Andrew Leigh

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This morning I had the pleasure of debating the Liberal's Andrew Laming in my regular slot on Breaking Politics with host Tim Lester. One of the topics was whether the government should intervene to save Australia's car industry.

E&OE TRANSCRIPT

ONLINE INTERVIEW

BREAKING POLITICS – FAIRFAX VIDEO

MONDAY, 9 DECEMBER 2013

SUBJECT/S: Car manufacturing, QANTAS, carbon policy, debt limit

TIM LESTER: Imagine Australia as a country that does not build cars, Mazdas, Hyundais or BMWs but for that locally built Holden's, Fords and Toyota's they'd be gone. Well it may be government and car maker decisions in coming weeks set us up for that future. On Monday, Breaking Politics is proud to have the two Andrews in the studio, Andrew Laming the Liberal MP in the Queensland electorate of Bowman and here in Fraser in the ACT, Labour’s Andrew Leigh. Welcome to you both. Andrew Laming one person in Labor who really ought to know, Kim Carr, says that for less than $150 million a year, according to one estimate government could keep Holden in Australia. Would that be money well spent?

ANDREW LAMING: Well this has been a tantalizing proposition for every government right up to today and here we are Groundhog Day again wondering whether or not we can save our vehicle manufacturers. It’s not too much the quantum of money but it’s the social impact of not having vehicle manufacturing and all of the support industry continuing so governments of both sides of the political fence work very hard to keep our manufacturing here in Australia. And I never ever forget the social benefits of keeping that industry here and the employment it provides.

LESTER: So you think this Government needs to work pretty hard to keep the car industry in Australia?

LAMING: Oh there’s nothing new. All governments up until today have worked extraordinarily hard - some would say too hard - to keep vehicle manufacturing here. We need to make sure if we are providing some assistance to keep it happening in Australia, that at an employment level we are also getting factories and manufacturing that is as efficient as possible and competitive.

LESTER: What’s your sense, have governments spent too much in the past to keep vehicle makers in this country, or do you think we've got it pretty right?

LAMING: Well self-evidently how much we've invested has simply led to the same question being raised again today, and we will have this on-going negotiation with overseas owners about how to keep manufacturing here.

LESTER: Andrew Leigh, $150 million well spent or would it be a waste of money?

ANDREW LEIGH: Tim, I share Andrew’s views about the importance of high-tech manufacturing to Australia. The typical car has a couple of hundred microchips, Kim Carr tells me. So its high-tech manufacturing. What I worry about though is the amount of time Mr Abbott has spent over the last few years focussing on the impact of the carbon price which is a very small impact on motor manufacturing, but then very little emphasis on the targeted assistance which is being provided to vehicle manufacturers which is a much larger component of their decision to locate in Australia.

LESTER: Okay, we know the price tag. Is the price tag worth paying.

LEIGH: Well there’s two reasons economists talk about the benefits of industry assistance. Of course in general economists take a pretty dour view of it, but the two reasons to support it are spill overs to other industries, research and development spill overs, and also geographic concentration.  And you see both of those things in the car industry I think. A lot of parts manufacturers and so on are tied into the production chain and benefits into other areas such as defence manufacturing. But also very heavy regional concentration  and it would be a bitter blow for some of these communities to lose car manufacturing.

LESTER: I'm taking you're saying money well spent?

LEIGH: Certainly those two criteria that economists apply to industry assistance can, I think, be effectively applied to car manufacturing.

LESTER: Andrew Laming the same ideological argument go on each time this comes up, over whether we should support the industries that can't make their own way or not. What’s your end conclusion on whether the Government ought to spend this money or say ‘say la vee’?

LAMING: Well in the end we've created a vehicle industry pedestal where to fall of the pedestal is something very difficult for any government to contemplate. My argument is that our nation has some of the least mobility of our workers between states, that has been pointed out by demographers before. We have large concentrations of unemployment, the highest proportion of unemployed workers living in completely unemployed households in the OECD after one or two non-English speaking economies. So we have a real problem with getting households working and we have a real problem getting unemployed workers to move to where there’s suitable work. Those reforms are absolutely vital before we can contemplate loosing something as significant as the vehicle industry.

LESTER: Right, so aren't you saying we need to keep the vehicle industry ticking over for a fair while yet?

LAMING: Without taking the eye off the more important area of reform around long term unemployment and mobility for work.

LESTER: Okay, how will you feel then if the federal government does not change its spending formula  for the car industry and Holden says ‘bye bye’?

LAMING: Well obviously any government either side of the fence will be working so that day doesn't arrive so that’s a negotiation we hope will be successful.

LESTER: Am I missing something here or isn't this government drawing a line on Holden here, saying it can't go further financially?

LAMING: Well that of course is the rhetoric one would expect before a negotiation so of course the Government will be expecting every pound of flesh out of Holden, the vehicle manufacturers to do their best. But when the negotiation eventually reaches its conclusion we've got to get the best deal we can for tax payer.



LESTER: So what we're seeing from Joe Hockey  and Tony Abbott is negotiation here it’s not a final decision?

LAMING: Well it’s self-evident that the negotiation is in progress. In the end we've got to get the best deal we can.



LESTER: Do you accept that Andrew Leigh, that the Government is doing all it can in terms of setting a strong negotiation position and is simply being careful with tax payer dollars here?



