Andrew Leigh

Here’s the fiscal challenge for the Coalition

Budget seasons is a time for parties to elevate debate above political point scoring and sloganeering, and to outline to the Australian people their respective visions for our future and their agendas for government. For this reason, it’s probably Tony Abbott’s least favourite time of year.

Instead of howling ‘no’ at every policy put forward by the government, Mr Abbott needed to step up as Leader of the Opposition and present an alternative. Instead of using nominal figures and juvenile scare-mongering on the state of the economy, Mr Abbott’s own policies – assuming he has any – will have to undergo scrutiny from the Parliamentary Budget Office and then the Australian public.

Tony Abbott is taking it for granted that he will become Australia’s next Prime Minister in September. This misguided sense of entitlement has distracted him from his current job. It’s simply not good enough for him to persist with catch phrases; he must come clean with the Australian people on his plan to fund his laundry list of bizarre policies.

As Treasury Secretary Martin Parkinson has pointed out, if the Pre-Election Fiscal and Economic Outlook (PEFO) had been released last week, it would have contained precisely the figures that were in the budget. This means that Tony Abbott knows the numbers. The election is now less than four months away, so he must have some idea what his policies are. The Parliamentary Budget Office is standing ready to cost the Opposition’s policies. The time for bluster is over; the time for details has arrived.

The fact is that Australia is facing a significant budgetary challenge, with the high dollar weighing heavily on government revenues. The amount of tax revenue that the Government has collected this year is $17 billion less than was forecast in our Budget last year.

Labor has made the tough decisions to accompany our spending with structural saves; for example by means-testing the private health insurance rebate. This is a structural save which generates more money in the longer term and can be used to support important priorities like DisabilityCare.

Only Labor has put forward a plan to make sure no Australian will be left behind, through introducing initiatives such as DisabilityCare, the National Plan for School Improvement and increases to pensions and superannuation. We know these are important investments in Australia’s future and we know the value of achieving these reforms now. The Coalition does not share this vision. It persists with their policy of giving tax cuts to big miners and big polluters, which must ultimately be paid for by middle Australia.

The Opposition doesn’t want to take these tough decisions before the election, because they know that Australians will be concerned with their plans to drastically cut spending. If Mr Abbott wants to be taken seriously as a manager of the economy, he should have used his budget reply to outline the tough decisions he will take and the details of how he will fund his policies. Unfortunately, he spent too much time talking the Australian economy down, and not enough time outlining the cuts he will need to make. Mr Abbott has demonstrated time and again that he does not take the task of managing the economic future of this country seriously.

This article originally appeared in Inside Canberra Vol. 66, No. 17

TRANSCRIPT – CAPITAL HILL
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
22 May 2013

E&OE



TOPICS:                Coalition costings.

Lyndal Curtis:                     Being Shadow Treasurer in budget week can be a little like being the understudy. You get to help prosecute your side’s case in the media, but the glory of the parliamentary reply goes to the Opposition Leader. It may be a little under a week since the formal budget reply, but Joe Hockey got his day in the spotlight today with the now traditional Shadow Treasurer’s post-budget address to the National Press Club. The government was calling on Mr Hockey to reveal the Coalition’s policy and costings – he didn’t do that, but he did make one or two announcements. Joining me this evening is the Shadow Small Business Minister Bruce Billson, and Labor Parliamentary Secretary Andrew Leigh. Welcome to you both. We’ll start this evening with Mr Hockey’s explanation of why, when the Coalition says there’s a budget emergency, it’s still electing to keep the carbon price compensation by way of tax cuts and pension rises.

Footage of

Joe Hockey:                        …We make no apologies for delivering tax cuts, I think it was every year for our last five or six years. And in fact Labor were so impressed with that that they went on to deliver our tax cuts when they got into government – and thank you for that. I think the challenge going forward is to have stability in tax. Now, we do not apologise for tax cuts that involve the abolition of the carbon tax and the mining tax, because they are a handbrake. Those two taxes are a handbrake on the Australian economy, and I think, if there is a change of government on the 14^th of September, there will be a surge of confidence. I believe that in my heart, and it’s true. And if that is the case, then part of that will be about the fact that the mining industry is not going to have a mining tax, and every household is going to be liberated from additional costs associated with the carbon tax. So we make no apologies for those.



Lyndal Curtis:                     Bruce, does it seem a bit odd that if you declare a budget emergency, and then you don’t elect to take $4 billion of savings you could have had by pulling back the carbon price compensation, which I assume you’d think would be needed because there’s no carbon price?

Bruce Billson:                     Well, Lyndal it’s not just the Commonwealth government that has a budget emergency because of the reckless spending and waste of the Labor government, it’s households as well. Households have budget emergencies, you’ve seen figures released this week about the pressure in household rising right across Australia. Cost of living pressures keep coming at them, very little opportunity for discretionary expenditure, real concern about paying the bills at the end of each month. And that’s something that we recognise; Australian’s want to get ahead, it’s a country that’s built a reputation of getting ahead from one generation to the next. That’s not what the Australian people feel night now, and our approach to remove the cost of living keeps those income tax and pension payments is about releasing the budget crisis in many Australian households.

Lyndal Curtis:                     But you doing it effectively twice over? You say the price of electricity and gas goes down if you remove the carbon price, that cost of living pressure is presumably eased if that happens. And then you relieve it again, by keeping the tax cuts and pension rises.

Bruce Billson:                     Well, an excellent account about how positive this is for the households, Lyndal. Removing the cost pressures that are created by a carbon tax that’s way out of step with anything that’s going on in the rest of the world, putting upward pressure not only on the costs of households face but Australian businesses face as they seek to compete internationally and seek to secure markets. And some opportunity to relieve the budget pressures in those households, with the tax cuts and also the additional pension payments paid fortnightly.

Lyndal Curtis:                     We might go now to some of the announcements in Joe Hockey’s speech. Andrew, it seemed like a pitch to small business to make the Tax Office nicer, to make it more accountable, have the Tax Commissioner appear as the Reserve Bank governor does before a parliamentary committee, have an inquiry into the structure of the tax office, and perhaps even break it up into administrative and policing functions. Do you believe that there’s anything wrong with what Joe Hockey proposed?

Andrew Leigh: Well Lyndal, I look at this as a federal representative for the ACT, and it’s pretty strange here when you see that the Coalition’s promise is to get rid of 20 000 Canberra public servants –

Lyndal Curtis:                     I think they’ve only actually said 12 –

Andrew Leigh: Mr Hockey has repeatedly referred to there being 20 000 more public servants than there were, and the need to cut back. I think that it is pretty clear that he is moving up –

Bruce Billson:                     It’s 12.

