tag:theconversation.com,2011:/uk/topics/andrew-leigh-6510/articlesAndrew Leigh – The Conversation2023-08-10T04:43:37Ztag:theconversation.com,2011:article/2113422023-08-10T04:43:37Z2023-08-10T04:43:37ZPolitics with Michelle Grattan: Labor president Wayne Swan on the party’s coming national conference<p>Next week the Labor Party will hold its national conference in Brisbane. It’s the first face-to-face conference in five years. These conferences don’t have anything like the bite they once did, but there’s still a chance for the party’s rank and file to have a shout about issues. More than 400 delegates will be there. Most of the delegates are aligned to a faction, and for the first time in decades the left will have the largest slice of the numbers. </p>
<p>AUKUS and the Stage 3 tax cuts are expected to be among the hot topics, but the conference will be carefully managed – there will be no defeats for Prime Minister Anthony Albanese. Ahead of the conference, we have already seen the government change its stance on Palestine, a sensitive subject among the left and right factions of the party.</p>
<p>In this podcast we talk with Wayne Swan, the Labor Party National President. Swan was treasurer and deputy prime minister in the Rudd and Gillard governments. </p>
<p>National conferences have “enormous power” Swan claims, denying they have lost clout, and casting the conference as more of a “partnership” between the party and the parliamentary caucus: </p>
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<p>Of course the parliamentary caucus does operate within the confines of the platform. And on one or two occasions in history there have been fundamental conflicts between the two. But for most of our history, Labor parliamentary caucuses, Labor prime ministers, Labor leaders of the opposition have worked within the confines of the platform and that’s where we are today.</p>
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<p>Recently, Labor assistant minister Andrew Leigh strongly criticised the stranglehold the factions have on the party. Swan is in complete disagreement with Leigh: </p>
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<p>It’s true to say that people mix and vote differently on different issues from different backgrounds at different times, which doesn’t always coincide with the story that Andrew tells in his recent essay. The factions are nowhere near as monolithic as Andrew presents them, and many more people get involved in the party who don’t come from the sort of backgrounds that you would imagine if it was just two big monolithic groupings. Our party is very much representative of the general community.</p>
<p>Yes, factions are organising groupings in the party, but they are much more diverse and free flowing then the presentations Andrew [presented] to people.</p>
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<p>On the conference issues, Swan says:</p>
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<p>I certainly think there’ll be a debate over AUKUS and I hope there is. As we’ve been through the history of this party - it’s 132 years [old] - national defence has always loomed large in our party conferences. Indeed the party split during the First World War over these sorts of issues. </p>
<p>People are passionate about the very big issues. That’s why the Labor Party has been around so long and why it’s the oldest social democratic labour party in the world.</p>
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<p>Swan as treasurer went through the global financial crisis, when Australia managed to avoid a recession. Swan’s former chief of staff, Jim Chalmers, is now in the economic hot seat. Swan believes Australians now are much more accepting of government intervention, using COVID as an example: </p>
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<p>One of the great differences between my period and Jim’s period is that the inadequacies of trickle down economics and the use of fiscal policy not only to promote growth but to promote equity is now much more strongly supported in our community than it was when I was last treasurer, simply because it was demonstrated through COVID in particular.</p>
<p>The intervention by government to massively support the economy and to produce social and to, if you like, produce desired social and economic outcomes was entirely legitimate.</p>
<p>One of the reasons the Liberal Party is floundering so much is that it’s in denial about this one important fact about our nation, that government must always intervene to protect people, to protect their jobs, and to distribute income throughout an economy, particularly when an economy is under threat from something like COVID or an international recession. During the GFC, we did precisely that. We were opposed all the way by the conservatives, they were forced to take similar steps during COVID, and now it is much more established that government has a fundamental role in intervening in the economy to protect people, to deal with insecurity and inequality.</p>
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<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In this podcast we talk with Wayne Swan, the Labor Party National President. Swan was treasurer and deputy prime minister in the Rudd and Gillard governments.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2101322023-07-20T11:06:35Z2023-07-20T11:06:35ZGrattan on Friday: We see a great deal of the Albanese government, but we don’t know much about what goes on behind the scenes<figure><img src="https://images.theconversation.com/files/538469/original/file-20230720-15-8p9vzc.jpeg?ixlib=rb-1.1.0&rect=2%2C4%2C1435%2C952&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">PMO</span></span></figcaption></figure><p>Andrew Leigh won’t have made himself many friends in Labor with his attack this week on the stifling power of the party’s factions. </p>
<p>Then again, when it comes to political advancement, Leigh’s non-factional status has, in opposition and government, left the well-credentialed Assistant Minister for Competition, Charities, Treasury and Employment relatively friendless. To ascend to the higher reaches of the ladder in Labor, you need to march in either the right or left battalion. </p>
<p>Leigh’s Wednesday speech, denouncing the factional “duopoly” and pointing to its downsides, received little attention among colleagues. The system suits very well those it benefits. </p>
<p>Labor has a long history of factions. What is distinctive about them now is how professionally they operate, as two powerful machines of control in an alliance of mutual convenience.</p>
<p>Under a proportional representation system, the factions carve up all the spoils – ministries, seats, trips. In the federal caucus, they keep the troops in line, so there are few notable breakouts. </p>
<p>That (as Leigh says) such an arrangement can undermine democracy within the party, suppress internal policy debate, and make it harder to attract and advance good candidates – who cares? That’s the way politics works, isn’t it? </p>
<p>It may be. But that doesn’t mean it should be, at least to the extent that it is. </p>
<p>Factions within broad-based political parties have their place in bringing together people with common views, playing an organising role, managing conflict. </p>
<p>But when they become over-tight, as in Labor, they can eventually corrode democracy more generally. Or where, as in the Liberals, they are warring fiefdoms, resorting to “whatever it takes” behaviour (as in the NSW division), they are seriously dangerous to their host party. “Community candidates” are attractive to some voters fed up with over-factionalised parties. </p>
<p>Currently, Labor’s factional system works very nicely for Prime Minister Anthony Albanese (who hails from the left). In contrast, factions in the Liberal Party are a nightmare for Peter Dutton, trying to keep together a party split on fundamentals. </p>
<p>In Labor, right and left have converged on the centre as they have become less ideological and found common interest in an orderly sharing of spoils. In the Liberals, the factions have increasingly diverged and formalised, with the right becoming more assertive and ideological and the moderates losing ground in most parts of the party. </p>
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Read more:
<a href="https://theconversation.com/word-from-the-hill-on-ditching-the-commonwealth-games-the-voice-pamphlet-labors-factions-210060">Word from The Hill: On ditching the Commonwealth Games, the Voice pamphlet, Labor's factions</a>
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<p>Within the federal Labor caucus, not only is everyone factionalised apart from Leigh and fellow ACT MP Alicia Payne, but as they have become all-pervasive, the factions have been tamed. Debates in caucus over policy are virtually non-existent; a few questions to the frontbench can be seen as a lively caucus meeting. </p>
<p>Leigh argues the factionalism at the party’s grass roots risks forcing recruits into an “uncomfortable choice”. Uncomfortable or not, the members make that choice, at least when it comes to the party’s national conference. </p>
<p>Voting for delegates to the conference, to be held in Brisbane on August 17-19, has just finished. There’ll be 402 delegates, half of whom are chosen directly by the rank and file. Of the 402, only about 20 are unaligned with either broad faction. </p>
<p>For the first time since the 1980s, the left will be the largest faction at the conference, with 49% of the total delegates, compared to the right’s 45%. In theory, this gives the unaligned delegates a balance of power. In practice, the factional chiefs will wrangle deals and trade offs. The debate about AUKUS is set to be a major test at the conference, but the factional heavyweights will manage it in a way that ensures it doesn’t embarrass Albanese (one insider makes the point this isn’t new, but how successful conferences have operated historically). </p>
<p>Labor’s blanket factionalism, with its modus operandi, is part of a wider development – the extensive professionalisation of modern politics generally, and the priority it gives to control. This has been a creeping phenomenon.</p>
<p>The government has an army of propagandists (titled “media advisers”) in ministerial officers to control and promote its messages, which are crystallised into comprehensive “talking points” (or swot sheets) for frontbenchers and backbenchers. Ministers are deployed with military precision to occupy the daily media landscape. No trench is left without a soldier.</p>
<p>The sheer volume of the government’s media presence (mainstream and social) disguises the large void in our current knowledge of what is happening behind the scenes. </p>
