Andrew Leigh

I'm speaking today to a business breakfast in Perth, on the theme of innovation in the Western Australian economic story.

Ideas and Engagement: The Western Australian Economic Story*

Andrew Leigh MP
Shadow Assistant Treasurer

Business Breakfast, Perth
21 February 2014

I acknowledge the Whadjuk Nyoongar people, the traditional owners of the lands on which we meet, my federal colleague Alannah MacTiernan, Western Australian Shadow Treasurer Ben Wyatt and Shadow Minister for Planning and Finance Rita Saffioti. My thanks to the Perth Writers’ Festival for flying me over to the left coast.

It’s a pleasure to have the chance to speak with you today.

When I was in my mid-twenties, I had the chance to work for the late Western Australian Senator Peter Cook. He was then the Shadow Minister for Trade – a perfect portfolio for a Western Australian.

Peter taught me a great deal about politics, and about Western Australia. I enjoyed travelling with him through places like Kalgoorlie, Karratha and Carnarvon, talking with mine workers and farmers, local business leaders and politicians.

Peter was an instinctive internationalist. He took the view that you couldn’t be a social democrat without believing in an open Australia – and you couldn’t believe in openness without a proper social safety net. He was a yachtsman, with a yen for open waters.

For many Western Australians, internationalism is instinctive. The ‘Swan River Colony’ began exporting wool to Britain in the 1830s and sandalwood to Singapore in the 1840s.[1] It was open to migrants: one indicator of how many migrants flooded in is that by the 1850s, there were two men for every woman. You don’t get a gender ratio like that in a closed society!

No surprise, then, that the Free Trade League, established in 1871, is thought to have been this state’s first political organisation. And at the time of Federation, Western Australia lined up on the side of free trading New South Wales, opposing protectionist Victoria.

In more recent decades, it was Western Australian John Dawkins who was the foundation chair of the Cairns Group of agricultural free trading nations. Western Australians on both sides of politics have continued that tradition. The likes of Paul Hasluck, John Hyde and Peter Walsh are a reminder that this state produces more than its fair share of straight-talking politicians.

Today, the numbers tell the story of a transformed state. When I worked as an economics professor at the Australian National University, one of my colleagues, Bob Gregory, liked to say that if you wanted to see economic growth in action, you could either watch Australia for a century, or China for a decade. In a similar vein, economists watching Western Australia over the past decade have seen their share of eye-popping numbers.

Try these five statistics, for example.

• Western Australia accounts for one-sixth of Australia’s GDP, but nearly half our exports.


• In a few years, iron ore exports will total 25 tonnes a second (up from a third of a tonne in the late-1960s).


• The cost of the Gorgon gas project – the world’s largest LNG with geosequestration project – is approximately the size of the GDP of Lebanon.


• Hundreds of Australians now work as fly-in, fly-out workers, including some who have chosen to commute from Bali (a shorter flight from Perth than it is to Sydney).


• Historically, Western Australia has had a similar level of inequality to other states. Now, it’s the most unequal jurisdiction in the nation, with a gap between rich and poor similar to the United States.[2]

In a fast-changing business environment, you need a federal government that will be predictable, responsible and responsive.

As Federal Labor Leader Bill Shorten said when he spoke in Perth a week ago, the extent of the previous government’s dialogue did not match the size of our reform.[3]

It isn’t an error we will be repeating in Opposition – nor in government, if given the chance to serve again.

My Western Australian colleagues – Mark Bishop, Gary Gray, Sue Lines, Alannah MacTiernan, Melissa Parke, Louise Pratt and Glenn Sterle – are each thoughtful parliamentarians who understand that good governments must take the long view.

In doing so, it’s vital that we recognise the diversity in the mining sector. Over the past decade, the Reserve Bank of Australia’s commodity price index has more than doubled.

But that average hides significant differences across sectors. Iron ore prices are at least six times higher than a decade ago, yet bauxite and alumina now face challenging conditions. The gold price has dropped by a quarter in the past year.

The advances in mining technology over the past decade have in some cases been nothing short of extraordinary.

We need to keep the partnerships between public and private researchers that encourage this to continue.

Australia has the potential to take global leadership in some technologies, such as carbon sequestration and floating LNG.

The same is true in agriculture.

In the early days of Western Australia’s founding, wool dominated wheat in the export markets. Per kilogram, it was 10 to 20 times more valuable. And it required less processing.[4]

The story of Western Australian wheat isn’t a story of picking low hanging fruit.

It’s a tale of ingenuity.

CY O’Connor’s pipeline took water 600 kilometres, and was the longest pipeline in the world at the time of its opening.

The pipeline water wasn’t used to water crops, but it made inland wheat growing possible because it sustained the settlements along its length.

The rail network made it possible to get the wheat to market at a reasonable cost.

A bulk grain handling system – the nation’s largest cooperative – cut costs and boosted wheat exports.

Western Australia is one of the oldest supercontinents on earth – around 3 billion years old. But as a result, your soils are some of the least fertile in the country. They have less phosphorous, nitrogen and copper. So technologies have had to be better – using the right fertilizers and choosing the right seeds. Western Australian farmers have had to be more ingenious than farmers in other parts of the world who started with better soils. Necessity, as the saying goes, is the mother of invention.

The success of Western Australia’s mining and farming sectors aren’t just a source of pride and prosperity for Australia – they are also a key part of our engagement with the world.

