Andrew Leigh

In today's Drum, I have an op-ed with Senator Lisa Singh.

Malaysia Trade Deal: In Praise of Openness, The Drum, 29 May 2012

The rise of Asia is often seen as the rise of Asia’s big nations, like India and China. But even taking these two giants out of the equation, Asia’s share of middle class consumption is expected to outstrip that of the United States and the European Union combined by the middle of this century. A growing Asian middle class means a massive increase in consumption and spending on imported goods and services. Those goods and services include the kind of things that Australians produce and expect: a wide range of yummy food; high-quality education; and elaborately transformed manufactures.

As well as providing a market for our exports, the rise of Asia has also benefited Australian consumers. The past 20 years have seen real prices for imported furniture, handbags, clothes, shoes and medical products roughly halved. Real prices of computers, telephones and other electrical goods have fallen by about two-thirds.

A generation ago, Australians missed out on this because of high tariff walls. As primary school children growing up in the 1970s, we both recall our parents having to pay large sums for our school shoes. Back then, tariffs had the effect of doubling the price of imported shoes. Today, thanks to technology and trade, Aldi sells school shoes starting at $6.49. Indeed, market-opening has helped keep prices low across the board. From 1950-85, inflation averaged 6.7 percent. Since then, it has averaged just 3.7 percent.

Australia is perfectly positioned to be part of Asia’s growth. Working with our neighbours to the north, Australia can both sow the seeds of economic and social progress in Asia, and reap the benefits of new markets and better relations. Last year, the Prime Minister asked Ken Henry to head a review of Australia’s place in the Asian Century. While that White Paper isn’t due until July, the Australian Government continues to improve our engagement with the region.

On May 22, Trade Minister Craig Emerson signed the Malaysia-Australian Free Trade Agreement (MAFTA). Malaysia is already Australia’s tenth largest trading partner. MAFTA is about deepening that engagement, and removing the barriers to doing business and building relationships between the two countries.

More and more, Australians and Malaysians are working together. Australian companies operate in Malaysia, and Malaysians seek the skills of our business leaders and professionals. MAFTA increases the number of Australians allowed to live and work in a range of sectors, like finance to architecture, in Malaysia and allows them to stay for longer periods.

This is especially important for Australian higher education institutions who have facilities in Malaysia, like Monash University and Curtin University. Australian service providers will now be able to increase their ownership in education services to 70 percent by 2015, moving to 100 per cent by 2015. Malaysia has also raised the limit on Australian lecturers at a single institution from 20 to 30 percent, meaning that it’s easier and more profitable to take the expertise of our higher education sector to Malaysia. MAFTA will strengthen ecotourism accreditation used by Australian tourists, while Malaysia will work with our scientists to the carbon emissions of the region. While economists have sometimes criticised bilateral free trade agreements for diverting rather than boosting trade, this one has been crafted with an eye to our long-term goal of free trade in the Asia-Pacific.

Opening international markets has long been an Australian aspiration. In the 1980s, we established the Cairns Group of agricultural free-trading nations, and in the 1990s, we set up the APEC Leaders’ Meetings. Under Labor Governments, Australia has had a strong preference for multilateral free trade agreements. But with the Doha negotiations at the World Trade Organisation having stalled, Australia has championed regional trade freedom.

MAFTA is one part of that. The other is the negotiation of the Trans-Pacific Partnership. A stepping stone to the APEC goal of a free trade area across the Asia Pacific, the Trans-Pacific Partnership allows other countries to ‘bolt on’ at a later date.

As an island nation, Australia depends on trade for our prosperity. By reducing our tariffs, we help our consumers. By improving market access into Asia, we boost wages and create jobs. The Malaysian-Australian agreement is a downpayment on the opportunities that will flow to Australia in the Asian Century.

Andrew Leigh is the Member for Fraser. Lisa Singh is Senator for Tasmania.

I spoke today on a private member's motion, moved by Adam Bandt, to raise the level of Newstart by $50 per week.

Private Member's Motion - Adam Bandt
28 May 2012

The issue of movement from welfare into work is one that has long concerned me. It was the reason that I chose 12 years ago to study overseas, researching on the topic of poverty and inequality, looking at the issue of how to move people from welfare into work and the relative effectiveness of interventions such as government jobs, wage subsidies and training programs.

It is important that we make that transition from welfare into work as straightforward as possible, particularly for families with children. We know that there are intergenerational cycles of joblessness and we know that high-quality programs that increase employment are at the core of a civilised society.

The Henry Review, in approaching the issue of income support payments, wrote of the iron triangle of means testing. The triangle was payment adequacy, program affordability and the incentive for self-support. In the Henry Review a great deal of attention was given to the effective marginal tax rates faced by income support recipients. It was an issue that Labor focused on a great deal while in opposition. The Treasurer and the Minister for Families, Community Services and Indigenous Affairs spent many years focusing on the issue of high effective marginal tax rates. Thanks to much of the advocacy from Labor in opposition, those effective marginal tax rates have been decreased.

