Andrew Leigh

My op-ed in Online Opinion discusses why it's so important to build infrastructure for generations to come, not just today's needs.

The Power of Fibre

When construction on the Sydney Harbour Bridge began in 1923, the city was home to fewer than 40,000 cars – not enough to cause a traffic jam. It may have seemed like a bold move, then, to build a bridge capable of carrying six lanes of road traffic, flanked by a further two lanes for trains. Upon completion, it would have cost you six pence to drive your car across the bridge, but only three if you were upon your horse.

Today the Sydney Harbour Bridge is an indispensable artery to the city’s transport system, with over 160,000 cars crossing it every day. Beyond its iconic aesthetics, the beauty of the bridge lies in the fact that it was never designed for a Sydney of the 1920s. It was designed for a Sydney of the future.

It was with this same view to the future that Labor first proposed the National Broadband Network. Without a doubt, the internet has been the biggest technological game changer of the past half-century. And its capacity for growth is still expanding: just think about how much your own use of the internet has changed in the past 10 years, and then imagine the same change over the next decade.

Like water or electricity, fast broadband is now essential infrastructure. Accessing it shouldn’t depend on where you happen to live or how much money you happen to have.

It is clear that having superfast internet provision will be vital to Australia’s communication systems and our economic development. This is why we need Labor’s National Broadband Network, the biggest infrastructure project in our country’s history. Upon its completion, every home and every business will have access to superfast internet connection via optic fibre, fixed wireless and satellite technologies.

For 93 per cent of all homes and businesses, this will be a national fibre network. Unlike copper, which transmits electrical current, fibre uses pulses of light to transmit information.

Over recent years, engineers have been steadily achieving more rapid fibre transmission speeds – up from 100 megabits per second a few years ago to over 1000 megabits per second today. That’s the difference between being able to download a CD full of information every 5 seconds rather than every 50 seconds. And the boffins don’t think they’ve yet found fibre’s maximum speed, with some tests suggesting it might be up to 1000 times faster again. Unlike copper, fibre direct to your home or business is an information superhighway without a speed limit. NBN Co will start offering 1000 megabits per second services from the end of the year.

At the moment Australia is mostly relying on an ageing copper network, so our broadband capacity already lags behind many countries. Dr Karl Kruszelnicki recently told me that he regularly talks to school classes using Skype. With Australian classes, he says the copper connection is unreliable and typically has to be reset once or twice in a one hour session. But with Korean or Japanese students, where fibre has been rolled out, he can expect an uninterrupted high-resolution videoconference.

The support that fast and reliable internet will provide our teachers (particularly in rural areas) will be of huge benefit to our schools. Health is another area where we will see big improvements flowing from the NBN. Families who are living outside capital cities will be able to consult with medical specialists from their homes or from their local GP’s surgery.

The NBN will transform how Australians communicate and share information with each other and the rest of the world. This will impact upon our businesses, our education and health systems, and also our community. I hope to see applications such as high-definition video-conferencing develop further to complement stronger community life. We’re already seeing this happen, from developing online mental health support groups to having year 10 students on the NBN in South Australia, Tasmania, and my hometown of Canberra, taking an astrophysics class with a teacher in Melbourne.

What about the Coalition alternative to the NBN? Tony Abbott and Malcolm Turnbull recently announced that they would spend over $20 billion to build a broadband network that still relies on copper. The Coalition would stop the fibre at suburban ‘nodes’ or street cabinets, leaving the copper in the ground to connect to your home (unless you want to pay up to $5000 for the equivalent of Labor’s NBN). Not only is this ‘get your water at the village well’ system inequitable; it will also result in connections that are 25 megabits per second at best (1/40^th of what the NBN can provide).

Tony Abbott’s brash statement that he is ‘confident 25 megs is enough for the average household’ reminds me how easy it is to underestimate the changes that technology can bring. When I bought my first computer in 1984, it had 3½ kilobytes of memory. That sounds tiny now, but it was about that time that Gareth Powell, the Sydney Morning Herald computer editor, wrote that he thought no program would ever need more than 16 kilobytes.

Those sorts of statements about technology are a warning to anyone who forgets that the things we can do with new technology often far outpace our imagination. Those that think that superfast broadband will just mean faster Facebook and YouTube do not get the power of technology.

Sydneysiders today are fortunate that the planners of the 1920s had the foresight to build for the future. Let’s hope we can do the same with by connecting all Australian premises to Labor’s National Broadband Network.

Andrew Leigh is the federal member for Fraser and Parliamentary Secretary to the Prime Minister. His website is www.andrewleigh.com.

SPEECH TO THE MINING FOR DEVELOPMENT CONFERENCE
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser

20 May 2013

(CHECK AGAINST DELIVERY)



Good morning – I’d like to welcome you to the Mining for Development Conference, on behalf of the Australian Government and the Minister for Foreign Affairs, the Honourable Bob Carr.

I acknowledge the traditional owners of the land, the Gadigal people of the Eora Nation.

I’d like to thank those of you who have travelled a long way to be here today, including elected representatives from Africa, Asia, Europe, Latin America and the Pacific, and leaders from civil society, academia and industry.

I particularly acknowledge my friend and parliamentary colleague Kirsten Livermore, the federal member for Capricornia in Queensland. Kirsten has a particular interest in mining in Mongolia, a country she has visited three times in the past four years. She tells me that over that time, she has seen major improvements in infrastructure and skills. Average incomes in Ulan Bator have risen – but so has inequality. Rio Tinto is working hard to meet the Mongolian government’s expectations that the benefits of the giant Oyu Tolgoi mine are spread across the Mongolian population. And AusAID working in Mongolia on development challenges such as managing the competing demands for water resources. Similar challenges confront Kirsten and me as we work with mining communities across Australia.

Let me start with the Australian mining story.

When Edward Hargraves announced in 1851 that he had found gold in Bathurst, it started an avalanche. Over the next decade, the population nearly tripled and our national income almost quadrupled, as people flooded in to take advantage of Australia’s mineral wealth.

