Andrew Leigh & ASSA President Barry McGaw

Andrew Leigh & ASSA President Barry McGaw at the ASSA New Fellows Dinner and presentation.
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Advice to PhD Students

I gave a keynote address this afternoon to the ANU Crawford School's PhD student conference. I'll post the video when it becomes available, but I promised the audience that I'd post on my website now the ten economics papers that I'd like to read. (Since my production of research has tailed off lately, the least I can do is to suggest papers I want others to write!)


1. Why are people in urban areas more left-wing? Is this selection or causation?

2. Do children of politicians make better politicians?

3. Is the frequency of an opposition leader’s media conferences negatively correlated with consumer confidence?


4. What is the elasticity of taxable income with respect to the marginal rate? How does it change across the distribution?

5. What is the deadweight cost of taxation? (Our current estimates are over a decade old, and this critical number needs updating.)

6. How do childcare, school, university and hospital reporting affect outcomes?


7. How well does a Taylor Rule fit RBA decisions?

8. How accurate are business sector economic forecasters?

9. How much do GDP announcements affect the sharemarket? (using GDP measurement errors as an IV)

10. How do international events affect the exchange rate channel of monetary policy?
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ABC News 24 Capital Hill 28 November

Lyndal Curtis hosted me and Michaelia Cash on the Capital Hill program yesterday evening. Topics discussed include Labor's plan for the Murray-Darling Basin, the Australian Labor Party national conference and how to involve party members, along with Tony Abbott's statement about only the "right kids" staying at school until year 12.
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Non-Parental Care

A report in today's Herald Sun returns to an economics paper that Chikako Yamauchi and I put out in the public domain in 2009, and which garnered quite a bit of coverage when I presented it to the December 2009 LSAC conference. The basic findings of the paper are:

  • the differences in behaviour between kids in parental and non-parental care are small;

  • there isn't 'one effect' of daycare - it differs across socioeconomic groups; and

  • kids appear to do a smidgin better in daycare centres with smaller ratios.

If you're interested in the paper (or would like to see our application of the Altonji-Elder-Todd approach of using selection on observables in order to gauge the potential importance of unobservables bias), it's available here.
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Wrapping up the Parliamentary Year

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Lil tent joins big tent

Due to the popularity of the 4x6 metre 'Big Tent' among local community groups, I've now bought a second marquee. The younger sibling is a smidgin smaller at 3x3 metres, and fits in a regular sedan with the front seat down. (The bigger one requires a station wagon or similar.)

If your community organisation would like to borrow one (or both!), just email me at <AT>, or phone 6247 4396.

Pictures of the two tents are below (small at the top, large at the bottom).

And of course, we also have a PA system for loan.
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National Memorials

I spoke in parliament today about the new national memorials report (and as it was my last speech for the year, thanked my staff, volunteers, interns and family).
National Capital and External Territories Committee Report
24 November 2011

National memorials are a crucial part of the nation's collective memory. They bind a nation together through one of the most powerful of unifying forces—shared history. The National Memorials Ordinance 1928 came about at a time when Canberra's population was under 10,000, and Lake Burley Griffin was just lines on a map. It was instigated by Prime Minister Stanley Bruce when parliament had just moved to Canberra and rapid development was underway in the new national capital. The recommendations arising from the inquiry of the Joint Standing Committee on the National Capital and External Territories into the administration of the National Memorials Ordinance 1928 reflect Canberra's transformed milieu and how Australia's management and use of national memorials can be improved.

In seeking to improve the management of the capital's national memorials, the committee found it instructive to look at the case of Washington DC. Washington, like Canberra, is both a national capital and a planned city. Both are sites for the expression of the national aspirations of their people. Both are governed by a detailed planning regime that balances the legacies of the past with the needs of the present and the potential of the future. Part of the challenge is in choosing appropriate subjects for commemoration and choosing suitable designs and locations for new monuments and memorials. This process must balance the competing desires and interests of the different stakeholders.

We on the committee found that one of the key strengths of the Washington model is that the planning stage involves broad constituencies. Washington's National Capital Planning Commission has 12 members, representing federal and local constituencies. Each member represents a different section of the community and brings different perspectives. No one entity dominates the process.

