Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

I rise today to speak on the Appropriation Bill (No. 3) 2005-2006 and the Appropriation Bill (No. 4) 2005-2006 and support the amendment moved by the shadow minister for finance. The amendment we have before us gives voice to the serious concerns about this government’s economic management and its economic credentials. This government is asleep at the wheel when it comes to managing Australia’s economy. Currently we are experiencing record commodity prices yet, at the same time, we are experiencing a record current account deficit and a record trade deficit. These are hardly signs of an economy that is in good shape and hardly pointers to an ongoing economic success should the economic boom come to an end at any time soon. While the government may dismiss the growing current account deficit, saying that Australia’s foreign debt is held by the private sector and mostly the debt is in Australian dollars, there is still a looming storm sitting on the economic horizon.

November’s trade deficit was $2.5 billion. That is one of the worst on record. Imports grew at a whopping 7.2 per cent compared to the export growth of a mere 0.6 per cent. The current account deficit continues to run at six per cent of gross domestic product. Household debt is at record levels, and people live in fear, quite frankly, of the slightest lift in interest rates. All of this adds up to a potential disaster. The Australian economy has benefited as other Western economies have acted through monetary policy to stimulate their economies. Borrowing has no doubt been cheap and we have taken advantage of that. However, the combination of events that have presented such great opportunities could come to a halt just as quickly through a sustained fall in the US dollar. The current account deficit will certainly matter then, and it is something that ought not to be currently ignored.

The potential for a disaster and for the Australian economy to be hit harder by external shocks has grown as we have taken advantage of the highly liquid international capital market. The government’s willingness to ignore the possibility of increased impacts of external shocks calls into serious question the government’s claim to be great economic managers. The government is not using this period of record high commodity prices and a resources boom to invest in Australia’s long-term economic future.

The trade and current account deficits are not the only economic indicators that this government is trying to sweep under the carpet. As noted economist Paul Krugman once said, ‘Productivity isn’t everything.’ But he went on to say, ‘But in the long run it’s almost everything.’ Sadly for Australia’s long-term economic growth, this government has seen fit to ignore the need to encourage productivity growth. Australia has once again fallen more than 20 percentage points behind the US efficiency levels after our dramatic improvements that occurred in the 1990s. It seems as though this government has a fundamental problem with driving productivity growth. In the decade that it has been in office, its claim to fame when it comes to promoting productivity growth is the introduction of labour market reforms culminating in the extreme Work Choices legislation. I am sorry, but the slashing of take-home pay and conditions of Australian workers does not constitute, to my mind, a serious attempt to improve the productivity ratings of this country. It constitutes a serious attempt at tearing at the very social fabric of Australian society, and it does not in any way, shape or form constitute a real solution to Australia’s declining productivity. At the end of the day, productivity growth is the only means through which real incomes can rise over the longer term. It is pretty straightforward stuff and I expect most economic students have come to terms with that. Despite this, the government continues to refuse to tackle Australia’s declining rate of productivity growth.

The opposition is not alone in voicing its concerns when it comes to productivity performance or lack thereof. Recently, the chief executive of the Business Council of Australia, Katie Lahey, said the following about Australia’s declining productivity:

This is the pointer to where our economy is heading. It is clear that after sustained growth, Australia’s productivity is in decline. This indicates that the benefits of past reforms are waning and we now need a fresh wave of economic reforms to reverse this trend.

It has also been reported recently that the Business Council of Australia—an association which is constituted of leading business executives—is also concerned about a culture of complacency developing within this government. It comes as no surprise to me that there are concerns about the complacency of this government creeping into the views of various leading economic and business groups. It certainly comes as no surprise to me that constituents in my electorate have expressed concern at this government’s complacency when it comes to assisting with their economic development.

I would like to refer to a case in point, that being the Hume Highway and the on-and-off ramps on the Hume Highway at Ingleburn. Efficient and adequate infrastructure is essential to support the development potential of towns and regions. Recently, the south-west of Sydney has benefited from the construction of the new M7 motorway. It is expected that, within three years of opening, the Westlink M7 will generate an additional 24,000 jobs in Western Sydney. That is certainly welcome news for those of us who live in the west. An efficient piece of transport infrastructure that bypasses up to 56 sets of traffic lights is going to make a considerable contribution to the future of Western Sydney. It is an important point—and I hope it is not lost on the government—that infrastructure supports and enhances employment opportunities. It is for this reason that I am extremely disappointed that the federal government has decided to throw away the longstanding protocol to fund infrastructure works around federal highways by forcing, in the case of the Hume Highway, the Campbelltown City Council to pick up one-third of the tab for the new on- and off-ramps at Ingleburn. Residents and business operators alike have been waiting for a long time for this important piece of infrastructure. These on- and off-ramps will improve access to industrial estates at Ingleburn and Minto, supporting the growth of local businesses and creating local employment opportunities. The ramps cost $13.8 million and the Campbelltown City Council will be forced to contribute $4.5 million to the construction of these ramps; otherwise, the ramps will not be constructed.

On the one hand, the federal government was willing to support the construction of the M7 motorway and bask in the reflected glory of the employment opportunities that will be created, but when it comes to the issue of the Ingleburn on- and off-ramps to a federal highway it has decided that in this case it needs to have a cost-sharing arrangement. There are not many councils around that have a spare few million to contribute to a project like this—a project that they ordinarily should not be expected to pay for. The money had to come from somewhere. In this case it will come from a special levy on the businesses in the industrial estate at Ingleburn and Minto.

