Don't Hit The Big Spenders

Today, the Australian Financial Review published my opinion piece on economic growth. 

Since the industrial revolution, modern economies have been in a perpetual state of transition. Indeed, economist Paul Collier once likened economic growth to ‘running across ice floes’.

But sometimes the transitions are particularly fragile. Right now, risks to global growth include potential disruption to European gas supplies, fragility in the Chinese shadow banking sector, and the possibility that structural reform in Japan will falter. Domestically, there is significant uncertainty about how much mining capital expenditure will drop.

So what should a responsible government do in uncertain times? Earlier this month, the OECD’s Economic Outlook recommended that ‘heavy front loading of fiscal consolidation should be avoided’.

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Advice to those leaving high school

My Chronicle column this month offers a bit of advice to those finishing high school this year.

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A Mate for Head of State

Crowning glory would be our own head of state, Canberra Times, 26 March 2014

Walter Scott once wrote: ‘Breathes there a man with soul so dead / Who never to himself hath said / This is my own, my native land.’

Alas, these fine words have never been uttered by any Australian head of state about Australia. Under our Constitution, they never could be uttered.

That is because - while no British citizen can ever be Australia’s head of government - only a British citizen can ever be Australia’s head of state.

In 1999, Australia held a referendum. It was a three-cornered contest between bipartisan parliamentary appointment Republicans, direct election Republicans and Monarchists.

As Malcolm Turnbull has pointed out, the monarchists ‘delightedly, if cynically, exploited the division by promising the direct electionists that if the parliamentary model was defeated at a referendum they could have another referendum on a direct election model within a few years’.

We have waited half a generation since then.

Some counsel patience. They argue that the push for an Australian as head of state should wait until King Charles III ascends the throne.

This fundamentally misunderstands the argument for an Australian Republic. Republicans’ quibble is not with Queen Elizabeth II, Prince Charles and their heirs and successors. Each of these individuals has done their jobs diligently.

Indeed, a belief in the Republic does not lessen our respect for them as individuals. In 2012, when Prince Charles and the Duchess of Cornwall visited Canberra, I was pleased to welcome them on the tarmac of Canberra airport (wearing my Australian Republican Movement cufflinks). Respect and politeness for the royal family sits alongside my passionate belief that Australia should have one of our own as head of state.

Last year, Prince William and Kate Middleton welcomed their baby George into the world, and today, at least 800 babies will be born in Australia. I congratulate William, Kate and all their parents. To be a parent is one of the greatest blessings we can receive.

But I cannot for the life of me see why Baby George is better suited than every Australian baby to grow up to be an Australian head of state. The 800 children born in Australia will grow up around gumtrees and sandy beaches. They will call their friends ‘mate’ and barrack for the Baggy Greens, the Wallabies and the Socceroos. Their success in life will not be decided by their surname. If they say they live in a castle, it’ll be because they’re quoting Darryl Kerrigan.

In short, those 800 babies born today will be Australians.  And every one of them should be able to aspire to be our head of state.

Those who disagree with this view sometimes claim that the Governor-General is the head of state.  At best, a contentious, strained protestation. All members of the Australian Parliament swore or affirmed our allegiance to the Queen, not to the Governor-General.

At state dinners visiting Heads of State toast the Queen of Australia. Her image is on our currency. Australian Government websites say: ‘Australia’s head of state is Queen Elizabeth II.’

The slogan ‘Don’t know? Vote no’ has never been more powerful in Australian public life. Tony Abbott used it when he was campaigning for the monarchy in 1999, and has deployed it relentlessly in recent years, including against a market-based solution to climate change, fibre to the home broadband, and fiscal stimulus to save jobs.

It is a seductively simple line, but one that is more dangerous than ever as Australia grapples with complex challenges.

In the Asian Century, how do we think it looks to our Indonesian, Chinese, Korean and Japanese friends that we cannot shrug off the anachronism of having a member of the house of Windsor as our head of state? How does it sit with our claimed belief in the ‘fair go’ when the qualification to be our head of state is that one must be British, white and preferably male? Is this really the image we want to project?

In parliament this week, I moved a motion calling on the government to hold a referendum to make Australia a Republic.