<p>Once, the media had much more access to the public service to discuss policy (we’re talking about background information, not “leaks”). Governments shut this down, as far as they could, years ago. Ministerial offices jealously guard the flow of information; if public servants are called in to do any media briefing, it is strictly overseen. </p>
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Read more:
<a href="https://theconversation.com/grattan-on-friday-labors-godfather-seeks-deal-on-electoral-reform-but-some-fear-changes-could-disadvantage-community-candidates-208285">Grattan on Friday: Labor's 'Godfather' seeks deal on electoral reform – but some fear changes could disadvantage community candidates</a>
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<p>There is access to material through freedom of information, but this has its strict limits and needs reform. </p>
<p>The media know very little about the internal dynamics of the Albanese cabinet. From Albanese’s point of view, this is a triumph. It is a product of a high degree of genuine unity, but it is also a mark of iron discipline. </p>
<p>Sometimes, when journalists hear what’s said in a cabinet, it’s a sign of leadership destabilisation. Remember the spectacular leaks from Tony Abbott’s cabinet, driven by the Turnbull camp’s (successful) undermining. It was the same in the latter days of Bob Hawke. </p>
<p>At other times during the Hawke government, there was a steady flow of information about ministers’ positions on issues and the arguments they were putting, which told a lot about the policy-making process and relations among ministers. For example, from early on in that government, much was known about the relationship between treasurer Paul Keating and Hawke.</p>
<p>We have little insight into the dynamic between the current PM and Treasurer Jim Chalmers. We do know they differed over the Stage 3 tax cuts. But that was early – what about other issues? We’re aware there’ve been strains between Resources Minister Madeleine King and Industry Minister Ed Husic, but they haven’t been given much media attention. </p>
<p>Significantly at the moment: what, if any, cabinet debate is going on about the strategy to boost the Voice, now its support is flagging? If there is not that debate, this says something about the cabinet. In general, we have minimal detail about the Albanese cabinet’s remit. For instance, what was the degree and timing of the full cabinet’s involvement in the planned AUKUS spend? Is the government’s decision-making effectively done in the expenditure review committee and the national security committee, as well as at leadership level?</p>
<p>Of course we can’t put all our ignorance down to control – we, as media, are not marshalling our own forces sufficiently. </p>
<p>It’s an irony. The PM and his ministerial team swarm into every corner of the media. But the media know less about the entrails of decision-making than we often did before the 24-hour news cycle.</p><img src="https://counter.theconversation.com/content/210132/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Labor has a long history of factions. What is distinctive about them now is how professionally they operate, as two powerful machines of control in an alliance of mutual convenienceMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2100602023-07-19T07:50:14Z2023-07-19T07:50:14ZWord from The Hill: On ditching the Commonwealth Games, the Voice pamphlet, Labor’s factions<p>As well as her interviews with politicians and experts, Politics with Michelle Grattan includes “Word from The Hill”, where she discusses the news with members of The Conversation’s politics team.</p>
<p>In this podcast Michelle and politics + society editor Amanda Dunn discuss Premier Dan Andrews’ surprise decision to pull Victoria out of hosting the 2026 Commonwealth Games. They also canvass the official yes and no cases issued this week for the Voice referendum, and Labor frontbencher Andrew Leigh’s strong speech warning of the excessive level of factional control within the Labor Party.</p><img src="https://counter.theconversation.com/content/210060/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In this podcast, @michellegrattan and politics editor @amandadunn10Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2099722023-07-18T12:35:19Z2023-07-18T12:35:19ZAndrew Leigh calls out how Labor’s factional ‘duopoly’ is undermining the party<p>Andrew Leigh, an assistant minister in the Albanese government, has launched a swingeing attack on the stranglehold the factional “duopoly” has on the Labor Party. </p>
<p>Leigh says the factions’ power is at an all-time high, which suppresses ideological debate, distorts preselections, and discourages people joining the party. </p>
<p>As one of two non-factional members of caucus, it is generally recognised that the promotion of Leigh, who has strong economic qualifications, has been handicapped by not being in the Left or Right. </p>
<p>In a speech to the Per Capita think tank’s John Cain Lunch, released before its Wednesday delivery, Leigh says he’s not arguing factions should be banned but that “not being in a faction should be as valid a choice as joining a faction”. </p>
<p>He says the silence about the factions and their operations “should be a clue. If a group’s practices and deals start to sound like they’ve been plucked from a John le Carre novel, these people should ask themselves whether their shenanigans befit Australia’s most important political party.” </p>
<p>In an excoriating critique of the way factionalism is operating at federal and state level, Leigh says today’s factions “are less likely to broker ideological debates than to try and find a way of avoiding the debate altogether”. He contrasts this with the 1990s feisty debates at NSW ALP conferences, and at national conferences, which showed Labor “was a sufficiently large tent to contain a spectrum of ideological perspectives”. </p>
<p>“If we stifle internal debate, we miss the chance to test our policies among ourselves,” Leigh says. </p>
<p>“As Assistant Minister for Competition, I can’t help but wonder if part of the problem is what we would call an increase in market concentration.” Leigh points to the collapse of the Centre Left faction, which was strong in the 1980s, and the decline of non-factional parliamentarians, producing a duopoly of Right and Left.</p>
<p>“And just as duopolies in the product market hurt consumers through price gouging and profiteering, so too duopoly factions may engage in behaviour that is not in the long-term interests of the party and its membership. </p>
<p>"When factional competition is less intense, dealmaking can replace debate. If factionalism becomes effectively compulsory, the party may become less dynamic.”</p>
<p>Factions can be profoundly undemocratic, Leigh says. </p>
<p>“In some jurisdictions, factions require their members to use a ‘show and tell’ approach to internal Labor Party elections. In the room where ballot papers are handed out, the faction sets up a second table. </p>
<p>"When members are given their ballot paper, they must walk over to the factional table, and hand their ballot paper to a factional official. </p>
<p>"That factional official then fills in their ballot paper, and gives it back to the party member to be deposited into the ballot box. This rule applies to all members of the faction, from new members to ministers. Failure to comply can mean expulsion from the faction.” </p>
<p>In contrast, “no Labor government would tolerate an organisation that set up a table in the corner of the polling station, asking people to volunteer to have their ballot papers filled in for them. We would see it as utterly undemocratic. Yet we tolerate it in our own internal elections.”</p>
<p>Criticising the way the factions carve up seats, Leigh says they are “at their worst when they serve only as competing executive recruitment agencies”. </p>
<p>“In most states, preselection is virtually impossible for people outside the factional system. It’s a case of Left, Right, or Out.”</p>
<p>He highlights the Victorian “Stability Pact” – “an agreement between the factions in which every winnable seat, every party leadership position, and every spot on every committee is divided between the Left and the Right, with a no-contest rule on the other’s possessions. </p>
<p>"Like the nineteenth century colonial powers meeting in Berlin to divide up Africa, the Stability Pact effectively takes away the ability of local members to have their say. Nominally, the party rules say that preselections depend equally on local member votes and the central committee. But if the factions vote together, then even a 90% local member vote can be overridden by a 95% central committee vote.” </p>
<p>Allocating seats to factions is “electorally reckless” because it can lead to failing to field the best person for a particular electorate, Leigh says. </p>
<p>He says factional dominance causes unnecessary division, with the risk of forcing new recruits to the party into an “uncomfortable choice”. Factionalism also has bad consequences in Young Labor and in university Labor clubs, with many campuses having two clubs, one for the Left and one for the Right. </p>
<p>“Factional dominance risks eliminating a tradition with deep roots in the Labor Party: people who simply choose to be part of the party,” Leigh says. </p>
<p>“Most Labor members will never seek a career in parliament or as a party official. They simply want their party to recognise that a non-factional member of the Labor Party is no less worthy than a factional member.</p>
<p>"On election day, these members will staff booths from dawn to dusk. They are motivated not by power, but by altruism. They joined Labor to shape a better nation. They should not be treated as second-class citizens within our party.”</p><img src="https://counter.theconversation.com/content/209972/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>He says factional dominance causes unnecessary division, with the risk of forcing new recruits to the party into an “uncomfortable choice”Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/598992016-06-15T03:44:50Z2016-06-15T03:44:50ZState of the states: Australian Capital Territory voters face two elections in 2016<figure><img src="https://images.theconversation.com/files/125331/original/image-20160606-25972-uergxs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Both ACT-based seats in the federal parliament are held by Labor MPs.</span> <span class="attribution"><span class="source">AAP/Mick Tsikas</span></span></figcaption></figure><p><em>Ahead of polling day on July 2, our <a href="https://theconversation.com/au/topics/state-of-the-states-2016">State of the states series</a> takes stock of the key issues, seats and policies affecting the vote in each of Australia’s states and territories.</em></p>
