Andrew Leigh

My AFR column today is on the myth that WorkChoices was good for productivity. I conclude with a few ideas about what we might do to raise productivity.

End Work Choices Myth, Australian Financial Review, 6 September 2011

In Monty Python’s The Life of Brian, a man is accidentally mistaken for the messiah. Despite all facts to the contrary, he is unable to persuade his devoted followers that he is not divine.

And so it is with WorkChoices. Over recent months, a steady drumbeat has been sounding through the Coalition and more extreme elements of the business community, claiming that a return to the industrial relations system that existed from 2006 to 2009 would boost productivity in Australia.

Alas, there’s precious little evidence to back this up. Productivity growth in Australia peaked in the early-2000s, and has been significantly lower in the naughties than it was in the nineties. If WorkChoices boosted productivity, you might have expected that Australia’s productivity would have soared in the period 2006-2009. But the opposite is true. In the WorkChoices era, labour productivity growth rates were lower than any 3-year period in recent times.

In a pair of papers presented to the Reserve Bank’s annual policy conference in August, these results were confirmed. In a splendid analysis of productivity, the Grattan Institute’s Saul Eslake concludes: ‘In particular, the workplace relations reforms introduced by the Howard Government under the title ‘WorkChoices’ in its last term in office were not, primarily, ‘productivity-enhancing’.’

The same holds true of unemployment. Looking at the jobless rate that prevails at a given level of inflation (the so-called ‘Phillips Curve’), Melbourne University’s Jeff Borland finds no evidence that WorkChoices reduced the unemployment rate.

None of this should have come as a surprise. Most of the WorkChoices package was not about labour market deregulation, but increasing the industrial relations power of the federal government and shifting the power balance from workers to employers (eg. by abolishing the no-disadvantage test and restricting union rights). Removing dismissals protection from small businesses greatly raised the chance of employees being treated unfairly, since small firms are least likely to have proper human resources processes.

Even when the Howard Government introduced the WorkChoices package, it struggled to provide evidence for its productivity-enhancing effects. In the Explanatory Memorandum, then-minister Kevin Andrews included a graph showing a negative relationship between an industry’s productivity growth from 1990-2004 and its award coverage rate in 2004. As Griffith University’s David Peetz pointed out, such an analysis only makes sense if time runs backwards. When Peetz used a measure of award coverage from an earlier year, the relationship falls apart.

But just because WorkChoices isn’t the answer, it doesn’t mean that the question isn’t important. In his study of productivity, Eslake notes that Australia’s productivity slowdown has been broadly-based, affecting most industries. He points out that Australian firms are less likely to introduce product innovations than companies in Japan, the US and the EU, and that many large Australian firms do not even bother to measure their productivity.

Among his favoured solutions, Eslake includes regulatory reform (eg. more competition in the pharmacy, newsagency and taxi markets) and tax reform (eg. removing tax loopholes and reforming inefficient state taxes such as stamp duty). He might also have mentioned policies to reduce congestion, which operates like a tax whose revenues are dumped into the ocean.

In my view, the most promising productivity-boosting reforms are in the area of education. With test scores having flatlined since the 1960s, it is vital to find ways of making our schools work better. Publishing test scores on the MySchool website, funding reforms in low-SES schools, and creating a system of teacher performance pay are among the promising policies that the Gillard Government is putting in place to raise school quality.

Alongside this, we need to increase the quantity of education that young Australians receive: through a higher school leaving age, more in-school trades training, and a demand-driven university system. Education reforms will take some years to affect productivity, but in the long-run, their value is likely to be higher than other productivity reforms.

Lastly, it’s important that more Australians have the chance to participate in the labour market. For example, we’re updating the disability impairment tables, and requiring that people try finding work before they sign up for the Disability Support Pension. Policies like this won’t raise average productivity (in fact, they’ll probably lower it a smidgin), but they’re unambiguously the right thing to do.

So by all means, let’s continue the national debate about productivity, but let’s drop the myth that WorkChoices will be the salvation all our productivity problems. As Brian’s mother finally tells the crowd: ‘e’s not the Messiah – e’s a very naughty boy’.

Andrew Leigh is the federal member for Fraser.

Thanks to the parliamentary library for research assistance on this issue. They also have useful chronologies of Fair Work and Work Choices.

Lyndal Curtis hosted Stuart Robert and me on the Capital Hill program yesterday evening, discussing a range of political issues. Topics included support for the manufacturing industry and the plan to put a price on pollution.http://www.youtube.com/embed/TkeRCmhb3gY?hl=en&fs=1

Transcript below (thanks to Mitch's team for transcribing).

ASHLEIGH GILLON:

Joining me this morning is Labor MP Andrew Leigh and the Liberal Senator Mitch Fifield. Good morning to you both. Andrew, let’s start with you. You would have heard John Lloyd’s views on the need for an overhaul of the Fair Work Laws. Is the Government open to that sort of criticism?