Andrew Leigh: - from 12 to 20. But regardless, there will be a big hit on the ACT economy and as a result to that, many small businesses will be sent into a tailspin. And yet at the same time that he wants to get rid of 20 000 hard-working public servants, Mr Hockey wants to add more senior public servants into the Tax Office. I mean, the first policy position Mr Hockey comes up with that is actually consistent will be his first. There is nothing for ACT small businesses in Mr Hockey’s smash-and-grab plans, and small businesses across the nation are going to be hard hit by the tough austerity that the Coalition has in promise. What we’re going to see if Mr Abbott is elected is similar to what the United Kingdom has seen, where David Cameron’s brutal austerity is closing libraries, and sending that economy back into recession. That’s clearly their textbook.

Lyndal Curtis:                     If we could just stay on the Tax Office for a minute – Bruce, if the Tax Office is split into two, isn’t that effectively creating a second bureaucracy?

Bruce Billson:                     My head is still spinning after Andrew Leigh, he must be on that Labor kool-aid, hardly anything that he said was actually grounded in facts, but let’s try and bring it back to what Joe was actually saying. He was saying the Tax Office has been particularly insensitive to the real life and commercial realities that small businesses are facing. He pointed to a potential conflict where the agency has its administrative function – the day to day work of collecting taxes that are needed to fund the important work and services of the Commonwealth provides – sitting alongside those that are in a prosecution role. And we’ve seen for instance the number of garnishees issued against small business up by about 450%. I get reports every day, every day about an insensitivity to the pressures that small businesses are facing, that there are assumptions of profitability that lead to claims of tax avoidance when the reality is margins are very thin, things are very tough out there, this ongoing attack against independent contractors. And those extra bureaucrats that Andrew is talking about are actually second commissioners with business experience out in the real economy making sure that the executive group in the Tax Office has a reality check about what is going on in the real economy, and that people have an opportunity to be treated with respect whilst adhering to their lawful obligations to pay tax. And that’s perfectly reasonable, perfectly adult, perfectly sensible.

Lyndal Curtis:                     We might move on now to the bigger picture, Joe Hockey is continuing to dispute the government’s budget figures. It’s the reason he’s saying the Coalition costings can’t be released until the pre-election fiscal outlook into the election campaign. The government says a speech by the Treasury secretary yesterday shows he’s wrong.

Footage of

Penny Wong:                     …Dr Parkinson made clear that the budget numbers are the numbers, he made it clear that if the – what’s know as the PFO, the pre-election fiscal outlook – had been released on budget day, the numbers would have been the same. You know what that adds up to? It adds up to Joe Hockey’s excuse for not releasing his figures being completely destroyed, that’s what it means.



Lyndal Curtis:                     Andrew, your side of politics is continuing to pressure the Coalition to release all of its policy and costings now. But if you look at it from the Opposition’s point of view, why would they put the out before election time? It just gives you more chance to attack what you perceive to be the holes in it.

Andrew Leigh: Well the question Australian families have to ask, Lyndal, is if the Coalition’s polices were so good for families, would they really be sitting in the bottom drawer rather than being out in public view? And we have a taste of where the Coalition is going from some of the policies that they’ve announced. They’ve said, for example, that they want to give a tax cut to Gina Rinehart and Clive Palmer, and that’ll be paid for by raising superannuation taxes on low-income Australians. They want to give a tax cut to the biggest polluters in Australia, and they want to pay for it by taking away money from kids on their first day of school.

Lyndal Curtis:                     But you also had a rise in family benefits you promised at the last budget that you rescinded at this budget.

Andrew Leigh: Lyndal, we have never cut back on income support for families, unlike the Coalition who has said it is going to take away an income supplement that benefits hundreds of thousands of Australian families. They’ve said that they’re going to decrease the tax-free threshold , which means that a million more Australians are going to be filing tax returns. Every one of their policies that is out is a policy that is going to hit those at the bottom to help those at the top. It’s a standard Coalition playbook, and the cuts in the bottom drawer are, if anything, going to be worse.

Lyndal Curtis:                     Bruce, the Treasury secretary Martin Parkinson disputed things some Coalition spokespeople have said, that the Treasury gives the government a range of economic forecasts and the government gets to choose which one it wants. He says that is not true, and he also said effectively that if PFO had been released now, the figures would have been the same, that he doesn’t expect to see much difference. Why do you take him at this word and say the economic forecasts that are produced in the budget are those that come from Treasury?

Bruce Billson:                     Well the Treasury secretary is doing what he’s paid to do, and that’s to provide advice and support the government of the day. That’s perfectly reasonable and that’s the expectation of senior public servants as they work hand in glove with the government of the day. So there’re no surprises in what the Treasury secretary said. What is surprising is some of the assumptions that are embedded in that document, spectacular assumptions about the carbon price movement and what’s happening in the mining industry, about a miraculous ending to the boat arrivals and the millions of dollars that have been blown out there, about some mucking around with the rate of indexation in the rate of education. That’s what the concern was, and in relation to PFO, Lyndal, it was only a few short weeks ago that in the space of about twelve days that the supposed revenue loss went from $7 billion, to $11 billion, to $17 billion over the course of twelve days. Now there’s ten times that period of time between now and the next election, who will believe none of that will change?

Lyndal Curtis:                     But some of that was measuring MYEFO to that period, and other bits of it was measuring budget to budget, that’s why it seemed to jump so rapidly.

Bruce Billson:                     So this is where you had the Prime Minister, the Treasurer and the Finance Minister roll out this $10 billion change in supposedly revenue lost in under a fortnight, yet we’re to believe that these numbers released recently are not going to change over 120 days? I mean, you can’t be serious about that suggestion Lyndal, there’s no evidence whatsoever under this government that they are competent and capable of nailing any of these economic forecasts and it’s perfectly reasonable for the Coalition to wait and see the last word on the state of the finances which is PFO – the pre-election fiscal outlook – before responding to this chorus call from Labor.

Lyndal Curtis:                     We might move on just quickly because we’ve only got a couple of minutes left. It seems that an analysis of the structural budget surplus or deficit is now the new black, we’ve had two today, one from the Parliamentary Budget Office. Bruce it does seem to suggest that the tax cuts delivered by the Coalition and then in the first in office by Labor have contributed to the structural budget deficit. It does show that decisions made have had an effect over a long period of time, doesn’t it?

Bruce Billson:                     Well of course decisions made have an effect Lyndal, and in terms of the budget cuts that were funded, affordable and reasonable under the Howard government – and they were thought to be so reasonable that the incoming Labor government kept them – what that structural budget outlook shows is that for every year that was analyses, that the Coalition was delivering surpluses, that there was a structural surplus. A structural surplus, so those tax cuts were responsible and measured and kept the budget in a structural surplus. Contrast that with the Labor years, every year  not only is there a deficit, there is an enormous structural deficit.