In a number of speeches since entering politics, I’ve argued that Australia’s foreign aid program should focus on our comparative advantage: the things we do relatively better than other nations.[5]

Two of these advantages are mining and dryland farming.

Initiatives such as the International Mining for Development Centre and the Australian Centre for International Agricultural Research are a good start – but as I argued when I opened the ‘Mining for Development’ conference last year, we can do more.

This involves taking ideas out of Perth and into Africa. Australian mining companies’ standards of corporate social responsibility and safety can help raise living standards in the world’s poorest continent.

But Western Australia isn’t just a quarry and a farm – important as quarries and farms are.

This is also the state that produced Nobel Prize winners Barry Marshall and Robin Warren – who were willing to give themselves ulcers to transform our understanding of that condition.

It’s the state that gave us Fiona Wood, whose breakthroughs with spray-on skin have made lives of burns victims more bearable.

It’s the state that produced great economists like Nugget Coombs. And like Ross Garnaut, who I’ll be joining in discussion later today.

It’s the state that produced novelist Tim Winton – who regularly tops polls of Australia’s greatest author.

And it’s the state that produced singer-songwriter Tim Minchin, who is currently wreaking offence and hilarity across the United States.

Innovation is at the core of Australia’s future prosperity, and Western Australia is as well placed as any part of Australia to capture its benefits. Western Australia is a great example of innovation at work.

The Square Kilometre Array is one example of such a project. The Murchison site, 315 kilometres northeast of Geraldton, will be part of a project that will test Einstein’s theory of general relativity, search for dark matter, and assess if there are other planets out there capable of supporting life.

But innovation also happens at a more modest scale – through breakthrough architecture firms, health researchers, manufacturing exporters and the like.

It’s also about how companies make their production methods more streamlined, thereby raising overall productivity.

Better productivity isn’t like a cake that governments slice up and hand out.

But governments do play a role.

Governments need to ensure that every child gets a first rate education, which provides broad skills and critical thinking. Many of today’s graduates will finish their careers doing jobs that don’t exist today, so they need to learn to be flexible and adaptable.

Governments must provide appropriate infrastructure, such as urban rail. Look around the world, and you’ll be hard-pressed to find a highly productive city that hasn’t made the most of its city centre.

Congestion isn’t just maddening, it’s bad economics. And any government that thinks it can get away with skimping on infrastructure needs to get serious about productivity.

Finally, governments need to maintain what Lindsay Tanner once called a philosophy of ‘Open Australia’.[6] The old Australian model of tariff barriers and a White Australia policy made us poorer in wallet and spirit. Today, governments need to be willing to make the case for foreign investment, rather than merely pandering to the old canard that investment is good, except if it comes from overseas.

* * * * *

If you ever visit the headquarters of the World Trade Organisation, the leading advocate of global free trade, make sure you look at the murals on the wall. The WTO occupies the building that used to be the International Labour Organisation, so social realist friezes of happy and productive workers smile down on the trade negotiators as they go about their business.

It’s an image that Peter Cook always appreciated: the idea that prosperity and engagement can go hand-in-hand. It requires us to be optimistic about the ability of our firms to compete in the world economy. It necessitates that we make the smart investments in education and infrastructure, and resist the temptation to hunker down. It’s a vision that befits Western Australia, and one that I hope we can work towards in the Asian Century.

Peter Cook entered parliament in 1983, and within a few years had made an impact on the young and increasingly confident Hawke Government. One of the reasons he did so was that he entered the parliament without baggage. Intellectually, he brought with him an instinctive Western Australian understanding that markets – properly functioning – are a great generator of wealth, but that government has a vital role in promoting prosperity and fairness.

When you stand on one of Perth’s great beaches and look west, you can watch the sun set over the ocean. It’s a scene that always reminds me of Peter Cook. In politics – and other walks of life – fireballs rise and set. But there are a few who make big waves. That’s what Peter did. Western Australia – and the nation as a whole – is better for it. And it’s a lesson for each of us to follow today.

---

* I am grateful to several colleagues and staff for valuable comments on an earlier draft of this speech.

[1] Western Australian Department of Treasury and Finance, 2004, ‘An Economic History of Western Australia Since Colonial Settlement’, Research paper produced for the 175th Anniversary of Colonial Settlement 1829-2004.

[2] Andrew Leigh, 2013, Battlers and Billionaires: The Story of Inequality in Australia, Black Inc, Melbourne.

[3] Bill Shorten, 2014, ‘Leadership Matters’, 14 February 2014, Perth.

[4] As economic historian Ian McLean has pointed out, wool and gold shared two key characteristics: they were high value for weight, and required minimal processing before export.

[5] Andrew Leigh, 2011, ‘Fragile States and Agile Aid’, Lowy Institute, 18 May 2011, Sydney; Andrew Leigh, 2013, ‘Opening Keynote’, Mining for Development Conference, 20 May 2013, Sydney.

[6] Lindsay Tanner, 1999, Open Australia, Pluto Press, Sydney.

In a couple of speeches and articles, I've argued that Labor should be the party of both egalitarianism and social liberalism. Blue Labour fan Nick Dyrenfurth takes a different view, so Tim Watts MP organised a Google Hangout to explore the issue further. Here's a video of the event.

The business of being in Opposition is to hold the Government to account. The Guardian today published my piece on the Prime Minister's jobs target.

