sacrificed their lives for our freedoms and to acknowledge the work that many of our service people make on our behalf. It was never the intent to dispel this recognition with these administrative changes.

Recognising the concern, the government engaged with our military community on the proposed administrative changes. These consultations have led to changes to make clear the uniqueness of military service. The bills before the House require the CSC board to have regard to that uniqueness, as provided for in the schemes established by the relevant military superannuation acts, when acting under such legislation. Further, when the board is making decisions concerning matters solely related to the military schemes, at least one director appointed by the Chief of the Defence Force must be present. As I outlined previously, the CDF will appoint two representatives to the board and the appointment of the employer representatives by the finance minister will be in consultation with the defence minister. The bills also provide for the establishment of the Defence Force Case Assessment Panel within the single trustee model. The panel will undertake functions currently performed by the DFRDB. We will also review the arrangements after the first five years to ensure that the changes have been effective.

The consolidation of these government super schemes into a single trustee arrangement is not occurring in isolation. There has been a trend in our local superannuation industry towards consolidation. In 2006, the merger of the Australian Retirement Fund, the Superannuation Trust of Australia and Finsuper created AustralianSuper, one of our largest industry super funds. This was followed in 2008 by the creation of Media Super from the merger of Print Super and JustSuper. In 2009, the Stevedoring Employees Retirement Fund and the Seafarers Retirement Fund consolidated into Maritime Super. Consolidation, particularly for smaller funds, allows the benefits of economies of scale, economies which some fund managers believe necessitate funds having at least $5 billion under management to survive effectively.

The advantage of scale is backed by studies and the experience of funds not only here but also overseas. A study by the Australian Prudential Regulatory Authority, APRA, found that large funds outperform medium and smaller funds by at least half a per cent and in some cases by a full percentage point. The APRA study, based on data over a 10-year period, was consistent with studies overseas. For example, a US study of pension fund data showed larger funds outperformed smaller funds by over four percentage points.

Scale has the potential not only to deliver higher investment returns but also to reduce administration costs. A 2009 study by Deloitte Actuaries and Consultants examined the public disclosure statements of 60 industry superannuation funds. That study found that:

operational costs, which largely relate to the number of fund members, in a fund with more than 500,000 members can be reduced by about 32% when compared with a fund of between 100,000 and 500,000 members. These costs are reduced even further (about 44%) when compared with a fund of between 50,000 to 100,000 members; and

investment fees as a percentage of total fund assets, using the default investment option, were 0.57% in a fund with over $10 billion in assets, compared with the higher 0.76% in a fund with between $1 billion and $2.5 billion in assets.

In investigating the net benefit of consolidation, the Department of Finance and Deregulation's actuary, Mercer, calculated that based on the 2008 figures net investment returns had the potential to be $10 million better in 2008, $15 million better in 2018 and $19 million better in 2028.

The bulk of the potential return of $10 million in 2008 would have benefited the military schemes as $7 million of the net return is related to those schemes.

While all funds in a consolidation benefit, it is the smaller funds that achieve the greatest benefits. There is a future risk that, without this consolidation, the military schemes could become smaller relative to other funds and then have problems obtaining good investment returns.

The larger the fund the greater the ability of a trustee to pool funds and thereby lower investment costs and drive higher returns. This is because a merger sees a better spread of age profile of members amongst all the schemes. That allows a better spread of assets across age bands and risk categories. The practical implications for fund members will be an increase in the super savings of over 90 per cent of our current serving personnel. Just a 0.5 percentage point increase in the net return of a cadet who joins the RAAF and retires as a group captain will be $95,000 if that person serves a full career or $41,000 if they serve for a decade. The benefits, though smaller, will also flow through to the government's main civilian superannuation schemes.