It isn’t much of an exaggeration to say that central Melbourne is largely a product of the Gold Rushes, which continued until the late-1800s. The Royal Exhibition Building, opened in 1880, was modelled on the Duomo in Florence. By the end of the nineteenth century, Australians enjoyed the highest standard of living in the world.

While our nineteenth century mining boom was driven by supply, Australia’s most recent mining boom has been driven by demand. The past decade has seen world commodity prices triple. The terms of trade recently reached a 140-year high.

Urbanising China and India need steel to make their skyscrapers, and Australia happens to be the world’s biggest producer of iron ore, and a major producer of coking coal. At present, we export iron ore at the rate of 4 tonnes a second.

Australia has the world’s largest demonstrated resources of mineral sands, coal, uranium, nickel, zinc and lead. Australia is also among the top six worldwide in bauxite, copper, gold, iron ore and industrial diamonds.

According to Treasury official David Gruen, while the mining and mining-related sectors constitute only one-fifth of the economy, they have in recent years contributed more than two-thirds of Australia’s economic growth.

And yet compared with the 1970s terms of trade shock, the benefits of this mining boom are flowing more broadly through the economy. Inflation is low, unemployment is below most developed nations, and even the dispersion of unemployment has fallen. We’ve shifted policy settings too. Moving from the old royalty regime to a profits-based mining tax means that when prices rise, tax revenue goes up too. In an environment where parts of the non-mining sector are suffering from ‘Dutch Disease’, this seems a reasonable approach.

Through the mining boom, Australia has benefited from having highly skilled industry professionals, cutting-edge technology, world leading infrastructure, welcoming investment regimes and strong links to important export markets.

The Australian government is working with industry and Indigenous communities to

create much-needed employment and economic opportunities. In fact, the Australian Government and Minerals Council of Australia have had a memorandum of understanding in place since 2005 that seeks to do just this. It focuses on helping workers obtain drivers licences and housing, raising literacy and helping Indigenous people make the transition to school and work.

Mining jobs matter. But because mining is so capital-intensive, they cannot be the only way in which the benefits of mining are shared across the economy.

So I think Australia has an obligation to share our mining experience with developing nations and to work with multinational organisations such as the United Nations, Asian Development Bank and World Bank.

In economic jargon, managing natural resources is a comparative advantage of Australia’s aid program.

Like Australia, many developing countries are well endowed with natural resources. And yet we all know of the ‘resource curse’ – the fact that developing nations who have more natural resources tend to have lower growth rates and perform more poorly on indicators of democracy.

This ‘resource curse’ arises because mineral endowments are easier for non-democratic leaders to expropriate than incomes derived from other sources, such as farming, industry or services.

The curse can be seen in the history of the Democratic Republic of Congo, a country whose extraordinary mineral wealth has more often been a source of conflict than a wellspring of prosperity. The DRC’s troubled history reflects the challenges of ensuring that minerals benefit the whole population.

In developed nations, oil and mineral assets generally raise living standards across the board. But the term ‘resource curse’ was coined because of the tendency for developing countries with natural resources to grow more slowly than those without natural resources. Some developing countries have avoided the resource curse. But on average the paradox holds: natural resources generally fail to help poor countries grow rich.

My thinking on these issues is particularly shaped by Oxford economist Paul Collier, who is here today. Collier points out that if we can help developing nations to make better use of their natural resources, the resulting fiscal flows could help societies to transform themselves for the better.

If developing countries can benefit from their minerals, the payoff could dwarf anything that aid might hope to deliver. Collier points out that in rich nations (where geologists have carefully surveyed the land) the typical square kilometre has subsoil assets worth US$114,000.

In all probability, the same is true for the developing world. On those figures, Africa’s natural resources would be worth $3.5 trillion, more than 70 times the amount of foreign aid it receives each year. Indeed, $3.5 trillion is probably an underestimate. In recent years, the petroleum frontier has shifted south from the Middle East to West Africa. Central Africa is rich in everything from gold to coltan (used in mobile phones). Southern Africa has bountiful reserves of precious stones.

To help developing nations make better use of their natural resources, a group of ex-politicians and entrepreneurs (working with academics like Collier) have proposed a Natural Resource Charter, which they hope will be adopted by governments, businesses and NGOs.

The Charter offers practical ways in which governments can ensure the people get a better deal. Australia financially supports the charter.

First, the Charter proposes that financial flows be fully transparent. As I’ve noted, mining generates relatively few jobs, so what happens to the royalties is critical. Through the Publish What You Pay campaign and the Extractive Industry Transparency Initiative, mining companies (such as the estimated 230 Australian mining companies currently operating in Africa) are encouraged to release information about the payments that they make to governments.

Australia is committed to promoting anti-corruption activities internationally. We are a supporter of the UN Conventions against Corruption and of the OECD Conventions on Combating Bribery of Foreign Public Officials and Guidelines for Multinational Enterprises.

Australia is involved in the Anti-Corruption Initiative for Asia and the Pacific, and financially supports the Extractive Industry Transparency Initiative. This enables citizens to pressure governments into spending the money on much-needed infrastructure, such as hospitals, schools and roads.

I stress that we should apply initiatives such as this practically, collecting information to ensue transparent governance, while acknowledging that resources belong to entire nations and wealth is spread accordingly. We must make sure that governments and their people are in the best position to benefit from resource development through strong and transparent legislation, and adequately trained staff who apply regulations. It means ensuring communities are engaged throughout planning, development and closure; and governments are informed on how to best use revenues.

Second, the Charter argues that extraction rights should be sold by auction. Once a handful of bidders participate, it becomes difficult for them to collude, and the final price is likely to reflect what the rights are actually worth.

Collier uses the example of the UK, which was on the verge of negotiating a £2 billion deal to sell mobile phone spectrum when it was persuaded to try an auction instead. The auction raised £22.5 billion. His pitch to developing countries is simple: ‘if the UK Treasury can get it wrong by a factor of ten, what makes you think you’ll do better?’. As an economist, I firmly believe that where there is uncertainty about the value of an asset – such as a greenfields mining licence – an auction is the best way to ensure that it garners a fair price.