LEIGH: Well you're talking about confidence in head offices I think Tim. I’m concerned that the governments overly bolshie position with car manufacturers doesn't send strong signals to headquarters about our support for the industry. Much as I'm concerned that Mr Abbott's approach to QANTAS effectively seeming to say that QANTAS is just another private company. It makes him sound a lot like the way Mr Howard was speaking about Ansett in the early 2000s.

LESTER: Okay, what would you do with QANTAS that Tony Abbott isn't doing How do you deal with that? Do we really buy back in to a national carrier?

LEIGH: What shadow treasurer Chris Bowen has suggested is that a small equity injection from the Government would send a strong signal to capital markets of the Government’s commitment to the national carrier. I think Australians would be pretty shocked by the collapse of QANTAS, the downgrade of QANTAS's shares is of deep concern to many Australians. This isn't, in my view, just another airline. And I get concerned when the Prime Minister suggests that it might be.

LESTER: Andrew Laming time to buy some of the QANTAS pie?

LAMING: Well that’s one of a number of options. We have the QANTAS Sale Act which really appropriately now needs to be a part of a national conversation. I think saving the QANTAS brand is important to every Australian but unlike the vehicle manufacturing issue, this is a more complex and international one where there are potentially a whole lot more solutions to this problem. So I think it’s right we keep our options open on QANTAS.

LESTER: Okay, Andrew Leigh the senate votes this week on the carbon tax withdrawal. Is Labor really better frustrate a change for another seven months that appears a new senate is going to make anyway?

LEIGH: What the Senate has done is decide to have a bit of scrutiny into the government's alternative proposals for dealing with climate change, and I think that's appropriate. What the government is trying to do in this debate is push off to one side what it would do about climate change, because it knows it has this dog of a policy, so called "Direct Action", which won't work and will cost more. So they want the focus to be on the carbon price, which, let's face it, is a policy which is already reducing  emissions, a seven percent emissions reduction on the national electricity market strongly praised by economists across the board, doing its job at a low cost. And you've got the Clean Energy Finance Corporation already making returns from targeted investment in clean technology. You know, really, if you believe the science and you believe Australia's future should be a clean energy future then I think we have the policy settings right and its reasonable that the Senate takes a while to contemplate the frankly retrograde  proposals being put forward by the government.

LESTER: Andrew Laming?

LAMING: Well, why this blowtorch-like intensity is on the current Labor opposition is that they had all these opportunities to come up with wise ideas as alternatives to a carbon tax when in government and they didn’t. We now have a situation where the relentless negativity of this opposition is now being cast as sticking to Labor values. So, one wonders whether Labor's values are simply relentless negativity around this issue. So the carbon tax is not being accepted by the Australian people. They voted accordingly and yet you have this pre-Christmas nickel-and-diamond from the new opposition. That's why I think Australians would be scratching their head wondering exactly what they're trying to achieve.

LESTER: Okay, but we are we not, or at least the Government is seeking is it not, to dump one carbon solution without really properly outlining and getting ready for the new carbon solution?

LAMING: Well, obviously a Direct Action based approach is little different to what many economies around the world do right now and keep in mind that what the Labor opposition when in government had up to three point eight billion dollars’ worth of direct action in their plan. I mean, every time you go directly to a brown-coal fired power station and try and improve the situation in that plant, that's a form of direct action. So, I wouldn't say that we should have this antipathy towards direct action. It's being used world-wide, used in nations as diverse as Japan, Norway and even the UN itself.

LESTER: Okay, one more topic before we close. The Greens are about to combine with the Government in the Senate to scrap the debt ceiling after so much criticism from the Government, Andrew Laming, of the Greens, you know, the 'economic fringe-dwellers' and the like. How comfortable are you partnering with them to do this?

LAMING: Well, obviously we have an agenda, and that is to allow us to fix the economic mess created by the former government, address the ten billion dollars that we're paying every year in interest, and we have to do a deal with one of these two players down in this place to make sure that we can get it through, and to get it through quickly. Whether it's a deal with Labor or the Greens, in the end, we can get about fixing the economic mess created and that's what we are doing.

LESTER: Andrew Leigh, will there be some great damage done when the debt ceiling disappears and the Government is unrestrained, in terms of how far it can borrow?

LEIGH: Well it will be in a pretty strange situation, Tim. I mean, if Andrew had gone to the good voters of Bowman before the election and said ‘I'm going campaign in this election to strike a deal with the Greens’, a party that Tony Abbott has described as being more extreme than any other because it doesn't in economic growth, he says. And if Andrew had said, ‘look the best thing I'm going to advocate is that we get rid of the debt limit altogether’. I suspect that would've been a page one issue during the campaign, it would've been seen as a gaffe by the Member for Bowman. Andrew, of course, didn't do that during the campaign. Tony Abbott and Joe Hockey are doing it now. A real broken promise to add to the litany of broken promises you've had from the Government. So, boat buy-back, non-existent. Unity ticket on school funding isn't happening. Superannuants are being hurt if they're low income superannuants, and now the so-called 'budget emergency' and our promised budget update within a hundred days isn't happening and the debt cap's been blown sky-high.

LESTER: Unlimited debt in a deal with the Greens is a bit of a mismatch from the Coalition's campaign isn't it?

LAMING: Tim, not at all. The average Australian, and certainly those in my electorate and in fact Andrew's, would simply say you only need a debt ceiling when you have a government with a debt problem and I can say to every Australian this Christmas they will have neither.

LESTER: Andrew Laming, Andrew Leigh, great to have you in the studio. Thanks for coming in.

