Today I held a mobile office with Member for Canberra Gai Brodtmann at the Civic bus interchange to discuss the Gillard Government's Clean Energy Future Plan.
Tackling climate change is an issue that many local families and businesses in the ACT have been eager to discuss with me, and there is a broad community consensus that the time to act is now.
The Labor Government's Carbon Price will target the biggest polluters, while driving investment in clean energy technologies and infrastructure. The package is designed to assist those who need it most, with 9 out of 10 households due to receive tax cuts or increased payments.
Details on the Clean Energy Future Plan can be found at http://www.cleanenergyfuture.gov.au/.
I understand that many people will have questions about the Plan and how it will affect them. I am happy to answer these questions, so please feel free to email me or call my office on (02) 6247 3457 if you would like more information.
So I was most chuffed last night when John was awarded the Distinguished Fellow award from the Economic Society of Australia, following in a long line of extraordinary economists, including Trevor Swan, Colin Clark and Bob Gregory (who gave a splendid intro about John's shift from mathematics into economics).
Incidentally, I was also delighted to receive the Young Economist Award for the best Australian economist under 40, following on from my friends/coauthors Joshua Gans and Paul Frijters. (Thanks to Justin Wolfers and Joshua Gans for very kind words, and Danielle Cronin for writing it up in the local press.)
The price is right for consumer shift, Australian Financial Review, 12 July 2011
One of the most persistent myths in Australian politics has been that providing household assistance undermines the effect of imposing a carbon price. If the prices of carbon-intensive products rise by $10 and you give me $10 in assistance, aren’t we back where we started?
If there was only one product in the world, the answer would be yes. If there’s only one thing I can buy, you can be sure that’s where every dollar in my wallet is going to go. So if you put the price of that product up and increase my income, I’ll carry on exactly as before.
Yet the one-product world is a far cry from the vast plethora of options facing modern consumers, who can spend on anything from a ballet lesson to a bunch of bananas, a train fare to a television. And here’s the insight from modern economics: when you have choices, changing relative prices changes behaviour.
While we’re sometimes coy about it, government policies change relative prices all the time. When we raise the first homeowner grant, house sales go up. When we cut tax rates on superannuation contributions, more people put money into their retirement accounts. When we raise cigarette taxes, fewer young people take up the habit. And when we tax alcohol, fewer people buy it.
Yet here’s the other thing: all these taxes and subsidies also affect government revenue. All taxpayers help subsidise homeowner grants and superannuation, and all of us share the revenue from alcohol and cigarette taxes. But the revenue impacts don’t undermine the price changes.
In understanding how carbon pricing works, there’s no more critical distinction than the difference between prices and incomes. Indeed, it’s this distinction that should make us optimistic about moving to a low-carbon economy. If some supermarket prices rise, but you have more money in your wallet, you have a choice: you can either buy the same amount of the high-carbon products, or make a switch to a low-carbon product.
One of the great things about a market economy is that we can leave it up to people to decide what’s best for themselves. For example, some might decide to turn off the beer fridge, so they can spend the household assistance on a new surfboard instead.
This will parallel the choices being made inside the 500 largest emitters, where managers will look for creative ways to cut CO2 emissions in order to save money for the company. Indeed, when the US introduced an emissions trading regime in the 1990s to tackle acid rain, firms found so many innovative ways of reducing emissions that the eventual cost was just one-third of what the boffins originally anticipated. Anyone who thinks companies will shut up shop rather than find creative ways of reducing carbon emissions underrates the ingenuity of Australian businesses.
To see the fallacy in the ‘money-go-round’ argument, just think back to recent increases in households’ disposable incomes. When economic stimulus cheques were sent to millions of households during the global downturn, did families spend it all on high-carbon products? When the single pension was raised by $65 a fortnight in 2009, did pensioners put it all towards goods that produced carbon pollution? And when tax rates were cut in recent budgets, did taxpayers spend all the money on carbon-intensive commodities?
In each case, the answer is no. If you increase disposable incomes, we spent the money on the next thing we’re hankering after: a nicer brand of coffee, a new book, a visit to the cousins. The same principle holds for tax cuts and pension increases that will be delivered as part of the clean energy future plan.
By pricing carbon, we’re encouraging a shift to a cleaner economy. But assistance offers a simple guarantee to most Australian households: if you want to keep buying the same things, you’ll be able to do so. Indeed, some groups will receive a buffer – such as full rate pensioners, who will get a 1.7 percent increase in their pensions to compensate for a 0.7 percent price rise.