OPINION PIECE



Unemployment: Abbott needs 1,007,000 more jobs to keep his promise



One of the great inkblot tests of modern politics is how you think about unemployment. While progressives tend to think in terms of social forces, those on the right are more likely to see unemployment as a personal failing.

You can hear echoes of this view from conservative politicians. Social Services Minister Kevin Andrews has announced he will be ‘reining in welfare’, while Abbott Government backbencher Ken O’Dowd has argued that welfare recipients ‘don't care about the community, they care about themselves and how they can screw the system’.

To see the oddity of blaming the victim, you only have to take the argument to its logical conclusion. Since the Abbott Government was elected, more than 7000 jobs have been lost. Is this because we’ve seen a surge in laziness among Australians? Did the millions who lost their jobs worldwide in the global financial crisis just decide to put their feet up? Was the Great Depression the result of a historic collapse in the work ethic?

Realising that unemployment is driven more by the macro-economy than morality is important because it brings the focus back to where it should be. As Clinton strategist James Carville put it, ‘It’s the economy, stupid’.

Before the election, Prime Minister Abbott campaigned hard on economic growth and job creation, stating: ‘I am so confident that we can deliver a million new jobs over five years.’ Yet the target seems to be slipping away from him. Almost half a year in office, and Mr Abbott now needs to create 1,007,000 jobs to keep his promise.

Australians recognise that there are many forces in the economy that are outside the control of government. When it comes to economic policy, people aren’t looking for Moscow on the Molonglo, but for a sense that the important economic settings are right: in the short and long term.

In the short-term, getting the settings right means ensuring that the government takes account of the economic cycle when making its budget decisions. With unemployment on the rise, is this really the right time to be axing thousands of jobs in the Australian public service? From regional tax offices to AusAID, public servant job losses are adding to unemployment pressures.  And yet there’s no evidence of a ‘bloated’ public sector: after all the number of public servants per capita did not rise under Labor.

In a fragile labour market, the Abbott Government needs to rethink the impact that its decisions have on growth. Because the poor have a higher spending rate than the affluent, the hit to demand from removing the SchoolKids Bonus and cutting income support will be significant. At the same time, it’s easy to see the removal of the Mining Tax having little positive impact on demand. If the government cuts family payments on low-income families, those families will spend less. If it pays the wealthiest families $75,000 to have a child, these families may simply choose to save a bit more.

And then there’s the long-term. The progressive view of economic growth is that it depends on education, infrastructure and openness. That’s why Labor opened up university places, took us from 20^th to 1^st in the OECD for infrastructure investment, and commissioned the Australia in the Asian Century White Paper.

These decisions need to be built on if Australia is to have more good-paying jobs in the future. And yet it’s worrying to see the scrapping of Trades Training Centres, the failure to build a fibre-based NBN, and the decision to turn away US foreign investment in GrainCorp.

Wage cuts and asset sales are a poor recipe for the nation once known internationally as ‘the Workers’ paradise’. In the future, Australia must be better-educated and have speedier transport networks; we must be connected to the world’s information superhighways, and we need to be open to trade and investment from our region.

Smart investments for the future will not only help to bring down the unemployment rate; they will also help to boost productivity. Over the past decade, we’ve experienced a historic rise in the terms of trade (the ratio of the price of what we sell the world to what we buy from the world), which has helped to mask a period of sluggish productivity growth. As the terms of trade decline, we need productivity-boosting measures more than ever before.

Even amidst the Global Financial Crisis – the world’s worst downturn since the Great Depression, Australia had better labour market figures than it does today. The unemployment rate is at an 11-year high, and the participation rate is at an eight-year low. As a nation, we can do better. It’s time to get Australia working again.

Andrew Leigh is the Shadow Assistant Treasurer, and his website is www.andrewleigh.com.

ENDS

Wednesday, 19 February 2014

Published in The Guardian, Australia edition

Ahead of the G20 meeting of finance ministers and central bank chiefs from major economies in Sydney at the end of the week, I have called on the Abbott Government to get serious about tightening tax rules so that multinational corporations pay their fair share.  For the first time Australia has a decision making role at the G20 and Labor urges the  Government to use the occassion to make sure it produces concrete actions rather than a series of platitudes.

MEDIA RELEASE

IT’S TIME TO BRING INTERNATIONAL TAX RULES INTO THE 21^ST CENTURY

Shadow Assistant Treasurer, Andrew Leigh, has called on the Treasurer to show strong leadership at G20 Finance Ministers’ meeting this week to achieve global action to crack down on multinational corporations that pay little or no taxation at all.

“Since coming to office, the Abbott Government has talked a big game on multinational profit-shifting. But all it has done is to water down Labor’s sensible reforms that ensure multinationals pay their fair share,” said Dr Leigh.

“On 14 December 2013, Assistant Treasurer Arthur Sinodinos announced that it would abandon a $700 million measure to prevent multinational firms reducing their tax bill.

“On 4 January 2014, Senator Sinodinos said he was considering abandoning measures that required 200 of Australia’s largest firms to disclose their total income, taxable income and tax paid.

“The Coalition seems to favour loopholes and secrecy – not fairness and transparency.

“It’s not fair that under existing rules global firms can siphon profits earned in Australia to low-taxing countries.

“That’s hundreds of millions of dollars of tax revenue lost that could go towards Australian hospitals, schools and infrastructure,” Dr Leigh said.

“When tax rules allow businesses to shift their income away from where it was produced, it erodes that country's tax base and shifts the burden onto individual taxpayers.