Today we are debating the appropriate level of the Newstart allowance. I do not think any of us in this House would argue that the current level of Newstart is generous. But the Henry Review argued that there ought to be a difference between levels of pensions and levels of what were called 'participation payments', of which Newstart is one. The Henry review argued for restructuring income support into three categories: a pension category, a participation category and a student category. It argued that pensions would be paid at the highest rate in recognition that people eligible for them are likely to rely on them fully for a long time. Participation payments would be paid at a lower rate to maintain incentives to work, the Henry Review argued. The Henry Review further argued that while there ought to be a difference between the levels of those payments, the same indexation levels ought to apply to all three sets of payments.

The challenge for those of us in considering a question like the level of Newstart payments is twofold. The first is that, as I read it, the bulk of the evidence suggests that higher unemployment benefits have the effect of decreasing transitions from income support into work. This effect is not as large as some have claimed and there are theoretical reasons where you might think it could go the other way—for example, if someone is having difficulty affording the costs of work. But the bulk of economic evidence—and I tend to go where the evidence tells me—papers such as Peter Fredriksson and Martin Söderström’s and the work of Anthony Atkinson and John Micklewright, seems to go in that direction. At the same time, we know that while we would like the Newstart payment to be a temporary payment, a significant number of Australians are on the Newstart payment for long periods of time. The Henry Review reported around one-quarter of Newstart recipients have been continuously on the payment for over two years. The issue of adequacy is therefore a large challenge.

If we had substantially more money in the budget, I would see no reason to oppose this measure. I would ideally like to be in a position in which we had the waves of tax revenue that were flooding into this country in mining boom mark I. But we are not in that situation at the moment and so worthy measures, such as this one, sometimes do not get supported.

http://www.youtube.com/embed/kNh9960f4rY

I put out a media release today with my ACT colleagues on the pension increases that are being provided as part of our carbon pricing plan.

MEDIA RELEASE

SENATOR KATE LUNDY
Senator for the ACT

GAI BRODTMANN MP
Member for Canberra

ANDREW LEIGH MP
Member for Fraser

Extra cash for thousands of local pensioners

Thousands of Canberra pensioners are set to get extra support to help them make ends meet, with $6.6 million worth of new cash payments hitting local households from today.

ACT Senator Kate Lundy said more than 30,100 pensioners in the ACT would receive a cash payment over the coming weeks, ahead of the introduction of the carbon price on 1 July.

“All full and part pensioners in the ACT will receive a lump sum payment of $250 for singles and $380 for couples combined.

“This extra cash will go straight into pensioners’ bank accounts to help them keep on top of their bills,” Senator Lundy said.

Member for Canberra, Gai Brodtmann said local pensioners will get another boost next year, with an ongoing increase to their fortnightly payments from March.

“In total, local pensioners will get about $338 extra a year for singles and $510 extra a year for couples combined.

“As part of our Household Assistance Package, we’re taking extra care to make sure pensioners have the support they need to keep up with the cost of living,” Ms Brodtmann said.

Member for Fraser, Andrew Leigh said about 93 per cent of all pensioner households will be at least 20 per cent better off because of these new payments.

“In fact, many pensioners will end up coming out ahead after the carbon price starts on 1 July.

“We get how tough it is for pensioners, which is why we’ve already delivered historic increases to the pension, as well as delivering this extra boost right now.

“And at a morning team in Amaroo on the weekend, Canberra pensioners spoke directly with Prime Minister Julia Gillard and Minister for Families, Housing, Community Services and Indigenous Affairs Jenny Macklin, and heard first-hand how they will benefit from the introduction of a carbon price,” said Dr Leigh.

To find out more by visit australia.gov.au/householdassistance or call 132 300







ELECTORATE BREAKDOWN OF PENSIONERS RECEIVING HOUSEHOLD ASSISTANCE PAYMENTS FROM TOMORROW

Electorate	Pensioners	Total of payments (rounded)
Canberra	15,000	$3,317,402
Fraser	15,100	$3,339,518
TOTAL	30,100	$6,656,920

I spoke in parliament today about Canberra hosting the Girl Guides' regional jamboree - for the first time in 47 years.

Girl Guides Jamboree
24 May 2012

On 16 April I attended the Girl Guides NSW & ACT Jamboree held at Exhibition Park, with the member for Canberra Gai Brodtmann, and Trudy McIntosh, an intern in my office. There were over 550 guides aged between 10 and 17 who pitched their tents for a week of fun-filled activities and leadership workshops. This was the first jamboree to be held in Canberra since 1966. Margaret Norris, a long-time girl guide, attended the opening night's celebrations and shared with the girls her experiences. Margaret had attended the first camp in Canberra in 1966 and her reflections were insightful.

There were Canberra girl guides from four local districts—Ginninderra, Gungahlin, Black Mountain and Murrungundie—who met with others from 261 districts across New South Wales and regions surrounding the ACT, including Queanbeyan, Goulburn, Yass and Bega. Kylie Gray, a guide leader staying in the camp all week, was dressed in a completely orange outfit, and brought along her polished tea set to make the girls feel more at home. Dressed in an orange feather boa, hat and orange overalls, she even had an orange camera to document the occasion.

Girl Guides NSW & ACT State Commissioner Belinda Allen spoke on the ability of guides to foster leadership skills. Youth leader Sam Chenney from Port Macquarie spoke of her love of Girl Guides and said that the best decision her mum ever made was to let her join the Girl Guides, given that she has had so many fantastic opportunities and met lifelong friends.