As many Canberra residents made clear in their submissions to the inquiry, the need for local consultation and input in the development of national memorials is paramount. While memorials and monuments are of national significance, Canberrans live with the consequences of their designs and management on a daily basis.

The committee recommended, as the member for Riverina has pointed out, that the National Memorials Ordinance 1928 be repealed and replaced with an Australian commemorative works act, based on the United States model. The act would provide for a two-pass assessment process for national memorials—the first pass focused on commemorative intent, the second pass on character and locations. Time does not permit me to go into the detail of our recommendations, but I commend what is a very bipartisan report to the House.

I would like to use this opportunity to thank the committee secretariat, particularly Peter Stephens and the indefatigable William Pender, for their work on this report. To the many Canberrans and representatives of national organisations who took the time to put together submissions for the inquiry, to give evidence and to engage so deeply with this process: thank you.

As this is perhaps my last parliamentary speech for the year, I would also like to use this chance to briefly thank my hardworking staff, Louise Crossman, Gus Little, Claire Daly, Lyndell Tutty, Ruth Stanfield and Nick Terrell, as well as my team of terrific volunteers, including Ken Maher, Barbara Phi, Alex Dixon, and Gerry Lloyd. I would also like to thank the interns who have worked in my office during the year, including Hariharan Thirunavukkarasu, Louisa Detez, Angela Winkle, Jessica Woodall, Huw Pohlner and William Isdale.

I am pretty sure that after our 3 am finish on Wednesday I was the only MP who was woken at 6 am by a four-year-old entering the bedroom. My two wonderful boys, Theodore and Sebastian, are more than a full-time job, and I would like to acknowledge my extraordinary wife, Gweneth, as well as my parents, Barbara and Michael, for all their help during the year. Our families bear much of the burden of this job, and I could not do it without them.
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Promoting Cancer Research and Treatment

I spoke in parliament today about cancer research and the Ben Donohoe Run and Walk for Fun.
Ben Donohoe Fun Run, Capital Region Cancer Centre
24 November 2011

Ben Donohoe was a sports-loving, caring and intelligent nine-year-old boy who lived with his parents, Robyn and Peter, and siblings, Luke, Lauren and Kate. An active boy who particularly loved cricket and soccer, he played every sport. He also loved his music and would sing and dance around his bedroom to the sounds of Shrek, Robbie Williams and Shannon Noll. Ben attended Latham Primary School and was in year 4 when he was diagnosed with a brain tumour on 10 June 2005. When he became sick, his mother Robyn would often ask him if there was anything she could get for him and Ben would simply say, 'Just a cuddle.' That is a testament to his caring nature. Despite an operation to remove the tumour and despite Ben's determination, the tumour was too aggressive. Ben passed away on 2 August 2005, less than eight weeks after being diagnosed.

Now in its seventh year, the Ben Donohoe Run and Walk for Fun has raised over $220,000 for the ACT Eden Monaro Cancer Support Group, Make-A-Wish Australia and Brain Tumour Australia. This has greatly helped in supporting families affected by cancer and bringing hope and joy to the lives of seriously ill children. The Ben Donohoe Run and Walk for Fun is now one of the largest fun runs in the region. On 6 November, a team from my office ran the six-kilometre circuit around Lake Ginninderra with almost 2½ thousand others who helped raise over $65,000.

Cancer patients in the ACT and surrounding region will also benefit from a new Capital Region Cancer Centre. When completed in late 2013, the new centre will improve cancer treatment by drawing together and integrating cancer services including chemotherapy, radiation therapy, haematology, immunology, research and teaching programs, within a single five-storey building on the Canberra Hospital campus. The Capital Region Cancer Centre is part of a $2 billion Australian government initiative to build a world-class cancer care system. It was my pleasure on 2 November to be part of a sod-turning with the Minister for Health and Ageing; Katy Gallagher, the Chief Minister of the ACT; the member for Canberra and Senator Lundy. The Capital Region Cancer Centre will service around half a million people across the ACT and surrounding regions by providing access to screening, assessment, diagnostic treatment and palliative care services.