LEIGH: Thanks, Tim. Thanks, Andrew.

LAMING: Thank you.

This morning I spoke to reporters about the Government's deal with the minor party Greens to scrap the debt ceiling - due to pass the Senate this week. Here's the doostop transcript:

E&OE TRANSCRIPT

DOORSTOP INTERVIEW

PARLIAMENT HOUSE

MONDAY, 9 DECEMBER 2013

SUBJECT/S: Debt cap, carbon policy and emissions, Holden.

Andrew Leigh: Today, the House of Representatives is going to vote on removing the Australian debt cap, and it’s worth just reminding ourselves of some of the things that Prime Minister Abbott has been saying over recent months. He said during the election that the Greens were the only party that didn’t believe in economic growth. He said that they were more extreme than any other political party running in the election. He said that if debt is the problem, more debt isn’t the solution. He promised to release a budget update within a hundred days. He’s done none of those things, and today he’s going to be striking a deal which, if people had known about it before the election might well have affected the way they voted. And let’s face it, this broken promise from Mr Abbott isn’t the first. Mr Abbott has broken promises over school funding, over his promise that no superannuants would be left worse off, and he’s broken his promise over the boat buy-back. I think that Mr Abbott might have thought that if he just kept his fingers crossed behind his back all the way through the last three years perhaps he could get away with all this promise-breaking. Frankly, I think the Australian people are beginning to think that the only promise you can believe from Mr Abbott is his pledge that if he hasn't written it down, you probably shouldn't take it too seriously. I’m happy to take questions.

Journalist: Why is it so bad to strike a deal with the Greens when you guys struck a deal with the Greens to help form minority government in the last Parliament?

Leigh: This is just the rank hypocrisy of this decision. The going out there before the election, holding press conferences in front of debt trucks. Now, if Mr Abbott had wanted to be honest about that, stand in front of the debt truck and say the real problem with this debt truck is that it’s got a speed limit, he'd like to take the speed limit off entirely, he would have been entitled to do that, but he didn't. He ran on one set of policies, now he's delivering another.

Journalist: Julia Gillard said there would be no carbon tax under the government she leads in the election campaign when she struck a deal with the Greens.

Leigh: Mr Abbott is the Prime Minister and I'm perfectly entitled to hold him to account on his promises to the Australian people, particularly given his interview with Michelle Grattan just days before the election in which he very clearly says that the Australian people would be entitled to take a dim view of politicians who promise one thing and then do something else.

Journalist: Mr Leigh, you’re an economist obviously. Is there actually a need for a debt cap or is it more a symbolic thing?

Leigh: The Labor Party believes that the debt cap is appropriate. We certainly believe that if you're going to increase the debt cap beyond where peak debt estimated to go, then you need to release that Budget update. Mr Abbott promised to do that, he promised to release that Budget update within a hundred days of wining office. Labor always released it in either October or November. Mr Abbot is now pushing it well into December clearly because he doesn't want to level with the Australian people about what his decisions have done to blow out debt; the nine billion dollars to the Reserve Bank now so he can get a bigger dividend later, seventeen billion in tax cuts to mining billionaires and big polluters. Those are Mr Abbott and Mr Hockey's decisions, and they're blowing out debt and that's what he's trying to hide from you.

Journalist: Did Labor do enough to help Holden when it was in government?

Leigh: Labor is committed to a strong car industry. We believe that the car industry is an important part of Australia's manufacturing, and yes, we put significant effort into making sure that Holden had a viable future in Australia, not simply treating it like any other business that could go to the wall, which seems to be the approach that the Government has taken.

Journalist: The carbon tax has reduced emissions by 0.1 per cent. The CEO of Origin is saying it's not working. Is that a good result in terms of emissions reduced?

Leigh: Oh, goodness me! Let's try and find again one serious economist around the country who thinks that Direct Action, so-called 'soil magic' is going to be better at reducing emissions than a carbon price.

Journalist: But is 0.1 per cent? Is that a good achievement so far?

Leigh: This isn't an economy-wide carbon price and if you look at the national electricity market, you've got emissions down seven percent. You're seeing effects of the carbon price taking effect immediately and you're not seeing any of the economic horror stories that Mr Abbott and his team told you would see before the election. If anyone has bought a hundred dollar lamb roast lately, let me know.

Journalist: Back to Holden, we've got predictions it will take a $150 million a year to convince Holden alone to stay in Australia. Is that money well spent?

Leigh: Well, the Government's going to have to make these decisions, but it seems to me that they're not making them in the long-term interests of Australia. This sort of hand-waving and pretending it's not their fault stands in stark contrast from the approach that Minister Kim Carr and others had during our time in office.

Journalist: But is that sustainable though? The long-term future of the industry being propped up by quite a far bit amount of government money? Is that sustainable?

Leigh: There's a range of ways of assisting industries and certainly Labor in government was assiduous in making sure the car had a strong future. Alright, thanks.

Last Friday, I ran my regular social entrepreneurs' roundtable with a group of inspiring young Canberrans working to build a stronger voluntary sector.

This week, I spoke in parliament about a barbecue for the homeless at the Canberra Early Morning Centre.

Homelessness BBQ, 5 December 2013

On 26 November 2013 it was my pleasure with Team Leigh volunteers to put on a barbecue at the Canberra Early Morning Centre, as part of Social Inclusion Week. Social Inclusion Week, created by Jonathon Welch, aims to ensure that all Australians feel included and valued. It is about connecting local communities, workmates, family and friends and addressing isolation, loneliness and homelessness.