My review essay in Inside Story discusses offending rates and incarceration in Australia and the United States.

Crimes and Punishments
Inside Story, 24 May 2012

WITH his casual dress sense, ready laugh and broad vowels, Bruce Western immediately strikes you as the expatriate Queenslander he is. The Harvard-based sociologist is also one of the leading scholars of crime in the United States, and a few years ago he presented a seminar about his research at the United States Studies Centre in Sydney.

Now, I’ve attended hundreds of conferences and academic seminars, and I don’t recall ever gasping out loud. But I did when Western’s PowerPoint presentation began reeling through the following facts.

US jails currently hold over two million people, more than 1 per cent of the adult population. Among men aged twenty to thirty-four who didn’t complete high school, the imprisonment rate is a jaw-dropping 12 per cent for whites and 37 per cent for blacks. That’s right – 37 per cent of young, black high school dropouts are currently behind bars.

But it gets worse, because that’s just the proportion behind bars on any given day. By the time black high school dropouts reach their mid thirties, Western estimates that 69 per cent of them will have been imprisoned. In other words, if you’re a black man who doesn’t finish high school, the chances are two-in-three that you’ll see the inside of a prison cell.

As Western points out, one of the things that a high incarceration rate does is to make other statistics look good. For example, official employment surveys exclude the prison population. If the official statistics counted prisoners, then the employment rate among young black dropouts would fall from 40 per cent to 25 per cent. A similar effect is likely to show up in other measures, such as income inequality and ill health. Because numbers often drive policy, this kind of invisible disadvantage can readily be missed in public debates.

Another feature of a persistently high incarceration rate is its intergenerational impact. In the United States today, 2 per cent of white children have a parent in jail. Among African-American children, the figure is 11 per cent. One-in-ten black children – 1.2 million kids – have a parent behind bars.

The extraordinary thing about this pattern is that while more people are being sent to jail, fewer people are committing crimes. From 1960 to 1990, the US homicide rate doubled. From 1990 to 2010, it halved. Most other violent and property crimes have followed a similar trajectory. So with the US murder rate lower than at any other time in the past generation, the incarceration rate is at an all-time high. In fact, while the US murder rate has halved over the past twenty years, the incarceration rate has doubled.

Over recent years, a number of good books have analysed the interplay of factors that have brought the United States to this point. Economists like Paul Krugman and Jeffrey Sachs have pointed to the stagnation of middle-class wages as proof that the American dream is in danger of slipping away. Sociologists and criminologists like Bruce Western and Mark Kleiman have argued that US criminal justice policies need to be fundamentally rethought. And political scientists like Larry Bartels and Jacob Hacker have laid the blame at the feet of ideological polarisation, as the Republicans moved sharply to the right.

STILL, none of those authors has actually gone quite as far as James Gilligan’s Why Some Politicians Are More Dangerous Than Others. Gilligan has written a book about how Republicans kill people. Specifically, Gilligan shows that when a Republican president occupies the White House, the homicide and suicide rates tend to rise. Conversely, when the president is a Democrat, the homicide and suicide rates tend to fall. He also shows that the same pattern holds across the United States: states that have traditionally voted Republican tend to have higher homicide and suicide rates than those that have traditionally voted Democratic.

At this point, you might expect a Labor politician like me to use these findings to beat up on my ideological opponents. But the more time I spent with Gilligan’s book, the less convinced I became that the associations he describes are truly causal. First, the empirical evidence turns out to be fairly fragile. There aren’t that many presidents, particularly if you omit those who served at times of national crisis, such as world wars and depressions. And taking a snapshot across states means that you’re capturing plenty of things that have nothing to do with policy, like a state’s racial composition. (The same problem plagues Richard Wilkinson and Kate Pickett’s book, The Spirit Level.) If you ask more nuanced questions like “Does homicide rise significantly when a Republican governor replaces a Democratic governor?” the answer is no.

Then there’s the causal channel. On the face of it, you’d think that both Republicans and Democrats have pretty strong incentives to reduce the rate of violent death. To the best of my knowledge, no one has ever run for election on the slogan “Let the killing spree begin.” So it’s not obvious why we should expect to see a relationship between election outcomes and violent crime. Gilligan argues that Republicans cause bad economic outcomes (higher unemployment and more inequality) and these outcomes cause homicide and suicide. But careful economic studies (such as those by Bruce Weinberg and Naci Mocan) suggest that the effect of joblessness and inequality on crime is weak or non-existent, so this can’t be the answer. At the end of Gilligan’s book, I was left feeling that there still might be a relationship between politics and violent death rates; but that if it exists, it’s a good deal more complex than he proposes.

SO IF simplistic partisan models don’t explain crime rates in the United States, what does? In Freakonomics, Steven Levitt and Stephen Dubner famously showed that one factor that explains the drop in crime rates in the 1990s was the legalisation of abortion in the early 1970s. The decision in Roe v Wade allowed women who didn’t feel they were ready to raise a child to have a legal abortion. Because criminal careers typically peak in the early twenties, the timing fits the data, but the implications shocked many. In his academic work, Levitt has also attributed the crime drop to more police and the waning of the crack epidemic. And he argues that higher incarceration rates cut crime – an issue to which I’ll return.