ANDREW LEIGH:

Ashleigh, we’ve had some pretty big reforms over recent years; getting rid of the WorkChoices regime which saw Australian workers have pay and conditions cut, moving to a much more reasonable process through Fair Work Australia which gets the balance right. It’s not surprising that there’s sections of the Liberal Party and extreme elements of the business community that want to get rid of penalty rates and want to go back to the bad old days but there’s absolutely no evidence that that boosted productivity. The productivity slowdown started about the year 2000 and indeed accelerated under the WorkChoices regime. In fact the Reserve Bank’s own conference last week had people presenting papers saying that WorkChoices did nothing for productivity.

GILLON:

Mitch Fifield, do you agree with the views that we heard put forward by John a short time ago, and why isn’t the Opposition making more of this issue, especially now that you appear to have people like Glenn Stevens onside? Is the Coalition still too scared of touching anything that could remind Australians of WorkChoices?

MITCH FIFIELD:

John Lloyd is an astute observer of the industrial relations landscape, and he is reflecting concern in the business community about the fact that productivity has been trailing off. Now I should say, Ashleigh, lest there be any hysteria, that after the 2007 election, the Coalition got the message from the Australian public, and as a result, WorkChoices is dead. But that’s not to say that the Labor Government have found some sort of industrial perfection. They themselves have undertaken to have a review of their workplace laws. We think that review should come forward. There’s no problem - there shouldn’t be an issue — with actually asking questions. I was astounded by the absolute tirade against Glenn Stevens from his evidence last week where he simply said that it would be good for employers and employees to get their heads together to see if there are ways that productivity can be lifted. We will be taking an industrial relations policy to the next election. It won’t be radical. It won’t be ideological. It will be a practical policy that seeks to respond to concerns expressed by both employers and employees.

GILLON:

Today Julia Gillard is going to be meeting with a couple of unions over the future of the manufacturing sector. She’ll also be having a meeting with an industry group leader to talk about how to go forward. We’ve seen some calls from unions about the need for the manufacturing sector to be more supported. There is a Buy Australia campaign underway to try to encourage Australian businesses to support the manufacturing sector. They’d also like to see an inquiry into how the manufacturing sector is travelling. Andrew Leigh, are you expecting that that will be a likely outcome of today’s meeting?

LEIGH:

Ashleigh it’s very clear that when you’ve got a high Australian dollar, the result of record commodity prices, that puts pressure on other sectors, it puts pressure on manufacturing as it does on domestic tourism and universities that rely on overseas students. But we’re committed to a sensible package of assistance in that area. We’ve got a steel transition plan, we’ve got automotive assistance amounting to half a billion dollars. And I have to make clear Ashleigh, these are both policies that are opposed by the Liberal and National Parties. They’re going to vote against the steel transition plan, and they want to scrap automotive assistance. So while we’re focussing on getting the fiscal settings right, the Coalition are out there wanting to rip away that assistance and to rip away the protections. Mitch talks about no one wanting to go back, but backbencher John Alexander has been out in his own electorate calling for scrapping of penalty rates, and so it’s pretty clear that there’s pressure within the Liberal and National Parties to go back to the bad old days of industrial relations. Can I just make one more…

GILLON:

Let’s get Mitch’s view on this. Mitch, we heard the criticisms from Andrew Leigh about how the Opposition might handle this sort of crisis in the manufacturing sector. The Government was quick to come up with those assistance packages last week. What would the Coalition like the Government to do? Does it need to go further in any aspect in your view?

FIFIELD:

It does need to go further. What it needs to do is to abandon the carbon tax. The carbon tax is the single greatest threat to Australian manufacturing and Australian businesses. I was meeting with a manufacturer the other week who said that his electricity bills were going to go up by $120,000 a year. What that represents is a couple of jobs. So the Government need to abandon the carbon tax. The other great threat to manufacturing in Australia is the formal governing alliance between the Labor Party and the Australian Greens. The Australian Greens have a stated policy to de-industrialise Australia. How can the current Government say that they’re committed to supporting manufacturers when they’re in a governing alliance with the Australian Greens? That is just absolutely nonsensical.

GILLON:

OK. We are going to keep you informed if anything comes out of that meeting with Julia Gillard and the union leaders. We’ll keep you updated on developments. I do want to move on to the Courier-Mail/Galaxy Poll that we’ve seen today. It shows that if an election was held now, Kevin Rudd would be the only Labor MP standing. On a 2-party preferred basis, Labor dropped four points down to 37%, that compares to the Coalition’s vote riding high at 63%. Andrew Leigh, these sorts of figures, you’ve seen them before. There was a hope within the Party that once the details of the carbon tax were released that these polls would start to turn around, but we’re not seeing it.