Lyndal Curtis:                     A quick response Andrew?

Andrew Leigh: Lyndal it’s pretty clear from this analysis that what the IMF said recently holds up: that the Howard government wasted mining boom mark one. I also want to return to a point that Bruce made about forecasts. When he is attacking the integrity of the Treasury secretary, he is doing so because the Coalition want to use a dodgy private accounting firm to do their costing, rather than the experts in Treasury and the Parliamentary Budget Office.

Bruce Billson:                     My attacks are on a dodgy Treasurer –

Lyndal Curtis:                     I’m sorry Bruce, we’ve run out of time, that’s where we’ll have to leave it. Andrew Leigh, Bruce Billson, thank you very much for your time.

MEDIA RELEASE

Andrew Leigh to represent the Australian Government at the 19th International Nikkei Conference on the future of Asia

Tonight, I depart Australia for Japan to represent the Australian Government at the 19^th International Nikkei Conference on the Future of Asia.

This will be my first visit to Japan as Parliamentary Secretary to the Prime Minister.

The Tokyo conference will examine the future of economic growth and development in the Asia-Pacific region, with a particular focus on Southeast Asia.

Whilst in Japan I will be meeting the Bank of Japan’s Assistant Governor, Mr Kazuo Momma to discuss ‘Abenomics’ - Japan’s new fiscal and monetary strategy under the Abe Government.

I will also be meeting with senior officials from Japan’s Ministry of Foreign Affairs, the Ministry of Finance, and the Cabinet Office.

During the Conference I will participate in a Roundtable with foreign policy and economic commentators from the University of Tokyo, Keio University and the Japan Centre for Economic Research.

This trip will be an opportunity to discuss the Australian Government’s Asian Century White Paper and to reaffirm the importance of our economic and security relationship with Japan.

Australia has an important contribution to make to the region’s economic growth and stability and I look forward to representing our country at this conference.

TRANSCRIPT – AM AGENDA WITH KIERAN GILBERT
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
21 May 2013

E&OE

TOPICS:     Equal marriage, school funding



Kieran Gilbert:   This is AM Agenda, thanks for your company. Joining me now from Melbourne, the Shadow Parliamentary Secretary for Small Business, Scott Ryan, and the Parliamentary Secretary to the Prime Minister, Andrew Leigh here in the Canberra studio. You heard what Senator Brandis had to say, Andrew Leigh, about Kevin Rudd; that this is all about him, not about same-sex marriage. What do you say to that?

Andrew Leigh: Well Kieran, it’s pretty clear that views on this issue have shifted and shifted pretty markedly. We’ve seen just over recent months same-sex marriage become law in New Zealand and Britain because Conservative leaders allowed their Party room to vote the way they wanted to. If Mr Abbott will do that in Australia, we’ll bring the vote back to the floor…[inaudible]

Kieran Gilbert:   But specifically on Kevin Rudd, that this is more about him than it is the issue?

Andrew Leigh: Ah look, Kevin is a backbencher. He’s entitled to his views and he articulated them well.

Kieran Gilbert:   Senator Ryan, on the prospect of any change, what Andrew Leigh points out there is accurate; there’s got to be a change within the Coalition formally to allow a conscience vote if there’s going to be any legislative move.

Scott Ryan:         Well, I’m not going to be lectured on a conscience vote from a member of the Labor Party. I mean, it’s a special occasion when a member of the Labor Party gets to display their own conscience. It’s something every Liberal Party member has always been able to do. We had a discussion on this issue in the Party room recently, and you know, any future decisions are a matter for a future Party room. But our view is clear. We support the Marriage Act as it currently stands.

Kieran Gilbert:   And Kevin Rudd incidentally holds a press conference at 9:30 this morning in Brisbane we’ll have that news conference for you live when it happens. On the issue of school funding, Senator Ryan, it really comes down to the projected growth rate in the indexed funding for state schools. Tell me, it’s all very complex but the Federal Government is pointing to the numbers provided to the Department and Treasury, surely we’ve got to rely on that?

Scott Ryan:         Well, no we don’t actually because we’ve learned we can’t rely on numbers in Labor Treasurer’s budgets just over the last few years. What is clear is that they have cut over $300 million from education, they’ve cut just under $3 billion dollars from higher education and they’re saying that in 2018/19 they’ll put some of it back. Now, that is up to three elections away. We can’t trust Julia Gillard’s budget, and Wayne Swan from week to week on the budget as we learned in the weeks leading up to it. You can’t take money off people in the next four years and promise to give it back them in years five and six, three elections away, and be taken seriously.

Kieran Gilbert:   Andrew Leigh, the point that Christopher Pyne made as well yesterday, was that you look at the last decade and the growth in school funding, stayed school funding, was six per cent, now, if that’s the record over the last ten years, why is there now this assumption that it will be half that figure?

Andrew Leigh: Because Kieran, state governments have changed. We now have more conservative premiers and they have a cuts agenda. They’re making big cuts to their school funding. And the way our formula works is that the Commonwealth funding is indexed to what the states spend. I don’t think that’s a particularly sensible formula which is why we put in place the Gonski reforms. It’s why we want to fix this system. But the fact is, when states and territories cut their spending, Commonwealth spending automatically comes down, and so the projections going out are not this six per cent growth, they’re now well down to four projected to fall lower still. And so this cuts agenda that is implemented at the state and territory level automatically feeds in to cut commonwealth funding unless you change the system, as we’re suggesting you should do.

Kieran Gilbert:   Senator Ryan, do you feel comfortable with the suggestion that Barry O’Farrell has been conned? A senior Liberal, one of the most senior Liberals in the country and you’ve got your colleagues saying that he’s been conned, he’s been duped?

Scott Ryan:         Well I think what’s clear is that Labor are trying to con the entire country. You know, a week after the Budget now we know that they’ve halved the indexation rate, it’s been reduced from the papers they released only six months ago, and all in an attempt to make the proposed increase outside the budget period in 2018 and 19 look bigger. Now, the Coalition’s got a track record in school funding. We funded growth in state schools. We funded growth in parental choice and gave that funding to independent and non-government schools.

Kieran Gilbert:   Well I suppose, Andrew, that’s the point that Scott Ryan, Senator Ryan pointed to there, that why’s it halved in the space of what, six months since October when the mid-year Budget update was delivered?

Andrew Leigh: Significant cut backs by state and territory governments is the simple answer to that Kieran. If you want…

Kieran Gilbert:   But are you now saying that it’s going to be the case for the next six years? It just seems to be a big, big assumption.