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<p>The Australian Capital Territory comprises just two House of Representatives electorates: <a href="http://www.abc.net.au/news/federal-election-2016/guide/canb/">Canberra</a> to the south and the <a href="http://www.abc.net.au/news/2016-01-28/electorate-of-canberra-creeps-north-to-encompass-inner-city/7122282">recently renamed</a> <a href="http://www.abc.net.au/news/federal-election-2016/guide/fenn/">Fenner</a> (formerly Fraser) to the north. A <a href="http://www.aec.gov.au/Electorates/Redistributions/2014/act/index.htm">redistribution</a> has changed the boundaries somewhat. </p>
<p>As they are both very safe Labor seats, political attention is usually focused instead on the contest for the second Senate seat, as well as on the bellwether seat of <a href="http://www.abc.net.au/news/federal-election-2016/guide/emon/">Eden-Monaro</a> across the border in New South Wales.</p>
<h2>Key seats</h2>
<p>The sitting members are running on national issues, including housing affordability and federal support for major road works. Their Liberal opponents have highlighted the leadership of the prime minister, Malcolm Turnbull – counting on his Canberra appeal to lift the party vote.</p>
<p>The sitting Labor MPs, Andrew Leigh and Gai Brodtmann, are well-established members of the shadow ministry. They were both first elected in 2010. Leigh is the shadow assistant treasurer and Brodtmann is the shadow parliamentary secretary for defence. Their Liberal and Greens opponents are all first-time candidates, which should advantage the incumbents somewhat.</p>
<p>The Australian Electoral Commission categorises <a href="http://www.aec.gov.au/profiles/act/canberra.htm">the</a> <a href="http://www.aec.gov.au/profiles/act/fenner.htm">seats</a> – among the largest in the lower house by population – as inner metropolitan: that is, situated in a capital city and with well-established built-up suburbs. The ACT is also demographically quite homogenous, with a highly educated white-collar workforce.</p>
<p>The safer of the two seats is Fenner, in which Leigh holds on a very substantial margin of 12.5%. The recent redistribution may eat into that margin somewhat, though, as the suburbs lost in the inner north were strong Labor-Green areas. </p>
<p>The seat, which covers Gungahlin, Belconnen and parts of the inner-northern suburbs, also includes the Jervis Bay Commonwealth Territory on the south coast. First established in 1974, Fenner has always been held by Labor. </p>
<p>The Greens’ heartland is the inner north, which is now split between the two seats. In 2013, the Greens candidate polled 14.1% of the first-preference vote.</p>
<p>The seat of Canberra, held by Brodtmann on a margin of 7.5%, has never been quite as safe as Fenner. The Liberals have held it twice: between 1975 and 1980 and 1995 and 1996. </p>
<p>As well as the inner south, which includes Parliament House itself, the electorate includes Woden, Weston Creek, Tuggeranong, and the industrial districts of Fyshwick and Hume. Norfolk Island residents entitled to vote also vote in Canberra. </p>
<p>The southern suburbs of Tuggeranong are slightly less rusted-on Labor voters. In recent times the perception they have been neglected by the territory government has taken hold.</p>
<p>The strong likelihood is Labor will easily hold both ACT seats, possibly with increased margins over the Liberals. The redistribution may even out the voting across the two seats. The Greens will again poll strongly.</p>
<p>The two ACT senators are the former chief minister, Katy Gallagher, and the former ACT opposition leader, Zed Seselja. Both are relatively new. For years there has been most interest in the ACT in the contest for the second of the two Senate seats, invariably held by the Liberal Party. </p>
<p>The challenge for the Greens, and previously the Democrats, has been to reach the quota of 33.4% with the assistance of Labor preferences. On several occasions, high-profile candidates have come quite close, but it is a near impossible task.</p>
<p>In 2016 Seselja, an <a href="http://www.abc.net.au/news/2015-09-15/act-senator-zed-seselja-has-no-regrets-over-abbott-support/6778626">unabashed Tony Abbott supporter</a>, is being challenged by the Greens’ Christina Hobbs, a UN food security expert. But he should hold the seat.</p>
<h2>Key local issues</h2>
<p>Federal politics is intertwined with local ACT politics more than usual this year: there is a territory poll due on October 14 for the <a href="http://www.elections.act.gov.au/elections_and_voting/2016_legislative_assembly_election">ACT Assembly</a>. The Barr Labor government is under pressure. </p>
<p>Local politics is dominated by one big issue: Labor’s plans to build an expensive <a href="http://www.abc.net.au/news/2016-02-07/does-the-act-labor-government-have-a-mandate-for-light-rail/7144218">light rail system</a> from the city to the northern district of Gungahlin. </p>
<p>The plan is very divisive – especially in southern Canberra. It could feed into the federal election against Labor.</p>
<h2>Policy proposals</h2>
<p>As neither ACT seat is marginal, major election promises from either major party are not expected. </p>
<p>Canberra is a public-service city. So, one big issue is the Abbott-Turnbull government’s <a href="http://www.abc.net.au/news/2016-05-04/labor-warn-budget-cuts-to-public-service-will-hurt-canberra/7381782">cuts to the federal public service</a>, though the impact on the local economy has not been as drastic as many feared – and Labor’s record is not entirely clean. The recent federal budget has been <a href="http://www.canberratimes.com.au/act-news/federal-budget-2016-andrew-barr-slams-cuts-to-canberra-institutions-20160503-golf19.html">calculated to mean</a> a loss of 1,400 public-service jobs in Canberra.</p>
<p>Associated with these cuts are the <a href="https://theconversation.com/getting-more-bang-for-public-bucks-is-the-efficiency-dividend-efficient-24803">efficiency dividends</a> imposed on the national cultural institutions such as the Australian War Memorial, the National Library of Australia, the National Gallery and the National Portrait Gallery. These institutions are not only of cultural importance in Canberra but, as tourist destinations, increasingly significant in the local economy.</p>
<p>The ACT’s demographics, with Greens support above the national average, means policies such as action on climate change, same-sex marriage, and refugee and asylum-seeker policy also have a particular impact.</p>
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<p><em>Catch up on <a href="https://theconversation.com/au/topics/state-of-the-states-2016">others in the series</a>.</em></p><img src="https://counter.theconversation.com/content/59899/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Warhurst does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Federal politics is intertwined with local ACT politics more than usual this year: there is a territory poll due on October 14 for the ACT Assembly. And the Barr Labor government is under pressure.John Warhurst, Emeritus Professor of Political Science, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/521472015-12-11T07:20:58Z2015-12-11T07:20:58ZFactCheck: might every household have to pay an extra $4,500 in GST a year?<blockquote>
<p>If you’re raising $45 billion then that is effectively saying to every Australian household: you’re going to pay $4,500 more tax every year. – Shadow Assistant Treasurer Andrew Leigh, <a href="http://www.andrewleigh.com/is_tony_abbott_auditioning_to_be_australia_s_donald_trump_transcript">speaking with</a> journalist Alison Carabine on RN Breakfast, December 9, 2015.</p>
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<p>GST reform is again front and centre of the tax policy debate, with state and federal leaders discussing the issue at the Council of Australian Governments (COAG) meeting in Sydney this week. </p>
<p>Is Labor’s shadow assistant treasurer, Andrew Leigh, right to warn that each Australian household may face the prospect of paying an extra A$4,500 a year in GST?</p>
<h2>Checking the source</h2>
<p>A spokeswoman for Leigh told The Conversation that the figure of A$45 billion was taken from a Fairfax <a href="http://www.smh.com.au/federal-politics/political-news/everything-is-on-the-table-leaked-coag-agenda-reveals-gst-changes-being-considered-20151208-gli766.html">news report</a> on a leaked COAG document that details federal Treasury modelling prepared in July.</p>
<p>According to the Fairfax report, the modelling outlined various GST options, including:</p>
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<p>The fourth and most radical option would be to raise the GST to 15%, expanding it to include food and non-alcoholic drinks, water and sewerage. This would raise $45 billion annually.</p>
</blockquote>
<p>Leigh’s spokesman said dividing $45 billion by the roughly 10 million households we have in Australia gets you an average of $4,500 per household. </p>
<p>Leigh’s statement begins with an “if”, which is an acknowledgement that the $45 billion option is just one of many options on the table.</p>
<p>But the key phrase in the Fairfax report Leigh is referencing is “most radical option”. The scenario he warns of is at the extreme end of the scenarios that Treasury modelled. </p>
<h2>Perspective, please</h2>
<p>Leigh’s comment about the $45 billion option does reflect recent <a href="http://www.smh.com.au/federal-politics/political-news/everything-is-on-the-table-leaked-coag-agenda-reveals-gst-changes-being-considered-20151208-gli766.html">news reports</a> on leaked Treasury modelling. However, his phrasing would leave most people with the impression that the GST burden could be divided equally across all households. That impression is misleading.</p>
<p>A bit of perspective is required.</p>
<p>Firstly, GST reform will affect households differently, based on the consumption patterns of different household types.</p>
<p>Like Treasury, the Parliamentary Budget Office (PBO) recently <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/research_reports/Goods_and_Services_Tax">mapped out</a> a range of GST reform scenarios, detailed in the table below. </p>
<p>The PBO’s Scenario Four would boost the GST rate to 15% and extend it to basic food, water and sewerage – this would raise $42.1 billion. The PBO’s most extreme option, Scenario Five, would also include health, education and child care and would raise $49.3 billion in net additional GST revenue.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=340&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=340&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=340&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=427&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=427&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105217/original/image-20151210-7422-14sk3no.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=427&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/research_reports/Goods_and_Services_Tax">Parliamentary Budget Office</a></span>