About 40 people attended the barbecue at the Early Morning Centre, a service hub under the auspices of the Canberra City Uniting Church. The Early Morning Centre provides office facilities such as desks, phones, a computer with internet access, a post office box address and safe mail collection point for mail, and laundry and shower facilities for people in Canberra who are homeless. It provides a free breakfast each day, and support and referral services. The Early Morning Centre is a place of support and community for Canberrans doing it tough, where they can catch up with friends, get help with day-to-day business and enjoy a meal.

Other groups supported the barbecue on the day, including Supportive Tenancy Services, Lifeline Canberra, St Vincent de Paul Street to Home, Partners in Recovery and Red Cross Roadhouse Services. I would like to thank the Early Morning Centre Team: Chris Stokman, John McDonald, board members, Margaret Watt and Terry Birtles, and the Friends of the Early Morning Centre patron Tim Gavel, as well as my friend Bronwyn Fagan. The barbecue was Margaret Watts's idea and I would like to thank her connecting us with the Early Morning Centre in this regard. I want to thank the onion cutters, the salad preparers and the snag turners from Team Leigh—Rob and Robin Eakin, Rod Holesgrove, Meredith Hinchliffe, Adrian Rumore, Joan Costanzo and Matthew Walker. The great Aussie barbecue is a terrific tradition which encapsulates so many great Australian values: mateship, the fair go, egalitarianism, and—with vegetarian and halal sausages—multiculturalism.

I am deeply concerned about the drop in community spirit that has occurred in Australia over the past few generations. I wrote about this in Disconnected, and it is an issue of great concern to me. It is a pleasure to be able to work with great Canberra community organisations like the Early Morning Centre, which are reaching out to some of the most vulnerable Canberrans, and making sure that they are part of our great city and the community spirit contained within it. Working together we can deal with social isolation, build a stronger community and make sure that Australians are better connected.

My short review of Ross Garnaut's new book appears in this month's AFR Boss magazine.

Review of Ross Garnaut, Dog Days: Australia After the Boom, Australian Financial Review, Boss Magazine, 6 December 2013


When judging a batsman in cricket, we often forget to account for the ground. We all know the Adelaide Oval has even bounce and short square boundaries compared to the MCG. But we still mistakenly think a batsman is doing better when he’s wielding the willow in Adelaide.

The same goes for economic policymakers. In the ‘salad days’ of the early-2000s, argues Ross Garnaut, ordinary policy looked celestial. In the ‘dog days’ of the post-GFC era, celestial economic policy could look ordinary. Poor decision-making in Mining Boom Mark I went unnoticed. In Mining Boom Mark II, everyone was a critic.

Ross Garnaut has been a major feature in Australia’s public life for over two decades (which helps explain the fact that his writings account for one-fifth of the reference list). Dog Days catalogues a plethora of concerns. Garnaut is troubled by the dominant role of bank economists in macroeconomic debates, shamelessly partisan newspapers, sluggish productivity in the utilities sector, and a fall in hours worked per person. On climate change, he warns that non-market approaches ‘would cost much more to meet the same targets’.

Garnaut notes that the beneficiaries of reform are diffuse and may not even exist at the time of the change. His suggested solutions include a negative income tax to raise participation rates, a state-federal mining profit tax, a cut in official interest rates, and the promotion of greater competition policy. But even with a new reform era, Garnaut believes, living standards will fall. Dog Days indeed.

Andrew Leigh is the Shadow Assistant Treasurer and the Federal Member for Fraser, and his website is www.andrewleigh.com.

Today during Question Time today my colleague Justine Elliot reminded the House of what the Prime Minister said in August – “There will be no change to the GST, full stop, end of story.” She asked, 'Why then is the Government now considering applying the GST to relocatable home parks – the complete opposite of what the Prime Minister promised?’

Shadow Assistant Treasurer, Andrew Leigh

MEDIA RELEASE

TONY ABBOTT ON GST HIKES: "THINGS HAPPEN"

Asked in Question Time today about the impact of putting the GST onto relocatable homes, the best the Prime Minister could do was to say "things happen".

"Before the election, Tony Abbott made a promise: that a Coalition Government would make no changes to the GST," said Shadow Assistant Treasurer Dr Andrew Leigh.

"But after the election, he's ducking and weaving like a true featherweight.

"Thousands of Australians living in relocatable homes are worried by the prospect of paying GST on their site fees.

"Yet the best Tony Abbott can say is 'things happen'," Dr Leigh said.

“When questioned in Parliament today about the draft ATO ruling, Mr Abbott’s response was ‘in the administration of tax law, various things happen’.”

Dr Leigh said, “The Abbott Government’s posturing that the ‘adults are now in charge’ is mere rhetoric.”

“Mr Abbott’s response squibbed the issue and shows us that this isn’t the government Australians were promised.”

“Many owners of relocatable homes are pensioners priced out of conventional housing. If the ATO draft ruling becomes law they will be hit hard.”

THURSDAY, 5 DECEMBER 2013

My Chronicle column this week celebrates the community spirit of the Canberra northside.

Celebrate the Spirit of Community, The Chronicle, 3 December 2013


Former Labor Senator Bob Carr once said that to truly be grounded in your community, you need to know something about its history and its geography. You need to know the stories of the people who’ve lived in your neighbourhood, and how their lives have been shaped by the physical nature of the place you love.