Australian history points to the importance of fairly allocating natural resources. In a recent article in the Journal of Economic Perspectives, Daron Acemoglu and James Robinson compare the Australian experience of gold prospecting in the nineteenth century with that of Sierra Leone’s alluvial diamonds in the twentieth century. By allocating mining rights in small lots, Australia spread the ‘lottery’ of mining, and created a pro-democratic force. By contrast, diamonds in Sierra Leone were exclusively mined by the Sierra Leone Selection Trust, which had its own security force. They argue that ‘The scene was set for the creation of one-party and authoritarian rule after independence in 1961.’

Third, the Charter suggests that developing country governments should maximise the amount of information about the country’s subsoil assets. If governments or aid donors conduct geological surveys and make them publicly available, then the people of that nation are more likely to get a fair share of their natural resources. One way the Australian Government has sought to achieve this is by establishing the International Mining for Development Centre at the University of Queensland and the University of Western Australia, A core aim of the Centre is to improve the quality of geological surveys in developing nations.

Another way to increase information is to require that auction winners begin prospecting within a fixed period of time. If one miner strikes it lucky, this will raise the sale price when nearby parcels are auctioned off.

The thing you notice about good management of the mining sector is how many of the challenges are truly global. That’s why the Department of Resources, Energy and Tourism have partnered with AusAID to share some of the lessons of Australia’s mining experience. The Department of Resources, Energy and Tourism recently held workshops in China, Indonesia, India, Mexico and Peru.

The sustainability program receives support at the national and state level by the Ministerial Council on Mineral and Petroleum Resources and by the Minerals Council of Australia.

The Minerals Council maintains its own Australian Minerals Industry Framework for Sustainable Development, known as Enduring Values.

This complements the International Council on Mining and Metals’ Ten Principles for Sustainable Development, with which many of you will already be familiar.

We don’t have all the answers, but we’re keen to be part of the conversation.



Currently, at a local level, Australia is working with African government counterparts to provide technical expertise in the minerals resources sector, trade policy, public sector reform and private sector development.

This includes working through the Australia-Africa Partnership Facility, Australian Development Scholarships and Australia Africa Fellowships program, supporting the establishment of the African Minerals Development Centre to help build capacity in governments and institutions across that continent.

We also have a strong focus on helping the world’s mining industry improve its safety record. Mining is hazardous work, and too many people have died worldwide extracting natural resources.

Our efforts in this regard include the Australia-China Coal Mine Safety Demonstration Project, which showcases mine safety technology and adopts leading practices to minimise mine injuries and fatalities.



Australia stands willing and able to help other countries however we can, whether through efforts to improve the lot of Indigenous communities, ensure protection of the environment and worker safety, or improve governance.

But we can achieve nothing without cooperation and communication within and between the global mining and development sectors. That is what makes events such as this and the upcoming Extractive Industry Transparency Initiative conference so important.

I encourage you to follow up with AusAID and the Department of Resources, Energy and Tourism to learn more about Australian efforts that interest you.

With your help, we can turn the old resource curse into a new resource blessing, and ensure that mining boosts living standards around the globe.

Update: Thoughtful reports on the conference from the ABC PM program and the Canberra Times.

TRANSCRIPT – 2CC WITH MARK PARTON
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
17 May 2013

TOPICS:                The Budget.

Mark Parton:     Andrew Leigh is the federal member for Fraser for the Australian Labor Party, he joins us on the line now. Hello Andrew.

Andrew Leigh: G’day Mark. How are you?

Mark Parton:     Excellent, I did have a chuckle this morning. I was half asleep when I got in and I read on the email from you think Tony Abbott should have said in the budget response.

Andrew Leigh: Well, we figured we’d have a bit of fun with imaging what Tony Abbott would’ve said last night if he was being upfront and honest with Australia.

Mark Parton:     See I think he is being quite upfront and honest, and I think that many of the worries that people in Labor and Labor supporters had about Tony Abbott, they’re starting to believe are not going to come to fruition. Of course one of the big dramas that we’re going to have is that Canberra’s going to get smashed, isn’t it?

Andrew Leigh: Well Mark, regardless of what you think is deep inside Tony Abbott’s head, I think the simple arithmetic means that he is going to have to cut to the bone. And that’s fundamentally because you can’t mathematically raise spending, cut taxes and pay down the debt faster, which is essentially what Mr Abbott promised he would do last night.

Mark Parton:     What if it works out the Joe Hockey is just a much better big-picture money manager?

Andrew Leigh: If Joe Hockey has a magic pudding, then that’s great.

Mark Parton:     I’m not talking about a magic pudding, I’m just talking about examining programs that aren’t important to a lot of Australians – cutting them, saving money in those areas.

Andrew Leigh: Mark, my general view of public policy is that if you think there are massive hollow logs around the place stuffed with cash, then you’re simply not a serious player in the game. Making cuts in the federal budget is an expensive thing to do, and a painful thing to do. Mr Abbot spoke last night about some of the household assistance that he would cut back, but he’s got to make swingeing cuts in order to fill his fiscal crater. Tax cuts to big miners and big polluters – they’re expensive tax cuts.

Mark Parton:     The really fascinating one to me is that the carbon tax is going to be scrapped, but all of the benefits from the carbon tax – and when I say benefits I don’t mean saving the planet, I mean the benefits to ordinary households – are somehow going to stay. Now it’s difficult to get your head around that as a regular Joe in the street, and sort of say ‘hey, now how can that work?’

Andrew Leigh: Exactly, and this is the sort of magic pudding economics that was on display last night: wanting to promise all things to all people, but being unwilling to say where it’s actually going to come from. We know that 20, 000 public service jobs cuts in Canberra are just a small part of what he needs to do in order to make the budget balance.

Mark Parton:     How long do you think it’ll be before the Direct Action plan to battle climate change gets scrapped?

Andrew Leigh: I think that’s probably first on the cutting board, were Tony Abbott to win office. The problem they have with that is the Grattan Institute puts it as a $100 billion program which is a third of the federal budget.

Mark Parton:     It’s a big lie, isn’t it? I mean, it’s only been put on the table so they’ve got something to say ‘this is how we’re going to deal with it’. It’s never going to happen.