</figcaption>
</figure>
<p>The PBO modelling <a href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/research_reports/Goods_and_Services_Tax">shows</a> (in table 4-12) that wealthy people (who spend more) will pay more GST overall than poorer people. Under the PBO’s Scenario Four, households in the top 10% for income could expect to face an increase of tax in absolute terms that is three times higher than for households in the bottom decile. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=233&fit=crop&dpr=1 600w, https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=233&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=233&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=293&fit=crop&dpr=1 754w, https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=293&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/105357/original/image-20151211-8297-wsl8f6.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=293&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">How the PBO’s Scenario Four GST reform option will affect different income deciles (D1 is lowest income decile, D10 is the top income decile).</span>
<span class="attribution"><a class="source" href="http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Budget_Office/research_reports/Goods_and_Services_Tax">PBO</a></span>
</figcaption>
</figure>
<p>So Leigh’s approach of averaging the $45 billion out across all households – as though we all buy the same amount of goods and services – is not very reflective of reality.</p>
<p>Secondly, remember that his warning reflects the most radical of the scenarios modelled by Treasury. </p>
<p>The GST proposals <a href="http://www.smh.com.au/federal-politics/political-news/everything-is-on-the-table-leaked-coag-agenda-reveals-gst-changes-being-considered-20151208-gli766.html">modelled by Treasury</a> include increases in the rate of the GST to 12.5% or 15%; and/or broadening the base of the GST to include food, water, sewerage, health, education and/or financial services. The funds raised by the various models range from $15 billion to $45 billion.</p>
<p>The third thing to bear in mind is compensation.</p>
<p>Leigh’s statement was not about people’s net position, it was about how much tax people paid and he made no direct comment on compensation. But when you hear about GST reform, remember it <a href="http://www.smh.com.au/federal-politics/political-news/scott-morrison-says-tax-take-wont-change-if-gst-is-increase">remains</a> <a href="http://www.andrewleigh.com/is_tony_abbott_auditioning_to_be_australia_s_donald_trump_transcript">unclear</a> what level of <a href="http://www.abc.net.au/news/2015-11-09/malcolm-turnbull-wont-increase-gst-without-compensation-schemes/6924766">compensation</a> will be built into any policy to raise the GST. </p>
<p>The Grattan Institute has modelled the compensation that would be required as part of GST reform. The institute <a href="https://theconversation.com/what-would-make-a-gst-increase-fair-50237">presented</a> a model that would ensure that on average households with incomes of less than $100,000 would be no worse off. </p>
<p>The matter of compensation is unresolved, with contradictory statements from the <a href="http://www.abc.net.au/news/2015-11-09/malcolm-turnbull-wont-increase-gst-without-compensation-schemes/6924766">prime minister</a> and <a href="http://www.smh.com.au/federal-politics/political-news/scott-morrison-says-tax-take-wont-change-if-gst-is-increase">treasurer</a>.</p>
<p>Of course, it’s theoretically possible that there will be no compensation for low-income people as part of a plan to boost the GST rate, but Prime Minister Malcolm Turnbull has <a href="http://www.abc.net.au/news/2015-11-09/malcolm-turnbull-wont-increase-gst-without-compensation-schemes/6924766">described</a> that as “inconceivable”.</p>
<h2>Verdict</h2>
<p>Andrew Leigh’s phrasing would leave most people with the impression that the GST burden could be divided equally across all households. That impression is misleading.</p>
<p>The statement by the shadow assistant treasurer reflects the “worst” of the scenarios presented by Treasury modelling. Even if no compensation is paid, the increase in the GST paid by low-income households is lower than the GST increase on the expenditure of high-income earners. <strong>–Helen Hodgson</strong></p>
<hr>
<h2>Review</h2>
<p>I agree with this analysis. </p>
<p>As discussed in the article, the Treasury and PBO modelling discusses a range of possible scenarios in relation to increasing the GST, and the one mentioned by Andrew Leigh is one of the more extreme proposals. </p>
<p>While this scenario is a possibility, implying that the increased GST revenue would be raised equally across all households is incorrect. Any proposal to increase the GST without compensation for lower-income households would be unlikely to be politically acceptable. </p>
<p>Further, as highlighted in the article, even if no compensation was offered, the amount of additional GST paid would vary between households depending on their level of expenditure. In actual dollar terms, higher-income households would have a greater increase in the amount of GST paid than lower-income households. <strong>–Kathrin Bain</strong> </p>
<p><em>Update: At 2:55 PM AEST on December 13, 2015 the following sentences were added to this article: “Leigh’s statement was not about people’s net position, it was about how much tax people paid and he made no direct comment on compensation. But when you hear about GST reform, remember it remains unclear what level of compensation will be built into any policy to raise the GST” and “Leigh’s statement begins with an ‘if’, which is an acknowledgement that the $45 billion option is just one of many options on the table.”</em></p>
<hr>
<p><div class="callout"> Have you ever seen a “fact” worth checking? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/52147/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Hodgson was a Member of the WA Legislative Council from 1997 to 2001, elected as an Australian Democrat. She has no current affiliation with any political party.</span></em></p><p class="fine-print"><em><span>Kathrin Bain does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Is Labor’s Shadow Assistant Treasurer, Andrew Leigh, right to warn that each household may effectively face the prospect of paying an extra $4,500 a year in GST?Helen Hodgson, Associate Professor, Curtin Law School. Curtin Business School, Curtin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/479312015-09-27T19:21:05Z2015-09-27T19:21:05ZFactCheck Q&A: is Australia the most unequal it has been in 75 years?<figure><img src="https://images.theconversation.com/files/95968/original/image-20150923-18224-gihpyb.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Opposition Leader Bill Shorten speaking on Q&A.</span> <span class="attribution"><span class="source">Q&A</span></span></figcaption></figure><p><strong>The Conversation is fact-checking claims made on Q&A, broadcast Mondays on the ABC at 9:35pm. Thank you to everyone who sent us quotes for checking. Viewers can request statements to be FactChecked via <a href="http://www.twitter.com/conversationEDU">Twitter</a> using hashtags #FactCheck and #QandA, on <a href="http://www.facebook.com/conversationEDU">Facebook</a> or by <a href="mailto:checkit@theconversation.edu.au">email</a>.</strong></p>
<hr>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/LaNEJPWf8Wo?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Excerpt from Q&A, September 21, 2015.</span></figcaption>
</figure>
<blockquote>
<p>Australian statistics show that we are at the most unequal we’ve been in 75 years. – Leader of the Opposition, Bill Shorten, <a href="http://www.abc.net.au/tv/qanda/txt/s4295053.htm">speaking on ABC TV’s Q&A</a> program, September 21, 2015.</p>
</blockquote>
<p>The complexity behind inequality is undeniable. Whole <a href="http://www.springer.com/economics/growth/journal/10888">journals</a> are dedicated to the topic and there are <a href="https://taxpolicy.crawford.anu.edu.au/sites/default/files/events/attachments/2015-08/crosswalk_australia_ttpi.pptx-powerpoint_18_aug_2015_0.pdf">myriad ways of measuring</a> it. </p>
<p>Members of the Opposition are <a href="https://www.laborherald.com.au/economy/its-time-we-talked-about-inequality/">fond of saying</a> that inequality in Australia is at a 75-year high. That is, that inequality is worse now than it has been since about halfway through last century.</p>
<p>Is that statement supported by the research?</p>
<h2>Checking the source</h2>
<p>The source for Shorten’s stat is <a href="https://www.laborherald.com.au/economy/its-time-we-talked-about-inequality/">research</a> by Shadow Assistant Treasurer Andrew Leigh, a former professor of economics at the Australian National University. </p>
<p>A spokesperson for Leigh directed The Conversation to the following graph, using <a href="http://www.andrewleigh.org/pdf/BattlersBillionaires.xlsx">data</a> published in Leigh’s 2013 book, <a href="http://www.blackincbooks.com/books/battlers-and-billionaires">Battlers and Billionaires: The Story of Inequality in Australia</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=408&fit=crop&dpr=1 600w, https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=408&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=408&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=512&fit=crop&dpr=1 754w, https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=512&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/96138/original/image-20150925-17083-8lwf56.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=512&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><span class="source">Andrew Leigh, Battlers and Billionaires</span></span>
</figcaption>
</figure>
<p>The chart shows inequality since just after federation, defined as total income share held by the top earners. A higher figure is more unequal; lower means more equal, until one (when 1% hold 1% of total income). </p>
<p>Leigh <a href="http://www.andrewleigh.com/2045">says</a> on his website that his analysis “is based on crunching tax data, national accounts figures, and population statistics.” </p>
<p>Leigh and fellow economist Tony Atkinson argued in a co-authored <a href="http://andrewleigh.org/pdf/TopIncomesAustralia%20%28old%29.pdf">paper</a> that inequality fell between the 1950s and the late 1970s. The same paper notes that for the top Australian earners:</p>
<blockquote>
<p>There is a clear spike in 1950, mainly due to the peak wool prices which sheep farmers received in that year. </p>
</blockquote>