One of the delightful features of this year’s Canberra Centenary program has been ‘Parties at the Shops’ – a chance for local communities to celebrate the things that are special about their suburb. You might need road signs to find the local shops in Canberra, but our suburban communities are something to be proud of.

I’ve enjoyed participating in many local community celebrations, including the 50^th anniversaries of Hackett (in September) and Watson (in November). Both are 1963 suburbs, and the celebrations gave a chance for some of the original residents to share their stories.

The Hackett celebration featured a bevy of local performers and a reminiscing corner with early photographs, including from now closed Hackett School. As long-time Hackett resident James Walker told a Chronicle reporter, ‘so many people were ripped from their previous lives and moved here and had to sort of band together. A tradition has grown up that you know your neighbours and are aware of things happening.’

At the Watson celebration, organiser Julie Smith and her team were inspired by the fact that the streets of Watson are named after lawyers. So they asked lapsed lawyers Gary Humphries and me to debate the topic: ‘That Federation is a Failure, Canberra is a Catastrophe and Lawyers are Laughable’. I drew the short straw getting the affirmative case, so employed the old debating trick of entirely redefining the topic.

Both Hackett and Watson are fortunate to have strong community groups doing innovative things for their suburbs. Hackett’s Music in the Park organised by John and Christy Murray brings together local bands in the Bragg Street Park. Watson Community Association has prepared a brochure on Watson and its history, discussing its Ngunnawal heritage and the role of the CSIRO Dickson Experimental Station for agricultural research.

One of the great things about civic life is that community engagement begets more community engagement. So it’s probably no accident that postcode 2602, in which both Hackett and Watson are located, was recently revealed to be the most generous postcode in Australia according to tax donation statistics.

In 2010, I wrote a book titled Disconnected, which documented the decline in community life since the 1960s. I still believe the basic argument of that book is right: data on churchgoing, political party membership, union membership, civic associations and sporting participation show that Australia has experienced a decline in civic engagement.

And yet the strength of many Canberra communities gives me hope that Australia can achieve a broad-based renewal of social capital. Canberrans are better connected with our neighbours than people in any other state or territory in Australia. It’s one of the many reasons why I am so proud to represent my neighbours in the federal parliament.

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

This evening I spoke on ABC RN Drive with Arthur Sinodinos and Waleed Aly. We discussed debt, school funding and standards and consistency in politics. Here's a podcast. And, below is the full transcript.

WALEED ALY: It seems though the Coalition and the Greens have reached a deal on getting rid of the debt ceiling. There’s some strange bedfellows in politics. We have the strangest coupling I suppose you can, although the new Senate may throw up some new challenges to that… To discuss this I am joined by our knights in shining armour, Assistant Treasurer, Arthur Sinodinos, and Shadow Assistant Treasurer, Andrew Leigh. Thank you very much for coming in.

ARTHUR SINODINOS: Hello Waleed.

ANDREW LEIGH: G'day Waleed. G’day Arthur.

SINODINOS: G'day.

ALY: It's the Greens, we love the Greens is it? Is that what's going on Arthur?

SINODINOS: I think our love has fluctuated from time to time, but at the moment…

ALY: I don't recall a fluctuation, I have to say. It's been fairly consistent.

SINODINOS: In all seriousness I want to thank them for the fact that they've approached this debate in a very constructive way. I was the President of Senate Estimates when this issue of the debt ceiling got quite an airing. The Secretary of the Treasury was being interrogated by senators and the Greens, in that context, raised this proposition around the debt limit and whether in fact it was better to move to a more transparent process of debating the uses and abuses of debt and being transparent about what they are used for, as opposed to having just an argy bargy over the fact that there was a limit and it needed to be raised every so often. So I think what we come to is actually something which will improve the transparency of the budget process. It also incorporates things like more references to climate change, intergenerational report and the like. So these are quite significant things.

ALY: Right so just to clarify, the deal is we get rid of the debt ceiling all together, the legislation that's there at the moment that imposes this, we just do away with it all together?

SINODINOS: We repeal that part of the Act.

ALY: We don't have an argument now about needing to raise the debt ceiling like we've had in America. We don't it anymore, but in exchange the Greens get a statement that has to come from the Government?

SINODINOS: Well every time the debt increases by about 50 billion, depending on when that is, the Treasurer within I think three days, would make a statement about why that is the case and with a statement…

ALY: And where it's going…

SINODINOS: Yeah, that would be debated and also there would be more augmentation of the budget documentation. Now we all know there is a lot of information in the budget, but the sort of information that we're now talking about, it will give people a better picture of the composition of debt, the trends in debt and I think also importantly it will help to clarify this debate we're having about good versus bad debt. And I think that's something that is quite constructive in this context, because we do get a lot of debate about the role of debt in financing, for example infrastructure. I think this will help to clarify the circumstances in which it's useful to have debt for that purpose.

ALY: The analogy Christine Milne used is, it's about separating the debt on the credit card from the debt on the mortgage. We're actually buying an asset, we're actually building something. Andrew Leigh this is actually one of the most interesting ideas in the election campaign that came from Jeff Kennet, I think it was at the time. Sounds like an eminently sensible idea, why did the Labor Party not strike this deal?

LEIGH: Well Waleed every now and then in politics I think you're entitled to look at the consistency of your opponents and to look at what they say before an election and what they do after the election. And I suspect if Joe Hockey and Tony Abbott had said back in August that what they were planning to do was to remove the debt limit entirely and that they would do so through negotiation with the Greens, people might have responded a little differently to them at the ballot box.

