Canberra International Walking Weekend

I've just signed up for the Canberra International Walking Weekend on 2-3 April. If you're after a relaxed non-competitive walking event, it's well worth checking out their website.
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Jobless in America

My AFR op-ed today is on the US economy, and why the labour market numbers are so much worse than the growth figures.

Down and Out in the USA, Australian Financial Review, 1 February 2011

Ten years ago, I wrote an opinion piece with Justin Wolfers. Titled ‘A jobs miracle that has baffled the experts’, our goal was to try to understand the ‘miracle’ US labour market, and what lessons could be learned by Australian policymakers as they strove to get our unemployment rate (then 6%) down to US levels (then 4%).

Today, the dole cheque is in the other hand. Australia’s unemployment rate is 5% (ranging up to 6% in Queensland), while US unemployment is 9% (ranging up to 15% in Nevada). But those figures understate the magnitude of America’s unemployment problem. Many US adults have now given up looking for work, and so do not show up in the unemployment statistics. In addition, 1% of US adults are in jail, and are not counted in the jobless numbers.

For the most part, the picture Australians get of the US is an economy steadily recovering from recession. The National Bureau of Economic Research formally dates the end of the US recession as June 2009. Yet growth statistics show only part of the story. Far more disturbing are the labour force figures.

The magnitude of the US jobless problem was brought home to me when I attended the annual meetings of the American Economic Association in Denver in early-January. In a session titled ‘Lessons for Economics from the Great Recession’, Princeton’s Alan Krueger pointed out that the magnitude of the job loss was about one-third larger than would be expected given the fall in GDP. Compared with past recessions, US firms were quicker to fire employees in the latest downturn.

Looking to the future, Northwestern University’s Robert Gordon showed that merely to keep pace with steady increases in the working-age population, substantial job growth is needed. He painted one scenario: what if the US economy was to regain the employment rate it had before the crisis, and it was to reach that goal by 2016? To achieve this, Gordon calculated, it would be necessary to create nearly 300,000 jobs per month. Yet the current rate of job creation is just 100,000 per month.

Even if Gordon’s over-optimistic scenario was to be realised, the impact on the US workforce would be severe. Using the fact that every one-point fall in the employment/population ratio equates to 2.4 million people, he estimates the number of ‘job-years’ sacrificed as a result of the recession. In total, Gordon estimates that the US recession has led to 54 million lost job-years.

And if that picture wasn’t bleak enough, MIT’s David Autor presented historical data showing increased polarisation of the US labour market over the past three decades. Adjusted for inflation, US males without a university degree have gone backwards. Indeed, these men now have lower hourly wages today than their counterparts at the end of the 1970s. Yet for university graduates, earnings are one-third higher than they were a generation ago. The gap between rich and poor in America is higher than at any time since the 1930s.

The worrying labour market outcomes for less educated US men can be seen in declining marriage rates (particularly for black men), with potential adverse implications for future generations. One-tenth of African-American children have a parent in jail, while two-thirds are living with one parent.

The underperforming US labour market is likely to have three impacts on Australia. First, many migrants who might otherwise have looked to the US or Europe will now be likely to apply to enter Australia. This means that it’s a buyers’ market for skilled migrants.

Second, US politics is likely to be even more inward-looking than usual. With the rise of Tea Party Republicans (the modern-day version of the nineteenth-century ‘Know Nothing’ movement), US politicians who speak honestly about global challenges risk being attacked for being ‘out of touch’ with the concerns of Kansas City and Cincinnati. This will make it tougher than ever to strike international deals on issues such as trade and climate change.

Third, it ought to give pause to those who have argued that Australia’s industrial relations system requires a burst of US-style deregulation. The ability of US employers to fire workers with few legal impediments probably helped fuel the mass layoffs of 2008 and 2009. And while policymakers should always do everything we can to reduce the Australian unemployment rate, it remains a fact that our labour market is one of the best-performing in the developed world.

Andrew Leigh is the federal member for Fraser.
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Mitch Fifield and I kick off Sky's AM Agenda show for 2011

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What I'm Reading

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Tax Expenditures Tabled

The Treasury's annual statement on tax expenditures* has just been issued. Here are the biggies:
The largest measured tax expenditures are the concessional capital gains taxation of owner-occupied housing (E4 and E5) which is estimated to provide a benefit to taxpayers of around $40 billion in 2010-11. Together, these tax expenditures represent the exemption of owner-occupied housing from CGT. After the owner-occupied housing exemption, the next largest tax expenditure is the concessional taxation of employer contributions to superannuation (C5) of around $14.3 billion in 2010-11. This is followed by the concessional taxation of superannuation entity earnings (C6) and the GST-free status of food (H28). These tax expenditures are estimated to provide benefits to taxpayers in 2010-11 of around $12.2 billion and $5.9 billion respectively. ...
There are a number of tax expenditures for which an estimate is not available but which have been assigned an order of magnitude classification (for details refer to Chapter 3). The largest such tax expenditures are as follows: philanthropy — income tax exemption for charitable, religious, scientific, and community service entities (B72); income tax exemption for Commonwealth, State and Territory public authorities, and State and Territory entities (B3); and quarantining of capital losses (E31).