<p>Commodity price anomalies aside, the overall trend in Leigh’s graph supports the narrative that income equality in Australia improved after the 1940s, began <a href="http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4932.1993.tb02117.x/abstract">worsening in the 1980s</a>, and is now back at levels not seen since the middle of last century.</p>
<p>So Shorten’s representation of Leigh’s data is perhaps a slight exaggeration but not a major one. </p>
<p>Technically, there was a spike in income inequality in 1950 so perhaps some sticklers will say Shorten should have said the most unequal in 65 years. Leigh’s data shows that apart from the spike, Australia is back to the level of top income shares of the 1940s (except for the war years 1944 and 1945).</p>
<h2>What does other research say?</h2>
<p>There is not much research on this issue going back as far as 75 years. Most other studies look at the last 20 years and most <a href="http://www.natsem.canberra.edu.au/storage/Inequality%20and%20Redistribution%20in%20the%20Australian%20Welfare%20State.pdf">show</a> that <a href="http://www.pc.gov.au/research/completed/income-distribution-trends/income-distribution-trends.pdf">inequality</a> is <a href="http://onlinelibrary.wiley.com/doi/10.1111/1475-4932.12090/abstract">still a problem</a> in Australia.</p>
<p>An Australia21 <a href="https://theconversation.com/increasing-inequality-brings-high-social-cost-report-27867">report</a> released last year and launched by former politician John Hewson also warned of rising inequality. And a Parliamentary Committee recently <a href="http://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs/Income_Inequality/Report">reported</a> Australia is more unequal.</p>
<p>Work by Professor <a href="https://theconversation.com/profiles/peter-whiteford-2016">Peter Whiteford</a>, a researcher on inequality at the Australian National University, shows that higher average incomes <a href="http://insidestory.org.au/are-the-rich-getting-richer-and-the-poor-getting-poorer">do not benefit all Australians</a> if gains are only held by the wealthy few.</p>
<p>And Whiteford <a href="https://theconversation.com/income-and-wealth-inequality-how-is-australia-faring-23483">wrote</a> last year on The Conversation:</p>
<blockquote>
<p>The most common measure of inequality is the Gini coefficient, which varies between zero and one. If everyone had exactly the same income then it would be zero (perfect equality). If one household had all the income then it would be one (complete inequality)… <a href="https://www.dss.gov.au/about-the-department/publications-articles/research-publications/social-policy-research-paper-series/number-27-the-causes-of-changes-in-the-distribution-of-family-income-in-australia-1982-to-1997-98">Research</a> by economists David Johnson and Roger Wilkins found that the <a href="https://en.wikipedia.org/wiki/Gini_coefficient">Gini coefficient</a> increased from around 0.27 in 1981–82 to around 0.30 in 1997-98. Subsequently, the official ABS income statistics show that the Gini coefficient increased to 0.34 just before the global financial crisis in 2008, then fell to 0.32 in 2011-12.</p>
</blockquote>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=319&fit=crop&dpr=1 600w, https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=319&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=319&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=401&fit=crop&dpr=1 754w, https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=401&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/42495/original/ry3mg8ps-1393364934.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=401&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Trends in income inequality (Gini coefficient) in Australia, 1981–82 to 2011-12.</span>
<span class="attribution"><span class="source">Author</span></span>
</figcaption>
</figure>
<p>The most recent <a href="http://www.abs.gov.au/AUSSTATS/subscriber.nsf/log?openagent&6523do00001_201314.xls&6523.0&Data%20Cubes&4F00682720AFA825CA257EB5001B77B9&0&2013-14&04.09.2015&Latest">income survey</a> released by the ABS tracks, among other things, how Australia’s Gini coefficient has changed since the 1990s.</p>
<p>It shows that inequality peaked in 2007-08 and then fell, but in the most recent year went up again but not quite to the 2007-08 level. That suggests inequality was a little bit higher seven or eight years ago, compared to now.</p>
<p>A quick qualifier: tracking the Gini coefficient is valuable because it gives information on the bottom income earners as well as the top. However, the Gini can be constructed using broad or narrow income measures, different data sources, and can look at either household or individual incomes. So it is not a simple matter to compare Gini coefficient results. The ABS, in their Table 1.1 <a href="http://www.abs.gov.au/AUSSTATS/subscriber.nsf/log?openagent&6523do00001_201314.xls&6523.0&Data%20Cubes&4F00682720AFA825CA257EB5001B77B9&0&2013-14&04.09.2015&Latest">data release</a>, urged caution in interpreting the recent changes in Gini coefficient results, saying:</p>
<blockquote>
<p>Estimates presented for 2007–08 onwards are not directly comparable with estimates for previous cycles due to the improvements made to measuring income introduced in the 2007–08 cycle.</p>
</blockquote>
<p>Much of the discussion of inequality is about the pattern of change over time - the <em>trend</em>, not the year-to-year differences. Many would argue insufficient consistent figures exist even since 2007-08 to identify a trend. </p>
<p>Finally, the ABS Gini estimate is based on surveys (which the tax based measure of the 1% share used by Leigh isn’t), with survey errors (<a href="http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/6523.0Explanatory+Notes12013-14">see ABS explanatory note 78</a>), and so each Gini is a mid-point and needs a window drawn around it, to reflect the possible range of the true value. This window might show that the very small differences in the estimates since 2007-8 actually aren’t statistically different. </p>
<p>We should be cautious not to draw conclusions from any sole figure; any single inequality measure provides only a partial picture. Looking at a broad range of inequality measures and trying to grasp the trend gives a better picture of inequality in Australia.</p>
<h2>Verdict</h2>
<p>It all depends on what figures you use. </p>
<p>Shorten’s representation of his ALP colleague Andrew Leigh’s data is perhaps slightly exaggerated but broadly correct – give or take a few years. There are not many inequality analyses going back as far as 75 years and most research supports the proposition that inequality has been rising in Australia. </p>
<p>There is data recently released by the ABS using the Gini coefficient that suggests inequality may have been a little bit higher seven or eight years ago than it is now. But there are strong doubts about whether this is true statistical difference or a trend. So it is too early to say whether inequality was stable or falling over the period from 2007-8 to now.</p>
<hr>
<h2>Review</h2>
<p>The fact check is a good summary of the available data on income inequality and, importantly, the difficulty in measurement. The spike in the 1950s was probably due to one-off factors, so it is fair to discount it. What we should emphasise is that our choice of index matters. Different indices focus on different parts of the distribution. Do we care more about the middle compared to the bottom of the distribution, the top compare to the middle, or the very top of the distribution (the famous 1%)? Whatever index we use, it is reasonably clear that inequality is not falling over the long term in Australia, and is a key area of policy concern. </p>
<hr>
<p><div class="callout"> Have you ever seen a “fact” that doesn’t look quite right? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/47931/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Opposition leader Bill Shorten told Q&A viewers that Australia is the most unequal it has been in 75 years. Is that statement supported by the research?Genevieve Knight, Senior Research Fellow, National Institute of Labour Studies, Flinders UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/450522015-07-24T01:12:03Z2015-07-24T01:12:03ZFactCheck: is the GST as efficient but less equitable than income tax?<blockquote>
<p>If you look at the efficiency of the GST – in other words, the amount of economic activity that is destroyed for every dollar you raise – the Government’s latest tax discussion paper says it is just as inefficient a tax as the income tax. It’s much less equitable though. The income tax is paid disproportionately by those further up the distribution and the GST hits those down the bottom. – Andrew Leigh, Shadow Assistant Treasurer, <a href="http://www.andrewleigh.com/the_gst_is_inefficient_and_inequitable_so_why_raise_it_rn_drive">interview</a> with Patricia Karvelas on RN Drive, July 20, 2015.</p>
</blockquote>
<p>There are two parts to the Shadow Assistant Treasurer’s statement. In the first part, he simply cites a Treasury report that shows that the GST is as efficient – or inefficient – as the income tax. The second part states that the GST is less equitable as “the income tax is paid disproportionately by those further up the distribution and the GST hits those down the bottom.” </p>
<p>A spokesperson for Dr Leigh said:</p>
<blockquote>
<p>In terms of data supporting the statement, I’d refer you to p.25, chart 2.9 of the government’s <a href="http://bettertax.gov.au/files/2015/03/TWP_combined-online.pdf">Re:think tax discussion paper</a>. This shows that the GST and flat rate labour income tax have an equivalent marginal excess burden, according to Treasury modelling.</p>
</blockquote>
<h2>What do economists mean by an efficient tax?</h2>
<p>There are both direct and indirect costs associated with raising taxes. Direct costs include those that are incurred in the collection of the tax. While direct costs are not insignificant (the Australian Taxation Office employs over 20,000 people), economists consider the indirect costs of taxation to be more relevant. These relate to the distortions that a tax creates. </p>
<p>For example, a tax on apples raises the price of apples to consumers and importantly makes apples relatively more expensive than say oranges. This will lead to consumers buying fewer apples and perhaps more oranges. While the government raises revenue in this process, the tax distorts the behaviour of consumers with possible impacts on the production of oranges and apples. </p>
<p>The efficiency loss is the reduction in welfare, usually measured in dollars, from a consumer buying fewer apples than what she would like to because of the tax, and also any distortions in production.</p>
<h2>Is the GST as efficient (or inefficient) as the income tax?</h2>
<p>To apply this idea in the current context, an income tax will reduce the remuneration of a worker, relative for example to other non-remunerated activities such as leisure. </p>
