Stephen Cenatiempo:
Time to talk federal politics with the Assistant Minister for Competition, Charities and Treasury. And I always forget where I’ve got to put productivity in there. And the Member for Fenner, Dr Andrew Leigh. Andrew, good morning.
Andrew Leigh:
Good morning Stephen. Productivity comes first!
Cenatiempo:
All right. Well it should. And so it should too. Right. So, productivity, competition, charities and Treasury. I want to. Look, I’m not going to ask you to speculate what’s in the Budget, which I’ve got to say though, why don’t we just do what we used to do in the old days and release the Budget on the day, rather than all these leaks in the weeks and sometimes months leading up to them?
Leigh:
When you said the old days Stephen, I thought you were going to refer to giving the entire budget to Laurie Oakes a couple of days beforehand so he could publish the whole thing beforehand.
Cenatiempo:
Well yeah, maybe not that. Yeah, okay. But at least there was only a couple of days.
Leigh:
We’ve spaced out a number of the announcements and the announcement today around electric vehicles I think, recognises the change in the market. As you said, when we put in place the EV tax discount, there were only 2 models under $40,000. Now there’s 10 models under $40,000 and one model that’s under $30,000.
So, that change in the EV markets means that it’s appropriate to start phasing down that EV FBT discount. But the technology has also helped extend our fuel reserves, so we’ve got more days of fuel available as a result of having a greater uptake of electric vehicles.
Cenatiempo:
Yeah, okay. All right. Well, we’ll agree to disagree on that. But one of the big talking points has been changes to the capital gains tax discount. Now, I’m not going to ask you to confirm whether or not that’s going to happen. I think most of us know it probably is, but the argument here is that changes to the capital gains tax discount will somehow make it easier and more affordable for a young person to get into the housing market. You’re a – you know, you’re a, as far as politicians go, a highly intelligent person. Explain to me how that works?
Leigh:
Well Stephen, our main focus in the housing market has been on housing supply. That’s the 1.2 million home target with the states and territories. The work we’re doing for National Competition Policy to get planning and zoning reforms so we get houses approved quicker.
Cenatiempo:
Sure.
Leigh:
New South Wales’ pattern book, I think, is a good way of looking at this. There’s a lot of work that Clare O’Neil has done through the Housing Australia Future Fund to see the Commonwealth do its part in building homes, so that’s our main focus when it comes to improving housing affordability.
Cenatiempo:
Okay, but you’re avoiding the question. How will it change the capital gains tax, actually make it more affordable for anybody to get into the market?
Leigh:
Well, we haven’t announced any change in capital gains tax.
Cenatiempo:
Yeah well, hypothetically?
Leigh:
Only 7 sleeps to the Budget now Stephen. Looking forward to people having the opportunity to hear that directly from the Treasurer…
Cenatiempo:
Okay, so if that was…
Leigh:
It’s not my job to speculate about it…
Cenatiempo:
No, I’m not asking you to speculate, I’m just saying Andrew, if for instance the Treasurer did decide to do this, how would it make a difference?
Leigh:
Well, what the Treasurer has announced is significant measures on housing supply and as an economist, that’s the work we’re doing. Of course the Budget will have a tax reform component. Part of that tax reform component was announced today: the changes to make the EV discount more affordable. But there’s going to be other important measures as well focused around intergenerational fairness which is one of the things…
Cenatiempo:
Okay then how will making EVs more affordable get people into a house?
Leigh:
Well, they’re 2 different questions Stephen…
Cenatiempo:
Oh, right well so because you keep avoiding…
Leigh:
You asked me about tax reform in general. So there will be…
Cenatiempo:
No, I didn’t ask you about tax reform in general, Andrew. I asked you specifically about changes to capital gains tax. If they indeed come to fruition. And let’s pretend for a moment that we don’t all know what’s going to happen. How will that help people get into a house?
Leigh:
Stephen, we haven’t announced any changes to capital gains. What we’ve done is we’ve got important measures in place on housing supply and what I can say is that there will be a significant portion of the budget directed towards tax reform as well as to productivity, as well as to resilience.