ALY: Which people? The Australian people?

LEIGH: I think so. Yes. I mean let's face it, what we were actually hearing from the Coalition pre-election was that if debt was the problem then more debt wasn't the solution. We heard some very cross words from Tony Abbott about the last increase to the debt cap and in fact the Coalition voted against past increases in the debt cap. So to suddenly move from voting against an increase to the debt cap to doing away with the debt cap altogether is a backflip of historic proportions.

ALY: Okay, well there are consistency arguments and I take them and we can explore those questions. But when you run a consistency argument it does suggest that there is not a substantive argument available to you to be run here and that actually the idea of having this debt limit that was imposed by your government, the Labor Government, the previous Labor Government in 2008 that introduced a bizarre sort of artificial barrier that we dare not cross.  But then it would be crisis if we did and so you could never invoke this legislation, we have to keep amending it in order to keep raising the debt ceiling. That was all a bit of a farce as we've seen in America and now we've gotten rid of it. That's good isn't it?

LEIGH: Well of course we have the inconsistency argument and you know we can talk about whether Joe Hockey should or shouldn't be eating his greens, but then there is also the substantive argument and Labor has always said that on the current budget papers debt is set to peak at, gross debt is set to peak at $370 billion in 2016, so it was perfectly reasonable for Parliament, given that projection, to improve an increase in the debt limit to $400 billion. And our argument was that if Mr Hockey thought that debt would peak at a higher level, then he should release the budget update as Labor did every year in either October or November and then Australians could clearly see the extent of the deterioration under Mr Hockey's watch, and for example the impact of the $9 billion to the Reserve Bank, the $17 billion tax cut to mining magnates, to carbon polluters.

ALY: Ok well I still don't see what's wrong with it?

LEIGH: Well the argument that Labor made, was that if you want an increase in the debt limit you need to justify it. Just as Australians, if they were looking for an increase in their mortgage, would be asked by a bank ‘why do you need the higher mortgage?’.

ALY: And now they do have to justify it. They just have to make that statement.

SINODINOS: Well we have to make that statement whenever debt increases in $50 billion increments, or close to that. And I think that does create a capacity for the Senate, the House to have that debate. It's a separate issue about whether this is a licence to go out and spend, you know, beyond limits or anything. It's not. We have concrete commitments about getting the budget under control, getting the debt under control. That's a separate set of arguments to this. This was about exactly what you said, something that Labor imposed in 2008. They made a virtue of the fact that look debt will not go above 50 billion. And then we got into this argy bargy every time that was surpassed. So they created a rod for their own backs and I think we've actually ended up, almost by accident, in a much better place as a result.

ALY: Now I want to pick up the accident, because of course the accident was not remotely of your side's making Arthur Sinodinos. This is exactly what you were opposed to until it seems very recently. That is the consistency question that Andrew Leigh raises. Why the radically different approach to debt suddenly from the Government?

SINODINOS: No, I think that we were always, and when we were in Government we were of this view, that we didn't need to have a so called debt limit. It was something that happened under Labor and you saw the argy bargy that occurred. But what happened is, that from a piece of lateral thinking, when everybody was talking: well should the limit be 400 billion or 500 billion? There is this considered discussion in the context of Senate Estimates and everybody is sitting there, talking about the situation, how it's different from the US in this regard. And Christine Milne was very keen to make that point. Almost out of that came this idea, well yeah actually maybe we should contemplate getting rid of the limit. But the point is, the conditions that the Greens have put on this are quite rational conditions, which relate to actually creating opportunities to debate the substantive issue, which is the debt and what it's being used for, as opposed to the argy bargy over the fact that there is a limit and it's been surpassed.

ALY: Sure, but the point that the Opposition makes, is a fair point, isn't it? And that is a few months ago you were countenancing not raising the debt ceiling when you were in Opposition and if the Government did that would be a statement of failure on its part and that any increase in debt was merely a statement of continued failure.?

SINODINOS: I don't think in Opposition we made a statement that we would not increase the debt limit.

ALY: No, no you said that you were open to that.

SINODINOS: The point we were making in Opposition was every time the debt limit had to be raised this was a reflection of Labor's economic management and we stand by that critique.

ALY: Was it a reflection now that you sought to raise it?

SINODINOS: Well Joe Hockey's whole strategy around the Budget is that he will use the Mid-Year Economic and Fiscal Outlook to say this is essentially the fiscal outlook that we inherited, this was what it was looking like. And the Budget, which will also have the benefit of the work of the Commission of Audit, will be the opportunity to show how the new budget settings will apply, what the medium term budget strategy will look like and then there will be that comparison that we can make.

LEIGH: My concern I guess Waleed is that I don't think there is anyone in Australia who believes that if Labor had proposed this from Government, that Tony Abbott would have voted for it. There is no possibility that he would have done anything other than drive his debt truck around the country talking about how outrageous it was. And you know, I am concerned frankly that there’s an attempt to engage in what AFL fans call tanking, which is to try and dump problems into the 2013-14 Budget and then blame that Budget on Chris Bowen and Wayne Swan. We've seen this with the $9 billion to the Reserve Bank, which is I think an attempt to try and get greater dividends out in subsequent years and we're also seeing it with a range of other Government decisions which are worsening the public finances.