Andrew Leigh: That’s right, and the reason is that soil magic doesn’t work. If you want to reduce pollution, the best way to do it is to put a price on it. And we’ve seen the effects of the carbon price already.  We’ve seen a 9% reduction in electricity emissions and that’s just the innovation of the market that you engender with a carbon price; electricity generators finding smarter ways to produce electricity cleaner. You’ll see that right across the economy – if you back the ingenuity of business, which a carbon price does, you get emissions reductions.

Mark Parton:     We’ve got a minute until news, Alistair’s just SMS’d us and said ‘I’d like to know if Andrew is going to pay for parking in Parliament House’, and he says ‘Andrew supports a $2 500 pay cut for public servants who work in the parliamentary triangle’.

Andrew Leigh: My response to Alistair would be, as we spoke about the other day Mark, Questacon has turned away 23 000 visitors every year as the result of people not being able to find a car park. I think that if you’re going to have national institutions working well, paid parking eventually had to be a part of the solution. Gai Brodtmann has got some concerns around amenities, I think they’re important ones, and if pay parking comes to the House I’ll pay my share like everyone else.

Mark Parton:     Right, so in essence you are supporting a $2 500 pay cut for public servants working in the parliamentary triangle?

Andrew Leigh: Mark, we’ve seen solid wage growth for public servants, as they deserve, they work hard. But the free parking in parliamentary triangle has turned it into a shemozzle for visitors and for workers.

Mark Parton:     I’m with you Andrew, on that particular issue. Thanks for coming on this morning.

Andrew Leigh: Thank you Mark, appreciate it.

Podcast of 2CC Breakfast With Mark Parton

This morning I had a chat with Mark Parton about Tony Abbott's Budget Reply

The Real Budget Reply

Tony Abbott likes to claim that he supports honesty in politics. But if he was coming clean with the Australian people, what would he say in his budget reply? Here’s one possibility.

Tony Abbott, the Honest Budget Reply

Last year, I had a bit of fun with my budget reply. We didn’t have much policy, so I reworded my speech to the Young Liberals’ national convention, and delivered it in parliament. But at the end, I said the thing that really mattered in politics was to be honest. That got me thinking – maybe I should really be honest. So this year, I’m glad to deliver my first ever honest reply to the Government’s budget.

The uncomfortable truth is that the Australian economy is doing well – really well. We’ve grown 13% since 2007 – while Europe’s economy has shrunk and over half all advanced economies haven't recovered lost output over this period. I was wrong when I said WorkChoices ‘was good for wages, it was good for jobs, and it was good for workers’, because productivity growth is higher now than it was under WorkChoices. The share market is up about 10% just since January. The level of expected business investment has never been higher.

We have one of the lowest unemployment rates in the developed world, and there’s few countries where you’d rather be looking for a job right now than Australia. Our net debt – as a share of GDP – is low. It is expected to peak at only 11.4 per cent of GDP, a fraction of the major advanced economies.   My own personal debt to income ratio is over 200%, So if I start accusing the government of taking on unsustainable debts, I don’t know what that would say about my own ability to manage money.

Former Prime Minister John Howard – a man I deeply admire – put it well last week, when he told a Sydney conference: ‘When the current prime minister and the treasurer and others tell you that the Australian economy is doing better than most – they are right. We are still fortunate that we have an unemployment rate with a five in front of it. I wouldn’t have thought that was going to be possible a couple of years ago, and I don’t think many people would have. Our unemployment has remained pleasingly quite low. And our debt to GDP ratio, the amount of money we owe to the strength of our economy, is still a lot better than most other countries.’

Tonight, I pledge to stop trash-talking the Australian economy. Rather than fearmongering on the cost of living, let me be honest: our best measure of the cost of living is the consumer price index, and it’s been consistently low over recent years. Interest rates are down, so a family with a $300,000 mortgage is saving over $100 a week compared to when the Coalition were last in office. So tonight, I pledge that the Coalition will scrap one of our promises: the promise that interest rates will always be lower under the Coalition. It’s a pity that getting rid of this pledge won’t save me any money.

Which brings you to my funding gap. The Coalition has spent the last few years saying ‘no’ to responsible budget measures and ‘yes’ to special interests. The result, as Andrew Robb and Joe Hockey have admitted, is a funding gap that a year ago we estimated at $50 to $70 billion. But that was before global economic circumstances and the high dollar helped wipe $17 billion off government revenues in 2012-13. So our gap today is $70 to $90 billion. That’s thousands of dollars for every Australian household.

And then there’s my spending problem. As a result of ongoing, unfunded promises, Joe Hockey and Andrew Robb now have a mammoth task ahead of them to see how it all adds up. Because we remain committed to:

• Removing the means test on the private health insurance rebate - $3 billion


• Bringing back the chronic disease dental scheme - $4 billion


• Bringing back the baby bonus - $1 billon


• Billions in unfunded infrastructure commitments – around $18 billion at last count.

The only way a Coalition government could spend more, tax less and have lower debt than Labor would be if we repealed the laws of maths. In my initial conversations, the Greens Party have been supportive of this, so I think I might be able to get it through the Senate.

In 2009, I told Lateline that Labor’s stimulus package was ‘not going to stop the recession being long and deep’. In the years since, it’s become clear that government stimulus saved over 200,000 jobs, and ensure Australia avoided going into recession entirely. So my response has been to pretend the Global Financial Crisis didn’t happen at all, and complain about debt, even although I know that two-thirds of our debt came through revenue write-downs during the GFC. Would the Coalition have taken the budget into debt if we’d been in power when the GFC hit? Of course we would have.

Similarly, I’ve spent the past few months pretending that the revenue write-down didn’t happen, hoping I could muddy things up with my usual lines about Labor spending. But tonight, I want to be straight with you: in a budget, revenues and expenses are different sides of the ledger. The revenue write-down has nothing to do with government spending. Following the fall in revenue, I have no idea how I’m going to make my costings balance. Even my regressive parental leave scheme doesn’t seem to add up, because since 2010 wages have grown and company tax revenues are down. Do you think Coles and Woollies customers would mind if I raised company tax by a bit more than 1.5%?