But the drop in crime wasn’t uniform across the country. In New York City, crime rates fell about twice as much as they did in the rest of the country, and continued falling through the noughties. The crime-ridden New York that features in Crocodile Dundee bears little resemblance to what’s there today. The chances of a New Yorker being killed are a fifth of what they were in 1990. The odds of a New York woman being sexually assaulted are a quarter of what they were two decades ago.

In The City that Became Safe, criminologist Franklin Zimring asks what can be learned from the dramatic fall in crime in the Big Apple. Having previously written a book on the nationwide crime decline, Zimring is keen to see what made New York different. How could it be that the chance of being robbed in the Times Square precinct is now one-twentieth of what it was two decades ago?

The conventional view on New York’s crime decline is that it was due to “broken windows policing.” The theory goes that cracking down on minor offences – street prostitution, riding the subway without a ticket, public gambling – changed the social norms about offending. By signalling that the city had a “zero tolerance” for criminal behaviour, this policing strategy changed the norms around misbehaviour.

Economists like me tend to be dubious of theories based on social norms, and Zimring’s book shows that scepticism to be well founded. Despite the public rhetoric, he finds that arrests for street prostitution and public gambling actually fell during this period. Broken windows may have been a good public story, but it’s a flawed account of what New York’s police officers were doing.

Yet other policing strategies appear to have been deployed successfully. Zimring credits part of the crime decline on “hot spots” policing, which targets locations (such as open-air drug markets) that have a history of criminal activity. Another approach that seems to have worked is the Compstat policing database, which allows top cops to see in real time the crimes that are being reported around the city. More controversially, Zimring concludes that “stop and frisk” policing helped to reduce crime. Although he acknowledges that the burden fell disproportionately on minority communities, he points out that they also enjoyed the benefits of the crime decline. For example, a strategy of stopping and searching cars with darkened windows was disliked by the young minority men who tended to drive such vehicles but was effective in reducing handgun deaths.

Despite this, there is still much that we don’t know about successful policing. As Zimring points out, many policing tactics are based on intuition rather than evidence. A few US criminologists – such as Lawrence Sherman – have collaborated with police departments to run randomised experiments. Very often, their findings challenge conventional wisdom. And yet most police departments still rely more on anecdotes than data, much as medicine did in the nineteenth century.

The most interesting aspect of New York’s crime decline was the extent to which it occurred without a commensurate increase in incarceration. If New York had followed the national trend, there would be five times as many black and Hispanic men in its jails. Somehow, New York has managed to stop the school-to-prison pipeline that plagues so many other parts of the United States. Understanding this is perhaps the most important lesson of the New York crime success, since it suggests that the whole country could potentially have both low crime rates and low incarceration rates.

America’s mass imprisonment is one of the most troubling features of an extraordinary country. In a recent article in the New Yorker, Adam Gopnik pointed out that more than 70,000 prisoners are raped annually – and yet the subject remains standard fodder for comedy. On our television screens, lovable cops often use the threat of prison rape to force a suspect to confess. Gopnik surmises that future generations will look back on our society’s sadistic attitude to prison rape much as we look back at “eighteenth-century japery about watching men struggle as they die on the gallows.”

Mass imprisonment is also a symptom of a broader illness in the US polity. If you’re a high school dropout there, your inflation-adjusted wages have barely budged since the 1970s. Adjusted for inflation, the typical American family was $4000 poorer in 2010 than in 2000. Over the past two decades, more than half the income gains in the United States have gone to the top 1 per cent.

AS WITH so many things, Australia’s social trends look like a smoother version of America’s. Our crime rate never rose as high, but our rise and fall followed a similar pattern. Your odds of being a homicide victim are half what they were in the late 1980s. And yet our incarceration rate has risen to record highs.

Last year, my colleague Shayne Neumann and I moved a motion in the House of Representatives aimed at reducing crime and incarceration. The motion pointed out that over recent decades, Australia has invested in prison-building at an astonishing rate. In 1991, the national imprisonment rate was 117 prisoners per 100,000 adults. By 2011, it had risen to 167 prisoners per 100,000 adults. Each prisoner costs the taxpayer nearly $300 per day – about the price of a nice hotel room in the CBD.

The story is even worse for Indigenous Australians. When the royal commission into black deaths in custody reported in 1991, there was widespread shock about the level of Indigenous incarceration in Australia, at 1739 prisoners per 100,000 Indigenous adults. Yet over the next two decades the Indigenous incarceration rate increased even further. In 2011, 2248 out of every 100,000 Indigenous adults were behind bars; in Western Australia, 4 per cent of all Indigenous adults are currently in jail. Even adjusting for the fact that Indigenous people tend to be younger, they are still fourteen times more likely to be in jail than non-Indigenous people. By their mid twenties, 40 per cent of Indigenous men have been charged by police with a crime.

As in the United States, Australia’s prison population has increased while crime has fallen. The drivers are changes in the law, such as tougher bail conditions and mandatory non-parole periods. Longer sentences have an incapacitation effect, but probably not much impact on deterrence. Increasing sentence lengths from five to ten years may sound tough, but if you’re dealing with someone who lives from day to day it could have no impact on crime rates.