“International tax rules are not keeping pace with changes in the digital age and the realities of doing business in our globalized world. Rapid and dramatic shifts in global economic activity, driven largely by e-commerce, pose very real and significant risks to Australia's corporate tax base and the tax bases of countries right around the world.”

A number of Australian media companies have come out this week to urge reform.

“There is a pressing need for action. This week’s G20 finance ministers is a potential watershed moment in international tax policy,” said Dr Leigh.

“Labor advanced a fair agenda to combat tax avoidance and evasion. It’s up Joe Hockey and Arthur Sinodinos to take up the baton left by Wayne Swan and David Bradbury so multinationals pay their fair share of tax.

“Until they do Australian households and businesses will have to take on a higher tax burden and local communities suffer.”

TUESDAY, 18 FEBRUARY 2014

Today Michelle Rowland and I issued a joint media release urging ACT Senator Zed Selelja to come clean and acknowledge there was money allocated in the federal budget for assistance to the Gunghalin Jets and other groups awarded grants under the Building Multicultural Communities Program. The Abbott Government has abandoned organisations who were successful in applying for those grants.

SESELJA CAUGHT OUT ON FUNDING CUTS



Shadow Minister for Citizenship and Multiculturalism, Michelle Rowland, has called on ACT Senator Zed Seselja to front-up to organisations in the ACT, including the Gungahlin Jets, and explain to them why his Government has cut their funding rather than misleading his constituents.

Speaking on radio yesterday Senator Seselja falsely claimed that funding the Abbott Government ripped away from the Gungahlin Jets wasn’t budgeted for under the Building Multicultural Communities Program.

Senator Seselja: “They promised something they didn’t have the money for. They didn’t allocate the money for it.” - 2CC – MONDAY, 17 FEBRUARY 2014

“Senator Seselja is either blatantly misleading the good people at the Gungahlin Jets or is too incompetent to read Labor’s 2013/14 Budget[i] and the MYEFO document his Government prepared[ii],” Ms Rowland said.

“If he did his research he would be aware that the program was fully budgeted for and the Abbott Government ripped $11.5 million out of the program in 2013/14 – that’s why the funding is no longer there.”

Member for Fraser, Andrew Leigh said Senator Seselja should come clean to organisations like the Gungahlin Jets about his Government’s cruel cuts.

“Senator Seselja isn’t an advocate for Canberra, he’s an apologist for the Abbott Government’s cuts,” said Dr Leigh.

“While other Liberal backbenchers are fighting hard for their local communities to get these grants, Senator Seselja is trying to mislead his electors.”

“Last week’s break-in at the Gungahlin Jets might have been prevented if the Abbott Government had given them their budgeted grant, which included funds for a security door and security cameras.

“The only decent thing to do is for the Abbott Government to apologise to the Jets and pay them their full grant immediately.”

ENDS

TUESDAY, 18 FEBRUARY 2014

[i] From Labor’s 2013-14 Budget, page 197 of Budget Paper 2:



[ii] From the Abbott Government’s MYEFO statement, page 110:

Today I joined Chris Hammer, host of Fairfax Media's Breaking Politics, for a wide-ranging discussion about this morning's news including the upcoming meeting of G20 finance ministers in Sydney. Labor hopes Joe Hockey will use the meeting to tackle multinational profit shifting in order to maintain Australia's tax base.

BREAKING POLITICS – FAIRFAX MEDIA

MONDAY, 17 FEBRURARY 2014





SUBJECT/S: Fairfax-Nielsen poll; unemployment; farmers’ assistance; G20 Finance Ministers; IMF report and the economy.

CHRIS HAMMER: By any measure last week was not a good one for the Government. On Monday Toyota announced it was going to no longer going to make cars in Australia and by Thursday unemployment figures were out showing that the jobless rate at increased to six per cent, the highest rate in a decade. And yet when Nielson polled voters between Thursday and Saturday last week the results were very good for the Government. On the two-party preferred vote, the Government is leading 52 to 48 per cent, that's the Government up four point, the Opposition down four points from last November. And perhaps most worrying of all for the Labor Party, Bill Shorten's approval rating is down a full 11 per cent to 40 per cent. To discuss the poll and other matters, I'm joined by Andrew Leigh, the Shadow Assistant Treasurer and Member for Fraser in the ACT.

Andrew, why is Labor not doing better in the polls?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Chris, I would expect the polls to jump around like a healthy ECG for the best part of the next three years. I'd say that political discourse wouldn't be damaged if we are to leave the polls on page 17 where they belong. That's an argument I'll make when Labor's up and when Labor's down in the polls. Fundamentally we need to be concerned about economic figures, such as the jobs figures. These new job figures that have come out not only show that unemployment is at an 11 year low, but also show that the participation rate is at an eight year-low. So, many people are giving up looking for work and the loss in the full-time jobs has just been staggering: one every three minutes since the Government came to office and I think, leaving many Australians saying 'this is a Government without a plan for jobs creation' in the wake of some significant manufacturing job losses.

HAMMER: And yet the tough line as expressed by Treasurer Joe Hockey, that narrative does seem to be appealing to voters in giving the Government a tick.

LEIGH: I think what voters want from Mr Hockey is a sense that he has a long run vision for Australia. That he has a sense of where the jobs of the future are coming from and that he is willing to make the smart investments to get there. Scrapping a mining tax and putting your head in the sand on climate change aren't smart investments. Going back to copper, the great technological breakthrough of the early 20th century to deliver your broadband, well that's not a smart investment either, as your viewers will know when they watch guests on bad broadband connecting into Breaking Politics.