LEIGH:

Ashleigh let me give you the answer I will always give you if you ask me about polls — that is that polls two years out from an election have no predictive power. It’s a waste of time — politicians getting engaged, and frankly the public debate should be….

GILLON:

That doesn’t mean that you don’t pay attention to them, Andrew. Let’s be real here.

LEIGH:

It really does Ashleigh. It actually does. What I’m focussed on is reforms that make a difference to my constituents. Putting a price on carbon pollution is absolutely essential. Australians put out more carbon pollution per head than any other country in the world including the United States. So if we’re the last country to act on climate change, we’re the ones that are going to have to make the fast transition. This is a sensible package of reforms backed by every serious economist in the country. And we’re doing that because we recognise that moving to low carbon Australia means more of those manufacturing jobs are in the clean technology industry. There’s jobs like that being trained up in my own electorate, we have a clean energy hub at the Canberra Institute of Technology. And so there’s a whole range of those new, clean tech manufacturing jobs that we’re out there trying to move Australia towards.

GILLON:

Well Tony Abbott is riding high in the polls but he does have his own set of problems. Over the weekend we learned that Tony Windsor said that in those conversations and negotiations he had with Mr Abbott after the last election, he said that Mr Abbott said he’d be willing to sell his backside to win government. That’s something that Mr Abbott denied yesterday — have a listen:

TONY ABBOTT (file footage):

I don’t speak like that. People who know me know that I don’t speak like that. Sure, after the election I wanted to secure government because I wanted to save our country from what was already a bad government. I think what we’ve seen has vindicated my judgement — this is a bad government getting worse.

GILLON:

On top of that today the Canberra Times is reporting that there’s Coalition angst about Mr Abbott’s attitude. Apparently, according to this report and sources within the Coalition, Mr Abbott has little trust of his frontbench and is paranoid about being doublecrossed. Apparently he’s making too many unilateral decisions. Some colleagues are apparently worried that he’s jumping too much on the populist stuff even if it is contrary to Coalition policy. Mitch Fifield, are they fears and concerns you’re hearing much among your colleagues?

FIFIELD:

Not at all. I haven’t seen that report but it sounds like complete rot to me. Tony has an open door policy with his colleagues. I never have any difficulty getting to see Tony and to talk about policy. In fact, it’s usually Tony who’s on the other end of the phone asking me for my thoughts. He’s a very inclusive leader, he has the full support of his colleagues and it’s just a bizarre report.

GILLON:

OK Mitch Fifield and Andrew Leigh , we are out of time. Thanks for joining us.

LEIGH:

Thanks Ashleigh, thanks Mitch.

FIFIELD:

Thanks Ashleigh.

ENDS

http://www.youtube.com/embed/UGpZOxWymiQ?hl=en&fs=1

As a inveterate Kindle user, I've just added this blog to Amazon's list of Kindle-accessible blogs. Unfortunately, Amazon's policy is to charge for all blogs (in order to cover their data transfer costs, I assume). But if $1.99/month strikes you as reasonable for the convenience of reading this blog on your Kindle, you can access it here. And in the unlikely event that Amazon actually pass part of that cost back to me, I'll donate it to charity.

Update: It turns out that Amazon doesn't yet allow Australian Kindle readers to subscribe to blogs - so this post is really only relevant if you're in the US (and perhaps in the UK).

The academic pipeline being what it is, my paper with Philip Clarke on mortality and socioeconomic status has just been published in Economic Papers. Titled 'Death, Dollars & Degrees: Socioeconomic Status and Longevity in Australia', it estimates how much longer someone in the richest fifth of the income distribution can expect to live than someone in the poorest fifth (6 years), and how much longer someone with a diploma/degree can expect to live than someone with a junior high school degree (5 years). We're the first in Australia to come up with these figures using individual-level data (rather than regional aggregates).

Our findings represent massive differences, given that most of us would give up a large share of our income to buy a handful of extra years on the planet. Indeed, the Department of Finance uses for its costings the figure of $151,000 for an additional year of life.

The paper has been written up by Peter Martin (in the SMH/Age), and Philip and I had a very pleasant chat with Peter Mares on the ABC radio National Interest program.

And while I'm on the topic of research, I thought I'd let you know that I'm off to Munich on Saturday to give the keynote talk at a CESifo conference on the economics of education. My topic is the politics and economics of teacher performance pay. I'll post the paper here when it's ready (likely to be a month or so before I have a polished version).

The last parliamentary fortnight wrapped up with a debate over a motion moved by the Liberal Party about Australia's 'forgotten families'. I spoke in the debate, and used it as a chance to discuss the government's achievements and agenda, and contrast them with the relentless negativity of the Opposition Leader.