With few exceptions, the Liberal and National Party speakers on the motion seemed unconcerned by the rise in imprisonment. If this is the pattern in the federal parliament, it bodes ill for state jurisdictions, where it’s harder still to escape the shock jocks. Progressive legislators like Western Australian MLA Paul Papalia, NSW attorney-general Greg Smith and ACT attorney-general Simon Corbell are thinking about approaches such as justice reinvestment, but we need more politicians who are willing to adopt evidence-based criminal justice policies.

One solution may be for Australia to invest in a blue ribbon commission on “what works in criminal justice.” Accompanied by a commitment to conduct more randomised policing experiments, such an approach would strengthen the hand of politicians accused of being soft on crime.

The lesson of New York is that we don’t need to rebuild the gulags to keep the streets safe. Mass incarceration may cut crime temporarily, but at a huge cost to the budget and to the prospects of those locked up. And that’s before we consider the impact on children. There’s nothing family-friendly about the fact that around 40,000 Australian children currently have a parent behind bars. If we care about breaking the intergenerational poverty cycle, we need to reduce incarceration rates.

Unlike Gilligan, I believe that the solution must be a bipartisan one. In the heat of an election campaign, slogans often trump facts. This is particularly true of issues that strike an emotional chord. It’s not for nothing that the most famous negative advertisement in political history is the Willie Horton attack ad deployed by George H.W. Bush against Democratic presidential candidate Michael Dukakis. Featuring Horton’s bearded mugshot, the ad described in chilling terms how Horton used weekend prison leave (a policy permitted in Massachusetts while Dukakis was governor) to kidnap a young couple, stabbing the boy and raping the girl. Faced with such a horrific set of facts, our minds shift away from facts and reason towards thoughts of anger and revenge.

As books by psychologists like Daniel Kahneman and Drew Westen have pointed out, the political landscape is replete with the hulks of logical arguments that were defeated by emotional appeals. And yet it’s not beyond the realm of possibility to imagine that we can achieve a better set of justice policies than we have today. As the United States shows us, a strategy of “lock them up and throw away the key” has a massive social cost. There are smarter ways to keep our streets safe.

Andrew Leigh is the federal member for Fraser, and a former professor of economics at the Australian National University. His most recent book is Disconnected (UNSW Press, 2010).

Why Some Politicians Are More Dangerous Than Others
By James Gilligan
Polity | $32.95

The City that Became Safe: New York’s Lessons for Urban Crime and Its Control
By Franklin Zimring
Oxford University Press | $59.95

I spoke with host Kieran Gilbert and the very reasonable Liberal Senator Simon Birmingham about the importance of parliament not playing judge and jury, about Australia's strong economy, and about why Aluminium smelters are more affected by a $1000/tonne world price drop than a $1/tonne carbon price effect.

I spoke in parliament last night about the Opposition's threat to block an increase in Australia's debt ceiling.

Debt Ceiling
23 May 2012

On 17 April this year the member for North Sydney [Joe Hockey] travelled to London where he gave a speech in which he said that Hong Kong's government debt was 'moderate'. That speech pointed out that Hong Kong's gross government debt was then 34 per cent of GDP. As Simon Howson pointed out to me, given that Australia's gross government debt will peak at 18 per cent of GDP, the only appropriate word for Australia's debt levels is 'low'. Australia's net debt as a share of GDP will peak at 9.6 per cent of GDP. That is like somebody earning $100,000 and owing $9,600. This debt was, of course, taken on in order to save jobs—200,000 of them, and tens of thousands of small businesses.

Late last year, Australian banks were actually concerned that there were too few Australian government bonds in the market for them to meet the Basel III requirements. They were concerned that the Australian government had too little debt, and Australia's debt levels will peak at one-tenth of the average in major advanced economies. But now the coalition appears set to stand against an increase in Australia's debt ceiling, to stand against an increase in Australia's debt limit.

I want to use the opportunity tonight to inform the House as to the consequences of this reckless action. Rob Nicholl, head of the Australian Office of Financial Management has told the government:

‘Any uncertainty whatsoever as to the Government's ability to undertake normal debt management operations would create widespread and potentially serious negative speculation, this in turn creating unfavourable perceptions on the part of the investment community.’

Mr Nicholl told the government:

‘With increasing scrutiny of, and interest in, the market for CGS, it is critical to maintain a clear and unambiguous signal that debt market operations will not be impeded…’

We are raising the debt limit for two reasons. The first is that revenues tend to come in later in the year and payments are made throughout the year, so government needs to meet the gap through temporary further issuance in short-term markets. The second is to manage maturity of long-term bonds outstanding. Prior to their maturity, the Australian Office of Financial Management has to accumulate enough money to pay out the long-term bond holders because not enough tax receipts have yet flowed in. So for a little while we have twice the amount of bonds on issue before we pay off the first lot of long-term bonds. While the budget papers show that Commonwealth government securities on issue will be under the existing limit, fluctuations require us to raise the debt cap. This is, of course, sound economic management, as Paul Krugman pointed out during the US fight over the debt:

‘… since debt is the consequence of decisions about taxing and spending, and Congress already makes those taxing and spending-decisions, why require an additional vote on debt? And traditionally the debt limit his been treated as a minor detail.’