Since Tony Abbott has called economics ‘boring’, it’s perhaps not surprising that he is in complete misinformation mode on this point, describing tax cuts to assist households as ‘a con’. Yet language sometimes reveals. When universal superannuation was introduced in the 1990s, Abbott told parliament that it was ‘a con’. Let’s see how long he’s able to rage against good economic policy this time around.
Andrew Leigh is the federal member for Fraser.
Eastern University Games, 7 July 2011
I rise to speak on the 2011 Eastern University Games, hosted this year by the University of Canberra and the Australian National University. The games were launched in style on Sunday night and finish up today. Canberra is playing host to 19 universities from across New South Wales, the ACT and, for the first time, New Zealand. The Eastern University Games complement the Northern, Western and Southern university games being held across Australia.
There are 1,600-plus students attending the Eastern University Games, which were opened by my good friend the ACT minister for sport, Andrew Barr. Representatives from the University of Canberra and the Australian National University appropriately took an oath on their own behalves and on behalf of all athletes to uphold sportsmanlike conduct and commit to a fair and fun week of competition. Last year's champions were the University of Technology Sydney, and all other universities are aiming to give them a run for their money this year. There are 15 sports being played at the Eastern University Games: basketball; football, futsal; handball; hockey; lawn bowls; netball; both kinds of rugby, league and union; squash; tennis; tenpin bowling; touch; volleyball; and ultimate frisbee. I would particularly like to pay tribute to the ultimate frisbee players, who have played this week in blizzard-like conditions in Canberra. To them, my hat goes off—as theirs no doubt did.
The games have been accompanied by a great social program, including 1980s nights, country and western nights and hero and villain nights. What the Eastern University Games represents is the notion that student life in Australia is alive and flourishing. Camaraderie at universities is a critical part of the student experience. The friends many of us make at universities are friends who we keep for life. On the sporting field, we not only make friends but learn new skills, such as how to win with grace and how to accept losing.
The teams that are coming together this week will in some cases be wonderfully well prepared. They will be teams that have been training together every week for the past year. But there will also be teams that have come together more recently, with not everyone feeling that they know their team mates. They will not necessarily all have been playing the sport since they were kids. I pay tribute to them as well, because they are in that great Aussie spirit of diving in and giving it a go. Good luck to all of those competing this week. May the best university win.
Carbon Pricing, 7 July 2011
Labor's policy on climate change is grounded on three simple facts: (1) Australia is the largest per capita polluter of carbon in the developed world; (2) climate change is real; and (3) the market mechanism is the most efficient way of dealing with dangerous climate change. What is striking about what the member for Moncrieff likes to say about this is that Australia's emissions should not be taken into account; Australia cannot do anything about dangerous climate change. He neglects the fact that Australia's per capita emissions are the highest in the developed world. And what is particularly striking about the comments of the member for Moncrieff is that the coalition themselves are committed to a five per cent reduction by 2020. It is odd, isn't it? You would think if the member for Moncrieff really believed what he was saying, he would be arguing that Australia should not do anything and that the Liberal Party should walk away from the bipartisan emissions target. But he is not saying that. He just thinks that we should get to that target in a very inefficient way. That is the coalition's policy. By contrast, Labor recognises that we want to reduce pollution using market mechanisms. Business needs certainty, big polluters should be taxed and families deserve appropriate assistance. So our package targets the big polluters. It provides assistance to nine out of 10 households and it will cut 160 million tonnes of carbon pollution by 2020.
The Leader of the Opposition has gone into interesting territory in recent weeks. He has been repeatedly asked to name a single economist who will back him up, and he cannot name one. He cannot name a single economist who will back him. I have put that question to the member for Moncrieff from time to time and he will sort of shrug his shoulders and wriggle a little. But the Leader of the Opposition has decided he is going to come out punching on this. He said last week: 'maybe that is a comment on the quality of our economists'. Professor Joshua Gans, my good friend and co-author, who won the Economics Society of Australia award for the best Australian economist under the age of 40, put it best on his blog when he said: 'maybe that's a comment on the quality of our opposition leaders'.
You might well think, if you were to listen to the Leader of the Opposition, that he is talking about just Australian economists. There is something specific about the Australian economics profession. But as Professor John Quiggin pointed out in the Australian Financial Review today, overseas economists are just as hostile to the sort of voodoo economics that the coalition would have you believe in. John Quiggin reminds us that Greg Mankiw, George Bush's chair of the Council of Economic Advisors, established the Pigou Club dedicated to the notion that appropriate corrective taxes are the best way of dealing with environmental challenges. Who are the radical, low-quality economists that have signed up to the Pigou Club? There is Gary Becker, Paul Krugman, William Nordhaus, Kenneth Rogoff, Larry Summers. You would expect maybe there is a 'No Pigou Club' to go up against it. Well, actually there is not. Someone tried to form one and it turned out that they could not find any members for it.