It is easy to forget that if those opposite had their way we would not be talking about administrative changes to strengthen investment returns for those who serve our nation. Those opposite have always stood against superannuation reforms. I would like to draw the House's attention to a terrific after dinner speech delivered last night in Parliament House by the Assistant Treasurer—who I am pleased to see in this place—in which he took the audience through the history of superannuation and pointed out that when Bob Hawke took office in 1983 just 40 per cent of the workplace had super cover and that by 1991, after the Hawke Labor government's major superannuation reforms, 72 per cent of the workforce had superannuation cover.

But the Assistant Treasurer also pointed out some of the statements of those opposite when Labor under the Keating government moved to introduce a superannuation guarantee levy. The Assistant Treasurer said:

… Wilson Tuckey drew on his 'long history in the racing industry' to compare the legislation to the 'worst type of jockey … both stupid and dishonest.'

Wilson Tuckey continued:

'When the poor old employer levy gets to 12 per cent, what will it deliver? Luckily, it might deliver an overseas holiday and a few presents for the kids, but it will not deliver a retirement income at the inflated costs of those days.'

As the Assistant Treasurer pointed out, a 12 per cent super guarantee will provide a worker now aged 30 on average full-time wages with a real retirement benefit of over $553,000 at age pension age. That is certainly more than 'an overseas holiday and a few presents for the kids.'

These sorts of statements of doom and gloom at the introduction of compulsory superannuation were not restricted to members who have left this place. Then Senator Bronwyn Bishop told the Senate at the time of a conversation that she had had with a small business person. That small business person had told Senator Bishop:

But now that this compulsory superannuation payment has gone through, yesterday I had to sack a part-time employee and turn a full-time employee into a part-time employee.

The late Senator Peter Cook, for whom I had the privilege to once work, interjected very speedily and said that, given that the law had not yet come into effect, it was difficult to see how small business people would have been affected by it. But Senator Bishop was as unmoved then, as she is now, by the facts. She finished the 1992 debate as follows:

I heard Senator McMullan said, 'The difference between our systems on superannuation is that ours is compulsory and theirs is voluntary.' That is very true. That is an essential difference. Our policy is designed to make it attractive for people to provide for themselves in later life whereas this Government's is designed to penalise business, to regulate it out of existence.

Of course, that is what those opposite have often thought about compulsory superannuation—that it is an imposition.

The Leader of the Opposition once called Labor's superannuation guarantee 'a con job'. Those opposite have been fundamentally uninterested in superannuation. Perhaps the reason for that is that it is so far in the future. When you are just focused on getting your face on the evening news, why should you be thinking about things that are going to happen a couple of decades hence? No, you want to focus on the here and now, the latest poll and the latest snappy grab.

But superannuation is about much more than that. Superannuation is about ensuring that Australians enjoy dignity in retirement. Because of the lag in investment accumulation, the decisions we are making now are going to affect people like my one- and four-year-old sons, who will enter the labour market possibly around 2030 and continue in it possibly as late as 2080. My little boys are among those who will benefit from having a good superannuation scheme. It is those long-run reforms—that many of us will not be around to see—which lie at the heart of superannuation reform. It can sometimes look like a technical detail but, let me tell you, it is anything but. It is about securing dignity in retirement and ensuring that Australians are able to enjoy their retirement, comfortable in not having to worry about being able to pay the bills. I commend the bills to the House.

(Update: The bills passed both houses on 21 June.)

Transcript – Sky News AM Agenda – 6 June 2011

8:40am

E & OE 

Subjects: Carbon pricing, live exports, immigration

KIERAN GILBERT:

Welcome back to AM Agenda. With me now is Liberal frontbencher Senator Mitch Fifield and Labor MP Andrew Leigh. Gentlemen, good morning to you both. Andrew first to you. Why not give the people a say with a plebiscite as Mr Abbott is proposing?