* As the report puts it, "A tax expenditure is a provision of the tax law that provides a benefit to a specified activity or class of taxpayer that is concessional when compared to the ‘normal’ tax treatment that would apply. ... Tax expenditures can be provided in many forms, including tax exemptions, tax deductions, tax offsets, concessional tax rates or deferrals of tax liability."
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Social Capital, By Design

As a fan of ABC Radio National's By Design program, I was chuffed on Wednesday to be invited by host Alan Saunders to discuss social capital and the findings of my book "Disconnected". A podcast is available here.
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What I'm Reading

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Blue Sky Mining

I'm  looking for an office manager, with an ad today in the Canberra Times, The Australian, and on Seek. If you know anyone who might fit the bill, please encourage them to apply by Feb 1.

Dr Andrew Leigh MP

Member for Fraser


Applications are invited for the above position based in Canberra.

The duties of the positions include: managing a team of four other staff (plus volunteers), community engagement, liaising with government departments, preparing and coordinating correspondence, organising events and meetings.

Applicants should possess the following skills and experience:

  • Experience in managing a medium-sized team in a high-pressure environment

  • Passionate about community engagement

  • Hard working and enthusiastic about addressing local issues

  • Excellent oral and written communication skills

  • Well developed office IT skills

  • Extensive understanding of government and parliamentary processes

A commencing salary of up to $66,868 will be paid (plus allowances).

A probationary period of 3 months will apply.

Applications setting out details of experience and the names of two referees should be forwarded to

Applications close on 1 February 2011. For further information please contact Shobaz Kandola, acting office manager, on 02 6247 4396.

My previous office manager, Rick Youssef, has alas taken a job with Peter Garrett. So as well as having the chance to work with me and my talented team, I can claim that my alumni place exceedingly well!
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Indigenous Economic Development Inquiry - Sub Deadline Extended

If you're planning to make a submission to our House of Reps inquiry into Indigenous Economic Development in Queensland, you now have an additional three weeks.

Extension for submissions to the inquiry into Indigenous economic development in Queensland

The House of Representatives Economics Committee is continuing its inquiry into Indigenous economic development in Queensland and review of the Wild Rivers (Environmental Management) Bill 2010.

The Committee is examining the full range of issues affecting Indigenous economic development in Queensland including the operation of environmental and industry regulation.

“The Committee is, of course, well aware of the natural disaster that has befallen Queensland. Our thoughts go out to the communities that have been affected by these unprecedented floods” said the Chair of the Committee, Craig Thomson (Member for Dobell, NSW).

Given Queensland’s current circumstances, and that many involved in this inquiry are suffering hardship, the Committee has extended the closing date for submissions.

Submissions were due by Friday 28 January 2011, but this is now extended until Friday 18 February. Further extensions beyond this date can be negotiated with the Committee secretariat.

Further public hearings are now expected to be held in Queensland during the week beginning 7 March 2011. The Committee strongly encourages those who wish to participate in hearings to contact the Committee secretariat to register their interest. The secretariat will also be happy to provide further information about the inquiry and the submission and hearings process.

Submissions addressing the terms of reference should be emailed to [email protected] or sent to:

The Committee Secretary

House of Representatives Standing Committee on Economics

PO Box 6021

Parliament House

Canberra ACT 2600

Further details about the inquiry, including the terms of reference and advice on how to make a submission, can be obtained from the committee’s website at

For further information: please contact the Committee secretariat on (02) 6277 4587 or email [email protected]
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Strengthening the Not-for-Profit sector

Media Release - 21 January 2011

Andrew Leigh, Federal Member for Fraser

Strengthening the not-for-profit sector

Federal Member for Fraser, Andrew Leigh, has welcomed the release of a consultation paper on the design of a new national regulator for the not‑for‑profit sector.

“This is part of the government’s commitment to strengthening the 600,000 or so not-for-profits and community organisations throughout Australia,” said Andrew Leigh.

“It’s about making it easier for not-for-profits to do what they do best – help people.

“We want to reduce red-tape and streamline processes so that the sector can spend more time servicing the needs of our most disadvantaged and vulnerable citizens.

“We want to hear from the sector on their ideas about delivering smarter regulation that reduces the compliance burden while improving transparency and accountability.

“This is the start of the process to deliver a “one-stop shop” regulator and the feedback from the sector while help determine its role, function and design,” concluded Andrew Leigh.

The consultation paper was today released by the Assistant Treasurer Bill Shorten and Minister for Social Inclusion Tanya Plibersek.

In releasing the paper Mr Shorten and Ms Plibersek said Treasury will use the consultation paper to seek the views of stakeholders on the goals of national regulation, the scope of national regulation, and the functions and form of a national regulator.

Submissions in response to the paper close on February 25, 2011.  The consultation paper is available on the Treasury website at

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