Matter of Public Importance Debate, 25 August 2011

The motion before the House today refers to Australia's forgotten families. It is clear where that reference from the Leader of the Opposition comes from. It is a hearkening back to Sir Robert Menzies, the founder of the Liberal Party. What the Liberal Party want to do is to claim that they have some of the policy credibility of Robert Menzies. The Leader of the Opposition is in fact the Sarah Palin of Australian politics. He is willing to say anything, to do anything to wreck the economy.

I know a little bit about the Menzies government and the Leader of the Opposition is no Robert Menzies. Robert Menzies opened up Australian trade with Japan - the Leader of the Opposition would start a trade war with New Zealand. Any chance he gets he will fearmonger about foreigners investing in Australian agriculture. Robert Menzies established the Colombo Plan to bring young Australians to help build a better region - the Leader of the Opposition would scrap aid to Indonesian schools. Robert Menzies began the initial steps of dismantling the White Australia policy - the Leader of the Opposition refers to 'boat people' and he wants to turn back boats to who knows where.

Robert Menzies was committed to Canberra, this fine city that I am proud to represent - the Leader of the Opposition would strip 12,000 jobs out of the Public Service which the ACT government estimates would drop the employment rate in the ACT by six percentage points once you factor in the flow-on effects. The Leader of the Opposition would happily send Canberra into recession. Robert Menzies believed in respect  - any time he thinks he can get away with it the Leader of the Opposition will use the Prime Minister's first name. Robert Menzies massively expanded the CSIRO  - the Leader of the Opposition will attack scientists, describes climate change as 'absolute crap' and thinks CO₂ is weightless.

But there is I suppose some similarity. After all Robert Menzies made a lot of his career on attacking communists but won the 1961 election on communist preferences. The opposition leader for a while bankrolled court cases against One Nation but now is quite happy to address extremist rallies with their signs about ‘new world government’ and misogyny.

But the motion before the House today goes to Australia's families and it is worth running through some of the achievements of the Gillard government to date in delivering for Australian families. In the global financial crisis we put in place timely, targeted and temporary fiscal stimulus that saved 200,000 jobs. Those opposite would have been happy to see young lives blighted by unemployment. Their view is that you would never take on any debt, so no stimulus because it would send the budget into debt. No matter that most of the debt is actually revenue downgrades—that is what happens in a recession, you get less revenue. So those opposite would have taken the Herbert Hoover approach—they would have slashed government spending as the recession hit. That is right, as the private sector scaled back, their view was that the government should have scaled back as well. What a disaster that would have been. The Gillard government and the Rudd government have seen 750,000 jobs created since we came to office—three quarters of a million jobs with the pay packets and the dignity that goes with work.

We put in place the largest increase to the pension since it was introduced: $128 a fortnight for single pensioners and $116 a fortnight for pensioner couples. We have got rid of Work Choices, to make sure Australians get a fair go at work and have the rights that they deserve. For Australians with children in care, we have increased the childcare rebate from 30 per cent to 50 per cent - a rebate that helps families and boosts female labour force participation.

We have put in place paid parental leave and we have launched My School 2.0 in an unprecedented wave of education reforms. We have Trade Training Centres rolling out across the country, recognising that we have to start investing in trade skills for the next generation and that we can do so while children are at school. I am particularly proud of the Trade Training Centre here in the ACT, which is a consortium of St Mary MacKillop College, St Francis Xavier College, Merici College and St Clare’s College. There is the National Curriculum, which ensures that those thousands of Australians with children in school who move across state borders have the opportunity for those children to continue their education. And there is a new health deal that is, frankly, the biggest health reform since Medicare.

There are all of these achievements, and yet there is a major agenda for the future. We are putting a price on carbon because we know the scientists tell us that climate change is happening and the economists tell us that a price on dangerous carbon pollution is the most effective way of dealing with the problem.

We have a big health reform agenda: e-health and investment in hospitals. In immigration, we have a regional solution through the Bali process. It has two aims: firstly, to increase the number of humanitarian migrants by 1,000 a year; and, secondly, to ensure that fewer kids die on the seas between Indonesia and Australia. No-one wants to see a repeat of the Christmas Island tragedy, and the Malaysian agreement is aimed at ensuring just that.

We have major reforms with the National Disability Insurance Scheme, aged care and mental health: issues that were long regarded as the ‘third rail’ of Australian politics—too dangerous to touch. We have commissioned major reports on those issues and we are setting about the consultations with states and territories to make them happen. On superannuation: we are boosting retirement savings because we know that Australians need a little bit more in the bank when they get to retirement. Fifteen per cent superannuation is good enough for those opposite. They are happy to give themselves 15 per cent—I do not see them moving any motions, saying, 'No, no, no! Don't let us have 15 per cent. Let's drop parliamentarians’ superannuation back down to nine per cent.' But nine per cent is good enough for ordinary Australians in the view of those opposite. We disagree. Labor is the party that put in place superannuation in the early nineties over the objections of those opposite. And Labor is the party that is now boosting superannuation to 12 per cent.