ANDREW LEIGH:

Well Kieran we had an election last year, and it was very clear that the majority of Australians voted for Parties that wanted to put a price on carbon. We’ve seen that of course in the 2007 election as well when both major political parties went to the election saying we should put a price on carbon. Tony Abbott, of course, is running more stunts than Jim Rose. He wants to do anything he can to distract himself from serious policy. He doesn’t want to talk about the different plans that are on the table. And there are two very different plans on the table.

GILBERT:

Why is a plebiscite a stunt, necessarily? You would think that giving the people a say on the specific issue - the Government didn’t say it would bring in a carbon tax before the poll, in fact Julia Gillard explicitly rejected the idea.

LEIGH:

Well Kieran, the differences between a carbon tax and an ETS are miniscule…

MITCH FIFIELD:

Tell that to the punters!

LEIGH:

…compared to the differences between pricing carbon and not pricing carbon. I mean, the real difference here is, are you going to use a market-based mechanism - the most efficient way of dealing with climate change. Tony Abbott during the period immediately after the election was asked by the independents whether he wanted another poll, and he said no, he didn’t. But of course, when things didn’t go his way, he’s now like a spoiled kid in the school yard trying everything he can to run a nasty, negative campaign to try and distract attention from the big economic reform, which is…

FIFIELD:

What’s nasty about a plebiscite?

GILBERT:

Senator Fifield, Senator Brown said this morning effectively what Andrew has said here – that Tony Abbott didn’t get what he wanted, ie Government, and now he wants to sideline Government with taxpayer’s money. This could cost tens of millions of dollars – this plebiscite.

FIFIELD:

We’re not wanting to revisit the last election, we’re not wanting to re-prosecute that. We just want to give the Australian people a say, for the first time, on this issue. Andrew and Julia Gillard are in denial and in a parallel universe. Julia Gillard went to the election - she said, “there will be no carbon tax under a Government I lead.” She lied. She also said before the election that she would seek a community consensus before seeking to price carbon. That was the whole genesis of the “people’s assembly.” She hasn’t sought a community consensus. She’s lied to the Australian people. They deserve to have a say. We’re not saying that the Government definitely has to have an election. We think that would be the right thing to do – to seek a mandate at the polls – but if they aren’t prepared to do that, then the right thing to do is to seek the people’s view through a plebiscite.

GILBERT:

Are you trying to get this through before the Greens take the balance of the power in the Senate as of July the first?

FIFIELD:

We’re seeking to expedite this through the Senate.

GILBERT:

Through the Senate that’s going to allow it through?

FIFIELD:

Sure, the Senate changes in composition, but we don’t know whether this Senate will allow the plebiscite bill through. We hope that it will. We’ll be making the case to the independents, we’ll be making the case to the minor parties. Who knows, maybe the Greens might suddenly embrace the concept of democracy and want to seek the people’s will on this. We’ll wait and see. There’s absolutely no reason why Julia Gillard shouldn’t support a plebiscite.

GILBERT:

Is the Government confident that they’ve got the numbers in the lower house with Andrew Wilkie and Mr Windsor, Mr Oakeshott and co?

LEIGH:

Well Kieran we’re obviously working it through the multi-party committee on climate change. There’s good faith negotiations occurring there…

GILBERT:

Andrew Wilkie’s not involved in that though, so are you confident that he will back you on this vote?

LEIGH:

Greg Combet and the Prime Minister are very actively involved in talking to all the independents. And of course we would be happy to talk to any member of the Coalition who is prepared to accept that climate change is real and we need to look at the most efficient way of dealing with…

FIFIELD:

But Andrew, what about talking to the Australian people? Forget the multi-party committee, have a plebiscite.

LEIGH:

Let’s look at what we’re doing, we’re backing the scientists based on the best science, and we’re backing the economists, who almost to a person say the most efficient way of tackling dangerous climate change…

GILBERT:

It must be very tough to hold your nerve though – for the Prime Minister and the Government to hold its nerve given the polls are so bad and given the polls show almost unanimously that people don’t back a carbon tax.