Andrew Leigh: Look, Scott is running here with sort of hyperventilating hyperbole which assumes there is some grand conspiracy occurring in Treasury. The Treasury officials who put together these projections are the same capable Treasury officials who worked for the Howard Government. They are putting their best estimates of what’s going to happen to funding, unless we fix this broken model, unless we put back in what will amount to about a million dollars per school.

Kieran Gilbert:   And Senator Ryan, if the states do sign up, that does make your position a lot more difficult. Obviously it’s just one state at the moment. But if Victoria, Queensland, WA, if they eventually do sign up before the June deadline, it changes, well, it’s a game changer, isn’t it?

Scott Ryan:         We’ve said that we’ll support a national school funding model if it’s a national school funding model. And you know, you remember back in the days of the Howard Government, David Kent went to a great deal of trouble to make sure non-government schools, particularly the Catholic system, signed up to the National School Funding Model the Howard Government introduced. We’re not going to have a hodge-podge of mechanisms across the country. But Andrew Leigh there, makes what Peter Garrett did earlier, just another series of Labor excuses. You know, they’ve been caught out halving the indexation rate and of course now they’ve got to find someone to blame so they blame the state governments. These are not numbers that Australian parents can trust and they’re not numbers that we believe those who run our schools, government and non-government should trust.

Kieran Gilbert:   We’ve only got a minute left on the program. I want to look quickly at analysis in the Financial Review on the polls, the Nielson Poll, which suggests the Coalition could likely have control of the Senate after the election as well. Does, that would be a concerning prospect for you Andrew Leigh?

Andrew Leigh: Kieran, you know I pay no attention to polls and there’s good science behind that. But, Australians will have a clear choice come September. They’ll have a choice between the nation-building reforms of Labor; DisabilityCare, important schools reforms which you’ll see big increases in funding for every school, and Tony Abbott’s agenda which is savage cuts including 20,000 public servants, cutting out income support – he’s said he’s going to do that, cutting back on superannuation, reducing, probably never increasing superannuation…

Kieran Gilbert:   Scott Ryan, 20 seconds, your final thoughts on that?

Scott Ryan:         Look, polls don’t change what the Coalition’s going to do between now and September 14. We’ve got a plan to improve Australia. We know we’ve got to convince people and earn their trust so you know, the only thing Andrew and I might agree on is that the polls aren’t actually going to change what we actually do for the next 116 odd days.

Kieran Gilbert:   Gentlemen, thanks for your time…

Andrew Leigh: There’s many things we agree on Scott!

Kieran Gilbert:   I’m sure there are. We’ll get to those on another date and morning. Thanks for those gents. That’s all from AM Agenda, the latest Sky News is next.

TRANSCRIPT – 'BREAKING POLITICS' WITH TIM LESTER
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
21 May 2013

TOPICS:                Marriage Equality, baby bonus, negative gearing.

Tim Lester:          Senator Fiona Nash, Andrew Leigh, welcome back here to Breaking Politics.

Andrew Leigh: It’s good to be here.

Tim Lester:          Former Prime Minister Kevin Rudd now says he supports same sex marriage, inspired partly by an unnamed political staffer who he had coffee with and turned out to be gay, and wants to marry. Andrew Leigh, is Mr Rudd right?

Andrew Leigh: I believe he is, Tim. I understand that there are deeply held views on both sides of this debate in the community, and I’ve had hundreds of email exchanges, phone conversations, discussions in my electorate office, about the issue. But fundamentally I do believe that attitudes are shifting, and they’re shifting much faster than they did on big issues such racial equality and gender equality. Just recently we’ve seen conservative leaders in the UK and New Zealand move same sex marriage through their parliaments, not because they thought it was an issue of the left, but actually because they thought – in David Cameron’s words – that as a conservative, they should be a supporter of same sex marriage. So I think that there’s a case from liberalism and even conservatism that supports a change like this.

Tim Lester:          Fiona Nash, your views on what Kevin Rudd has had to say?

Fiona Nash:        Well it’s interesting, isn’t it, that he should change his view and make a point of it at this time of the cycle. I think that people will rightly think is it really just a straightforward change of mind or are there any other motives behind Kevin Rudd coming out and changing his view on same sex marriage. But with the Labor Government at the moment every day is a new day, you never know what is going to happen around the corner.

Tim Lester:          So what motive do you think Mr Rudd might have?

Fiona Nash:        Well look, who would know? It may be very genuine, he may have just had an epiphany of a change of mind, it may well be to raise his own profile again, who would know. He’s certainly done that in the past and maybe it is a profile raising exercise, but we’ll have to wait and see.

Tim Lester:          What about your view, Senator, on the question of same sex marriage? What do you believe should happen?

Fiona Nash:        Well I support the status quo, that marriage is obviously between a man and a woman. I certainly understand that there are many people who have a different view on this, I’ve spoken to many of them. But at the end of the day it is the Coalition’s view that marriage is between a man and a woman, and that hasn’t changed.

Tim Lester:          Kevin Rudd tells a story of a simple change of a point of view, of having a coffee with a gay man, a gay political staffer that he knows here in Canberra. Isn’t his case an argument for at least a conscience vote, or don’t you see it that way?

Fiona Nash:        Certainly within the Coalition we haven’t seen a need to date for a conscience vote, we are supportive of the current situation. Kevin Rudd is entitled to his own view, he’s entitled to change his mind on his position of course. Our view in the Coalition hasn’t changed, and that’s where we stand at this point in time.

Tim Lester:          And Andrew Leigh, your views on the fact one, no doubt you oppose the lack of a conscience vote on the Liberal side of politics. But there are plenty on your side of politics who speak exactly as Fiona Nash does on this issue, don’t they?

Andrew Leigh: Absolutely Tim. I think there are people of good heart on both sides of this debate and I would certainly include Fiona in that. I do think, though, that it’s a bit cute to overplay Kevin’s views. I think Mr Rudd could change the name of his cat and somebody would find an angle on that which would have something to do with national politics. Fundamentally this is a backbencher expressing his change in views, and I think the way that he’s found that one story has affected him reminded me of the Washington State legislator, who voted against same sex marriage and then a few years later left the parliament, and one year her daughter came home for Christmas and said that she was gay. And the legislator just broke down in tears because she knew that she had voted against her daughter being able to marry, and that she could never go back and reverse that vote.

Tim Lester:          Fiona Nash, a big search on now inside the Coalition for the cuts that would balance an Abbott government’s budget, ultimately. Has the time come to end the tax break that 1.2 million Australians claim on their investment properties, the one we know as negative gearing?