ALY: Well including additional spending on education, we don't know where that will come from and perhaps the Budget will fill us in on that…

SINODINOS: Well that Budget spending on education, which you raise and quite validly, that will be offset from within the portfolio. It will have to be.

ALY: What does that mean? Can I ask what that means exactly?

SINODINOS: That means other programs will have to be pared back to pay for it.

ALY: What sort of programs?

SINODINOS: Well that's a matter for the Education Minister.

ALY: Can you help me conceive of what…

LEIGH: Must be caps to university places.

SINODINOS: Well the cuts to universities are already factored in, unless you go ahead with your threat not to support them Andrew. But what I'm saying is, it's up to the Minister now to come forward with a package that will offset, through savings, the measures that he's had to introduce.

ALY: You can't help me with an example of what it might, we will never hold you to it..

SINODINOS: Well I don't want to pre-empt the Minister.

ALY: No, but I just can't think what it would be that doesn't worsen education outcomes.

SINODINOS: Well it's a big portfolio, so watch this space, it's a reprioritisation. We’ll watch Christopher Pyne's space, because he is the one who will explain that.

ALY: Is there excessive use of Comcars going on we could save money on? I don't know, I just can't, I can't think of…

SINODINOS: Well that would be more parliamentary than education.

LEIGH: This is a whole University we're talking about Arthur. I mean a typical university does have funding of about, you know $1.2 billion so you just, I mean you close a university, that would get it for you.

SINODINOS: Christopher Pyne will make the hard decisions necessary to pay for this.

ALY: I look forward to Christopher Pyne's receipt of your (inaudible), it will be very interesting…

SINODINOS: Look Waleed, the reality is that if we sat here and said that's fine, that's all just a further increase in debt, you and Andrew would be quite within your rights to say ‘well that's just further profligacy’.

ALY: No what I would say is that's very unlike you. I wouldn't say necessarily about the profligacy, that's a separate debate. The reason I raise education is because of the OECD report that we now have. Australia's education standards are slipping, relative to the world. Now part of that is the improvement of other countries, other parts of the world and we should keep that in perspective, but part of it is slipping in our own standards, particularly in mathematics. I am going to ask you first, how concerned you are, just get a brief response on that before we talk about the policy issues that this has raised. How big a deal is this for you?

LEIGH: It's a huge deal from my perspective, it's one of the issues Chris Ryan and I worked on when we were academics at the ANU. We went right back to the 1960s and it's all flat lining over that period, so I think there really is a concern and it's the absolute slump rather than the relative slump that worries me. I do think though that it gives stronger impetus to get the school funding system right and the work that was underpinning the Gonski review was having looked at the decline which we'd already seen going from 2003 to 2009. We'd seen a decline in absolute terms and the Gonski panel were looking at ways of getting a fair school funding system. Because aside from Christopher Pyne, I don't think there is anyone in Australia that thinks that the current school funding model is anything but broken.

ALY: Well you've kind of delivered us to the policy question, but I'll get your reflections first Arthur.

SINODINOS: Well look, we could get into a whole lot of argy bargy over what period some of these outcomes declined, but the point is now, where there is hopefully agreement between both sides about quantum of funding going forward, the real issue is the quality that goes with the quantum that we are talking about delivering. And that's an area where I think Christopher Pyne generally wants to put his own stamp on some of the proposals that are around. This is not about throwing Gonski out and saying it can't be used at all, because clearly there are issues around the needs basis of the system and all the rest of it that have to be addressed.

ALY: Except that he is not stamping it at all, isn't that the point?

SINODINOS: No, but the point is…

ALY: Once you get beyond the Gonski States, he is shovelling money at them, 1.2 billion, with no strings attached.

SINODINOS: No no. He has made some considered commitments around the quality of teaching, around independence of school, the role of principles and the like. And I think what we need to do is give him the time now, over the next year, to roll out that agenda as part of negotiating what goes with the funds that we're providing, because we will be holding the States to account. There will be, to use the buzz word of the moment, transparency around how our funds are being used and what they are being used for.

ALY: But there is no, as I understand it, unless I've got this radically wrong, there is no obligation that the States who receive this money, and the Territory I should say who also receive this additional money, that they have to put in any money of their own. We've received no indication that there has been negotiation on what obligations the States and that Territory would carry in to receiving that money. All we've been told is there is an in principle agreement, we're chucking money at them and we're going to be less involved, we're not going to do command and control.

SINODINOS: In the period before the Prime Minister and Christopher Pyne announced this funding agreement or deal on Monday, there had been discussions with those States and the issue here is that it's not one size fits all. You talk to Western Australia, you talk to Queensland, I was in Queensland last week and I saw Campbell Newman on other matters and he made it clear to me he had a particular view about how he wanted his education system or the State's education system to run. So to some extent we've got to deal individually with each of these States around how our funds are used and our understanding of what those States and Territories will do.

ALY: So a different funding model in every State?

SINODINOS: No, not a different funding model, but a recognition of where conditions differ. For example the Northern Territory has a particular Indigenous issue.

ALY: As does WA.

SINODINOS: As in part of the State, exactly. So what I'm saying is, what he's doing is not a one size fits all approach, he's been having those bilateral discussions and I think they will bear fruit.

ALY: Andrew?

LEIGH: I think that more money certainly creates the potential for improvements and if you strike a deal with a State, which doesn't increase the amount of money that goes to students, because the State withdraws a billion dollars for every extra billion dollars the Commonwealth puts in…

ALY: Cost shifting effectively..