But not so under the wrecking ball approach of those opposite. As Stephen Koukoulas has observed:

‘Think back to what happened mid last year. Congress was going to block a required increase in the US debt ceiling. The US government was going to miss its bills. I don’t want to overstate it, but things got pretty ugly... Around 80 per cent of our bond market is held by foreigners. We can’t afford to alienate these people by playing silly buggers with the ceiling.’

The approach that the coalition is taking over the debt limit is an approach that is aimed at convincing investors that Australia is no longer a responsible country. As Mike Konczal of the Roosevelt Institute puts it, the approach of the US Republicans, which is effectively the approach of those opposite, is to come around with baseball bats declaring: 'Nice economy you have here. A real shame if something happened to it'.

Raising the debt limit is sensible economic management. Those opposite, including the member for North Sydney, have called for more 30-year bonds. He has spoken overseas about the 'moderate' debt of a country with nearly twice Australia's debt levels, and yet here, as Stephen Koukoulas has said,

‘… the opposition is willing to risk overseas investor confidence in Australia for the sake of a cheap political point.’

The opposition should stop playing politics with the debt ceiling and start focusing on the national economic interest.

I spoke in parliament last night about the impact on the environment of delaying the introduction of a carbon price.

Climate Change - the Cost of Delaying Action
22 May 2012

Tipping points are crucial in the climate debate. They can be the difference between success and failure and, if misjudged, can prove costly. While, thankfully, the global environment has not yet reached any tipping points, we have had a few political tipping points in the Australian climate debate. A lone voice that switched the opposition leadership from the member for Wentworth to the member for Warringah condemned the party of Menzies to be antimarket, and turn its back on economists and scientists.

Another tipping point, less well known, was just as costly. On 7 December 2009 five Greens party senators had the opportunity to act on climate change and ensure Australia had a price on carbon. They had the choice to join two brave Liberal senators and act in the interests of the future. Instead, the five Greens party senators chose political self-interest over the national interest. They chose to side with the sceptics and the antimarket forces. What was the result of their action? The Clean Energy Future package enacted by this parliament has the same 2020 emissions reduction target as that of the Carbon Pollution Reduction Scheme back in 2009. Both schemes aim to reduce our carbon emissions by five per cent compared with a year 2000 baseline. Both schemes are market mechanisms designed to find the least-cost method of reducing carbon pollution.

The economics of climate change is clear. A market based scheme is the cheapest, most efficient method of abating carbon in the economy. It is based on basic public economics; putting a price on the negative externality. The earlier you act the cheaper the cost of abatement to the economy and the greater the potential economic gain. So if you are aiming for a particular goal by 2020 then your total emissions will be higher if you start in 2012 than if you started in 2010. These principles underpin the work of Sir Nicholas Stern, Professor Ross Garnaut and numerous other economists both in Australia and overseas.

The CPRS was to have come into effect in July 2010. The Clean Energy Future package will come into effect in July 2012—two years later. That delay—that inaction—has meant a lost opportunity, both social and economic. The failure of the Greens party to put the national interest ahead of their narrow political interest has cost Australia. A report from ClimateWorks in April 2011 showed that delaying action by one year increased the cost of abatement by $1 billion. Since the Greens party delayed a carbon price by two years, they increased the cost of abatement by $2 billion. Over this two-year period, ClimateWorks also estimates, the delay has caused at least 10 million tonnes of abatement to be lost. We will still get to the same emissions reduction goal as the CPRS would have, but total emissions over the decade 2010-2020 will be higher than they would have been if we had put a price on carbon pollution back in July 2010.

That extra 10 million tonnes of carbon pollution equates to the annual emissions of two million cars. The increased carbon emissions due to the actions of the Greens party is equivalent to two million more cars on the road for a year. Two million cars—remember that, next time you hear a Greens party representative talking about their commitment to environmentally sound transport.

Delaying a price on carbon by two years also cost Australian households and businesses $5 million a week from unrealised energy efficiency opportunities. We have lost investment opportunities and there has been an increased cost to business caused by lack of certainty regarding climate policy. For all their claims to be green, the Greens party has a brown tinge. Pricing carbon is not a Greens party reform; it is a Labor reform. It sits proudly amongst Labor's achievements—economic, environmental and social. Like the market deregulations of Keating and Hawke, pricing carbon will keep our economy and industry competitive in the low-carbon-pollution world of tomorrow. On the way through, we are reforming the tax system by trebling the tax free threshold, saving one million Australians from filing a return. It was Labor that fought for the age pension and, as we price carbon, it is Labor that is ensuring that pensioners and families are assisted.

Long before environmentalism became a fad it was Labor that not only talked green but acted green, acting to protect the environment. It was a Labor Premier of New South Wales who founded the Kosciusko National Park in 1944. It took a Labor government—the Hawke government—to protect the Franklin River and it was Labor leadership on the world stage that preserved Antarctica. Labor heritage listed the wet tropics of Queensland—the Daintree. Labor created the Great Barrier Reef Marine Park. It was Labor in 2007 that ratified the Kyoto protocol, following in the proud footsteps of the previous Labor government, which had signed and ratified the United Nations Framework Convention on Climate Change in 1992.

Labor has been protecting the environment for over a century. While the actions of others have cost the environment and the economy, Labor has had the courage to act to secure the environment and the economy for generations to come.

Here's a writeup in Fairfax papers from David Wroe.