Fiona Nash:        Well, certainly we are going to have to have a look at everything from one end to the other because of the disaster financial state that Labor has got this country into. We’re now looking at $257 billion of gross debt, and the economic mismanagement is just extraordinary. So obviously if we’re fortunate enough to win government we’re going to have to look at everything. But in terms of negative gearing, in 2005 the Productivity Commission looked at this, it was determined at the time that it was appropriate for negative gearing to be part of the taxation system. Certainly within the Coalition the view has always been supportive of negative gearing, and at this stage certainly that position hasn’t changed. And interesting to know, I think it was around 1985 that Paul Keating got rid of it, rents went through the roof and I think in 1987 the Labor Party reversed that decision to get rid of negative gearing. So there are going to be a lot of things that need to be considered down the track to try and get the country back on track, out of this economic mess that the Labor government has got us into.

Tim Lester:          Ok, and you personally though support the continuation of negative gearing?

Fiona Nash:        Well at this stage I see no reason to change my mind, I have supported it in the past as the Coalition have. But as I say, we are going to have to look everything when and if we are fortunate enough to get into government, we’re going to have to try and look at everything to fix this mess so the country can actually get back on its feet. I think the Australian people understand the very dire situation that the country economically now is in.

Tim Lester:          Andrew Leigh, would it be worth the government revisiting the question of negative gearing or no?

Andrew Leigh: Well Tim, come September I think Australians are going to face a pretty clear choice. They’re going to face a choice between a Labor Party that has put responsible taxes on carbon pollution and on the mining sector, and a Coalition that has promised to rip those taxes away to give tax breaks to big miners and big polluters. And that’s the reason that we’re having this conversation over Coalition costings, not because there is a budget crisis – it’s quite clear that Australia’s debt level is at 10%, very modest by international standards, and responsible to get us through the financial crisis. But it’s also clear that because the Coalition wants to give these big tax cuts, because they want to put in place this very expensive, very unfair parental leave scheme – maybe $12 billion – that they then need to start, as Fiona has said, considering all the options. Putting everything on the table, raising GST, cutting pensions, cutting income support, getting rid of negative gearing for people who just bought a house last year and thought that that was an investment property that they could rely on. This is a scary world indeed when these Coalition cuts come into force, which they would if Mr Abbott were to become Prime Minister.

Tim Lester:          So you personally support the retention of negative gearing as it is?

Andrew Leigh: Negative gearing is in accord with our tax system, which allows people to deduct certain expenses when they’re claiming income. Certainly what we’ve done at the moment is to make a series of responsible savings: we’ve done things like removing the baby bonus, and that is in accord with $180 billion of savings we’ve made on payments we thought were unfair or outdated, like the dependent spouse tax offset. We get attacked on these every single time by the Coalition, but the point is when Australians go into the ballot box on September 14, they’ll be choosing between Labor’s investments and the Coalition’s cuts.

Tim Lester:          Fiona Nash, was the baby bonus good policy? And is it now good policy to get rid of it?

Fiona Nash:        Well certainly there have been discussions around the baby bonus over the years, but at this point in time the Coalition will ensure that as we go down the track towards an election people are very aware what we’re going to have in place for families. Now there’s been some discussion around the baby bonus, obviously there’ve been discussions around changes to the Family Tax Benefit Part A that the government is now talking about, but at the end of the day we are looking at an economic disaster in this nation, we’re looking at the gross debts reported in the budget going out to $370 billion over the forward estimates. We cannot let this economic situation continue, we’re now paying a billion dollars a month in interest because of this Labor government. Those are the sorts of things people in Australia want fixed, and they want us to make sure that we get this country back on track.

Tim Lester:          Ok, but under that, those tough choices that you talk about, one of them that Joe Hockey at least looks like supporting is the abolition – the total abolition – of the baby bonus. Do you back Mr Hockey doing that?

Fiona Nash:        Well look I support Joe Hockey, and what he’s trying to do to get the country back on its feet. I think there’s absolutely no doubt about that we’ve seen this Labor government just run rampant with this economy, they’ve got no idea how to manage the economy. We’ve got Australian people right across the nation trying to balance their household budgets, trying to do the right thing, and at the same time looking at a Labor government that is particularly irresponsible and looking at a gross debt at over $370 billion over the forward estimates.

Tim Lester:          What do you say to stay at home mums who look at the generosity of the Coalition’s paid parental leave scheme and the removal of a relatively small payment that would have gone to them when they had a child, how is that equitable?

Fiona Nash:        We are certainly aware of the stay at home mums and the wonderful jobs that they do, I was indeed a stay at home mum for many years. Certainly it will become very apparent in the time running up to the election that we will indeed be looking at those stay at home mums and making sure that they have the support they need.

Tim Lester:          Senator Fiona Nash we know you’ve got a plane to catch from Hobart so we’ll let you be, thank you for joining us this morning. Andrew Leigh, appreciate you coming into the studio.

Andrew Leigh: Thanks Tim, thanks Fiona.

TRANSCRIPT – RN DRIVE WITH WALEED ALY
Andrew Leigh MP
Parliamentary Secretary to the Prime Minister
Member for Fraser
20 May 2013

Topics: Federal budget, paid parental leave, GST.

Waleed Aly:        Both sides this week are assessing the impact to last week’s Budget, and the Budget Reply, as they shape their campaigns for the election that’s coming in September. Just seventeen weeks away, incidentally. We know it wasn’t a traditional pre-election budget, it wasn’t full of vote-winning spending initiatives. In fact the big surprise was that the Government is axing stuff, moving to axe the baby bonus for example. And you might be surprised to learn that that has gone down very well with voters. What will the politicians make of that, will it influence their campaigns on other issues perhaps? To discuss the politics and the policies we can expect, I’m joined now by our political panel: Senator Arthur Sinodinos, Parliamentary Secretary to the Opposition Leader and Coalition Deregulation Taskforce chairman, he was previously chief of staff to then Prime Minister John Howard; and Dr Andrew Leigh, who is now Parliamentary Secretary to the Prime Minister. Thank you gentlemen for joining us. I think I should congratulate you, Andrew Leigh – you’ve been promoted since the last time we spoke.

Andrew Leigh: Thanks Waleed. It just occurred to me that it’s almost as though we’ve got the seconds for the Prime Minister and the Leader of the Opposition. It made me think of the old way lords would resolve disputes by each choosing a knight to go forth and fight their battles for them.

Waleed Aly:        That’s a very flattering way of describing both of you, I appreciate that, the imagery is wonderful. Let’s start with this Nielsen poll, and I don’t really want to talk about the headline issue. The support for the baby bonus, or the scrapping of it, was really interesting. 68% of respondents backed the move of scrapping it, only 27% opposed. Arthur Sinodinos, does this suggest that it wasn’t really great policy to begin with?