LEIGH:

Not at all Kieran, and let me give you the opposite argument. The opposite is – can you imagine if the Government looked at the front of the paper, saw that some poll had given some particular number, we walked away from good policy and went straight for populism? That’s not the Labor way. That’s not our tradition.

FIFIELD:

The Labor way is to lie to the Australian people – that’s the Labor way. That’s what Julia Gillard has done.

LEIGH:

We have backed putting a price on carbon, and I can go directly to what Mitch has said with the analogy the Prime Minister herself has used. If you find yourself driving home and your way is blocked, do you sit there at the roadblock? No. You drive around and you find another way home. And that’s exactly what we’re doing here. The fixed carbon price period will last three to five years and then we’ll move into an ETS. That’s the goal we’ve always sought, and the reason we’re doing that is the reason the British conservatives, the New Zealand conservatives, a whole host of sensible governments around the world support pricing carbon.

GILBERT:

Including the New Zealand leader who’s here today to address the Parliament, who does, as Andrew said, back a similar initiative.

FIFIELD:

John Key is responsible to the Parliament and people of New Zealand. Julia Gillard is responsible to the Parliament and people of Australia. Andy was talking about the multi-party climate committee – how many people are on that? Eight or ten? They’re giving eight or ten people a say. What about giving the Australian people a say for the very first time? The Australian people have not had the chance to have a say on a carbon tax. Julia Gillard said, no, she wasn’t going to introduce one. The Government’s explanation is, ‘well, we’re driving a different way.’ That’s just garbage! You can’t fib, fudge and slide.

LEIGH:

Mitch, you’re a sensible conservative, so I’m sure it pains you to come out with lines like these.

FIFIELD:

It doesn’t pain me at all.

LEIGH:

You must know that in 2007 all major parties went to the election supporting a price on carbon. You must know that the consensus across all serious economists is that pricing carbon is more efficient. You must also know that your policy is going to extremely inefficient. Direct action is…

GILBERT:

Senator Fifield…

FIFIELD:

Just on that point, all bar two or three serving members of the Australian House of Representatives went to the election vowing not to introduce a carbon tax. We certainly weren’t going to introduce a carbon tax. We said we weren’t, the Labor Party said they weren’t. So, the majority of people in the Australian Parliament are there on the basis of not introducing a carbon tax.

GILBERT:

OK, I’ve got to move on. I want to talk about the Labor Party at the moment. Friday is the anniversary of Kevin Rudd being ousted. Andrew, the former Prime Minister has had to delay, postpone a party he was going to have with former staff because it begun a media circus apparently – that was the message from his wife. Peter Beattie has urged Kevin Rudd to bury the hatchet and in fact to leave Parliament. It’s pretty messy at the moment.

LEIGH:

Well Kieran this party really characterises some of the sideshow nature of some of the commentary on this. I mean, you see column inches being spilt on this, but frankly, that’s not what this Government is about. When I speak to caucus colleagues and Ministerial colleagues, they’re focused on the big reforms. Reforms like helping disabled kids in schools, reforms like trying to close the gaps, making sure the Australian economy has the productive capacity to compete in a new economy…

GILBERT:

Can Julia Gillard convince people to listen to her once again? When you look at the number in the Nielsen poll on Saturday, over 60% believing that Kevin Rudd should be leader, compared to 30% for Julia Gillard.

LEIGH:

Kieran, you can look back to the media sideshow that was going on under the Hawke and Keating Governments, and there’s column inches being spilled on leadership tensions and polls. But what do we look back to? We look back to the major economic reforms of that time. The transition to a more productive economy, throwing off those shackles of tarrifs, engaging with Asia. Those big, long-run reforms were what those Governments focussed on then, and that’s what our Government is focussed on now.