HAMMER: Why is Bill Shorten's approval rating dropped so much? Is that because of his association with the trade union movement?

LEIGH: I'd expect you'd see these figures going up and down over the next few years –

HAMMER: An eleven-point drop, that's not a usual statistical shift is it?

LEIGH: You'll see these numbers moving around. Certainly from Labor's side, we're not resiling from the fact that we will be fighting for better paying jobs and more of them for Australians. We don't believe that the road to prosperity for Australia is through lowering wages and cutting penalty rates. We think it's through a high-skill and high wage approach where people are paid appropriately because they are among the most talented workers in the world. That means you've got to get into education. You've got to trades training, you've got to get the schools system humming. You've got to make sure that everyone who wants to get to university can get there and that the vocational training system is linked into employers. That's the secret to prosperity Chris.

HAMMER: Okay. Now, Tony Abbott's been out and about on the weekend visiting flood affected areas. Does the Government need to move more quickly in giving assistance to drought-hit farmers?

LEIGH: It would have been good to see a farm household assistance bill in the Parliament last week. The House of Representatives as essentially been presented with no substantive legislation by the Government at the moment. We were debating a Bill to do with the fiscal stimulus whose total impact on the budget was $250,000.

HAMMER: So, what should the Government be announcing for drought assistance?

LEIGH: Labor's happy to work with the Government on constructing an appropriate package. The Farm Finance package that we put through in Government provided smart assistance. You've obviously got to make sure that what you're doing is helping out people in the times of need while also encouraging farmers to do what they can to plan for lean times. Our reforms aimed to get that balance right under Joel Fitzgibbon.

HAMMER: Now, the Government says farmers deserve Government assistance because they've been hit by a natural disaster which affects an otherwise viable business. Could not the same case be made for manufacturing? It's been hit, if you like, by an unusual disaster in the high Australian dollar.

LEIGH: The view that Labor took was that targeted assistance can sometimes be appropriate. We don't argue that it ought to be the norm. It's a special case. But in the instance of manufacturing, that perfect storm of a high Australian dollar for a number of years and the benefits that manufacturing brings right through the automotive components stream did argue the case for some targeted assistance there. But what you need is collaborative work across party lines and what you're getting instead is Barnaby Joyce floating thought bubbles on front-pages of papers. I mean he was out on the front pages of the paper when we spoke a fortnight ago, floating a $7 billion assistance package. This simply just leaves people with a sense of uncertainty. In the same way as the thought-bubbles around Qantas are leaving the airline industry with a sense of they're just not quite sure where the Government is coming from. Do the hard work, speak collaboratively with the Opposition and we'll back in good policy.

HAMMER: Now the G20 Finance Ministers are meeting in Sydney this week. The IMF has come out with a report saying that Government debt isn't necessarily a brake on growth. Does Joe Hockey need to step back a little bit from an obsession with debt and getting the budget deficit under control?

LEIGH: The G20 Finance Ministers meeting in Sydney is a once-in-a-decade opportunity. So, it’s a great chance to showcase Australia at our best. I'd like to see Mr Hockey talking about the optimistic picture for the Australian economy recognising as the IMF has that government debt of a tenth of GDP is in no way a brake on growth. Also, recognising as Christine Lagarde has done, a conservative head of a conservative institution, has sent a message to our conservative Prime Minister that a price on carbon pollution is a smart way of dealing with dangerous climate change. Finance ministers around the world are scratching their heads that Australia would move away from the effective, economical way of dealing with climate change through a carbon price to an ineffective, expensive strategy. And, they'll also be coming here to hear about strategies to deal with multinational profit shifting, something that Labor, through David Bradbury, really tackled in office but which the Coalition has begun to crab-walk away from.

HAMMER: Okay. You mention that Joe Hockey should be delivering an optimistic message about the Australian economy. The last week with manufacturing businesses closing, the whole debate about SPC Ardmona, there is a fairly grim look at the Australian economy. Do you think that's accurate or do you think there actually is a promising near-future for the economy?

LEIGH: It's a good question Chris. I'm concerned about the labour market but I'm optimistic about Australia's macroeconomic position. I think our location in the Asian time zone at this period of history is a great strength for us. I think the debt that we have, albeit that has been blown out since the Coalition came to office, is manageable and was an appropriate response to the global financial crisis. And I think trash-talking the economy by a Treasurer is ultimately risky. As Ross Gittins has pointed out, treasurers have the ability to affect consumer and business confidence and they shouldn’t want to drive it down unnecessarily.

HAMMER: Okay. Andrew Leigh, thanks very much for your time.

LEIGH: Thank you Chris.

ENDS

The Canberra Times today runs an op-ed from me on the Abbott Government's shabby treatment of the Gungahlin Jets.

Struggling Gungahlin Jets have been robbed twice, Canberra Times, 17 February 2014

Among the guardians of Canberra’s community spirit are the people who keep our sporting clubs running. On scorching days and freezing nights, thousands of volunteers throughout Canberra make sure that there are sporting opportunities for everyone aged four to 94.

These people don’t ask much from the government, but occasionally a small grant can go a long way. One of these programs is Labor’s Building Multicultural Communities program, which gave $66,000 to the Gungahlin Jets to refurbish their clubhouse, and make it more secure.