LEIGH: Exactly. If all you do is you see that the education system is now payed for more by the Federal Government and less by the State Government, then there is no new funding available for schools and it's hard to see how you then begin to bring about change. I respect what Arthur is saying on terms of autonomy and so on. But I do think we've learned a bit from the economics of education over recent decades. Questions around teacher quality I think are paramount. And when I look at say the role that literacy and numeracy coaches are playing at some of the more disadvantaged schools in my electorate, that's a model which was federally driven, where you can actually be in a classroom and see the coaches working side by side with teachers, improving the way in which they raise literacy and numeracy. But if we'd simply said to the jurisdiction ‘well here you go, here's the cash, do with it as you will’, I'm not sure why any reasonable person would expect that to raise standards.

ALY: Well I think Arthur's saying is that's not necessarily what's going to happen and we'll have to wait for some detail. We're waiting on a lot of detail Arthur I've got to say, I do look forward to receiving it. I want to ask though about the higher education and the cuts to funding that you, your side of Government Andrew were effectively using to pay for the Goski reforms. You received a lot of criticism, taking money out of tertiary education to give it to secondary education. Now you've changed your mind on that, just at a time where the new Government is looking to fund its education. You asked the consistency question before, is this just political opportunism?

LEIGH: Well Waleed you and your listeners know the broad context to this, which is that over the period that Labor was in Government we increased education funding by about 73% and then introduced an efficiency dividend, which meant that people had expected we would increase it by 75% and instead we increased it by 73%. Either way you're talking about massive increases in university funding under Labor, largely because we took the cap off places, allowed a whole lot of kids to be the first in their family to attend university. And in terms of the efficiency dividend, the view we took was that it was worth imposing that while the money was going to go to schools, but if we're not going to see that money flow through to improve outcomes in schools, then we don't support it being taken out.

ALY: Hang on, but the money is still going to schools.

LEIGH: But we're not going to see that I don't think, because I suspect that, the States are pretty cash-strapped at the moment and I suspect many of the States will withdraw money from schools as fast as the Commonwealth puts money in.

ALY: But they still have to fund those original agreements with those States that signed on under Gonski. They still have to fund those and part of that funding was going to come from this and now you're denying them that funding that you yourself wanted.

LEIGH: Well it's unclear whether they're going to follow through on those deals. They're taking about four years of certainty rather than six years of certainty, which means that the total amount that they're putting into schools is considerably less than what we would have seen under Labor. They were saying during the election that it was a unity ticket on education, but I'm not sure that we've seen that delivered after the election, in fact I'm pretty sure we haven't.

ALY: Arthur I'll let you give expression to that smirk that I can see.

SINODINOS: No no, I wasn't smirking so much as reflecting on the fact that, having identified these saving, to now go back on them after the election, I don't think is a good look for the Opposition. I think there has to be consistency.

ALY: There's not consistency anywhere in the Parliament can I just say as a voter. Really, that seems to be the theme, I not sure anyone is entitled to run on it are they?

SINODINOS: On consistency?

ALY: Yeah.

SINODINOS: Well from our point of view, given the state of the Budget, we do need to maximise our savings going forward and these measures play into all of that.

LEIGH: We've got the two consistency issues, we would like the Opposition to be consistent in their attacks on debt, they would like us to be consistent on spending less on universities. I'm happy to be criticised that Labor now has a position where we believe we should be spending more on universities.

ALY: Kind of like the Coalition are happy to be criticised for spending more on schools. I expect in three years' time the Australian people will give their verdict on this gymnastics show that they are watching. We will see. Gentlemen it is always a pleasure to talk to you. I know it's very busy around here and you've got engagements to get to, thank you so much for dropping in.

SINODINOS: Thank you.

LEIGH: Thanks Waleed, thanks Arthur.

ALY: We'll be doing it again.

This afternoon I issued a release about the Government's disdainful treatment of the Not-for-Profit sector as it prepares to axe the charity regulator.

MEDIA RELEASE

Abbott Government to increase red tape on charities

Shadow Assistant Treasurer Andrew Leigh says the Abbott Government has a tin ear for genuine dialogue with the charitable sector which overwhelmingly wants to keep the first national charity regulator.

Social Services Minister, Kevin Andrews, said today that he’ll seek to axe Australian Charities and Not-for-profits Commission (ACNC) with repeal legislation to be introduced into the Parliament early next year.

“At the same time the Minister said he’ll listen to the sector. How patronising,” said Dr Leigh.

“The ACNC is the result of years of consultation and listening by Labor to the Not-for-Profit sector.

“The sector supports an independent regulator as a one-stop shop to strengthen charities, grow their profile and reduce red tape over time. The ACNC is based on a robust Productivity Commission inquiry.

“Mr Andrews claims to want to assist the sector but is deaf to it,” Dr Leigh said.

Before the election a major Not-for-Profit sector survey by peak body the Community Council for Australia and Tomorrow’s Agenda Research Institute reported a strong preference for the newly established ACNC. Eighty per cent of respondents said the ACNC was important to keep.

“The Abbott Government knows what it is against but not what it is for,” says Dr Leigh.

“This is another example of regressive and shallow policy on the run.”

“The Coalition talked a lot about consultation before the election but has already made up its mind about the ACNC with the veneer it will listen to the sector,” Dr Leigh said.

WEDNESDAY, 4 DECEMBER 2013