GILBERT:

Senator Fifield, given the state of the polls, it looks in that context unlikely that the Coalition will secure the support of the crossbenches. They’re not going to want to go to an election now, are they? They would get wiped out, they would lose their seats as well. So how can you get people across the line on this plebiscite, for example, when it just seems that all the politics and the polls suggest that it would be suicide to do it?

FIFIELD:

Well a plebiscite wouldn’t be suicide. We’re not expecting the independents are going to call an election or put pressure on the Government to call an election. But what we are hopeful is that they will see the plebiscite as a way of the Australian people expressing their view. The independents talk a lot about the true will of the Australian people being expressed, and I think that this is a very good way for that to happen.

I’ve got to say, just coming back to Kevin Rudd’s party, it does go to show just how fragile Julia Gillard’s leadership is. A Member of Parliament can’t even get a group of former staffers together for a party without it being seen as some direct challenge to the Prime Minister’s authority. This is extraordinary.

GILBERT:

Everything that he’s doing at the moment is being interpreted in that context. You’re talking about that being a sideshow, but isn’t it largely being driven by a Foreign Minister who is continually popping his head up one way or another?

LEIGH:

I’m really proud of our Foreign Minister. I think it’s terrific to have a foreign minister that sits in the Evatt/Evans tradition of being an activist, who is out there in the world’s councils. Who was, a week ago, sharing a stage with Bob Geldoff and Bill Gates at the global alliance against vaccines initiative in London, pledging that Australia would make a difference towards making the number of kids who die before their fifth birthday through preventable diseases, pledging …

GILBERT:

Is there any chance of him making a comeback to the leadership, do you think?

LEIGH:

Kevin Rudd’s doing a great job as Foreign Minister, and that’s what he’s going to continue to do. He will be there in the world’s councils, he’s actively engaged in Libya he’s actively engaged in the local…

GILBERT:

So there’s no chance of return to the top job?

LEIGH:

We’ve got a - he’s doing a terrific job as Foreign Minister, Kieran, and that is what he will continue to do. We have a mandarin speaking Foreign Minister. How good is this, for Australia in the Asian Century….

FIFIELD:

And Julia Gillard’s face lights up every time she sees Kevin on TV. I’m sure she shares your view.

GILBERT:

Senator Fifield and Andrew Leigh, gentlemen have a great day. Thanks for that.

ENDShttp://www.youtube.com/v/LA1STtRRFug?version=3&hl=en_US

If you’re after some light entertainment, try asking a member of the federal opposition what they think of climate change deniers.

If you’re talking to someone in the half of the party room who voted for Tony Abbott over Malcolm Turnbull, they’ll likely try to change the subject. They know that it’s a difficult task to argue that the CSIRO, the Bureau of Meteorology, NASA and the Academy of Sciences are engaged in a vast conspiracy. But in their heart, many Coalition politicians somehow can’t come to accept the overwhelming scientific evidence in favour of climate change.

Alternatively, you might be talking to a Malcolm Turnbull supporter. They know the science is solid, but their leader believes climate change is ‘absolute crap’. So they’ll likely tell you that the Coalition is a broad church, which tolerates a variety of views.

But rejecting the science of climate change isn’t a fashion choice. It’s a fundamental question about whether you’re serious about public policy. If you believe the cranks and shonks on a matter as big as whether humans are causing climate change, why should we trust your judgement on anything else?

On some issues, we should tolerate difference. I may not like paisley shirts and ABBA, but I respect your right to love them both.

But if you can’t accept the thousands of temperature readings that show us that 2010 is one of the three hottest years on record, then you’re off with the fairies. Yes, Cori Bernadi, I’m talking about you.

If you can’t accept that every decade since the 1940s has been hotter than the preceding decade, then I have as much respect for your views as a flat-earther. Yes, Dennis Jensen, I’m talking about you.

And if you can’t cop the mainstream evidence that CO2 emissions are causing climate change, then you’ve just joined the loony right. Yes, Nick Minchin, Barnaby Joyce, Sophie Mirabella, Eric Abetz, Guy Barnett, Bronwyn Bishop, Ron Boswell and Michaelia Cash, I’m talking about you.