The problem associated with the on- and off-ramps is not the only dereliction of duty on infrastructure by this government in my electorate. The government is also dragging its heels on the completion of the widening of the freeway north of Raby Road, particularly in the section north of Brooks Road. The widening project on the southern side of the freeway is well on the way—in fact, it is almost complete—but I have yet to receive any advice from the government as to when the additional northbound lane might start. The benefit of such an additional lane is clear to anyone who travels in the area. Currently, there are significant delays for northbound traffic during the morning peak, and these delays are being exacerbated as motorists and transport operators seek to use the Hume Highway as an access point to the Westlink M7 to cut out, as I said earlier, up to 56 sets of traffic lights that would otherwise need to be negotiated.

The additional northbound lane from Brooks Road will not only assist in reducing traffic congestion; it will also improve the safety in the area and contribute to business growth as local businesses are able to efficiently and effectively transport their goods through Australia’s global cities and to the world. Campbelltown City Council has estimated that the financial benefit of a third northbound lane from Brooks Road would be up to $18.5 million annually by the year 2021. I call on the government to commence this project immediately. It concerns me greatly that this government goes about its merry way, ignoring serious threats to our economic future, ignoring the prospect that the salad days of the current resources and liquidity boom will one day end and ignoring the real and serious need to address underlying structural and economic problems. Instead, it concentrates on implementing an agenda based on some ideological social engineering. Instead, we have two appropriation bills before us today that seek to allocate more government money to advertising.

I understand that there were only two policy initiatives that this government had up its sleeve when it came to government this term—one being industrial relations and the other the privatisation of Telstra. But I have to ask: is there a need to spend an additional $110 million on advertising associated with these industrial relations changes? When residents in my electorate are struggling to get prompt access to a GP because there are not nearly enough of them to serve the population, would it not be better to take some of that $110 million and open up more places at university? Members opposite may claim that this was done last week with the COAG agreement, but the agreement was only for the creation of additional full fee paying medical degrees. I do not know many people in the south-west of Sydney who have a spare couple of hundred thousand dollars to allow them to send their sons or daughters to study medicine through a full fee paying degree.

In addition to the increase in taxpayer funded media in these appropriation bills, there is another $52.4 million to cover the increased costs of the highly disadvantaged in the Job Network. I welcome any additional spending to assist people to get jobs, particularly local jobs. Unemployment has almost become an intractable problem in the south-west of Sydney, and various reasons underpin that. But local unemployment rates are consistently above those in the rest of Sydney and they rank among the highest in the state. By way of comparison, the national unemployment rate in January rose slightly to a seasonally adjusted rate of 5.3 per cent. In the Fairfield-Liverpool and other outer metropolitan Sydney region, the statistics in December of last year showed that the unemployment rate rose to 7.8 per cent. That is another 2½ per cent above the current national rate. I note that these regional figures are not necessarily seasonally adjusted, but I would suggest that the comparison is not without merit.

In the December quarter last year, in outer Western Sydney the number of unemployed increased by 4,400. These figures could best be described as disappointing, but even more disturbing are the statistics for youth unemployment. At a national level it seems that progress on youth unemployment has stalled. Nationally, the male youth unemployment rate is more than 17 per cent—some two per cent higher than it was a year ago—while the female youth unemployment rate is 14.3 per cent, up one per cent from the previous year. But locally, in the south-west of Sydney, the rate is much worse: it is a staggering 17.9 per cent. Immediate action needs to be taken by the government to address this situation.

The government’s response to matters of unemployment is the same as its response to corrections within the Australian labour market—that is, change the industrial relations system to see whether forcing down wages and conditions will prompt employment gains. No evidence has been presented to support that case. No-one, except the Prime Minister, is expecting thousands more jobs to be created by cutting wages and conditions back to the bare minimum.

What is required is real and serious commitment to training and skills development. Earlier, I reflected on the need for the government to get serious about halting the decline in productivity growth, and I take this opportunity to remind the government of the importance of investing in its human capital. While I welcome the additional funds that will be dedicated to the Job Network to help people with disabilities find work, often the biggest barrier they face is access to training. The OECD noted:

... the single most important finding of recent economic research might be that new evidence from longitudinal microeconomic data reveals that firms that innovate more consistently and rapidly employ more workers, demand higher skill levels, pay higher wages, and offer more stable prospects to their workforce.

No matter how much money is dedicated to job search activities, it will not be worth nearly as much as investment in improving the skills of those seeking work to make them more employable. Lowering the cost of labour does not make people more employable; it makes them more expendable.

Australia’s economic future—its capacity to grow and thrive—hinges on our ability to innovate and, through that, to improve productivity—to be better than the best. Innovation, research and development and the key drivers of economic growth in an age of the global economy interaction stem from skilled workers applying those skills. Innovative firms are able to grow much more rapidly than those who do not innovate, and growing those firms has to be a priority.

Research and development spending has been allowed to fall to 0.89 per cent of gross domestic product—nearly half the OECD average. This gives Australia a rank of 15th in the OECD when it comes to research and development. It is not a proud record, and it is not a situation that is going to be corrected by Work Choices. No matter how you look at it, the long-term economic prosperity of this country is being squandered by this government. (Time expired)

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