The Jets – like most sporting clubs – aren’t political. They love their AFL, and run a damn fine team (though as patron of the Belconnen Magpies, I should be careful how much I praise them!). The Jets also have some innovative ideas about using sport to build a strong multicultural community. From Adam Goodes to Majak Daw, the AFL has a proud record of diversity, and the Jets wanted to be a part of this.

$66,000 isn’t much in the scheme of things, but Labor wanted to make sure that it was guaranteed, so we put money aside in the budget for the multicultural communities program.

And yet upon winning office, the Coalition retrospectively cancelled the grants. While the Jets management patiently worked with the department to see if they could get reimbursed for what they’d already spent, the club was told that they couldn’t get most of the money. Among other things, that meant no upgrade to the secure roller door, and no security cameras to detect intruders.

Then, as the Canberra Times has reported, thieves broke into the Jets Amaroo clubhouse last Thursday night. They damaged the building and stole items to be used for a fundraiser.

We’ll never know for sure whether the break-in could have been prevented if the Jets had received the grant, but we do know that the government’s penny-pinching didn’t need to happen. For all its hot air about ‘the age of entitlement’ coming to an end, the Abbott Government is offering tax cuts to mining billionaires and big polluters, and keeping open tax loopholes for multinational firms.

Indeed, the government went to the election promising a parental leave scheme that would pay $75,000 to the most affluent families to have a child. Just one millionaire family will get more if they have a child than the Gungahlin Jets were denied to build a better sporting club.

I’m not inclined to get angry about most things in politics, but what the Abbott Government has done to the Gungahlin Jets leaves me seething. If they have any decency, the Government will apologise to the Jets, and pay them their full grant this week.

Andrew Leigh is the federal member for Fraser, and his website is www.andrewleigh.com.

Yesterday in the House of Representatives I raised concern about the Government's intention to abolish the charities regulator.

AUSTRALIAN PARLIAMENT HOUSE

MEMBERS' 90 SECOND STATEMENT

THURSDAY, 13 FEBRUARY, 2014

Dr ANDREW LEIGH: An alarming story on the 7:30 Report last night highlighted the need to keep the Australian Charities and Not-for-Profits Commission. The ABC uncovered a children's education charity which has received nearly $1 million in donations but cannot or will not say where some of the funds have gone. The ACNC shines a light on bad behaviour in the sector as well as strengthening charities and celebrating exemplary work.

The Australian public deserves and needs a charities regulator that provides them with confidence in the charities they donate to and receive services from and provide tax deductions to. Why can't this government understand that transparency and accountability are keys to the growth of the charity sector in Australia?

The fact is that the government has a tin ear for dialogue with the charitable sector. In wishing to abolish the commission, Minister Andrews is going against the vast majority of informed voices in the sector, four out of five of whom want to keep the ACNC.

The sector supports an independent regulator as a one-stop shop to strengthen charities, grow their profile, harmonise fundraising law and reduce red tape over time and, despite the government's rhetoric about red tape, the reverse is true. The government should be working to support charities and charities deserve better than a back-to-the-future approach.

Today I delivered a speech in the House defending Labor's stimulus measures which saved Australian jobs over the course of the Global Financial Crisis and allowed the Australian economy to emerge relatively unscathed.

SPEECH, HOUSE OF REPRESENTATIVES

THURSDAY 13 FEBRUARY, 2014

DR ANDREW LEIGH (Fraser):  I thought I might begin my contribution with a couple of important numbers. One is the figure on the total amount that will be saved as a result of the passage of this bill, the Tax Bonus for Working Australians Repeal Bill 2013.

Mr Chris Bowen:  How many million?

Dr LEIGH:  'How many million?' says the former and I hope future Treasurer of Australia, the member for a McMahon. The answer is not even one million; $250,000 will be saved by this bill which is taking up so much of the House's time—a figure around the salary of a member of the House of Representatives, or a little more than that. Other numbers are relevant to the debate. One of those numbers would be the total deficits over four years before the member for North Sydney became the Treasurer and the total four year deficits afterwards. Before the member for North Sydney became the Treasurer, the total for deficits over four years in the pre-election fiscal and economic outlook was $54.6 billion; afterwards, under the Treasurer's first budget update, $122.7 billion.

There has been a doubling of the deficit over the forward estimates under this Treasurer, a huge increase in the deficits—as a result of many of the decisions made by this government, such as the $9 billion grant to the Reserve Bank, such as the government not pursuing a crackdown on multinational profit shifting, which is recognised as a critical issue and an issue that will be the focus of the G20 finance ministers' meetings in Sydney next week. Yet, when the Treasurer has to do something about this issue, he runs away—he takes $700 million of sensible savings out of the budget, because when it comes to being tough, this Treasurer can only be tough on the weak.

It is the same story when it comes to transparency measures. When the Treasurer is faced with the modest proposal that Labor had put forward that we ought to publish the tax paid by some of Australia's largest firms in order to place some pressure on those whose tax bills seem to be a little smaller than they ought, the government has flagged that it intends to not pursue the measure. Sunlight is the best disinfectant, as Justice Brandeis once put it. But under this government the sunshine is being shut out.