[caption id="attachment_2640" align="aligncenter" width="798" caption="Andrew Leigh and Grace Gill with Local Sporting Champions"][/caption]

I spoke in parliament last night about some of the many extraordinary volunteers in Canberra.

Volunteering in the ACT
22 May 2012

Over recent decades, Australians have lost social capital. We are less likely to be civically engaged in our communities; we are more disconnected than we once were. But this does not change the fact that there are many great volunteers in Australia, and no part of the country is more likely to volunteer than here in the ACT. Tonight I want to share with the House three stories of volunteering in the ACT worth celebrating.

Volunteering Awards

Last week I attended the 2012 ACT Volunteer of the Year Awards. Across a wide range of awards the contribution that volunteers make to our community and our economy was recognised. The 2012 ACT Volunteer of the Year was Dr Mary Webb. Nominated by Multiple Sclerosis Ltd, Mary has provided volunteer service to those people in the Canberra community with MS. Over the years, she has also made a valuable contribution through her service to various advisory bodies.

This year Volunteering ACT introduced new awards for Volunteer Teams of the Year across the various categories. This year's ACT Volunteer Team of the Year was the Adult Migrant English Program Home Tutor Scheme. The team has up to 150 volunteers assist people from different cultures and widely different levels of English literacy skills.

Other individual award recipients included David Hutchinson, Max Kimber, Hazel Giesecke, David Williams, Gordon McLoughlin and Frank Brown. Others team awards went to the St Vincent de Paul Night Patrol Team, the Stanford Course Peer Leaders and the   YMCA of Canberra Runners Club Committee. In addition to those, several other people and teams were highly commended for their work with the community, including Dot Mills, Neville Tomkins, Geraldine O'Connor, Di Evans, the Talking Newspaper Service Cooma and Narooma, ANU Volunteers and the Pegasus Hippotherapy Team. Finally, I would like to thank Maureen Cane and Rikki Blacka from Volunteering ACT for their efforts in coordinating this important event.

Parkland Volunteers

Parkland volunteers are essential in the Bush Capital, and earlier this year I had the pleasure of joining Chris Bourke MLA to launch the Frost Hollow to Forest Walk for the Friends of Aranda Bushland. Taking their modest Caring for our Country grant, the Friends of Aranda Bushland, particularly Peter Ormay and Jean Geue, partnered with Aranda Primary School and ACT Parks and Conservation to build the project. The many volunteers who make up the Friends of Aranda Bushland deserve thanks for their significant contribution to the project. Thanks to them, Canberra now has a self-guided walk for locals and visitors to enjoy. The walk has preserves and provides access to the unique treeless grasslands and the remnant snow and yellow box-red gum woodlands in the Aranda bushland forest. There are many other parkland volunteers doing terrific work through the Canberra community.

Sporting Volunteers

Another area in which volunteers are contributing to the community is in sporting circles. In my time as the member for Fraser I have had the pleasure of allocating the Local Sporting Champions grants. Local Sporting Champions assists young athletes aged 12 to 18 with the costs of competing at state, national or international competition. Often, huge amounts of volunteer time are involved, from parents and sporting club officials. Local Sporting Champions grants provide a modest amount of assistance to students who are engaged in sporting activities.

Over the past 18 months, assisted by sportspeople like Raider Bronson Harrison, swimmer Sally Foster, soccer player Sally Shipard and Canberra social entrepreneur Michael Pilbrow, I have awarded Local Sporting Champions grants to individuals and sporting clubs in my electorate. Recipients of a Local Sporting Champions grant over the past year include Jack Connell, Melissa Leary, Kenyah Lawler, Renee Polyak, Nicholas Tanner, William Pulley, Maris Colton, Andrew Meyer-Coyte, Jayden Sawyer, Reilly Shaw, Stuart Grey, Danusia Sipa Borgeaud, Anthony Joe, Nathan Cawley, Luke Sarris, Luke Letcher, ACT Badminton and Rowing ACT. Last week I held an afternoon tea in my electorate office for Local Sporting Champions recipients, where the soccer star Grace Gill talked about the joys and challenges of elite sport.

Volunteers are our unsung heroes. They give up their free time to deliver services, to lend a helping hand and to build a stronger community. I want to thank those volunteers I have spoken of tonight and all those across the ACT and Australia for their contribution and their dedication. Our community is richer for it.

In parliament today, I moved a motion on the importance of a strong public service. The motion and speech are below.

A Strong Public Service
Private Member's Motion
21 May 2012


To move—That this House:

(1) recognises the important role played by the Australian Public Service in upholding and promoting our democracy and its key role in ensuring stable government;

(2) commends the Australian Public Service on continuing to be one of the most efficient and effective public services in the world; and

(3) condemns plans by the Opposition to make 12,000 public servants redundant.

I rise to speak today about the dire plans the coalition has in store for the Australian Public Service and to contrast them with Labor's optimistic plan for a strong Public Service.

For the 11th time, the member for North Sydney on 16 May 2012 has gotten wrong the growth in the size of the Australian Public Service. For the 11th time, the member for North Sydney, Mr Hockey, has claimed that the government has grown the Australian Public Service by 20,000 when he knows in fact the true growth is 12,000.