As Peter Costello wrote about me in his book, ‘Never one to be held back by the financial consequences of decisions, he had grandiose plans for public expenditure.’ So in that spirit, let me tell you about some of the grab-bag of ideas that currently constitute Coalition policy.

First we have a $30 billion policy to construct dams. Yes, some biased and uninformed groups – like experts – have characterised the plan as ‘unfunded’, ‘uncosted’ and ‘barking mad’. But what these elites don’t get is that this policy is the voice of the Australian people. Every day, people come up and tell me to announce some damn policy.

Second, I’m proud to re-announce our $4 billion centrepiece saving: re-introducing the 15% superannuation tax on low-income Australians. I expect people will support this measure because, I’ve said before, superannuation is a con job. This tax increase will mean 3.6 million Australians have to delay their retirement – so it’s not just a saving, it’s a job creator. Central to the Coalition’s values are senior Australians and hard work. Making senior Australians work hard is our ultimate aspiration.

Third, I’m especially happy have the chance to talk about my Paid Parental Leave scheme. Now Alex Hawke may say that it ‘does not pass the fair-go test’, Mal Washer may say that he doesn’t see how it will assist productivity, and Peter Reith might have argued that ‘it is obviously bad policy’. But the one thing everyone agrees on is that it was my idea. So I’m sticking to it. This is because I understand the needs of Australian families: it’s not people on Family Tax Benefits that need assistance through things like Labor’s Schoolkids bonus, it’s people who are earning over $150,000 that we should be helping most. High income earners are the true women of calibre, and they deserve fair dinkum assistance.

Fourth, continuing in this vein of providing assistance to those of calibre, the Coalition if elected in September will ensure that Manly Football Club, which has never won the wooden spoon in its 63 seasons, the longest period of any current club, receives another $10 million in addition to the $1 million I got them in 2005 to create some undercover seating.

Fifth, the Coalition is committed to meaningful tax cuts. So meaningful, we can’t say what they are, who they’ll be for or how much they’re going to cost. I’ve said that I aspire to a lower tax to GDP ratio, but given that it’s fallen from 23.7% to below 22% under Labor, even the dries in my partyroom have started to ask me how much lower it can go. In fact, someone reminded me the other day that another 1% reduction in the tax to GDP ratio would be equivalent to slashing the entire schools budget, cutting almost all Family Tax Benefit payments, or axing three quarters of the defence budget.

Sixth, there’s the interweb. Some call me old fashioned, but I am proud to be a man who believes in tradition.  I believe in Australia’s future as a constitutional monarchy, I believe that marriage should be between a man and a woman, and I believe in our decades-old copper wire. I’m no tech head, but I just don’t see the need to bring our technology into the 21st century. Personally, I get my staff to print out my emails and I dictate the responses and have them sent to the typing pool.

Seventh, we will use soil magic to mitigate that climate change thing. We call it ‘direct action’, because it directly acts to take money from the pockets of households and give it to big polluters. Households will need to pay $1,300 in new taxes annually in order to meet the $100 billion that the Grattan Institute said we’d need to put towards an abatement purchasing fund.

You’ll notice that there are a few things missing from this list. As I said in 2003, ‘Transport infrastructure is a state responsibility.  The Commonwealth Government should no more have to fund … [it] than the State Government should have to buy new tanks for the army.’ So don’t expect me to follow Labor’s historic investment in roads, rail and urban public transport. And under cover of a Commission of Audit, I’m hoping to cut spending on ports too. The experts tell me this is my best chance of stopping the boats.

As Coalition leader, I have been described as ‘not a policy-driven person’ who ‘sees politics as a game’. But by being honest and upfront tonight I have shown the Australian people what kind of Prime Minister I would be. And frankly, even I’m kind of worried. Honestly.

I spoke on the Matter of Public Importance debate today about the strong Australian economy, and the choices that Mr Abbott faces with his budget reply.

Matter of Public Importance - Australian Budget, 15 May 2013

Dr LEIGH (Fraser—Parliamentary Secretary to the Prime Minister) (16:12):  It is my pleasure to rise on this matter of public importance to speak about the strength of the Australian economy and the important choices that this budget makes. The Australian economy is performing strongly by international standards. As previous speakers have noted, we have grown 13 per cent since 2007. It is a period when the United States has only grown a couple of per cent and when all of Europe has actually shrunk. The European economy is smaller now than it was then. Australia's economy has moved up the rankings from being the 15th largest to the 12th largest in the world. We have seen faster productivity growth over recent years than we saw under Work Choices, giving the lie to the notion that all that stands between Australia and stellar productivity performance is cutting back workers' entitlements. We have seen the sharemarket up. In fact the sharemarket is up more than 10 per cent just this year.

You do not have to take my word that. As former Prime Minister John Howard has noted, ‘our debt to GDP ratio, the amount of money we owe to the strength of our economy, is still a lot better than most other countries’. Former Prime Minister Howard has been willing to speak the truth on this. While the member for North Sydney used question time to fearmonger about debt, former Prime Minister John Howard has acknowledged that Australian debt levels are low. In fact the Leader of the Opposition himself has a debt-to-income ratio well over 200 per cent, so it is hard to see why he would envisage a debt-to-income ratio of 11 per cent as being unsustainable.

If we go back to 2009, we had the Leader of the Opposition telling Lateline that Labor's stimulus package was 'not going to stop the recession being long and deep'. He was of course completely wrong about that. Thanks to the stimulus package, Australia avoided going into recession entirely. We did not cut back on government spending when the private sector turned bad. Two-thirds of the debt that Australia took on was due to revenue write-downs with just one-third being due to the stimulus spending we put in place. So when you hear those opposite fear-mongering about debt, they are really saying that the Australian government should have cut back when the private sector was cutting back. That would have led to a long and deep recession of the kind the Leader of the Opposition forecast incorrectly in 2009.