Arthur

Sinodinos:           Firstly congratulations to Andrew on the Parliamentary Secretaryship, he richly deserves it. Look, it’s easy for us after the event to rationalise this result about the baby bonus because you think on the face of it people would favour more spending on anything. But I think the political environment has changed pretty significantly in the last few weeks, if not the last few months. And in a sense, the politicians are catching up to where the public have been for a while, where the public have raised their own savings post-GFC. Household savings are now about 10% of household income, so if we’re going out there and saying as a political class that some things are no longer affordable, or that we should borrow to have X or Y, I think it actually resonates with the public. Now some people will say that sounds a bit self-interested, but I’m willing to bet that people are saying ‘well, if the politicians are axing something because they don’t think it’s affordable, they’re telling the truth’ and it will resonate with them.

Waleed Aly:        Yeah, I just got a text though on this: ‘Baby bonus gone-ski, but why did we ever have it?’ That’s from Shane. There seems to be a feeling, not just that its time has come, but that it was always just a middle class welfare handout, that was of dubious use and benefit to the economy, that it was always just more political than policy.

Arthur

Sinodinos:           Can I just say – and I think my recollection of this will be slightly hazy – but I think that this was an alternative to having a paid parental leave scheme, from memory. It was an alternative that was put up and it was meant to be available to whoever was having a baby, whether you were in the workforce or a stay-at-home mum. But that, I think, was the context in which it originally arose. So it makes some sense that, now both sides of politics have embraced paid parental leave schemes, to review the efficacy or the need for this particular benefit.

Waleed Aly:        Sure, but that didn’t stop your side of politics opposing it when the Government tried to reduce it in previous budgets, even though a paid parental leave scheme was both parties’ policy.

Arthur

Sinodinos:           Well I think we came to the right decision on that in this context.

Waleed Aly:        Ok. Andrew Leigh, first home buyers’ grant stays though. Wouldn’t that be something that would be ripe for the chopping block, if you’re going to go down this path?

Andrew Leigh: Well I think that certainly both sides of politics have come around on the baby bonus, and it’s really interesting for me to see that greater focusing on targeting. First home buyers’ grant deals with a different challenge. But I certainly think that on this one, it was a policy that was not particularly well targeted, we means tested it down to $150 000 but that only took out the most affluent 3% of parents. So really you had a policy that wasn’t in the spirit of the highly targeted Australian social safety net. A typical developed country gives twice as much to the bottom fifth as it does to the top fifth. We give twelve times as much to the bottom fifth as the top fifth, and I think that’s the genius of the Australian income support system, that it is so powerfully targeted, through the assets and means tests on the pension, for example, in the early ‘80s, and a whole lot of means tests that surround other programs. That’s how you make a system that’s sustainable in the long run.

Waleed Aly:        And I suppose that you could say the first home buyers’ grant is in a way means tested, because it’s for first home buyers. But the effect of it hasn’t really been that helpful for first home buyers, it’s really just pushed up the prices in that sector of the market. So it makes it even harder to enter the market.

Andrew Leigh: Well, the effect of the price is going to depend – I’m just trying to do the models in my head – you want to think about the share of all buyers who are first home buyers, say that’s one in five, or one in ten. And then you want to think about what economists call the incidents, or basically the split between the buyer and the seller – say that’s half – you’re going to get something like a tenth or a twentieth of the money goes to push up house prices. So I think the effect of pushing up house prices tends to be over played on this. But yeah you’re right, it’s a benefit that’s going to all, and given that the least affluent are less likely to buy homes, then they’re less likely to claim the first home buyers’ claim.

Waleed Aly:        So why not get rid of it?

Andrew Leigh: Well, all of these things need to be considered in their time. I think that, at the moment, our decision has been that the baby bonus isn’t sustainable and that comes off the back of looking at a whole range of other programs: means testing the family tax benefits, getting rid of the dependant spouse tax offset. So we’ve got a strong record of things in this area.

Waleed Aly:        Are we seeing a philosophical shift here? Is it just about the baby bonus, and parental leave, and the timing of it? Or is there something here where both parties are recognising that the era of middle class welfare should be over?

Andrew Leigh: Well I thought Arthur’s comment about the savings rate was fascinating, because Australia does – now that 10% savings rate is now higher than Japan’s, and it’s against our standard psyche, we don’t think of Australians as being more frugal than the Japanese, we think of ourselves as being as spend-thrift as the typical Anglo country. I thought it was really interesting the way Arthur characterised that, and the way it plays into political debate, but I suppose the extra thing I would add to that is that Australians also want to see income support go to the neediest, unlike say Europeans, who have this idea that when the Government spends, it ought to spend across the income spectrum. And I think that defines the difference in the two parties’ parental leave programs. I would characterise ours as being much more in the Australian spirit, because it’s the minimum wage for everyone. The Coalition’s is a much more European-style one, where it’s replacement wage, therefore it gives more to those than earn more.

Waleed Aly:        Would you like to respond to that, Arthur Sinodinos?

Arthur

Sinodinos:           A couple of comments, Waleed. On the paid parental leave plan, Tony Abbott has been pretty clear I think in that he sees it as a workforce entitlement, rather than just income support, and that’s what it’s got the payment levels we’re talking about. He wouldn’t characterise it necessarily as a European style payment, but as more of a workforce entitlement and its rationale is to keep women more in touch with the labour market during that period, so they’ve got an incentive to return. So they’ve got paid leave, they go back to their place of employment. We’re trying to find ways of encouraging labour workforce participation. We don’t want a situation where women just drop out of the workforce completely after having kids, or if they have an aspiration to have a full time job, they feel that they can only put up with a part time job, and helping women who want to move from part time to full time.

Waleed Aly:        But it’s not a workplace entitlement though. Because a workplace entitlement comes from your employer, like leave is a workplace entitlement. Your boss, or your employer, grants you leave, that isn’t a handout from the Government. So you can call it a workplace entitlement, but doesn’t that really mask what it is?

Arthur

Sinodinos:           Yes, but I mean, yep. You can go into semantics but it will be funded by companies at the big end of town, so in that sense we are matching the accountability with the responsibility for the money. Now it’s separate whether we have a modest company tax cut, and we can come back to that. But the point is, that’s the mentality that Tony is trying to emulate, the idea of a workforce or a workplace entitlement.