I would like to thank the organisers of the Ben Donohoe run, and members of the 'Leigh team', who wore T-shirts emblazoned with my name and joined me on the day—Damien Hickman, Gus Little, Claire Daly, Jules Zanetti, Angela Winkle, Karina Leys, Jess Woodall, Alex Cubis and Eleanor Cubis. Next year's Run and Walk for Fun will be on Sunday, 4 November 2012. I look forward to doing another lap of the lake and encourage all Canberrans to take part.
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Time to Simplify Phone Plans

I spoke in parliament yesterday, arguing that Australian mobile phone plans are too complex, and phone companies should make them simpler.
Complex Mobile Phone Plans
23 November 2011

I rise to speak on the unnecessary complexity of mobile phone plans in Australia. According to the 2009-10 report of the Australian Communications and Media Authority, 15 million Australians use a mobile phone. Thirty-seven per cent of Australian adults use a mobile phone as their main form of communication. Mobile phones are an integral part of life for many of us. They help us stay connected while travelling, simplify the process of meeting a friend on the weekend, make it easier for tradespeople to do their jobs and allow parents to keep tabs on their teenagers. The mobile phone is a great piece of technology, yet the process of choosing a mobile phone plan is currently Byzantine.

I recall moving back from the United States to Australia in 2004. In the US, choosing a mobile phone plan is simple: you pick a handset and choose the number of minutes per month—500, 1,000 or unlimited minutes each month. The choice is simple, and you can readily compare across mobile phone carriers. Having lived in the US for four years, nothing had prepared me for the complexity of Australian mobile phone plans. First, you have to choose from among a plethora of handsets. Then you have to choose your cap. The cap is expressed in dollars, but of course that does not mean anything because it depends on how much each call costs. If you tell me that I have $50 for calls, that is twice as much calling time if calls cost 50c a minute as if they cost a dollar a minute

Again, it is not easy to figure out how much a call costs. With many carriers there is a flag-fall charge, meaning that the first minute carries a different price from subsequent minutes. Sometimes it is cheaper to call people whose mobile phones are on the same network. Some carriers have lower off-peak charges. Calls to landlines are often priced differently from calls made to other mobiles. For voicemail, some plans charge for leaving messages, some for retrieving messages and some for neither. So, if you want to know how much your month's calls will cost, you need to be thinking about how often you call landlines, how often you call mobiles, which carriers your friends use, what time of day you make your calls and how many voicemail messages you expect to receive. Are you confused? I know I am. If you have an ABN, you are eligible to buy a phone on a business plan, which for many people just introduces another layer of complexity. If you are a tradesperson, you now have to compare the personal plans and the business plans. And did I mention that you can choose a prepaid or a postpaid plan?

So in 2004, when my wife arrived here a couple of weeks after me, she could not work out why, although I had been in the country for two weeks, I still had not been able to choose a mobile phone plan. But it has only gotten more complicated since then. Many US mobile phone contracts provide unlimited data downloads. But an Australian mobile phone buyer has to decide how much data they want to download. Then they have to look at the excess fees for going over that cap. Sometimes products such as Twitter, Facebook or Myspace will be excluded, or off-peak data charges will be lower. Text messages are charged differently again. And don't get me started on the exorbitant cost of data roaming if you decide to use your mobile phone to check email overseas.

I defy anyone to sit down with the contracts for half a dozen mobile phone carriers, each offering a handful of plans, and choose the one that best suits their needs. The complexity of Australian mobile phone plans most harms people with low levels of financial literacy. Complexity hurts the poor, new migrants and the elderly. In this sense, unnecessary complexity operates like a regressive tax.

Labor has always stood on the side of consumers. The Gillard government has taken steps to improve consumer rights—providing simpler information to credit card and home loan customers, and standardising terms in insurance contracts. Under the new Australian Consumer Law, consumer guarantees are enforceable as statutory rights, while unfair contract terms can be declared void if they cause a significant imbalance. This allows the regulator potentially to work with mobile phone carriers to deal with unfair contract terms. I pay tribute to the Parliamentary Secretary to the Treasurer, David Bradbury, for his work on improving consumer protection in Australia. But I think it is also important that mobile phone companies recognise their responsibility to customers and start offering a simpler product.
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Breaking the intergenerational poverty cycle

I spoke in parliament yesterday about policies to break the intergenerational poverty cycle through education.
Social Security Legislation Amendment (Family Participation Measures) Bill 2011
23 November 2011

In 1981 a young woman found that she was pregnant at 16. After confirming the pregnancy and breaking the news to her mum, she attended school until the baby was nearly due. Although her mother was supportive and encouraged her to go back to school, the young woman decided it was too hard to commence year 12 with a young infant. Having already completed her year 11 studies, she eventually enrolled in a TAFE course and began a diploma in child care, part time. Now 45, with two children, she has a successful career in the early childhood sector running childcare centres in Melbourne. She also helps pregnant women who are not so lucky, in particular teenage mothers. Her daughter, now 29, is married with two children of her own. This story was told anonymously online by the woman herself to encourage teenage mothers never to give up. It shows why attaining year 12 or its equivalent is so important for teenage parents.