Australia’s conservatives didn’t always oppose mainstream science. Stanley Bruce created CSIRO.

Robert Menzies was an original fellow of the Australian Academy of Science. Malcolm Fraser created the Australian Science, Technology and Engineering Council.

Today, every living Liberal Party leader apart from Tony Abbott accepts the science of climate change and the need to put a price on carbon. It’s time for the Opposition to recognise that if you’re not serious about climate change science, you’re not fit to govern the country.

(crossposted at the ALP blog - please comment there)

'Vertical funds' are playing an increasingly important role in foreign aid these days. One of these is the Global Alliance on Vaccines and Immunisation (GAVI), which received an extra $200 million injection from Australia at a donor meeting in London a week ago. Kevin Rudd's speech received plaudits from those who attended (Bruce Boyd told me of a colleague at the meeting who said the announcement 'took people's breath away'). Given how well GAVI has performed in assessments such as the UK multilateral aid review, this is good news indeed.

Another vertical fund that Australia contributes to is the Global Fund to Fight AIDS, Tuberculosis and Malaria. The fund will be holding its fourth Partnership Forum in Sao Paulo from 28-30 June, and I'll be attending as part of a parliamentarians' event on 27 June. You can guarantee that I won't be making any spectacular pledges of Australian aid, but I am looking forward to the conversation.

Flying from Australia to Brazil is messier than you might think (I'm getting there via South Africa), so it turns out that I won't be able to return in time for the community forum that I had advertised for Saturday 2 July in Downer Community Centre. I'll post details here once I've rescheduled that event. Apologies to inner north residents for any inconvenience.

I spoke in Parliament today about the Australian Youth Climate Coalition, as well as Canberra's first 'Carrotmob'.

Climate Change, 16 June 2011

In politics, some of the most important decisions you make are the ones that outlive you, whether it is the Menzies government's decision to expand basic research through the CSIRO, the Keating government's decision to put in place a superannuation guarantee or this government's decision to dramatically improve early childhood education. Great policy is made with the long game in mind. In the case of climate change, the decisions we make today will matter more for my sons than they will for me. It will be my little boys whose world will be most affected if sea levels continue to rise and temperatures increase. Young people in my electorate, much like their peers across Australia, want a clean energy future, a future where Australia prices carbon.

This was the message 24 enthusiastic young Canberrans brought to me last week: Claire Bailey and Laura Hyde, year 9 students from Campbell High School; Kiara Creaser from Dickson College; Fehin Coffey, Sophia Rose O'Rourke, Kirk Demant and Claire Hickstepp from Orana School; Vicki Tjandra and Andrew Lovering from the University of Canberra; and Zoe Anderson, Moira Cully, Laura Hogan, Eliza Hopkins, Lindsey Cole, Charlotte Wood, Joshua Creaser, Jonathan Rosseau, Tess Corkish, Ben Huttner-Koros, Adam Huttner-Koros, Alexandra Gill, Hayley Shone, Ben Molan and Tom Sloan from the Australian National University.

These young Canberrans presented me with a petition signed by 700 people supporting a price on carbon and investment in renewable energy. They did so under the umbrella of the Australian Youth Climate Coalition. The AYCC has been determined to see Australia act. They have been dogged in their determination and unwavering in their commitment to ensure youth throughout Australia have their voices heard. It is often said that young, progressive activists are anti-market, that they are hostile to economics. But Australia's young climate change activists show how wrong this is. The AYCC activists I met with understand there is no contradiction between economic growth and environmental preservation and that a market based mechanism is the most efficient way of tackling dangerous climate change.