The age of entitlement is ending for those of modest means. If you receive the income support payment, that will be taken away. If you are a low-wage worker, you will have the taxes increased on your superannuation benefits. But for those who are well connected, the age of entitlement is just beginning. If you are a high-income family, you will get $75,000 to have a child. If you are a well connected firm in Tasmania, you will have no trouble getting a tourism grant from this government. If you are a financial planner, you are going to be assisted in the scrapping of the best interest tests. If you are of high-income retiree then you have seen this government dump the plans to ensure that you pay a fair rate of tax. If you are somebody who is a fan of the Prime Minister's local footy club then you will be seeing assistance in terms of taxpayer handouts to redevelop Brookvale Oval.

So the age of entitlement continues for many, as the member for McMahon points out, it is yes to Manly and no to SPC. The bill before the House today is really making a political point with saving $250,000, but it does give us a critical opportunity, as the shadow Treasurer has noted, to talk about the benefits of the stimulus package built by Labor.

As the Nobel prize-winning economist Joseph Stiglitz noted, Australia maintained strong economic growth when other countries fell into global recession. Professor Stiglitz has said:

In Australia the stimulus helped avoid a recession and saved up to 200,000 jobs. And new research shows that stimulus may have also actually reduced government debt over time. Evidence from the crisis suggests that, when the economy is weak, the long-run tax revenue benefits of keeping businesses afloat and people in work can be greater than short-run expenditure on stimulus measures. That means that a well-targeted fiscal stimulus might actually reduce public debt in the long run.

I draw the House's attention to a memo put together by the Department of the Treasury analysing the impact of the fiscal stimulus titled 'The Treasury briefing paper for the Senate inquiry into the economic stimulus package'. That briefing paper notes very clearly how the stimulus package prevented recession. Make no mistake, had we not had Labor's timely, targeted and temporary stimulus package, Australia would have been plunged into recession. The pre-stimulus real GDP forecasts for 2008-09 and 2009-10 both had negative growth. It was as a result of stimulus that we saw employment, consumer confidence, growth and productivity increase.

These are outcomes that ought to go well beyond politics in this place. All of us in this parliament ought to care about growth, we ought to care about jobs and we ought to care about boosting productivity, and there is nothing pro-productive about a recession. It is a terrible loss of skills. It is so deeply demoralising for young Australians who find themselves leaving school unable to get a job. I saw this in graduating from high school in the teeth of the last Australian recession when unemployment went double-digit and for an 18-year-old school leaver it was near impossible to find a job. I saw mates of mine spending years looking for their first job.

So when you avoid a recession, you avoid the blight of unemployment. You avoid the loss of small businesses and, as a member of this House who cares deeply about strong small businesses, I am really proud that we managed to prevent tens of thousands of small businesses going to the wall. The OECD in 2009 rated Australia's economic stimulus package highly. They said:

Australia's fiscal stimulus package seems to have had a strong effect in cushioning the decline in employment caused by the global economic downturn.

You can see this also in an open letter signed by many, many Australian economists, which said:

We the undersigned economists are convinced by the evidence that the coordinated policies of the Australian Labor Government have prevented the Australian economy from a deep recession and prevented a massive increase in unemployment.

That is signed by Raja Junankar, Professor Harcourt, Peter Kriesler, John Nevile, Harry Bloch, the late Steve Dowrick, Roy Green, Elisabetta Magnami, Fiona Martin, John Quiggin, Michael Schneider, Roger Tonkin and many, many other economists. Time being short, I will not read all of their names into the Hansard, but the list represents many of the best economists across Australia.

Yet when crisis hit, we saw a lack of the bipartisan spirit which, one would hope, would have characterised a quick response to a global financial crisis. We saw on the 7.30 Report on 16 September 2009 Leigh Sales putting to the now Prime Minister that the OECD's estimate was that unemployment would be 1.9 per cent higher absent the stimulus package. To his credit, Mr Abbott said at the time:

There's no doubt that the stimulus package has helped in the short term.

But that was not the way in which he acted when the votes were on. We saw the Prime Minister being notably absent from the discussions over these economic matters and the Prime Minister had to apologise to then Chief Opposition Whip Alex Somlyay for missing five divisions on the night of 12 February, the circumstances of missing those votes being laid out in an article by Sharri Markson on 8 March 2009 in the Sunday Telegraph.

The stimulus package saved Australia from recession and all parliamentarians in this House should be proud of that success. For the government to now be playing political games, to be focusing on the final tail of stimulus payments—$250,000 of them—rather than the great success of the package itself is disappointing to me and I think ought to be disappointing to all members of this House. This was an extremely well-designed package.

There are still some countries in the world languishing with high unemployment rates and sluggish growth, and for them the tale of the global financial crisis is worse than the Great Depression itself. But we have learned a great deal from the experience of the failure of policy-makers to successfully confront the Great Depression from the too-late responses in Australia to the early 80s recession and the early 90s recession. As a result, Australia acted quickly in the case of the global financial crisis and to the great surprise of many avoided recession entirely.

Yet at the time, you had then opposition leader Malcolm Turnbull, the member for Wentworth, drawing on some extreme right-wing economists in the United States arguing that fiscal stimulus simply would not work, that people would cut back their demand in anticipation of future cuts. It was the 'freshwater school of thinking' and it simply is not borne out by the data. The fiscal stimulus was successful. The fiscal stimulus managed to save jobs and it should be a matter of great pride across this House. We should in fact have a motion from the Treasurer here commending the former government on leaving him with an economy in which the unemployment rate was below six per cent rather than above eight per cent, as some of the projections prior to the global financial crisis were suggesting. The social debt of unemployment with the debt of tens of thousands of small businesses gone to the wall would have resulted in hundreds of thousands of young people whose career earnings would have been permanently scarred. We know from the experience of past recessions that school leavers experience a hit not just temporarily with a period of unemployment but later on in their careers, and Australia has managed to avoid all of that thanks to a well-designed fiscal stimulus package. The household stimulus was important because it would get out there quickly, ahead even of the worst of the global downturn.