In so doing, Australia would make it clear to ourselves and the world that instead of a foreign child in a foreign land, we trust an Australian child to grow up and be an Australian head of state. Such a child will be more appropriate for us, more representative of us and more worthy of us ­– a child who knows their own, native land in their living, Australian soul.

Andrew Leigh is the federal member for Fraser, and his website is www.andrewleigh.com.
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Population in the Tele

The Daily Telegraph today publishes an extract from my population speech at the Lowy Institute.

Don't be scared, let's populate and prosper, Daily Telegraph, 20 March 2014

If there’s one thing that’s really big in the population size debate, it’s the size of the scare campaigns made by both sides. One side tells us that a big Australia is a ‘catastrophe’, while the other says that slow population growth will hurt share prices and drive up debt.

Australians comprise just one in 300 of the world’s population. We have the third-lowest population density of any country. Only Mongolia and Namibia have fewer people per hectare than Australia. Yet we also have one of the highest urbanisation rates. Nearly nine in ten Australians live in urban areas.

An unusual feature of the Australia’s population debate is how much it is sparked by population projections. This is especially odd given the record of past projections. In 1888, the Daily Telegraph predicted that the population in 1988 would be 60 million. The Australian Treasury recently updated its population forecast for the 2040s from 26 million to 35 million.

And while you might think that the government has two population levers: one marked ‘more babies’ and one marked ‘more migrants’, only one of them really works. Government can control migration, but its policies have little impact on whether or not people have babies. So the population debate is really a migration debate.

In the debate over a larger Australia, there are dud arguments on both sides.

Advocates of more migration argue that size will reduce the per-person cost of government, and give us much additional heft on the global stage. I don’t think there’s much evidence for either of these.

But it does seem likely it will get us better cultural goods, such as international sporting events and great entertainers. If you want to host a World Cup or attract the world’s best musicians, size helps.

Perhaps the best argument for a larger population is that it means more entrepreneurs. One channel for this is simply scale: if extraordinary people like Albert Einstein and Steve Jobs are one in a million, then it follows that they are also an argument for another million people. Innovators may also be over-represented among migrants. Some evidence suggests that bilingualism raises intelligence, and a global outlook is good for business (half of Australia’s exporters are foreign-born).

How about the claimed costs of migration?

It is often said that a larger population will mean more traffic congestion. Over the past decade, Sydney’s population has grown by 12 percent, while commuting times have grown by 4 percent. And yet while gridlock is one of the most serious problems faced by Sydneysiders today, the best way to address it is through good city planning and economically sensible policies, not population control. Even if we stopped all population growth tomorrow, cars would still become cheaper to buy and use. We should tackle congestion efficiently and directly, not via population policies that could harm Australia in other ways.

A similar argument applies to house prices, where the best approach is to focus directly on housing affordability, by removing unnecessary supply constraints, and ensuring that housing policies are as effective as possible. Even if we adopted a zero population growth strategy, rising incomes and higher marriage ages would still drive up the demand for housing, creating a good argument for getting housing policies right. Likewise for the natural environment, where market-based policies can do far more than population control to address the challenges of water supply and climate change.

Population growth has the potential to get us things we cannot obtain in other ways: better cultural goods and a more productive, more entrepreneurial culture. A larger nation has more mouths, but also more minds. Size has potential costs, but economics teaches us that these are best addressed by good policies to reduce congestion, increase housing supply and protect the environment.

Over the past decade, three in ten permanent immigrants have been family reunion, six in ten have been skilled migrants, and one in ten have been refugees. Skilled migrants are more likely to compete with high-wage workers, making the Australian immigration system quite different from the US immigration system. Some evidence suggests that the Australian skilled migration system reduces inequality.

The skilled migration system can surely be improved – for example, through harmonising occupational requirements with source countries, or better exchanging data on applicants’ labour market history. But overall, it should be a source of pride.

Skilled migration will remain the largest component of our permanent migration program, and it is vital that we don’t just focus on ‘how many?’, but also on ‘who?’. If we want to have a healthy migration debate, then ensuring that our migrant mix reflects our national values and priorities matters more than fretting about the next set of demographic projections.

Andrew Leigh is the Shadow Assistant Treasurer, and his website is www.andrewleigh.com. This is an edited extract of a speech delivered at the Lowy Institute.
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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.