Speaking of markets, I want to use this opportunity to commend the organiser of Canberra's first 'Carrotmob'. Modelled as the environmental equivalent of a flash mob, Carrotmobs attract extra shoppers in return for the store owner's commitment to spend the extra revenue on improved energy efficiency. I commend Ren Webb and the other Carrotmob organisers who helped Ainslie IGA manager Manuel Xyrakis accumulate an extra $12,000 to spend on reducing his store's carbon footprint.

Thousands of Australians, young and old, support market based mechanisms for tackling climate change. It is time for all members of parliament to get on board. We need to price carbon now.

I spoke in Parliament today about the ACT Community Living Project.

ACT Community Living Project, 16 June 2011

On Monday, 13 June, I had the pleasure of attending a barbecue to raise funds and awareness for the ACT Community Living Project. CLP is a not-for-profit community organisation seeking services for people with a disability, particularly those with a moderate to severe intellectual disability, many of whom have physical or health issues. The group also includes people with autism.

The event was held at Magnet Mart Gungahlin on a crisp Canberra winter's day. CLP had organised balloons and face painting for the kids, hot soup, coffee and sausage sandwiches. My four-year-old son, Sebastian, and I helped David and Kay behind the counter and then he sat and chuckled at me while I had my face painted with the CLP logo. I acknowledge CLP president, Esther Woodbury, and CLP coordinator, Allison McGregor, for their hard work in promoting CLP and pay tribute to CLP and the 350 Canberra families it supports for family members with an intellectual disability.

CLP recognises the need to provide people with an intellectual disability with a choice of accommodation, access to lifelong education, meaningful work or voluntary activities, quality health care and the chance to be socially included. I am pleased to support its work to raise funds for CLP and to raise awareness of the important issue of supporting people with an intellectual disability.

Tim Harford’s latest book is a cracker (Adam Smith meets Malcolm Gladwell). It’s titled Adapt: Why Success Always Starts with Failure. Some choice quotes:

An enterprising civil servant… decided to bypass the regular commissioning process and order the new plane as ‘a most interesting experiment’. The plane was the Supermarine Spitfire. … it is only a small exaggeration to say that the Spitfire was the plane that saved the free world.

He studied… statistics on the death of corporate titans and compared them with half a billion years of data from the fossil record. The timescales were different, but the relationship between the size of an extinction event and its frequency proved to be exactly the same. … If companies really could plan successfully – as many of us naturally assume that they can… then the extinction signature of companies would look totally different to that of species. In reality, the signatures could hardly be more similar.

Margaret Thatcher famously declared, ‘You turn if you want to. The lady’s not for turning.’ Tony Blair was proud of the fact that he didn’t’ have a reverse gear. Nobody would buy a car that didn’t turn or go backwards, so it is unclear why we think of these as desirable qualities in Prime Ministers. … But whether we like it or not, trial and error is a tremendously powerful process for solving problems in a complex world, while expert leadership is not.

The Soviet failure revealed itself much more gradually: it was a pathological inability to experiment.

And so Mario Capecci became a street urchin at the age of four and a half. … In 2007, Mario Capecci was awarded the Nobel Prize for Medicine for this work on mouse genes. As the NIH’s expert panel had earlier admitted when agreeing to renew his funding: ‘We are glad you didn’t follow our advice.’

scientific societies shifted from chiefly awarding prizes to mostly handing out grants… Grants, unlike prizes, are a powerful tool of patronage. Prizes, in contrast, are open to anyone who produces results. That makes them intrinsically threatening to the establishment

[Archie] Cochrane … was a prisoner of war in a German camp in Salonica when the prisoners were struck by a severe outbreak of pitting oedemas – a horrible swelling up of fluid under the legs. … he improvised a trial with the only two potential treatments at his disposal: his personal store of vitamin C tablets and some Marmite… He divided twenty severe cases into two groups of ten… one young German doctor … studied the data. He was deeply impressed by the care of the clinical trial and the incontrovertible results.

evaluation experts such as Esther Duflo and Edward Miguel have criticised the evaluation of the Millennium Villages. They may be working brilliantly and they may not, but without a randomised trial it’s going to be difficult to know.

the Inland Revenue Service recently increased the rewards people could earn by reporting suspected tax evaders, and the number of tip-offs increased sixfold

The differences between a carbon permit scheme and a carbon tax are insignificant relative to the differences between having some kind of carbon price and not having one. [See also Peter Martin's column, which quotes Harford on carbon pricing.]