<p>Thus, in theory, an income tax could impact on one’s decision of how much to work (or whether to work at all). The GST, however, raises all prices except for goods and services not subject to it. </p>
<p>There lies the conceptual reason for the GST to have a similar impact than an income tax; individuals care not about the dollar amount they receive as wages but rather about the goods and services that they can purchase from their wages over their lifetimes, including savings and bequests. </p>
<p>Let me illustrate this with an example. Here I assume that there is no borrowing or saving, a flat income tax of 10% and a broad-based GST of 11.11%. Consider an individual on a $50,000 income. After paying taxes, she has $45,000 left to spend on goods and services. In this case, $50,000 expenditure on goods and services would include GST of $5,000. That is, both taxes would allow the consumption of $45,000 of goods and services and, as a result, should lead to similar behavioural impact and distortions. </p>
<p>This theoretical argument is borne out by <a href="http://www.treasury.gov.au/%7E/media/Treasury/Publications%20and%20Media/Publications/2015/Working%20Paper%202015%2001/Documents/PDF/TWP2015-01.ashx">Treasury modelling</a>. Chart 33 from the report is reproduced below. It estimates the “marginal excess burden” (MEB) of different taxes. </p>
<p>The MEB is measure of efficiency loss that captures the decrease in the future ability to spend across the economy per dollar of revenue raised from a tax. These estimates are derived using a long-run economic (computable general equilibrium or CGE) model where households are captured by a representative economic unit.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=421&fit=crop&dpr=1 600w, https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=421&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=421&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=530&fit=crop&dpr=1 754w, https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=530&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/89446/original/image-20150723-22849-1anubmx.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=530&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<p>The chart reports the marginal excess burden of a number of taxes including a stylised personal income tax (represented by a flat rate), a stylised tax on labour income only and the GST. An out-of-model calculation for a marginal tax rate of 25% is presented as an illustration of an average taxpayer in 2011-12. As it can be seen in the chart above, the MEB estimates for the GST and the stylised income tax are nearly identical. </p>
<h2>Is the GST less equitable than the income tax?</h2>
<p>To answer this question, I need to define a couple of simple terms. </p>
<p>A tax system is regressive if the tax paid, as a fraction of income, decreases with income. A common view of the GST, reflected in the Shadow Treasurer’s statement, is that poorer households pay proportionally more than do richer households. Conversely, a tax system is progressive if the tax paid, as a fraction of income, increases with income. By design, the income tax rate faced by individuals in Australia increases with their income. </p>
<p>The table below uses a survey of households undertaken by the Australian Bureau of Statistics (ABS) to shed light on this question. It shows the average amount of GST, taxes and net income per income quantile for the 2009-2010 financial year. Net income includes pensions, family tax payments, and other benefits, and excludes tax paid on income. As expected, the income tax is clearly progressive. The amount of GST as a fraction of gross income varies considerably less across most of the income distribution, although it is overall decreasing, with the exception of the lowest quintile who pays a much higher fraction of their gross income as GST.
Taxes and GST paid as a percentage of average weekly household gross income per income quantile (2009-2010).</p>
<iframe src="https://datawrapper.dwcdn.net/DOd4S/3/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="350"></iframe>
<p>However, looking at the fraction of GST paid and income may be misleading as incomes are volatile and spending can be smoothed via borrowing and savings. To take this into account, I report below the amount of GST paid as a fraction of total expenditures, which is likely a better measure of the level of spending that households can sustain. Once again, the lowest quintile pays substantially more GST as a fraction of expenditures, but there is a small variation for the other groups. </p>
<iframe src="https://datawrapper.dwcdn.net/SiW3O/1/" frameborder="0" allowtransparency="true" allowfullscreen="allowfullscreen" webkitallowfullscreen="webkitallowfullscreen" mozallowfullscreen="mozallowfullscreen" oallowfullscreen="oallowfullscreen" msallowfullscreen="msallowfullscreen" width="100%" height="300"></iframe>
<h2>Verdict</h2>
<p>The Assistant Shadow Treasurer is correct that the efficiency of the GST as a tax is similar to that of income tax. He is also correct that the income tax is more progressive than the GST and that the GST hits disproportionally those in the bottom of the income distribution. </p>
<p>However, while technically the data above suggests that the GST is a regressive tax, the difference between the fraction of income or expenditures paid in the form of GST is small amongst the various quantiles of the income distribution, with the exception of the poorest. </p>
<hr>
<h2>Review</h2>
<p>I concur with the comparative distribution effects of the GST and personal income tax.</p>
<p>In the case of relative efficiency effects, because the income tax in practice falls on capital income as well as labour income and because it has a progressive rate schedule, it has additional distortion costs to those assessed with a flat rate tax on labour income considered in the FactCheck. </p>
<p>First, income tax applies to <a href="http://www.wisegeek.org/what-is-capital-income.htm">capital income</a> (for example, stock dividends) as well as to labour income. Capital income tax distorts aggregate saving versus current expenditure decisions. The hybrid Australian capital income taxation of different saving options distorts the composition of savings between one’s home, other property, bank deposits, superannuation and so forth.</p>
<p>Second, while the GST has a flat rate of 10%, the income tax rate schedule is a progressive one with marginal rates from zero to 49%. With efficiency costs increasing more than proportionately with the tax rate, a progressive tax rate generates larger distortions on average than a flat rate tax.</p>
<p>Accepting the comparative efficiency and distribution effects of the GST and income taxes, most sensible suggestions for taxation reform which involve a more comprehensive base and/or higher rate GST to reap efficiency gains from a tax mix change also propose that some of the GST revenue gain be recycled as higher social security rates and a lower but more progressive income tax rate schedule to maintain the effective purchasing power of the poor. – <strong>John Freebairn</strong></p>
<hr>
<p><em>CORRECTED: An earlier version of this article mislabelled the last two rows in the table titled “Taxes and GST Paid”. The last two rows were labelled “GST/Gross income (%)” and “Income tax/gross income (%)”, but have now been changed to “GST Net income (%)” and “Income tax/net income (%)”.</em></p>
<p><div class="callout"> Have you ever seen a “fact” that doesn’t look quite right? The Conversation’s FactCheck asks academic experts to test claims and see how true they are. We then ask a second academic to review an anonymous copy of the article. You can request a check at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/45052/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Shadow Assistant Treasurer, Andrew Leigh, has said the the Government’s latest tax discussion paper says the GST is as inefficient as income tax, adding he thinks it’s less equitable. Is that right?Flavio Menezes, Professor of Economics, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/297752014-08-13T20:24:40Z2014-08-13T20:24:40ZMaking the world a better place, one economist at a time<figure><img src="https://images.theconversation.com/files/56024/original/fx6whvth-1407468035.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Economics isn't about money, it's about everything.</span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/stuckincustoms/3792320953/in/photolist-6M7CU2-dG9ffs-dHqUe6-7xEiLp-9SNSvm-4oEuw2-aU1eNR-7oN6Zb-7zQwgc-9mN16c-58Ya7f-5ZR61T-dXo477-7wrYeQ-7TKr9h-2tyYcK-eo3VZr-6zht4x-97LuaK-2AqWpd-9KyKpy-b3inBe-6HAbnE-bVBmGM-55uEMb-sinxb-dbUd2g-dsGBJd-adVsyL-9TKYq1-fKvDWd-58vEfv-fP55ks-5eTZai-bmTjoV-ebYhmo-asSfWq-7RobdB-dTDyGP-7uFYiM-66GqfS-eQqpih-8bLDLR-gmsPzU-asyN8z-Fjdgq-7BbF9c-wr7tB-5WoGvo-6yL654">Flickr/Trey Ratcliff</a></span></figcaption></figure><p>“The Economics of Just About Everything” is the latest contribution by Andrew Leigh MP, ex-ANU economics professor, to the bookshelf of the intellectually curious Australian. The book is a long-overdue Antipodean interpretation of the global wave that took off in 2005 with Freakonomics: a sharing with the smart layperson of “the economist’s lens” on diverse issues from across society. Along the way, the reader learns that far from being a dismal science, economics is a compassionate yet pragmatic discipline that proposes particular ways of viewing situations in order to understand better where behaviour comes from, and hence how to change it to achieve better outcomes.</p>
<p>Re-branding economics is no mean feat, particularly in this country where arguably most non-economists operate under the delusion that economics is mainly concerned with money, not welfare. Leigh confronts this misguided view with a raft of citations to research by economists, including himself and many other authors from down under and around the world, offering guidance on topics that carry significant implications for social welfare, individual welfare, or both. </p>
<p>Perhaps Leigh’s most uniquely Australian example relating to social welfare documents the effects of the different incentives facing the Second and Third Fleets sent to Australian shores in the late 1700s. </p>
<p>The same firm financed both voyages, but for the Second Fleet it was compensated based on the number of convict heads taken on board in England, whereas for the Third Fleet it was compensated based on the number of convict heads alighting in Australia. With the monetary incentives that previously supported over-crowding now shifted towards survival, the death rate plummeted.</p>
<p>While this example is riveting, such uplifting stories about how incentives can be used to increase aggregate welfare might not be enough to retain the attention of many self-interested readers for 187 pages plus references, and Leigh - as an economist after all - knows that. </p>