As was highlighted in question time, those opposite are happy to turn out to openings of new school buildings. Senator Gary Humphries joins me from time to time when I am opening new school buildings in my electorate. I am sure he is proud to be there, opening those new school buildings. But those opposite attack the school building program generally. They are willing to take a swipe at the whole program but are also delighted to turn up for the photo op when it is happening. We see exactly the same in the case of Trade Training Centres.

We see a clear contrast on the big issues in Australian politics. We want Australians to get a fair share of the minerals that are their birthright - the opposition thinks that miners pay too much tax. We are committed to global trade and the notion that Australia has always prospered as an open economy engaged with the world - they want to start a trade war with New Zealand. We are committed to rapid fiscal consolidation and clear budget rules - they have a $70 billion black hole, which is going to look even blacker when we have a Parliamentary Budget Office and there really will be nowhere to hide on those costings—no way of going to an election with an $11 billion hidden black hole as they did at the last election. Of course that $11 billion black hole at the last election looks pretty modest set against the $70 billion black hole that the opposition now faces.

We want to put a price on carbon pollution because we know, as all sensible policy makers do, that going to the heart of the problem is the right way to solve it. They want to put in place a direct action scheme. Maybe it is because they do not actually understand this stuff. Of course, there was the classic interview in which the Leader of the Opposition asked:

'If you want to put a price on carbon, why not just do it with a simple tax?'

But the thing that surprised me most, as an economist, is the next bit:

'Why not ask electricity consumers to pay more, then at the end of the year you can take your invoices to the tax office and get a rebate?'

I am not sure what the Leader of the Opposition was thinking. If you did it that way it is actually true that the assistance would undo the price effects. But that is not what anyone is proposing. We are proposing generous household compensation, untied to your carbon tax bill.

We want to put in place world-beating health policy on cigarettes - those opposite think that smoking is ‘fun’, and say things like, 'life kills'.

In the debate over plain packaging of cigarettes, we had some procedural shenanigans this afternoon, with the Coalition calling two 'quorums' on every Labor speaker. In order to get the debate finished, Labor eventually withdrew several of our speakers, including yours truly.

But I rather liked my speech (which Huw Pohlner and Louise Crossman had put a lot of time into), so have pasted it below for your enjoyment.

Most importantly, the bill has now passed the House of Representatives.

Plain Packaging
24 August 2011

Australia has been a leader on action to reduce smoking in the past and we have a chance again this year to do much more to protect the health of all Australians. This is a chance to demonstrate that we are not a nation that just says ‘no’ to progressive ideas, not a nation that shies away from taking bold steps, from taking the lead where it is right and proper to do so.

Smoking kills over 15,000 Australians every year. Put another way, for every two speeches in this debate, an Australian dies from smoking-related causes.

On one estimate, smoking costs our society $31 billion a year. It is responsible for 84% of lung cancer cases in men and 77% in women. We know the score when it comes to long-term smoking. The hacking cough, easy breathlessness, fatigue, chest infections and bloody phlegm.

We also know what happens when you stop smoking. Immediately, you smell better and your hair and clothes are no longer infused with the stench of stale smoke. In a week, most of the nicotine has left your body and your sense of taste has improved.  You gain so much more enjoyment from a meal or drink. An ex-smoker tells me she could finally drink herbal tea. A month later, better blood flow has improved your skin. People notice that you’re looking healthier. Three months down the track, your lung function has increased by 30%. You’ve got your breath back, so much air available, and you can finally feel it reaching right into your lungs and suddenly walking and running become much easier.  One year without a cigarette and your risk of heart attack has halved. You’ve also got noticeably more cash in your pocket. Ex-smokers describe quitting smoking as the best thing you’ll ever do.

If tobacco had been discovered today, it’s unlikely that most developed countries would legalise it. Uniquely, smoking is harmful even in small doses. This makes it unlike other legal vices, which can be consumed in moderation. The occasional double whiskey or deep-fried Mars Bar won’t kill you – but as the ad says ‘every cigarette brings cancer closer’.

Because cigarettes are such an abnormal product, the government is aiming to take away one of the tobacco industry’s last avenues for promotion: an attractive pack design. Described as ‘the silent salesman’, cigarette companies have long relied on slick packets to communicate to consumers not merely the desirability of their product, but also to reach out to particular target groups, such as youth, women, or consumers wanting a milder product.