Waleed Aly:        But it’s more than a semantics difference isn’t it? Because the top end of town is funding this with its levy, but all employers will be passing it on. So there will be a whole lot of employers, a majority of employers, across Australia, who will not be contributing money to this –

Arthur

Sinodinos:           But recognising, Waleed, that smaller employers don’t have the same capacity to pass it on –

Waleed Aly:        Right, which is why it’s not a workplace entitlement, it’s a government handout.

Arthur

Sinodinos:           Yes, but we’re trying to entrench a certain approach to the treatment of women in the labour force, promoting that attachment to the labor force. And the second part is of course what you do to improve the affordability and access to childcare as well.

Waleed Aly:        Ok, Andrew, I want to pick up on some more points on this in a moment, but Andrew Leigh I might throw that to you. You’ve spoken a lot, and your government has spoken a lot, about wanting to keep people in work, and get people working, this sounds like the kind of thing that would lead to that. Why would you not adopt something that is as generous as this?

Andrew Leigh: Well I guess you have to look at the total government spend in order to achieve this outcome, Waleed. And we’re looking at a government spend that might well be as large as $3 billion a year, $12 billion over the forward estimates period. And then you’d have to say well, could you more effectively to boost workforce participation. And I’d say, for example, if you’re sitting down from the Coalition’s perspective, they could keep the reductions in superannuation taxes that we’ve put in place. Two thirds of those go to women, because women are disproportionately low income earners. They could, for example, support the continuation increase of the superannuation increase from 9% to 12%, because disproportionately those who are on lower superannuation contribution rates are going to be at the bottom of the income spectrum, and are therefore more likely to be women. Those retirement savings incentives are important, as is the big agenda we’ve driven through childcare – and not only improving access and quality, but increasing the rebate there. I think childcare costs are more likely to be a larger disincentive. This kind of very regressive paid parental leave scheme is, I think, unlikely to have much impact on workforce participation, and as Arthur well knows, the company tax from which is raised is ultimately a tax that is being paid by workers. We know that the company tax doesn’t get paid by the other two sources of income: land and capital. It gets paid by labour.

Waleed Aly:        Arthur Sinodinos, just to pick up on the politics of this, I mean whatever the benefits or otherwise of the parental leave scheme proposed by your side, can you stand here now, hand on heart, and tell me that this is actually going to get through the party room given that there is so much opposition within the Coalition?

Arthur

Sinodinos:           Comrade Tony Abbott is potentially taking us to an election victory. If he gets us there, this policy will stand, it will be a signature policy of his, and there would not be a reason for people to oppose it.

Waleed Aly:        But there’s such deep opposition within the party. I mean you can’t deny that.

Arthur

Sinodinos:           There’s an even deeper opposition to staying in opposition, let me put it that way.

Waleed Aly:        Well once you’re in government, you won’t be staying in opposition, so that’s the point at which you can talk about it.

Arthur

Sinodinos:           Look no, I don’t, I seriously don’t believe that a majority of people in the party room would oppose this scheme, if we get into government. If we don’t get into government, all policies get reviewed, clearly. But if we get into government and he’s promised this policy at the election, it’s a promise he’s going to have to keep. We made such a meal of Julia Gillard breaking her promise on the carbon tax eight days out from the last election, Abbott’s made it pretty clear he’s going to be judged on keeping his commitments. He’s got to keep it.

Waleed Aly:        He’s snookered the party room, I love it. That’s very good.

Arthur

Sinodinos:           No hang on Waleed, I want to say one thing on that. I know why you say that, but by the same token, it’s part of a series of measures that if we’re serious about gender diversity particularly in the workplace, we’ve got to tackle. I’ve mentioned childcare, there’s the white paper on tax reform, which is coming in the first term if we get elected. These are all areas where the tax transfer system can play its role, these are all issues that can work together when it comes to promoting workforce participation.

Waleed Aly:        Ok, fair enough, I was just being cheeky. Before I let both of you go, I do want to talk about GST. Should we increase the rate of GST, and thereby fix this structural problem in our current tax base which puts the burden overwhelmingly on the corporate sector rather than on individuals, and we end up with this structural problem in the budget whenever the profits decline. Andrew Leigh, you first?

Andrew Leigh: Waleed, I think that we’ve got the tax mix there right. I certainly don’t support increasing GST, against a tax that ends up basically falling on labour. It worries me when I hear Tony Abbott say that he’s absolutely committed to getting rid of a carbon price, and moving the profits-based mining tax back to the much less efficient royalties mining tax. Neither of those are reforms that could be supported by consensus of economists. Most economists think pricing carbon is efficient, most economist think that you ought to have a profits-based mining tax rather than a royalties-based mining tax. So Mr Abbott’s problem is that once he has made those decisions is that he has a big revenue gap, and he has to plug it by using things like the GST.

Waleed Aly:        But it’s not just Tony Abbott saying this is something he might look at, and that’s all he said, he didn’t say he’d adopt this. He just said that if you’re going to do a tax review you may as well do a review of everything and the GST is clearly part of that. And there’s a lot of the Government for leaving the GST off the table when the Henry tax review happened, and its various attempts to reform taxation policy. And the main problem, or one of the big structural problems is that we don’t tax individuals enough, and that we tax companies heaps, and then when prices go down in the mining sector, there’s a huge hole in the budget. Isn’t this in fact a really good way to fix it?

Andrew Leigh: Saying you’re going to review something is sort of a standard trick for pushing it off but just keeping it at arm’s length. I guess what troubles me is that Mr Abbott is not saying that he’d like to get expert opinion on the carbon price, on that he seems to be listening to the folks who, I sort of characterise, as soil magic, you know the Direct Action. On the mining tax, he doesn’t seem to be wanting to see what the experts have to say there. But on a tax that will fall heavily on Australians, and of course of all Australians it will fall disproportionately on those with lower incomes who tend to spend their entire pay check rather than saving anything, there Mr Abbott is suddenly saying he’s open to considering it. So when you say you’re open to considering the tax that has one of the most regressive impacts in the system, I begin to worry a bit. I’d be fascinated to hear Arthur’s views on this, I mean he was right next to John Howard when he introduced the GST, he’s seen this all the way through.

Waleed Aly:        Well Arthur, final word to you. It does suggest that the Coalition certainly doesn’t have a problem with regressive taxation, when you look at the GST and the parent leave scheme.