<p>He hence cleverly includes plenty of examples of how the reader can personally benefit from economic insights, organising his material thematically into creatively-titled chapters like “Fit for Tomorrow”, which highlights the implications for individual welfare of economic thinking on matters such as obesity (i.e., how do I lose weight?) and smoking (how do I quit?). </p>
<p>If you want to know how to behave in the dating market, see Chapter 1, “For Love or Money”; if you want to know how to plan your child’s birth so s/he has a leg up in the trials for national sports teams, see Chapter 3, “Starting Lineup”.</p>
<h2>“What we are trying to do is hard!”</h2>
<p>But true to what is arguably the main agenda of the economics discipline, Leigh also addresses some of the big social welfare questions of our time: how to reduce violence (examining recidivism, firearms access, and terrorism through an economist’s lens); how to understand the persistent gender gap in wages; how to help people in the developing world. He also confronts head-on economists’ famously inaccurate forecasting, using an apt quote from Treasury’s David Gruen: “Economic forecasters aren’t stupid; what we are trying to do is hard!” </p>
<p>Indeed, while it has been said that social scientists are prone to “physics envy”, wishing to be but not quite being the hard scientists of their fantasies, Leigh’s presentation is more in line with the claim that economics is harder than physics since economists have no laws to lean upon, but only best guesses. </p>
<p>And Leigh is unafraid to propose some of his own best guesses, such as that Australia would be better off if we paid prisons a bonus for every released prisoner who does not re-offend; and that the rest of the world would be better off if we Aussies concentrated our foreign aid efforts in activities where he argues we have a comparative advantage - namely, assistance in dryland farming, natural resource management, and security provision in unstable states.</p>
<h2>Stopping short</h2>
<p>The book is terrific airplane reading, but it stops short at times from a full exploration of what is being revealed. For example, the fact that births dipped before, and peaked just after, expectant mothers became eligible for the baby bonus in mid-2004 implies that there were fewer earlier-term inductions and C-sections in that cohort of births, which in turn should have implications for the health outcomes of that cohort of babies; yet this is not pursued. </p>
<p>It is observed that Australia is comparatively good at keeping the peace in unstable places; but why is this, and how might we teach others to mimic our success? Obesity is described mainly as a problem of eating too much of the wrong things, and partly as a problem of time-inconsistency. Yet becoming truly obese brings such a dramatic reduction in quality of life that it is hard to believe that most obese people really got to where they are through mindless present-biased munching, correctable via a properly designed array of little nudges: something more must be going on.</p>
<p>In sum, “The Economics of Everything” manages to be at once a call to action for Australian policymakers, a fascinating introduction to some of Australia’s most entertaining applied economic research, and a supreme source of cocktail-party banter. Buy it for what it can teach you about economics and ideas, and use it to help make your world a better place.</p><img src="https://counter.theconversation.com/content/29775/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Gigi Foster receives funding from the Australian Research Council.</span></em></p>“The Economics of Just About Everything” is the latest contribution by Andrew Leigh MP, ex-ANU economics professor, to the bookshelf of the intellectually curious Australian. The book is a long-overdue…Gigi Foster, Senior Lecturer, UNSW SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/298012014-07-29T06:09:56Z2014-07-29T06:09:56ZWhen an economist politician plays with numbers, you can get some surprising results<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/55042/original/w6gq8tvy-1406551243.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/55042/original/w6gq8tvy-1406551243.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/55042/original/w6gq8tvy-1406551243.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/55042/original/w6gq8tvy-1406551243.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/55042/original/w6gq8tvy-1406551243.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/55042/original/w6gq8tvy-1406551243.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/55042/original/w6gq8tvy-1406551243.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Andrew Leigh with his earlier book Battlers and Billionaires.</span>
<span class="attribution"><span class="source">AAP/Alan Porritt</span></span>
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<p>As books by or about present and former politicians rain down, Labor frontbencher Andrew Leigh, a one-time academic, has produced something for the superior trivia night.</p>
<p>The shadow assistant treasurer is the ultimate magpie in his discipline of economics. There is nothing he can’t explain by the dismal science, whatever might be said about damned lies and statistics. <em>The Economics of Just About Everything</em> might be a diversion as politics tragics chew over former Labor minister Greg Combet’s <em>The Fights of My Life</em>, Madonna King’s <em>Hockey: Not Your Average Joe</em>, and Mark Latham’s <em>The Political Bubble</em>, all out within a week.</p>
<p>Leigh had a special interest in the effect of the Howard gun buyback scheme, because of personal connections with two of Australia’s worst gun massacres. Hoddle Street killer Julian Knight is Leigh’s adopted second cousin (he’s never met him); one of the Port Arthur victims mentored Leigh at a law firm where he worked as a summer clerk.</p>
<p>The buyback had one “rock solid” result. Australia averaged more than one mass shooting a year (involving five or more people being killed) in the decade before the buyback – between 1987 and 1996, 94 victims were killed in mass shootings. In the decade after the legislation there wasn’t a mass shooting.</p>
<p>Leigh puts the chance of this being just luck at less than one in 100.</p>
<p>But actually the buyback reduced gun deaths mainly through fewer domestic shootings and suicides. Leigh and another researcher looked at whether places with more buybacks had a larger drop in gun homicide and suicide. The answer was yes.</p>
<p>With firearm suicide, the greatest reduction in weapons was in Tasmania, which had the biggest drop in these deaths. The smallest reduction in firearms per person was in Canberra, which saw the smallest drop in the firearms suicide rate. “Overall, we estimated that the Australian gun buyback saved at least 200 lives per year – mostly suicides.”</p>
<p>Leigh noted that one’s chances of being a victim of homicide in the late 2000s was about half what it had been in the late 1980s.</p>
<p>He has posited a couple of unexpected causes – legalised abortion and unleaded petrol – with Australia following US trends.</p>
<p>Although changes in the circumstances in which abortions could be legally performed (following court decisions) did not occur everywhere at the time, for more than two-thirds of the Australian population the change happened in the late ‘60s or early '70s – about 20 years before the crime rates dropped. There was “some evidence that the drop in homicide occurred first in the states that legalised abortion the earliest”.</p>
<p>The effect of legalising abortion, he says, has only a minor effect on the number of children born. “The main effect is not that families have fewer children, but rather that all of these children are born when the parents feel ready to raise them” – making them less likely later to fall into crime.</p>
<p>Children exposed to lead are more likely have behavioural difficulties and, when they become adults, to commit crimes, according to research. In the United States, lead was phased out of petrol between 1975 and 1985. Two decades later, it was found the sharpest drop in violent crime occurred in the states that were the first to reduce lead levels.</p>
<p>In Australia the phase-out didn’t start until 1986, but happened at the same time nationwide. “If we assume that the impact on crime was similar in both countries, it suggests that unleaded petrol might have been responsible for reductions in crime as late as the mid-2000s.”</p>
<p>Turning to the field of sport, Leigh declares that perhaps the biggest piece of luck you can have is to be born in the right month of the year. To make the case, he has looked at the birthdays of the general population in the 1980s and those of samples of top cricket, rugby league and soccer players, along with the age cut-off that applied to most of them when they were children.</p>
<p>There is little difference in the general population between the proportion born in the least and most common months for births (February and March respectively).</p>
<p>But for cricket, NRL and soccer, there are spikes just after the cut-off date. “This shows an excess of players who would have been among the oldest in their teams when playing age-graded sports.</p>
<p>"In cricket, the most common birth month is November (the third month after the cut-off), while in league and soccer the most common birth month for elite players is the month directly after the cut-off. A boy born in January is nearly twice as likely to play first-grade rugby league as a boy born in December. A boy or girl born in August is more than twice as likely to play soccer for Australia than a child born in July.”</p>
<p>Also, when the youth soccer cut-off point was changed (until the late 1980s it was January 1), the birth dates began to change. “If you look at the distribution of top soccer players’ birthdays in that era, the most common season of birth is the first few months of the year. But when the cut-off date was shifted, the birthdates of top soccer players began shifting too. It’s a fair bet that if we hadn’t changed the cut-off age for youth soccer, the Matildas and the Socceroos would contain more members with January birthdays and fewer members with August birthdays.”</p>
<p>Strangest of all are the death statistics on either side of July 1, 1979, the day federal inheritance taxes were abolished.</p>
<p>Leigh (building in the odd assumption) estimates that about half of those who would have paid inheritance taxes if they’d died in June “managed to shift their date of death to July”.</p>