Then you might think—and we have been making this claim a little—that the opposition's policy would have some supporters among command and control economies. We have been suggesting that their climate change is effectively Moscow on the Molonglo. The sad thing is I think we now have to withdraw that claim. Even in China, as John Quiggin points out, where central planning is still very much in vogue, the Chinese Communist Party's 12th five-year plan, the one that will run from 2011 to 2015, includes market mechanisms to deal with dangerous climate change. The Chinese, with all their central planning, are far more pro-market than is the current opposition.
Of course, the Leader of the Opposition has been hitting up businesses left, right and centre with his mobile scare campaign. This is a man who is pulling more stunts than Jim Rose. The great stuntman of Australian politics has been inflicting much of this misinformation upon my own constituents. That is the great cost of things. He has been taking his mobile scare campaign to some of the local businesses near this House. He went to David Smash Repairs in Queanbeyan and said that they would face substantial costs and substantial job losses. It is a little hard to see exactly how this is going to eventuate. They are a smash repairer. They fix people's cars. Are we going to be sending cars overseas to get fixed under an emissions trading scheme? I do not think so.
Of course, there is generous household assistance. This is exactly the sort of thing that the household assistance is for. More than half the carbon price revenue raised from big polluters will go to households to cover the very small price impacts.
The Leader of the Opposition then went to Ziggy's Garden Fresh in the Belconnen Markets. He walked around there telling any shopper who would listen to him that food and grocery prices were going up under a carbon pricing regime. We can go to CPRS modelling. What does it say about the impact of the former Carbon Pollution Reduction Scheme on fresh food prices? It suggests the impact would have been 0.6 per cent. Let us take a kilogram of apples or oranges. That means that the price impact would have been less than 2c. A kilo of broccoli would have been 3.5c. Once we take into account household assistance, many households will be well ahead under the carbon pricing package. They will not, however, be well ahead under the Leader of the Opposition's 'subsidies for polluters' policy. As the Minister for Climate Change and Energy Efficiency has pointed out, the Leader of the Opposition's subsidies for polluters policy would cost an average family $720 a year which is, if you want to talk Ziggy's Garden Fresh numbers, 241 kilos of apples.
The Leader of the Opposition then took his mobile scare campaign to Capital Doorworks, a business owned by a former Liberal Party political candidate in the ACT. The Leader of the Opposition then began his scare campaign suggesting the price of doors would go up as a result of carbon pricing. Capital Doorworks is, I can assure the House, not one of the businesses to which carbon pricing will apply. Treasury modelling suggests that the prices of products such as those sold by Capital Doorworks would rise by 0.7 per cent under the former Carbon Pollution Reduction Scheme and the government will provide generous assistance to deal with price impacts.
The Leader of the Opposition has been taking his mobile stunt campaign, his Jim Rose campaign, to Visy. He has visited a number of Visy plants, claiming that there will be massive impacts on Visy's business. Of course, he always neglects to mention the industry assistance that will be provided. Under the former CPRS, 94.5 per cent shielding from the carbon price would mean an impact of just $1 per tonne of product. Put another way, if you had enough boxes to hold 3,000 pizzas, the cost impact under the former CPRS would be $1. I think the household assistance will well and truly cover that.
It is very difficult to know the position of the Leader of the Opposition on this because he did write in Battlelines:
The Howard government had a preference for market mechanisms because these are generally most conducive to maximising choice.
A government member: He was right.
Dr LEIGH: He was right, as my colleague points out. The Leader of the Opposition also wrote:
The Howard Government ... proposed an emissions trading scheme because this seemed the best way to obtain the highest emission reduction at the lowest cost.
That leaves me with a dilemma. This was written down by the Leader of the Opposition in Battlelines and the most recent claims were things that he said. So, given the guidance that the Leader of the Opposition gave us in the last election campaign, I suppose we should probably favour the things that are written down. But then he sends out press releases as well. I am a bit confused by that because it is something he said but it is written down. Do I believe this or do I believe the book because it has a nice solid binding around the outside?
Frankly, the Leader of the Opposition is all scare and no facts in this debate. The carbon pricing scheme is the right scheme to deal with dangerous climate change. We will provide appropriate household assistance and Australia has a bright future ahead of us under a carbon pricing regime.