The member for North Sydney's inability to grapple with the facts about the size of the Public Service speaks volumes about the coalition's attitude to the Public Service. Last August the member for North Sydney was offered a briefing at the Australian Public Service Commission to get his numbers right, to cease using a number that includes Defence Force reservists as public servants. But he has so far refused to take that up.

The opposition, if they are to be believed, have a plan to cut 12,000 public servants. In fact, repeatedly, when the opposition are asked how they will fill their $70 billion black hole, they point towards slashing the Public Service as their plan for meeting their budget black hole.

The member for North Sydney is a little like Rick Perry, the inept Texas governor who ran for the Republican nomination for President, saying that he would get rid of three US federal departments. The only difference is that the member for North Sydney, unlike Rick Perry, can actually remember the three departments he intends to scrap: they are the department of health, which he says is out of control, despite the fact that it employs about as many people as when the Leader of the Opposition was health minister; the department of climate change, despite the fact that, under a coalition Direct Action program, more administration would be required than under the government's much more straightforward carbon pricing plan; and the Defence Materiel Organisation.

So the coalition has said that they will scrap 12,000 Public Service jobs, but it is entirely possible that they will scrap many more than that. Asked on 7.30 on 8 May whether or not the coalition would get rid of 20,000 Public Service jobs, the member for North Sydney refused to rule it out. At the same time, the coalition has plans for a 15,000-strong standing green army without any detail whatsoever as to how that proposal would operate.

The opposition has formally placed on the table plans to cut 12,000—or maybe 20,000—Public Service jobs, but it is entirely possible that this is the tip of the iceberg. I have a copy of the Liberal-National Party's public administration policy, which the coalition took to the 1996 election. That policy said:

‘Our plans to reduce department running costs by 2 per cent will involve not replacing a proportion of those who leave, up to 2500 positions over the first term of Coalition Government, a process of natural attrition with no forced redundancies.’

What did the coalition actually do when they came to office? In 1996-97, they retrenched 10,070 public servants; in 1997-98, they retrenched 10,238 ongoing employees; and, in 1998-909, they retrenched 9,061 ongoing public servants. In total, upon winning office in 1996, the coalition retrenched 30,000 public servants—that is in clear contrast to their election policy's statement that said they would be not replacing 2,500 positions. Indeed, the number of public servants who eventually lost their jobs after the coalition won office in 1996 was more than 10 times the number whom they said would be made redundant.

It is interesting to note, if we turn to the bottom of the 1996 election policy, that it is printed and authorised by a Mr A Robb, who is now the shadow finance minister.

He is the shadow finance minister under Mr Abbott—the man who says that you do not trust anything he says unless he writes it down—and he is the person who said, prior to the 1996 election, that there would be only 2,500 Public Service job cuts. In fact, upon winning office, the coalition got rid of 30,000 public sector jobs. When asked why they would want to get rid of Public Service jobs, the member for Dickson noted that the federal department of health does not see one patient, does not run one hospital, does not employ one doctor,  nurse or pharmacist. It might surprise the member for Dickson to know that that is exactly how things have always operated in the Department of Health and Ageing, which administers a vast health promotion program, oversees health research and maintains a network of public hospitals throughout Australia. The coalition may be surprised to learn that the Department of Education, Employment and Workplace Relations does not have schoolchildren walking its corridors. They might be shocked to learn that the Department of Agriculture, Fisheries and Forestry does not regularly partake in office fishing trips. We can only hope that the coalition does not call on the Department of Resources, Energy and Tourism to demand room service and more towels.

Those opposite simply do not understand the important work of public servants. They do not understand the critical work that is being done to support Australian prosperity by the hardworking public servants in Australia, including the many public servants in my own electorate of Fraser. On this side of the House, we are proud of public servants. It was public servants who did so much to get us through the global financial crisis with a temporary, timely, targeted fiscal stimulus program that was recognised by international economic authorities, such as the IMF, as being a world-beating fiscal stimulus program because it was put into place quickly and efficiently. When those opposite see public servants, they only think of how to beat them up to win votes.

It is true that in the current budget we have made savings across the board. In the process of making savings across the board, there has been an impact on the Public Service. For example, there are redeployments from the Department of Education, Employment and Workplace Relations across to the Department of Industry, Innovation, Science, Research and Tertiary Education. There have been changes in the Department of Climate Change and Energy Efficiency as result of some of the pre-carbon pricing programs coming to an end. We have been honest about those changes, which will take total Australian Public Service numbers back to about where they were in 2009. Having had modest growth year on year in Public Service numbers under the Rudd and Gillard governments, this budget now sees Public Service numbers returning to about where they were in 2009.

This has been difficult for some public servants, including those in my electorate of Fraser. I have been keen to work with departments to make sure that redeployment policies are followed and to make sure that unfilled vacancies are filled. Where we are able to, we will redeploy across federal agencies and the ACT government, which is often struggling to find talented public servants. The cuts are difficult in the ACT, but they do come at a time when, according to the latest vacancy survey, there are around 4,900 job vacancies in the ACT. I do hope that the Canberra Business Council, which has spoken of the skills shortage in the ACT, is able to employ anyone who has taken on, for example, a voluntary redundancy and is able to grow and prosper in the current environment. In conclusion, Labor appreciates the value of a strong Public Service. Those opposite believe only in cutting it.