Mr Deputy Speaker, if you believe those opposite, you would believe that coalition governments spend more, tax less and have less debt than this government. Indeed, I even heard a voice from one of those opposite. 'Yes, we can do that,' they said. The problem is it is mathematically impossible. You have got to make choices. You actually have to make choices—and our budget does that. We make difficult choices but they are responsible savings measures: $43 billion in savings adding up to $180 billion in savings under this government. We understand those trade-offs. It is not sure those opposite do. Those opposite have a fiscal crater which was $70 billion before the revenue write-downs and now, with nearly $20 billion of revenue write-downs, it must surely be in the order of $90 billion.

Part of the reason they have that is their unfair paid parental leave scheme, which gives the most to those who have the most. Of course, you do not need to hear my criticisms of this scheme, which may cost between $12 million and $17 million over four years, as you can simply go to those opposite. The member for Mitchell said it did 'not pass the fair-go test'. The member for Tangney said he was 'aware of a number of colleagues that have similar concerns on this policy'. The member for Moore said, 'The Labor Party scheme is quite good.' He said he was not sure 'why it is necessary to go to this level and how it will assist productivity.' The member for Wentworth said he was 'not going to comment on whether it should be reviewed or not'. Senator Cormann said that he is yet to announce how they will fund it, and they have not released the costings yet. Peter Reith goes further. He just says 'it is obviously bad policy'. Nick Minchin: 'I have been on the record many, many times as saying that I'm not a supporter of the paid parental leave scheme of the opposition.' He says, 'I think Tony and the opposition should now put that in the aspirational category.' And Peter Costello says, 'My view is that it is a very generous scheme.' Well, yes, it is generous but it is generous to the most affluent; it is not generous to the neediest.

The opposition leader claims that he can pay for paid parental leave with a 1.5 per cent impost on Coles and Woolies customers. The trouble is that was predicated on company tax revenues being up and we have seen company tax revenues being written down, so 1½ per cent likely does not cover the cost of the opposition's unfair paid parental leave scheme. It is likely they would have to increase company taxes and therefore increase grocery prices by even more.

They have claimed that the tax increase combined with parental leave could even save the affected businesses money. But, unfortunately, business leaders have quickly come out to say that this did not fit the mathematical test—again similar to the claim that they can increase spending, cut taxes and pay down the debt faster. The opposition leader could not name a single business that would be better off under his parental leave scheme, because there is not one. It is no wonder that former Liberal leader John Hewson said the opposition leader has no interest in economics and called him 'innumerate'.

That brings me to the opposition's soil magic plan, a direct action plan which they originally said would cost $3 billion over four years and now will cost $2 billion over three years. But that is at odds with the costings of independent experts. The Grattan Institute say that it will cost $100 billion to achieve the coalition's emissions reduction target via soil magic, with $1,300 in new taxes because the opposition will not deal with foreigners in order to combat climate change and that again drives up the cost. If they were serious about this policy, they would submit it to the Parliamentary Budget Office for scrutiny. They would come clean with the Australian people. They would not go around making statements like the Leader of the Opposition has made that 'we will spend no more and no less on reducing emissions than we allocate'. The fact is that something has to give. Clearly the opposition cannot both meet its budgetary targets and meet its emissions reductions targets. It will have to do one or the other.

Then there is the coalition's $30 billion policy to construct dams. That shows the priorities of the coalition: $30 billion on a very odd dam scheme which seems to bear a curious resemblance to a major coalition backer's plans to develop the north. But there are no plans for investing in the education of Australia's children and no plans for paying for disability care. The opposition want to spend $1½ billion on drones, another thought bubble. When I first heard of this policy I thought we should just remind them that their coalition with the Nationals still remains strong. So there is $1½ billion on drones apparently and there is $10 million for upgrades to the opposition leader's football club, Manly-Warringah Sea Eagles, and there is $400 million for a green army.

I could go on all day but the coalition's fiscal woes are the result of saying yes to every special interest and no to every sensible revenue-raising measure. What the opposition leader must do tomorrow night is come into this place and back Labor's responsible saves. He must come into this place and he must say that he backs our revenue measures, because if he does not all he has done is dig deeper into his $70 billion crater. As the advice goes, when you are down deep the best thing you can do is stop digging. The opposition leader could stop digging by backing Labor' measures to get rid of the baby bonus and replace it with a targeted $2,000 for those on Family Tax Benefit Part A. He could back our company tax changes which see a fairer and more responsible company tax system being put into place. He could back the series of these measures but then he would still have to make swingeing cuts. When he is asked about his cuts he likes to speak about the cuts that he will make in my electorate of Fraser and the 20,000 Canberra public servants that he will get rid of. But that is only a small drop in the ocean compared to the budget gap that the coalition leader finds himself in. He wants to give tax cuts to big miners and big polluters. They have been guaranteed. But he does not want to provide tax cuts to the Australians who are at the bottom of the income spectrum. He is going to reverse Labor's cuts to superannuation taxation for low-income earners. He is going to reverse our tripling of the tax-free threshold. Both are policies that will disproportionately hit women. Budgets are about priorities and values. It is time for the opposition leader to show tomorrow night where his are.

MEDIA RELEASE

Liberals must use Budget Reply to be upfront about cuts hurting Canberra

ACT Senator Kate Lundy, Member for Canberra Gai Brodtmann and Member for Fraser Andrew Leigh are calling on Tony Abbott and Joe Hockey to be upfront about any planned cuts on Canberra in the Opposition’s formal budget reply on Thursday.

With only one day until the budget reply speech to Parliament, they are calling on the Coalition to use this unique opportunity to make clear their plans for Canberra.

The Coalition has already proposed a number of cuts that would hurt local workers and families, including:

• At least 20,000 jobs from the public service in Canberra


• Household assistance payments typically worth over $1000 a year to local families


• The School Kids Bonus – used by 14,000 local families in our electorate


• The Instant Asset Write Off that 34,100 of small businesses in our electorate are eligible to use if they purchase new equipment


• The re-introduction of a 15% superannuation tax on 46,500 of Canberra workers earning below $37,000.  This is worth up to $500 a year to their retirement savings.