7 July 2011
Elections are the best way we have yet devised to choose representatives of the people, and to hold leaders accountable. Malaysia has a parliamentary system, one that has now functioned for more than 50 years but without the ruling National Front ever having experienced defeat at the national level. Belief in the integrity of the electoral system is crucial for Malaysia's stability and prosperity.
Bersih—which literally means clean—is a coalition of organisations that believe that the government appointed electoral commission must urgently address policies, regulations and procedures that allow electoral outcomes to be corrupted and the wishes of the people to be no longer accurately reflected in parliament. Whilst it is understandable that the ruling National Front sees itself as 'the government' and utters forebodings that its defeat would harm the country, Malaysia is a much more prosperous and advanced country than its naysayers might suggest.
Bersih 2.0, led by a former president of the Malaysian Bar Council, has agreed to forgo the major street demonstration scheduled for 9 July and accept a compromise to hold its rally in a stadium. I hope Malaysian Prime Minister Najib Razak will order the immediate release from detention of MP Jeyakumar Devaraj and all those who have been arrested simply for wearing yellow or expressing support for the process of electoral reform.
Here's the joint media release from federal Infrastructure and Transport Minister Anthony Albanese and ACT Chief Minister Katy Gallagher:
FORTY YEAR MAJURA PARKWAY VISION SET TO BECOME A REALITY
More than 40 years after the first line appeared on a map, construction of the long awaited Majura Parkway will finally start next year and be completed in 2016.
Infrastructure and Transport Minister Anthony Albanese today said the project had secured the backing of the Gillard Labor Government and would receive $144 million in Federal funding, matching the ACT Government’s contribution dollar-for-dollar.
“Recommended by Infrastructure Australia and set to be built with monies from our Building Australia Fund, the Majura Parkway will make it easier for Canberrans to get around their city as well as well as taking trucks off local streets,” said Mr Albanese.
“Construction of this new road is an investment in Canberra’s future, with Infrastructure Australia putting its long term economic, social and environmental benefits at close to $1 billion.
"Funding for the Majura Parkway builds on the record capital works program we initiated in our very first budget back in 2008. Together with the Gallagher Labor Government, we’re building the modern, well planned transport infrastructure befitting Canberra’s status as our nation’s capital.
“This confirmation of funding for this project is the culmination of a persistent and passionate community campaign led by local MPs including Gai Brodtmann, Andrew Leigh, Mike Kelly and Senator Kate Lundy.”
The Majura Parkway will be an 11.5 kilometre long duplicated road with seven bridges and three interchanges at the intersections with Fairbairn Avenue, Federal Highway and Monaro Highway.
ACT Chief Minister Katy Gallagher said the Majura Parkway upgrade means increased accessability for motorists from Canberra’s north into the city and southern suburbs.
“It will also play a key role in distributing freight in a safer way by diverting heavy vehicles around the city and avoiding populated areas and on major arterial roads like Northbourne Avenue,” the Chief Minister said.
“Some 2,800 commercial vehicles and 18,000 passenger vehicles currently use Majura Parkway and this figure is expected to double in the next 15 years.
“There is no doubt Canberra is a growing city and the agreement between the ACT and Federal Labor Government’s shows a strong and constructive working relationship that can deliver for all Canberrans to improve daily life.
“This project of national significance will benefit Canberra as a freight hub and Australia’s national capital, but will also improve commute times in and out of Canberra on a daily basis for thousands of people who live and work in the ACT.”
More from the Canberra Times.
MEDIA RELEASE - Fraser student wins national education prize
Federal Member for Fraser Andrew Leigh today congratulated a local student whose academic achievement has earned them a 2010 Australian Student Prize.
The Australian Student Prize is awarded annually to 500 young Australians in recognition of their excellence in academic achievements, with winners nominated by state and territory education authorities.
Judy Mengzhou Wang was among this year’s winners.
“The Australian Government promotes excellence in our schools, and Judy is among the nation’s highest achievers,” Andrew Leigh said.
“The Australian Student Prize is a way of recognising and rewarding these students and I congratulate them for their achievements.”
The Prize is also awarded to members of the 2010 Australian Mathematics and Science Olympiad teams who won medals in mathematics, informatics, physics, chemistry and biology.
Each Prize includes a certificate and an award of $2000 from the Australian Government.
Winners for the 2010 school year included 12 students from the Australian Capital Territory, 154 from New South Wales, three from the Northern Territory, 97 from Queensland, 43 from South Australia, 11 from Tasmania, 132 from Victoria and 48 from Western Australia.
A full list of 2010 Australian Prize Winners is available at www.deewr.gov.au/asp
Further information about the Australian Student Prize is available at: www.deewr.gov.au/asp
7 July 2011