Arthur

Sinodinos:           Two comments, the first is proceeds of the tax go to the states, and what Tony has said is obviously we’re prepared to consider it but we’re not proposing anything, certainly not for this election. But we’re happy, and in a constructive spirit, to have the debate if we win the first term. So he’s really inviting people to put their views on this and other matters on the table, and as you’ve seen from some of the reports from state premiers and others, they’re willing to put stuff on the table. The other point I’d make about things like the GST is that they never happen in isolation as you would’ve seen from the new tax system in 2000. So nothing ever happens in isolation and it’s always a mistake when people try and focus on just one tax and say ‘well this tax, is this changes it is a bad thing’, you’ve got to look at the totality of what you’re doing and that was certainly the case with 2000. And Tony’s made it clear that anything that comes out of the white paper process would go to an election, so you’d be looking at systemic change rather than change focused on one or two things. I think, with respect to Wayne Swan, one of the downsides to what he did with the Henry tax review, was that he was very quick to pick and choose, rule out a whole variety of items, we never got to have a genuine dialogue on tax reform. And this goes to the process by which you make some of these reforms stick.

Waleed Aly:        Alright, well it’s a long way down the track no matter which way it goes, but we have to leave it there. Gentleman, it’s been wonderful to speak to both of you shining knights of Australian politics, I hope we can do it again sometime soon.

Arthur

Sinodinos:           I’ll get my lance.

Andrew Leigh: I’m looking forward to it, Waleed.

Response to Mark Latham’s Quarterly Essay

It’s occasionally been forgotten since he left the Labor leadership nearly a decade ago, but when he chooses to engage in policy, Mark Latham has a lot to say. He is optimistic about the intellectual and organisational future of the Labor Party, and appropriately proud of the role we have played in opening up the Australian economy in the 1980s and 1990s and dealing with climate change today.

One big question Labor thinkers are always willing to wrestle with is how the party’s guiding philosophy should evolve. Political parties invariably adapt as society changes, but Labor’s options have particularly opened up as the Coalition has shrunk into what Anthony Albanese has tagged ‘the noalition’. When Tony Abbott calls for a ‘people’s revolt’ against a market-based mechanism for dealing with climate change, it’s hard to know whether to criticise him for abandoning conservatism or trashing liberalism.

The same holds for other issues. A true Burkean conservative would acknowledge that Australia’s minerals belong as much to future generations as to ours, and that we have an obligation to our successors to tax mining profits appropriately. A true liberal would support the fuel tax reforms that were introduced by Peter Costello in 2003, rather than back-flipping at the last moment to win a tabloid headline. And it’s hard to see how either conservatism or liberalism justifies the opposition’s relentless critique of means-testing. Each time the government has reduced the welfare paid to millionaires, the Opposition has sprung to their defence.

In delivering the Deakin Lecture in 1973, Deputy Liberal Leader Phillip Lynch said ‘It is naively believed by some people that the one and only job of an Opposition is to oppose. This is a gross oversimplification. An Opposition’s function is to compose as well as to oppose; it is a constructive as well as a destructive role. An Opposition is the alternative Government and, as such, must initiate and promote positive and constructive policies if it is to be regarded as a potential Government by the electorate. No electorate can be expected to endorse a political party which has become expert at criticism at the expense of its own initiative.’

Indeed, it is Deakin himself who best pegged today’s Opposition. In 1906, he spoke of ‘a party less easy to describe or define, because, as a rule it has no positive programme of its own, adopting instead an attitude of denial and negation. This mixed body, which may fairly be termed the party of anti-liberalism, justifies its existence, not by proposing its own solution of problems, but by politically blocking all proposals of a progressive character, and putting the brakes on those it cannot block.’

A century on, there is a good case that the mantle of social liberalism, carried by Deakin in the early twentieth century, rests most easily on Labor shoulders. Latham mentions my own arguments to this effect, but he might also have noted Chris Bowen’s excellent 2008 speech to the Sydney Institute: ‘Reclaiming Liberalism for the Left’. Labor’s liberal legacy includes trade liberalisation, competition policy, carbon pricing, and the publication of test scores. These sit comfortably alongside our party’s egalitarian legacy: fiscal policy that saved jobs in the GFC, a school system that wants everyone to finish school (not just ‘the right kids’), Medicare and Disability Care to protect all Australians.

Latham is very comfortable with market liberalism, but worries that social liberalism might not be matched with appropriate responsibilities. He gives the example of multiculturalism, where he argues ‘Labor celebrates diversity for diversity’s sake’, and contends that laws to address discrimination and prejudice can harden public attitudes against the intended beneficiaries. And he goes on to argue that one of the reasons for the decline in social capital is the ‘free exercise of human rights’.

In each case, I’m not sure the evidence is as strong as Latham proposes. Multiculturalism, as philosopher Tim Soutphommasane argues, draws on both liberalism and egalitarianism. It recognises that everyone has equal rights, but also that different cultures are valued. As to the hardening of public attitudes, I’m not aware of any evidence that racism or sexism increased upon the passing of the Racial Discrimination Act 1975 or the Sex Discrimination Act 1984. And on social capital, my own exhaustive analysis (Disconnected, UNSW Press, 2010) concluded that the key drivers were changes in technologies and working patterns.

Latham worries that liberalism could undermine community values, but in some cases, it might serve to strengthen them. For example, my own support for same-sex marriage is partly grounded in my belief that the institution of marriage exerts a stabilising effect on society. Indeed, a good case for same-sex marriage can be made from the standpoint of egalitarianism, liberalism or communitarianism.

That said, the communitarian strand to Latham’s thinking is one we shouldn’t ignore. Like British parliamentarian Jon Cruddas, Latham articulately taps into the needs for modern Labor Parties to connect with strong local communities, and traditional values. This is about understanding our history, and shaping policy solutions that work for regional and outer suburban Australia, as well as the inner city.

Since Mark Latham’s piece appeared, the Labor Party has endured what Prime Minister Julia Gillard described as an ‘appalling’ week, with the loss of five frontbenchers and three whips. (As both Malcolm Turnbull and Kevin Rudd can attest, attention from the Quarterly Essay – like the appearance of oranges in a Godfather movie – is not a good omen.)

The media have picked over the minutiae of those circumstances exhaustively (and perhaps quite rightly so), while the Opposition have looked on keenly. But they have been less keen to fulfil their responsibility as the nation’s alternative government. There is no evidence that the Opposition is any closer to putting forward properly costed policies on which the Australian public could judge their credentials. Those shards of Coalition policy that get announced are frequently illiberal. From Scott Morrison’s call for ‘behavioural protocols’ for asylum-seekers to its relentless campaigning against Keynesian economics, this is a Liberal Party in name only.

In this environment, I welcome Mark Latham’s desire to drop in on the Labor family for a Christmas drink. Ideas have always been the lifeblood of Australia’s oldest political party, and his – along with many others – will help to shape Labor’s future in decades to come.

Andrew Leigh is the federal member for Fraser. His latest book is Battlers and Billionaires: The Story of Inequality in Australia (Black Inc, 2013).

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.

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.