In marketing jargon, cigarettes are known as a ‘badge product’, because the packaging is frequently displayed to others. As one industry insider put it, ‘if you smoke, a cigarette pack is one of the few things you use regularly that makes a statement about you. A cigarette pack is the only thing you take out of your pocket 20 times a day and lay out for everyone to see. That’s a lot different than buying your soap powder in generic packaging.’

A friend of mine actually changed the brand of cigarette that she smoked when she moved from the outer suburbs to the inner city. She’d realised that the cigarettes she smoked didn’t cut it status-wise so changed to fit in. But when she’d visit home, she’d revert back to the old brand to fit in with that group.

Much like brands of clothing, mobile phones and personal accessories, cigarette companies compete for status and social preference. They seek to differentiate themselves through symbols, colour, language and style. In 2010, one company introduced a ‘slide pack’, which opened via a side panel rather than the flip top. Their sales shot up 25% over six months and a further 32.5% after a year. Spokespeople for the company explicitly attributed sales success to the packaging.

For many smokers, packaging is a truly decisive factor. In one study, one in two smokers were not able to distinguish in blind tests between similar cigarettes. As an industry magazine advised in 1999, ‘If your brand can no longer shout from billboards, let alone from the cinema screen or the pages of a glossy magazine … it can at least court smokers from the retailer’s shelf, or from wherever it is placed by those already wed to it’.

Although no country has yet implemented plain packaging, medical researchers have run a spate of laboratory experiments to see how people’s perceptions of cigarettes change as design elements are progressively removed from the pack. For example, a 2009 study by Daniella Germain and coauthors recruited Australian adolescents (smokers and non-smokers). The researchers then randomly showed them regular cigarette packages, plain packages, or something in between. As branding was removed, adolescents became less positive about the kinds of people who smoked that cigarette, and more negative about its taste.

A Canadian expert panel reviewed a batch of studies in 1995 and found that they almost universally converged on one conclusion: plain packaging would likely lead to fewer people, particularly teenagers and young adults, starting smoking and more smokers choosing to quit. A separate review of the evidence up to 2009 concluded that plain packaging would have benefits across three core areas: ‘increasing the effectiveness of health warnings, reducing false health beliefs about cigarettes, and reducing brand appeal especially among youth and young adults’.

The laboratory evidence accords with what the tobacco industry has found in its street surveys. One marketing report (released as part of the US tobacco settlement) mournfully noted: ‘when we offered them Marlboros at half price – in generic brown boxes – only 21% were interested, even though we assured them that each package was fresh, had been sealed at the factory and was identical (except for the different packaging) to what they normally bought at their local, tobacconist or cigarette machine.’

Not surprisingly, the tobacco industry has reacted vehemently to plain packaging legislation, arguing that it will lead them to cut prices. From an economic standpoint, it is hard to see why this should occur. Price wars are generally a reaction to a temporary change in market conditions (such as the entry of a highly-leveraged competitor) – not to long-run changes in the market environment. The industry has also claimed that plain packaging will boost the illegal market, a strange claim given that many black market cigarettes are already sold in plain packages.

I have mentioned brand appeal. But the ways in which cigarette manufacturers choose to differentiate their products have also led some smokers to misconstrue the impacts of their actions on their own health. Looking at just one brand, one type of cigarettes with a gold logo on the pack was perceived to be much less impactful on smokers’ health and much easier to quit than the same cigarettes in a pack with a red logo. Researchers in that and another similar study found that ‘removing colours from packs, as well as terms such as ‘smooth’, ‘gold’ and ‘silver’ would significantly reduce false beliefs’.

This is why the government has chosen to legislate that all cigarette packaging will be uniformly olive coloured. Research has shown that this colour has the lowest appeal to smokers. I trust Australia’s olive-growers won’t be offended.

As for increasing the effectiveness of health warnings, the existing research is very clear. Health warnings on plain packs have been found in trials to be seen as more serious than the same warnings on branded packs. Brand imagery diffuses the impact of health warnings.

Branding also, quite simply, distracts the eye. Two UK researchers, Marcus Munafo and Linda Bauld, had a group of 43 respondents - non-smokers, light smokers and daily smokers - look at both plain and branded cigarette packets. All packs featured health warnings. Using eye-tracking technology, the researchers measured the number of times each participant viewed the top of the pack, which contained the brand information, and the bottom half of the pack, containing the health warning. They found that non-smokers and light smokers paid more attention to the health warnings on plain packs than on those emblazoned with logos, brand names and designs. Frequent smokers recorded no significant difference, indicating that they may have become conditioned to ignore the warnings.

This legislation will strengthen the effectiveness of health warnings; they will be the only colour and imagery on cigarette packs, and they will be larger and more dominant than ever before. The research findings from the UK support the idea that it is the future smokers of Australia in particular who will be most impacted by these changes and who may make different choices to what they otherwise would have.