• Labor’s fibre to the home NBN now confirmed for roll out in the suburbs of the Inner North and Gungahlin, and the whole of Canberra within 3 years.  The Coalition will make people pay up to $5,000 to get optic fibre all the way to the premises

Given the Coalition’s track record, ACT Labor representatives are concerned the Coalition may also cut:

• The Income Support Bonus payments going to 9321 people in Canberra.  Payments of $210 per year for singles, and $350 to couples – the next payments are scheduled for a week after the election.  The Coalition voted against this cost-of-living help only a few months ago in Parliament.


• The Fair Entitlements Guarantee scheme that supports workers who would otherwise lose entitlements if their employer goes bankrupt or into liquidation.  Since 2007, 829 local workers have received $8,699,566.73 in entitlements under this scheme

If these concerns about possible cuts are unfounded, then Tony Abbott should use his Budget reply on Thursday to make absolutely clear that he will not take the axe to these programs if elected.

If Tony Abbott is going to be honest and upfront with our community, he needs to assure us that important help for local families and communities won’t face the axe.

If he is not prepared to give that assurance, then he must clarify what is on the chopping block.

Canberra deserves detailed candour in Thursday evening’s budget reply so voters can make an informed choice on 14 September.

Labor have been absolutely clear about our future investment and spending plans – it is there for all to see in Tuesday’s budget.

MEDIA RELEASE

ANU to receive $3 million endowment to establish Tax Studies Institute

Dr Andrew Leigh, Federal Member for Fraser and former professor at the Australian National University has welcomed the establishment of the Tax Studies Institute (TSI) at the ANU.

As part of last night’s Budget, the Labor Government will provide a $3 million endowment to establish the TSI with ANU providing additional support and funding worth $750,000 each year plus $500,000 upfront.

With plans to establish the Institute in 2013, the TSI will help raise the quality of national debate on tax reform and the awareness of taxation policy issues.

The TSI will be a centre of excellence which will collaborate with academics and institutions across Australia and overseas. A new Chair in tax policy, to be taken up by an internationally renowned tax and public finance expert, will direct the new institute.

Member for Fraser, Dr Andrew Leigh said that continuing the national debate on ways to reform our tax and transfer system will help position Australia for the challenges and opportunities of the 21^st Century.

“Labor has delivered a budget that will make Australia a stronger, smarter and fairer country,” said Dr Leigh.

“It’s very fitting that the Tax Studies Institute be placed at the Australian National University given the reasons why ANU came into being in the first place,

“The Crawford School is fast gaining an excellent reputation not only in Australia, but in our region too. It’s fantastic to see an Institute that will play such an important role in future policy housed in one of Australia’s most prestigious and fast growing schools,” said Dr Leigh.

TRANSCRIPT – POST BUDGET REMARKS - DOORS
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
15 May 2013

TOPICS:               The Budget



Andrew Leigh: The Budget that was handed down last night lays the framework for what will be a very clear choice for Australians come September. A choice between a Labor Government that’s chosen to make responsible saves in order to invest in road infrastructure, in better schools and in disability care, and the Coalition which must either back in all of our responsible saves and then make more cuts of their own, or else, keep their cuts in the top drawer as they’ve been continuing to do. I think Australians will recognise that the high dollar has been a big hit to the government revenues and they will recognise too, that it is time for Tony Abbott to stop saying yes to every special interest and no to responsible savings measures, back in the Government’s saves and then be clear about how he will balance his budget. Happy to take questions.

Journalist:          Is the Treasurer being again, too overly optimistic? With the carbon tax and the mining tax in this budget, there’s been $13 billion lost out of those two initiatives together, and then the Treasurer is still forecasting a return to surplus in 2-3 years?



Andrew Leigh: Our forecasts are based on the best available data and what we saw over the course of last year was a once-in-fifty-year episode in which nominal growth for a sustained period was below real growth and that’s driven in large part by the high Australian dollar. Australians recognise, I think, the high dollar hurts our revenues. But our choice then is to make the responsible savings that you saw in last night’s budget or take the alternative that Tony Abbott would have of cutting to the bone.

Journalist:          The believability factor here is going to be a big issue with four months out from the election. Last budget, Treasurer Wayne Swan promised a surplus, this year we’re getting a $19.4 billion deficit. How can voters believe Labor?



Andrew Leigh: What you’ve seen from Wayne Swan and what you never saw from Peter Costello is a willingness to have a serious economic discussion with the Australian people. I mean, when you look at the great Australian Treasurers, Paul Keating and Wayne Swan, each of whom won the Euromoney Finance Minister of the Year Award, they’re people that were willing to talk about nominal and real growth, to talk about the impact of the high Australian dollar and to talk about trade-offs. That’s why I think Wayne Swan is a terrific Treasurer and it’s why Joe Hockey hasn’t measured up, because Mr Hockey talks ‘age of entitlement’, but when it comes to making tough decisions he compared our modest changes to the Baby Bonus last time round to China’s One Child Policy. This is a guy that just can’t make the serious trade-offs that are required to be a Treasurer. He gets rolled by shadow cabinet every time he tries to make a responsible saving, and then as he said last night to Laurie Oakes, “I’m a team player”. Well, that doesn’t cut it when you have big revenue downgrades on top of the $70 billion dollars the Coalition starts behind.

Journalist:          How do you think those in your electorate will react to the axing of the Baby Bonus? Do you think it will be met well in the electorate?



Andrew Leigh: I think there will be a recognition within my electorate that we have to make responsible saves and that changing the Baby Bonus and so it’s targeted to people receiving Family Tax Benefit Part A and comes down to $2000, is a responsible savings measure. We know that the Baby Bonus didn’t have a big impact on fertility. A Melbourne University study coauthored by Mark Wooden had the cost of each new baby induced by the Baby Bonus at $150,000 a year. So, this was never good public policy and what we’ve done by means testing it and bringing the amount down has been in the spirit of the means-tested, targeted, Australian social safety net which has served Australia well for decades.

Journalist:          How can you rectify scrapping the Baby Bonus but keeping a cash hand-out like the SchoolKids Bonus?



Andrew Leigh: The SchoolKids Bonus is targeted at those school expenses. It comes regularly in the beginning of each school term and it’s designed to encourage Australians to invest in their child’s education, to help ends meet around uniforms, books, we know school is expensive and we want to make sure no child turns up on the first day of school without an essential textbook, exercise book or uniform. The SchoolKids Bonus does that in a targeted way.