The number of teenage mothers in Australia has dropped significantly over recent decades. The most recent ABS data shows just four per cent of births were to teen mothers. But the outcomes of this small group are still worrying. In the 2006 census only 17 per cent of teenage mothers completed year 12. Over 1,500 females aged 15 to 19 years were not gaining the level of education that is increasingly essential for the demands of a 21st century workforce.

In June of this year the National Centre for Vocational Education Research released a report titled From education to employment: how long does it take? The centre found that young people who do not finish year 12 take significantly longer to move into employment. The prime factor influencing the speed at which a young person obtains work after they leave the education sector was their level of education. The report also found strong gender differences. For men, those with a degree obtained work five times faster than those who did not complete year 12. For women, those with a degree obtained work eight times faster. The unequivocal message from this report is that education is vital. For a young person entering the labour market, higher levels of education lead to better wages and to getting a job faster. In a worrying statistic, about one-quarter of the young people sampled with less than a year 12 education had not obtained any work by the end of the observation period. This is a serious warning for the long-term prospects of younger Australians who do not have year 12 or its equivalent. This prognosis for the career development and income levels of those young people is grim. This bill heeds that warning and puts in place a program for teenage parents to work towards attaining year 12 or its equivalent. From 1 January 2012, teenage parents in 10 disadvantaged locations with a youngest child under six who receive parenting payment and have not completed year 12 or an equivalent qualification will be required to attend Centrelink to develop a participation plan. Under the teenage parents trial, participants will be required to undertake compulsory activities from when their child is one year old. This will give them time to settle into life with a new baby; but, equally important, they will be able to develop a plan towards gaining a good education.

Education is the best antipoverty vaccine we have yet invented. It provides the foundations from which a young person can build a life of their choosing from the career opportunities and skills development that it brings. This government gets it. We understand that education is good social policy, that unemployment is the best predictor of disadvantage and that having the skills for the jobs of the future is essential to staying out of poverty. Although it was based on children and families in the United Kingdom, a recent Four Corners program made this point. It showed the human face, the cost and devastating impact of poverty on children.

One story was of Sam, who is 11 years old and lives in Leicester with his dad and older sister. Sam's dad is unemployed and struggles with finding enough money to buy food or to operate the electricity. Their income is £70 to £80 a week, which is barely enough to buy them the basics. Often the electricity and gas run out, leaving them cold and miserable. Sam has problems with bullying and suffers from low self-esteem. He has to be careful about what he says to other students for fear he will be judged and ridiculed. As Sam said, 'People don't like you if you're poor.'

This bill puts supports in place to cut the cycle of unemployment and poverty through education. I am sure that no-one in this place wants to see any child suffer, like Sam, the indignity of poverty. A great education in Australia can see a child from Cape York go to university, become a leader in her community and eventually become Young Australian of the Year. A great education means that a child from Ilfracombe can become the first female member of the Queensland bar and our first female Governor-General. This national parliament is itself a showcase of the opportunities that education provides to children from all corners of the nation. So many members of this House acknowledged in their first speeches that they would not be here today were it not for a great education.

The Brotherhood of St Laurence tells the story of another Sam. Forty years old, Sam has been working with the local council's road services department for the past 18 months. Now Sam's life is settled, he has safe, stable accommodation and is working towards future employment goals—but it has not always been that way. In 2009 Sam was living in a rooming house where violence was commonplace and the environment unsanitary. Through the Centre for Work and Learning at the Brotherhood of St Laurence, he was chosen to join a pre-employment training program. Sam successfully completed the training and was picked up as a trainee street cleaner with the local council. Having a steady income and taking control of his finances meant that Sam was finally able to renew his drivers licence. After he completed his traineeship he was linked to a recruitment agency used by the local council, and now enjoys a regular job. 'I really want to use my brain,' says Sam, when he is asked about his plans to work with youth and when he talks about becoming a teacher.