Earlier this year, I received an email from a constituent about why we should support efforts reduce smoking rates. The constituent wrote:

‘My great-grandfather, grandfather, father and one of my uncles all died from smoking-related conditions. Each of the latter three died 20-30 years before the life expectancy for their generation. My father’s addiction contributed to two decades of poor health prior to his premature death, resulting in frequent periods where he was unable to work.

‘My siblings and I grew up in poverty, the effects of which are still evident, and the taxpayer bore the cost of his many hospitalisations as well as the cumulative years of income support our family depended on in lieu of employment. I say this so that you will understand my absence of sympathy for the ‘principle argument’, that tobacco companies have a right to make a profit from pushing legal drugs.’

This bill is a progressive health measure. While the national smoking rate is 17%, it remains considerably higher for disadvantaged groups: 26% among people living in low socioeconomic areas, 34% among Indigenous Australians, and 38% among the unemployed. Smokers in these groups also consume 15-20% more cigarettes than the average smoker.

This bill will also have particular benefits for regional Australia. Smoking rates in regional areas are twice as high as in the cities, and people in the bush have higher death rates from lung cancer, heart disease, asthma and chronic obstructive pulmonary disease.

And this bill will help non-smokers. We know that smokers harm those around them—children who inhale passive smoke, or the one-in-six babies born to mothers who smoked while pregnant.

This plain packaging bill – combined with the 25% excise increase announced in April 2010, and record investment in anti-smoking social marketing campaigns - we aim to reduce the national smoking rate to 10% by 2018.

I spoke at the start of this speech about Australia as a leader of nations. We are rightly proud that ours was one of the first nations to give the vote to women, to use income-contingent loans to expand universities, and to choose skilled migrants using a points system. We were among the first in the world to put in place a minimum wage, an old age pension, and unemployment and sickness benefits. Australia was a world leader in these areas, and our society is better for it.

When this legislation is passed, Australia will have the world’s toughest tobacco advertising laws. We will be the only signatory to the WHO Framework Convention on Tobacco Control to have implemented this key recommendation to emerge from the 2009 Conference of the Parties. On this issue, this is where Australia should be: at the head of the pack, leading the way. It has been nearly twenty years since the Hawke-Keating government passed the Tobacco Advertising Prohibition Act and it is time that another Australian government continued their work in protecting the health of all Australians from the debilitating effects of nicotine addiction.

In parliament today, I reported back on my conversations with Canberrans about same-sex marriage.

Same Sex Marriage - Report Back to Parliament, 24 August 2011

In a representative democracy parliamentarians have a responsibility to do more than simply reflect opinion polls. If that were our only job, you would replace us with machines that phone poll the electorate and voted accordingly.

Leadership is about careful judgment. But you cannot exercise that judgment without listening. On this issue I have been struck by the willingness of hundred of Canberrans to share their stories with me by email and in person in my electorate office, community forums and mobile offices, stories told with dignity, grace and humility.

Some people who have contacted me oppose changes to the Marriage Act. They argue that marriage has a long history of being only between a man and a woman. They say that marriage should protect the reproductive relationship and as much as possible give children the opportunity to be reared by their biological parents.

Brent and Wendy Budarick came to my Jamison Centre mobile office to speak with me and gave me a petition signed by 146 people that opposed same-sex marriage, and I thank them for that. From a similar perspective Gordon of Ngunnawal told me that the family unit ‘is inherently and naturally based on the procreation and raising of children by their natural mother and father’.

But most people who have contacted me would like to see a change to the law on the basis of equality, removal of discrimination, and social justice and acceptance. Cheryl of Downer wrote of her gay daughter who has had a number of friends suicide over a period of two years because of the stigma placed on gay people. She wrote:

'I believe that the strength of marriage will not be undermined by the equality of all people in seriously committed relationships to have the right to this recognition and the legal protection it offers. My heart cries for the young people who have been placed in circumstances so severe that the loss of life is the only course of action they can see as a way forward.'

Another constituent, who preferred that I not use her name, related how her six-year old asked, ‘Mum, why aren’t you and mummy married?’ She wrote to me:

'I want to celebrate the relationship I have with my partner fully in the way heterosexual people can in our country and my kids should be able to celebrate with us! And how it is very sad to have to tell them that the only reason was because our government would not let us despite a lot of people in our country having no issue with it.'

Alan Verhagen of Watson has lived with his partner for 15 years and told me of the couples he has watched stick by their same-sex partners for decades. As long as marriage excludes same-sex couples, Alan said:

'I feel it devalues those relationships. It sends a message that those relationships are not as real or valid as different-sex relationships. I feel it is time to send a message that same-sex relationships are as real and valid as same-sex relationships.'