But infrastructure was important too, because the multipliers for infrastructure are higher and because they were able to leave us an important social legacy across Australian communities.

In my schools I will see education outcomes improve as a result of classrooms, such as in Amaroo School, where teachers can engage in team teaching through well-designed 21st century classrooms. I will see school buildings that are more environmentally efficient and allow the school to have assemblies together. Black Mountain School, a school which caters to children with disabilities, has a school hall that is suitable for children with wheelchairs and a stage where a kid with a wheelchair can now, for the first time, go on stage to receive an award with everyone else.

So that legacy of the infrastructure package is there right across Australia, in new roads, in new school building programs and in so many of the shovel-ready infrastructure projects. It is a legacy of infrastructure alongside a legacy of avoiding recession of which this House will be proud and of which I wish I would hear a little more from those in government.

ProBono Australia News this morning published my opinion piece on why the Abbott Government would be foolish to axe the Australian Charities and Not-for-Profits Commission. The online news service also produced a story confirming that Commission staff have been offered voluntary redundancies as part of a major public service jobs cutting move by the Tax Office.

OPINION PIECE

Government Should Keep the Australian Charities Commission

Over recent weeks, we’ve heard a lot from the Abbott Government about the need for transparency and accountability. These are worthy values; the public interest is rarely served by secrecy and the lack of a proper complaints process.

So it is surprising that those who believe in open government want to abolish the Australian Charities and Not for Profits Commission (ACNC): a body that handles complaints and ensures charities are transparent and accountable.

For decades, independent reports have made the case for an independent ACNC. It was after all a 2001 Howard Government report that concluded a Commission would provide “a clear and consistent accountability framework…to maintain and enhance public confidence in the integrity of charities and related entities”.

Created by Federal Labor, the ACNC is functioning well and in the public interest, actively working to protect public trust and confidence in charities. It has registered 2000 new charities in the past year, in addition to 58,000 existing organisations. And just as lawyers and doctors’ professional associations maintain their standing by investigating complaints, so too the Commission plays a similar role by looking into allegations of bad behaviour by charities.

In its first compliance report issued in late January, the ACNC told us it received more than 200 complaints in 12 months. That’s a significant number from a body that’s just beginning to get known. The majority of the complaints came from the public. Key concerns involve governance issues such as conflict of interest, fraudulent or criminal activity and claims of private benefit.  Fifty-five of the complaints of inappropriate behaviour are being followed up.

The Commission’s approach is gentle and graduated, shaped by many years of consultation. That approach begins with guidance and support from the ACNC and moves towards intervention, only if a charity is not open to change and meeting its obligations.

The ACNC is designed to serve the best interests of the sector, government and the wider community. It provides a ‘Governance for Good’ guide, a resource to help charities (especially new players) stay on track. The ACNC website has had unexpectedly high levels of traffic from in and outside the sector.  Feedback from large and respected players confirms the ACNC has been reasonable and accommodating in its dealings with charities and Not for Profits. Its people are easy to talk to and not at all heavy-handed.

What we have is a body designed to support the sector so the public can have confidence in the work it does. It’s the quid pro quo for charities getting generous tax concessions worth up to a billion dollars each year.

The Abbott Government often expresses concern about how taxpayer money is spent; arguing that accountability is crucial. And yet  when it comes to charities, which receive significant tax concessions, it seems to prefer no accountability at all.

Among the ideas flagged is a heavy-handed ‘Charity Navigator’, modelled on a US website that ranks charities but has no teeth to intervene. That’s like saying we should replace MySchool with RateMyTeacher.com. Ironically, the founders of Charity Navigator are themselves frustrated by a lack of transparency in a growing sector, and advocates for the US to have an independent regulator like the ACNC.

Despite the government’s rhetoric about the ACNC creating ‘red tape’, the reverse is true. The commission has a Reporting and Red Tape Reduction Directorate, aimed at freeing charities from double reporting. It will facilitate a Charity Passport so charities don’t have to engage in double-reporting.

Under the Abbott Government, handling of the ACNC has moved from the Assistant Treasurer to the Minister for Social Services. This is a mistake. There are many charities and Not for Profits that do not provide social services with Commonwealth government funds. The ACNC recognises the diversity of the sector. It may aim to be a one-stop shop but it is not a one-size fits all agency.

If the ACNC’s public register role is scrapped, charity regulation will default back to the Australian Taxation Office (ATO). Now subject to savage staffing cuts, it is hard to see how the ATO would manage the extra workload. And it’s difficult to see how charities are well served by being regulated through a body that focuses only on revenue collection.

Around the world, countries recognise the inherent conflict of interest in having a revenue collection agency decide whether or not a charity should get a tax break. That’s why many developed nations are moving towards the ACNC model. A recent survey of charities found that four in five wanted to keep the ACNC. Australian charities deserve better than a ‘back to the future’ approach from the Abbott Government.

ENDS

Thursday, 13 February 2014

Published in ProBono Australia News