<p>“How do people shift their date of death? One possibility is that families were considering whether to turn off life support. Another is that through force of will, people were able to hang on for another week. It’s also possible descendants misreported the date of death to the authorities … we can’t be sure precisely how so many people managed to avoid inheritance taxes in the final week: we just know that they did it.”</p>
<p>At the end, this flouts the observation about death and taxes being the two givens in life.</p><img src="https://counter.theconversation.com/content/29801/count.gif" alt="The Conversation" width="1" height="1" />
As books by or about present and former politicians rain down, Labor frontbencher Andrew Leigh, a one-time academic, has produced something for the superior trivia night. The shadow assistant treasurer…Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/160322013-07-23T20:19:31Z2013-07-23T20:19:31ZFactCheck: do the Liberals have ‘a secret plan’ to axe 20,000 public service jobs?<figure><img src="https://images.theconversation.com/files/27957/original/3vj25ksz-1374636648.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">How much truth is there in claims about public service job cuts?</span> </figcaption></figure><blockquote>
<p><strong>“The Liberals have a secret plan to cut jobs in Canberra – 20,000 public service jobs are just the start of the Liberals’ plan to punish Canberra. Housing prices will plummet, unemployment will rise, and the small businesses that rely on them will suffer. Just like what happened when they were last in government.” Labor MP Andrew Leigh, <a href="http://www.electionleaflets.org.au/leaflets/1234/">letter to constituents</a> in the federal seat of <a href="http://www.aec.gov.au/profiles/act/fraser.htm">Fraser</a>, Australian Capital Territory, July 2013.</strong></p>
</blockquote>
<p>The Coalition has repeatedly said it plans to reduce the size of the Commonwealth public service by at least 12,000 jobs, including in opposition leader Tony Abbott’s <a href="http://liberal.org.au/Budget_Reply_2013">budget reply speech</a> in May:</p>
<blockquote>
<p>“We’ve announced that we’ll reduce by at least 12,000, through natural attrition, the size of the Commonwealth public sector that’s now 20,000 bureaucrats bigger than in 2007.”</p>
</blockquote>
<p>The Coalition’s <a href="http://lpa.webcontent.s3.amazonaws.com/realsolutions/LPA%20Policy%20Booklet%20210x210_pages.pdf">Real Solutions plan</a> also discusses the need to reduce “the size of the bloated Commonwealth payroll, with a focus on natural attrition, to bring it closer to its size at the close of the Howard government” (page 17). </p>
<p>But the Coalition has never said it would cut 20,000 Commonwealth public service jobs. </p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=825&fit=crop&dpr=1 600w, https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=825&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=825&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1037&fit=crop&dpr=1 754w, https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1037&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/27821/original/nwzpnkdm-1374474806.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1037&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A letter from Labor MP Andrew Leigh to his Fraser constituents.</span>
<span class="attribution"><span class="source">http://www.electionleaflets.org.au/</span></span>
</figcaption>
</figure>
<p>Dr Leigh is the member for Fraser in the Australian Capital Territory, <a href="http://www.abc.net.au/news/federal-election-2013/guide/fras/">a safe Labor seat</a>. When <em>Election FactCheck</em> contacted his office, we were pointed to interviews given by <a href="http://www.abc.net.au/7.30/content/2012/s3498465.htm">shadow treasurer Joe Hockey</a> and <a href="http://www.liberal.org.au/latest-news/2012/11/22/tony-abbott-transcript-address-west-australian-leadership-matters-breakfast">opposition leader Tony Abbott</a> where he stated that the size of the public sector was 20,000 larger than it was during the Howard government. </p>
<p>Dr Leigh seems to be conflating the two statements, without evidence that the Coalition has plans to cut jobs by 20,000.</p>
<h2>How many jobs are likely to go in Canberra?</h2>
<p>While the 20,000 figure misleads Dr Leigh’s constituents, the Coalition’s promise to cut at least 12,000 public service jobs would still be a substantial reduction of around 7% from a total workforce of <a href="http://www.apsc.gov.au/publications-and-media/current-publications/aps-statistical-bulletin/2011-12/main#h1">around 168,000</a> (as at 30 June 2012).</p>
<p>They would also presumably come on top of recent cuts that have happened under Labor. Without even counting <a href="http://www.smh.com.au/federal-politics/federal-election-2013/4b-of-cuts-to-terminate-carbon-tax-20130716-2q0xq.html">the latest announcement to further cut senior public service jobs</a> to finance the bringing forward of an emissions trading scheme, the Labor government has <a href="http://www.smh.com.au/federal-politics/political-news/wong-unveils-more-cuts-20120925-26i6r.html">applied large “efficiency dividends”</a> without compensating agency budgets for the full costs of wage increases.</p>
<p><a href="http://www.canberratimes.com.au/act-news/senior-public-servants-facing-efficiency-dividend-20130716-2q0vy.html">Dr Leigh has defended the new Labor cuts</a> to senior public service jobs: </p>
<blockquote>
<p>“That’s a level of the public service that has increased by 29% since 2007 while the rest of the public service has increased by 6%.”</p>
</blockquote>
<p>Remembering that 40% of the Australian Public Service works in the ACT, if the coalition cuts were spread evenly around the country then job losses in Canberra would be more like 5000 – a quarter of the 20,000 figure Leigh uses in this letter.</p>
<p>But assuming Abbott sticks to previous commitments to protect front-office staff and <a href="http://www.canberratimes.com.au/act-news/abbott-takes-aim-at-act-ps-jobs-20130506-2j3yt.html">try to locate as many public servants as possible outside Canberra</a>, then the cuts could be disproportionately directed at Canberra, suggesting the best estimate may be closer to 10,000 or around half of Leigh’s figure.</p>
<p>However they are directed, the proposed cuts are substantial. In fact, given the reduction of around 3000 jobs since the peak in 2011, the Coalition cuts would mean the public service was actually smaller than the 155,400 jobs under the Howard government in 2007.</p>
<h2>Impact on housing prices and the local economy</h2>
<p>Adjusted for changes in the public service, the reduction between 1996 and 1999 under Howard was nearer to 30,000. Again the Canberra share of this reduction would have been much lower, but there certainly was a significant impact on the local ACT economy, including housing prices.</p>
<p>According to Andrew Leigh’s office in correspondence with <em>Election FactCheck</em>, between March 1995 and March 1998 the median house price in Australian capital cities grew by $22,950, and the median across all of Australia by $19,240. However, in Canberra the median house price fell by $5,750.</p>
<p>Dr Leigh also points to the ACT labour force growing by 1.3% in comparison to 3.4% growth Australia-wide, and both populations growing at similar rates (1.6% ACT and 3.7% Australia).</p>
<p>But the impact of the reduction planned by Abbott this time is unlikely to be so severe for a number of reasons, including because of the smaller size of the reduction, <a href="http://canberratimes.domain.com.au/real-estate-news/abbott-government-wont-derail-canberra-property-sector-industry-20130612-2o438.html">changed demographics</a> and because of the increased size of the non-public service components of the ACT labour market.</p>
<p>However, job cuts on this scale could still exacerbate the national downturn that many economists are predicting over the next year or two.</p>
<h2>Verdict</h2>
<p>Based on the available evidence, Dr Leigh’s claim that the Coalition has “a secret plan” to cut 20,000 public service jobs is incorrect.</p>
<hr>
<h2>Review</h2>
<p>Tony Abbott and Joe Hockey have both made it clear that there will be a cut of at least 12,000 public sector jobs <a href="http://www.canberratimes.com.au/national/public-service/hockey-says-12000-cull-just-a-start-20130516-2jpod.html">“as a starting point”</a>. </p>
<p>This stated position is often followed by the claim (<a href="http://www.canberratimes.com.au/national/public-service/coalition-doubles-public-service-job-growth-20130429-2io2w.html">disputed by many commentators</a>) that the public service has 20,000 more employees than in 2007. Their frequent pairing of the two numbers is suggestive, but not proof of a secret plan.</p>
<p><a href="http://www.liberal.org.au/latest-news/2012/11/22/tony-abbott-transcript-address-west-australian-leadership-matters-breakfast">Abbott’s statement</a> late last year: “Do we really need 20,000 more public servants in Canberra today than we had at the end of the Howard era? We don’t” is even more suggestive, but still not proof.</p>
<p>At present Dr Leigh’s claim is a reasonable opinion, but not provable fact.</p>
<p>Hockey <a href="http://www.theaustralian.com.au/national-affairs/well-axe-12000-public-sector-jobs-says-joe-hockey/story-fn59niix-1226083112182">has indicated</a> that the 12,000 public service job cuts would take place over two years. In the first two years under Howard the shrinkage was around 15,000.</p>
<p>So the minimum reductions proposed by Abbott are not much smaller than what occurred under Howard. And it is reasonable to think they will have similar effects on Canberra and the nation. <strong>– Christopher Stone.</strong></p>
<p><div class="callout">The Conversation wants to move beyond the national campaign to check what is happening in local electorates. You can help us by keeping an eye on what your local candidates are saying in leaflets, emails and the media. Let us know at checkit@theconversation.edu.au. Please include the statement you would like us to check, the date it was made, and a link if possible.</div></p><img src="https://counter.theconversation.com/content/16032/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Andrew Podger was Public Service Commissioner from 2002-2004 and has held other senior positions in the public service.</span></em></p><p class="fine-print"><em><span>Christopher Stone currently works for the Centre for Policy Development's Public Service Research Program, which is funded by the Community and Public Sector Union, the Becher Foundation and Slater & Gordon.</span></em></p>“The Liberals have a secret plan to cut jobs in Canberra – 20,000 public service jobs are just the start of the Liberals’ plan to punish Canberra. Housing prices will plummet, unemployment will rise, and…Andrew Podger, Professor of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.