My wife Gweneth is curating an exhibition at the Gallery of Australian Design in 2012 on the links between landscape architecture and public health.

If you have worked on design projects that promote healthy living (including schools, hospitals, prisons and parks), Gweneth would love to hear from you. Details here.

I spoke in parliament last night on the issue of live animal exports.

Live Animal Exports, 14 June 2011

The image of our stock men and women is deeply etched on the national psyche: the laconic stockmen rocking easily in the saddle, cajoling and guiding the herd; the alert and agile stockman darting through the bush, bringing a bolter back or displaying campdrafting skills at the local rodeo.

The resourcefulness and resilience of Sara Henderson, who successfully ran Bullo River cattle station, inspired us all with her campaign against breast cancer even as she herself was dying from the disease.

The government, those who raise the cattle and those who rely on the cattle care deeply about the welfare of these animals and ensuring they are treated humanely every step of the way.

Following evidence of animal mistreatment, the decision was made to suspend trade to Indonesia. This was not an easy decision, but it was the right decision.

The live export trade will only recommence when we are certain that the industry complies with supply chain assurances. The industry must be based on animal welfare outcomes, transparency and verification. The Australian and Indonesian governments have agreed to work together to establish a transparent, verifiable system that will account for cattle from Australia right through the supply chain.

The humane treatment of animals is a universal value that transcends international boundaries. It is the community standard. It is the government's standard. It must be the industry's standard.

Under World Trade Organisation rules, Australia has the right to take actions to ensure that Australian cattle are treated in accordance with international standards of animal welfare. I was horrified, as all Australians were, by the Four Corners footage.

We cannot turn away from this.

That is not the Labor way.

It is not the way of this government.

That is why the government is working with the industry and with animal welfare organisations to make sure that the cattle those in the industry rely on and care for are part of a supply chain that respects the animals' welfare.

Halal killing should only be done after animals are stunned. This is the best way to ensure the long-term sustainability of the industry for those that rely on meat exports for their livelihood and way of life, such as the Indigenous stockmen and their families who work in 82 Indigenous cattle stations across Northern Australia, providing economic and employment opportunities.

We know that in the short term the suspension will have an impact. The government is committed to the long-term future of the industry, an industry that is vital to many Australians and their communities.

We all identify with the spirit of our stock men and women, and the care they have for their cattle. Banjo Paterson wrote of this in his poem With the Cattle:

'The plains are all awave with grass,

The skies are deepest blue;

And leisurely the cattle pass

And feed the day long through;

But when we sight the station gate,

We make the stockwhips crack,

A welcome sound to those who wait

To greet the cattle back:'

If anyone is left in doubt as to the indelible mark left by those who work the land, look down at your feet or the person's next to you. There is a good chance they will be wearing a pair of RM Williams shoes, shoes designed by a stockman for stockmen to enable them to apply their trade in caring for their cattle.

The pundits like to find conflict in every story. In the case of live exports, the debate has been portrayed as city versus country, Bondi versus Barcaldine, naive animal lovers versus heartless farmers.

But the debate is more than that.

We are more than that.

Over the past fortnight, I have received more than 500 emails on the issue of live exports and engaged in numerous conversations with constituents here in the bush capital.

Australia is made up of urbanites proud of their cattle industry and people on the land horrified at what they saw on their TV screens.

Ours is not a country divided. Most want a strong cattle industry, but never again do we want to see cattle mistreated. I am confident that we can achieve both outcomes.