Dianne and Ian Hinton of Palmerston told me about their son, Ivan. I would like to welcome them to the public galleries today. They wrote to me:

'He has found a wonderful man, Christopher. They bought a home in a typical family-oriented suburb, Ainslie, a home that they are renovating within a wonderful community that has not once treated them specially or separately because of their sexual orientation. They are registered foster carers and will make wonderful parents. In 2008, after being together for six years, they were married in Montreal, Canada.'

Sandra from Page urged me to amend the Marriage Act so that same-sex couples can marry because, in her words, ‘Marriage should be about love and commitment, not exclusion or prejudice.’ Sandra wrote that in those countries where same-sex marriages are allowed, ‘the fears of those who oppose reform have proven unfounded’. As the mother of a gay son it broke her heart to see what she considered ‘segregation and discrimination against him’.

Finally, we should not assume that this debate simply pits believers against atheists. Brendan from Page wrote to me after returning from Mass on Sunday to say that he would like his friends who are in same-sex relationships to have their relationship recognised as marriage if that is what they choose. A serving army officer who is a practising Catholic wrote to offer similar sentiments, as did Lin Hatfield Dodds, National Director of UnitingCare Australia. I note that there is even a Christians4Equality group.

In closing I would like to thank all of those who have taken time to share their stories with me and apologise that in five short minutes I can only relate a small portion of the deeply moving stories that have been shared with me. I hope we can continue to deliberate this important issue with the dignity and respect it deserves. I thank the member for Melbourne for moving this motion.

And thanks to Damien Hickman for his help in preparing this speech.http://www.youtube.com/embed/fB2bxeftE3U?hl=en&fs=1

Are you aged 16-22, living outside Australia's big five cities? Then why not put an entry into the ABC's HEYWIRE competition. As the competition website says:

The HEYWIRE competition is now open to people aged 16 - 22, to submit a story about life in Australia outside the major cities.

Your story can be created in any form of media: text, video, photography or audio.

Entries for the 2011 Heywire Competition close on Monday 19 September 2011 at 5pm.

And while I'm on the topic of youth competitions...

The Connections UnitingCare Anti-Poverty Awards recognise that there are many young people in Australia who are working towards the eradication of poverty locally, nationally or internationally. These awards aim to recognise and acknowledge the hard work and dedication of individuals and schools across Australia who demonstrate a deep understanding of the causes and effects of poverty. One recipient will a $4000 grant to continue their work and one school will win a $2500 Jinta Sport pack. Applications Close 31st August 2011.

For more information about the awards to apply visit www.connections.org.au/anti-poverty or free call 1800 137 036 and speak to someone in the Community Relations team.

I put out a media release today on the 'Kids Alive Do the Five' water safety campaign.

ANDREW LEIGH AND LAURIE LAWRENCE OFFER FAMILIES FREE WATER SAFETY DVD

With the weather starting to get warmer, Federal Labor Member for Fraser, Andrew Leigh, has joined with Laurie Lawrence in promoting the important Kids Alive Do the Five water safety message.

Andrew Leigh has organised with Laurie Lawrence for every local family to be provided a free Living with Water DVD.

“I have a copy of this DVD to ensure that both of my young boys are safe around water. I encourage all parents of young children to contact my office and get their hands on a copy of this free water safety DVD.

“Summer is just around the corner so now is the perfect time to be making sure our children learn the important Kids Alive do the Five water safety message,” said Andrew Leigh.

Drowning is the biggest cause of accidental death in children under five in Australia.

“Tragically, on average one child in Australia drowns each week.

“Showing your children this DVD is just one small way everyone can do their bit to reduce drowning in Australia.

“My two young boys are in swimming lessons and I know how important the Kids Alive do the Five is for parents as well as children,” said Andrew Leigh.

Andrew Leigh said that the work Laurie Lawrence has done through the Kids Alive project over nearly quarter of a century is nothing short of inspirational.

“It’s great to be able to team up with Andrew Leigh and offer every local parent this free DVD,” said Laurie Lawrence.

“Owning a swimming pool is a big responsibility. Pool owners must ensure that their pool is fenced and complies with local government legislation” said Mr Lawrence.

“And every local parent should grab a copy of the DVD from Andrew Leigh’s office and make sure their children are doing the five” said Mr Lawrence.

Laurie Lawrence’s Kids Alive Do the Five are:

1. Fence the pool


2. Shut the gate


3. Teach your kids to swim – it’s great


4. Supervise – watch your mate, and


5. Learn how to resuscitate

Andrew Leigh said that the Gillard Government was proud to be able to provide the funding for the Living with Water DVD, which is an important lifesaving initiative.

Copies of the DVD can be obtained by calling Andrew Leigh’s Office on 6247 4396 or emailing [email protected]

For further information on Laurie Lawrence’s Kids Alive Do the Five water safety program, visit www.kidsalive.com.au