Cenatiempo:
Okay, alright. Well avoided. Moving right along, you have written an opinion piece basically asking the question how tightly should a person’s future be tethered to their parents income, their suburb or their school? Explain to me what you’re getting at here?
Leigh:
Well one of the things that is important, I think in Australia is that we have more intergenerational mobility. We know that in cases where you don’t have enough opportunity, that societies have become incredibly frustrated. We have seen in Australia a large degree of intergenerational mobility compared to other countries, but a little bit less absolute mobility for the current generation than in the past. So, I think it’s really important that we have opportunities for talented people growing up in disadvantaged circumstances to attain whatever heights their talents enable.
Cenatiempo:
But don’t they already exist?
Leigh:
Not as well as I’d like to see. I think we can do better in terms of providing better educational opportunities. Certainly, if you look at the Startup Muster survey, a terrific survey run by Murray Hurps out of UTS, that shows that more startup entrepreneurs come from advantaged backgrounds than disadvantaged backgrounds. So, we need to do a better job of putting the mentors and the money in contact with those entrepreneurs from disadvantaged circumstances.
Cenatiempo:
Okay. Yeah, look I mean I think about my own position. I made the decision myself that I was going to get into this career. I had no inheritance to speak of, or whatever. The opportunities were there for me to do it. I wasn’t, I don’t know that in Australia people are being held back?
Leigh:
Well, we certainly see a degree of relationship between what parents do and what kids do. And there’s, in the United States for example, that relationship is very strong. Income is as heritable as height. In Scandinavian countries it’s very weak. In Australia it’s about halfway in between.
What we’d like to see is, in Australia where there’s more mobility, where it’s easy for people to jump classes and where there’s much less of a static nature. Much less of a sense that the circumstances you’re born into determine what you do.
And so that’s partly education policy, partly competition policy, partly how we encourage entrepreneurs to succeed. And that’s not just good for those individuals, it’s also good for the whole economy if we’re making better use of the productive talents.
Cenatiempo:
Yeah sure, but how do we do that in practice though?
Leigh:
So, UTS Startups has a model of providing a start‑up experience to about half of its students. I think that’s a really interesting model to be thinking about how we foster entrepreneurship among people who come from backgrounds where there weren’t entrepreneurs in the family.
There’s a lot we were doing with our education system, trying to encourage more – provide better funding to disadvantaged schools and also to get more kids going to university who are the first in their family to attend university. Free TAFE is also a big part of that. Opening up educational opportunities for people who mightn’t be able to afford them.
So, we’re pushing on all of these different fronts Stephen, because we know if we don’t do enough then Australia can potentially go back to those old class‑bound societies that we read about in the Jane Austen novels.
Cenatiempo:
Yeah, well I don’t know that Australia has ever been that, but there was one line in your piece that struck me and you said this matters because talent is common, while opportunity is not. See, I would disagree with you there. I’d say that well, talent isn’t particularly common and opportunity is?
Leigh:
I’m really struck Stephen, when I spend time with young Australians, whether that’s at ANU where I was last night talking to a bunch of students, or in local schools where I was last week, about the amount of talent that you see across the community. People who are working on all kinds of different, interesting projects but sometimes finding themselves a little bit stuck and not being sure where to take them.
Mentoring is something that I reckon we could do better in this country. Linking people up with those who have succeeded in their chosen profession and showing a pathway forward. Part of that is around, for example, women in business and women in medicine. I think the women in STEM movement has been very strong. Perhaps for men who are looking occupations in the caring sector, we need to do the same sort of job providing those role models for men who want to work in health and aged care and sectors where blokes aren’t quite as common. The more mentors we have, the more pathways we show and the more mobile a society we can be.
Cenatiempo:
Okay. Interesting concept. It was an interesting piece to read for sure. Andrew, good to talk to you. We’ll catch up in a couple of weeks.
Leigh:
Thanks so much Stephen, take care.
Cenatiempo:
Dr Andrew Leigh, the Assistant Minister for Productivity, Competition, Charities and Treasury.