Journalist:          The mining tax raised ten per cent of what was originally forecast. Surely now is the time to rethink the design?



Andrew Leigh: When you look at the Petroleum Resource Rent Tax over its 25 year history, if you’d analysed the PRRT one year in, you would have said, “well this tax isn’t raising what we wanted it to raise”. But over the course of the last quarter century, the PRRT has bought in, I think, around $25 billion. The Minerals Resource Rent Tax depends on commodity prices and it also depends on the deductions that mining companies are making, and that will change with the point of the cycle. But anyone who says going back to the old royalties regime is better than a profits based mining tax has got rocks in their head. There’s no sensible economist that would argue that.

Journalist:          But, you’re a sensible economist, no doubt you’d agree with me in saying that, surely you would agree that there’s a structural flaw here that needs to be rethought into the future because Wayne Swan’s predictions about what that tax will raise are again, very overly optimistic over the forward estimates.



Andrew Leigh: But Laura, I don’t think it’s a structural problem that we’re not forecasting mining tax revenues down to the last dollar. I don’t think it’s a structural problem that we…

Journalist:          (inaudible) at all, this raised ten per cent of what was originally forecast: $200 million dollars.



Andrew Leigh: I don’t think it’s a structural problem that mining tax revenues are going to fluctuate up and down. There’s two things here. First of all there’s the slight drop-off in commodity prices. Secondly, the timing of deductions and companies are putting a lot more deductions in in the investment phase than they will be in the volume driven phase of the mining boom that we’re now shifting to.

Journalist:          Ok, you know how forecasting works and there’s been a lot of criticism of Treasury and how these forecast have been so out. Is Wayne Swan taking the high end of forecasting, the range given to him, or is Treasury getting it wrong?



Andrew Leigh: These forecasts are not a political choice. The forecasts are economic judgements done by our best forecasters. Now they’ve never been precise down to the last dollar. In the Howard years we saw underestimates of revenue and last year we’ve seen an over estimate of revenue. That’s not because of any mendacity by the people doing the forecasts; it simply reflects the fact that forecasting is an inexact science and changes in the global economy such as the huge demand for Australian bonds affect government revenues. All right folks, thanks very much.

I spoke this morning with Mark Parton about the federal budget, and the clear choice it presents for this year's election: between Labor's nation-building reforms in health, schools and DisabilityCare, and the Coalition's threatened cuts. Here's a podcast.

TRANSCRIPT – 2CC BREAKFAST WITH MARK PARTON
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
15 May 2013

TOPICS:                The Budget.

Mark Parton:     Andrew Leigh is the Federal Member for Fraser, for the ALP. He’s an economist of some note, and he’s a contributor to this program of some note, he joins us right now. Hello Andrew.

Andrew Leigh: G’day Mark. Does that make me a commenter of calibre?

Mark Parton:     That it does. Now obviously you are happy with what Wayne Swan delivered last night, because you have to be.

Andrew Leigh: Well Mark, it’s a tough international situation for our budget. This high dollar has had a big hit on government revenues and we’ve had to make a set of hard decisions last night, decisions that in an ideal world, you certainly wouldn’t want to be taking. But the choice that Australian families will have come September is between the sort of strong Labor investments and the cuts that Mr Abbott will have to make because he spent the last few years saying ‘yes’ to special interests and ‘no’ to any sensible revenue raising measure.

Mark Parton:     So many interesting things about this document from last night, among them that we’re only three or four months away from an election. And I’ve never seen a pre-election budget like this because there are no carrots, there are no sweeteners. There’s a stark honesty which I think is extremely responsible.

Andrew Leigh: Mark we’re being level with the Australian people about the challenges for the revenue. What we’ve seen over the last year is a $17 billion fall in what the government takes in. That’s got nothing to do with what we spend; just a large fall tax revenue, driven to a large extent by the high dollar driving down company taxes. That’s a challenge for us, but it’s a challenge for everyone in parliament and I really hope that Mr Abbott is going to stand up on Thursday night and he’s going to be able to say ‘well, I’ll back Labor’s saving here, I’ll back Labor’s saving here, I’ll back Labor’s saving here, I’ll back Labor’s saving here’. If he can’t, then he’s basically hiding cuts in his top drawer, hoping he can keep them secret until after the election.

Mark Parton:     I guess the other fascinating thing about it is so much of the pain here comes, in theory if there’s a change of government, not under you guys but under them. And it will be interesting to see how much they want to tinker with. So many of these measures won’t even be passed in this current term of government, will they?

Andrew Leigh: Mark I know there’s many people on the Liberal side of politics who think they’ve got the election sewn up. I take a different view, I’m pretty respecting of the voters and I think they’ll make a considered judgment in September. But the budget invests over a long horizon – we’re looking at putting in place important road building measures in Australia’s big cities, like we saw with the Majura Parkway investment for the ACT in last year’s budget. We’re looking at putting place DisabilityCare, which is going to be a pillar of our social safety system, hopefully for generations to come. And we’re putting in place that school investment that you’d expect from a responsible Labor government, recognising that great schools drive prosperity.

Mark Parton:     We spoke with Alex Malley from CPA, from the accountancy group earlier, and he was suggesting that there were massive missed opportunities here in shoring up Australia’s competitiveness, that it’s all well and good to beat the corporates over the head and try and get as much money out of them, but ultimately if we can’t compete on the business front, well the whole country is not going to be served well.

Andrew Leigh: But our company tax changes Mark, and I don’t know if he’s talking about the thin capitalisation deductibility rules, they’re driven by shifts that we’re seeing around the world. Countries trying to make sure that firms don’t shift profits in order to avoid paying tax. You and I can’t shift our salaries over to avoid paying tax, and we’re basically applying that principle to companies. That strikes me as being pretty fair and responsible in a budget in which we’re asking a lot of people to give a little to build a better country.

Mark Parton:     Andrew, thanks for your time this morning, we appreciate it.

Andrew Leigh: Thank you Mark. Appreciate it.