The other part of this bill focuses on families at risk of long-term unemployment. The aim of the jobless families trial is to break cycles of unemployment. For parents with children under school age, they will be required to develop a plan for re-entering the workforce once their youngest child starts school. Their Employment Pathway Plan can also include activities focusing on the health, wellbeing and education of their children. Because this government gets it, we are making sure children in families of risk are 'school ready' to make the most of their educational opportunities.

On a definition of poverty as households with less than 50 per cent of the median income, the OECD Family Database finds that 14 per cent of Australian children live in poverty. That is too many. This is why we are taking action with this bill and trialling these programs to support those at risk of long periods of unemployment and its lasting effects.

Recently the Economist magazine reported on the impact of unemployment in Western nations. Noting the scale of joblessness in the West, it pointed out that if all unemployed people lived in one country, it would have a population similar to that of Spain. By comparison, Australia's economy and our low levels of unemployment are the envy of other Western nations. We still have our own areas of stubbornly high unemployment, those pockets of disadvantage and of generational cycles of joblessness. For those Australians caught in those cycles of unemployment and disadvantage, or at risk of falling into those cycles, the human cost is all too real. Joblessness can lead to increases in depression, divorce, substance abuse, family breakdown and life's other troubles.

A 2007 study, 'Unemployment and Psychological Well-being', by Nick Carroll of the ANU, found that the adverse effects of unemployment on life satisfaction was large and significant. Not having a job was a much better predictor of having low life satisfaction than simply having a low income. Past unemployment also had a similar adverse effect, suggesting that unemployment had left long-term scars.

Internationally, there is substantial joblessness around the world, and we know that the longer a young person spends being unemployed, the greater that scarring effect is. In the United States, the average period of joblessness is now up to 40 weeks—an increase from only 17 weeks four years ago. In Italy, a person who is unemployed has, on average, been jobless for more than a year. The more detached people become from the workforce, the more their skills atrophy, the more their self-esteem drops, making it harder to re-enter the labour force, particularly a labour force that is moving on. That leaves countries with lower growth rates, putting strains on public finances and on the social fabric.

It is a grim picture, but it is important to understand the full impact that long-term unemployment has on individuals, communities and nations. That is why education is so important to prepare and equip people for the workforce of tomorrow, to safeguard them against the detrimental effects of unemployment. I know the power of education and the dignity of work have been at the heart of the agenda of the Rudd and Gillard governments. This is one of the reasons that I ran for parliament and it is central to what we on this side of the House believe in. There are still too many Australians who live in circumstances of entrenched disadvantage. Too many Australian children are in families where their parents and grandparents have not known regular employment. They deserve to know the dignity of work, and they can benefit from the habits that arise from growing up in a household where an alarm clock goes off in the morning and someone goes off to a dignified job.

As the Prime Minister said in her address to the Sydney Institute earlier this year:

'The party I lead is—politically, spiritually, even literally—the party of work … the party of opportunity not exclusion.

'Welfare reform and workforce participation is where progressive policy and Labor values come together.'

Not everyone can make it on their own. Sometimes the odds are stacked against people. We on this side of the House are committed to putting the odds back in their favour. This bill harnesses the transformative power of education to provide opportunities for some our most disadvantaged communities. This is what a government should do and this is what this Labor government is doing.

Recently the Australian Bureau of Statistics released figures showing that in June this year there were 96,000 jobless couple families and 210,000 jobless single parent families. Of these single parent families looking for work, 23 per cent had been jobless for more than a year. For those teenage parents and families experiencing long-term unemployment in Playford, Hume, Shepparton, Burnie, Bankstown, Wyong and the other trial regions, this government knows that in this place we have a responsibility to ensure that they are part of Australia's productivity, our economic fabric and our social wellbeing now and into the future. I commend the bill to the House.
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Cnr Gungahlin Pl and Efkarpidis Street, Gungahlin ACT 2912 | 02 6247 4396 | [email protected] | Authorised by A. Leigh MP, Australian Labor Party (ACT Branch), Canberra.