Daryl Melham (Banks, Australian Labor Party) Share this | Hansard source

This government trumpets its ‘family friendly’ credentials, yet when you consider the detail of the budget it emerges that the government is anything but. There are three key areas impacting on the families in my electorate of Banks that I wish to address this evening: interest rates, skills shortages and child care. Firstly, I wish to consider the potential for this budget to impact negatively on interest rates. The short-term tax relief contained in this year’s budget is welcome. However, I despair at the lack of foresight to protect Australian families from higher interest rates. This budget clearly does little to put downward pressure on interest rates.

In 2006-07 world economic growth and Australia’s terms of trade remain at their best levels in 30 years. But four years into the global commodities boom, instead of achieving strong trade surpluses, the half-trillion-dollar foreign debt will continue to grow. Australia’s current account deficit has not consistently run at this high level since the 1920s. Since 1996 Australia’s export growth has been the fourth worst of the 30 OECD countries. Export growth has collapsed since 2001, with average growth in export volumes of only 0.6 per cent compared to the 20-year average of 5.9 per cent. As in previous years, the budget promises export growth of seven per cent but delivers only two per cent. Manufacturing exports from this country have not grown substantially since this government won office. This is because of industry policies which scrapped the 140 per cent investment allowances, together with the cuts to CSIRO and tertiary input to industry. There is no doubt that this short-sighted lack of investment in infrastructure will haunt this government.

The government’s persistent failure to deal with the current account deficit exposes Australians to the risk of higher interest rates. To boost productivity we must eradicate the existing capacity restraints. The government has presented no infrastructure plan and, as I have already said, has presented no plan for skilling Australia or assisting Australian families with child-care options. Without a boost in Australia’s competitiveness we will not lift our export performance and we will not reduce our escalating foreign debt.

Labor is not alone in its criticism of the potential impact of increased spending. Since the budget was brought down economists and analysts have consistently criticised the Treasurer on the potential for his budget to impact negatively on interest rates. For example, Alan Mitchell in the Australian Financial Review on 13 May 2006 said:

But it is still the case that the budget is expansionary when, in the absence of the government’s policy intervention, it would have been mildly contractionary. If the RBA finds it necessary to increase interest rates further, these will be rate rises that might have been avoided had the government allowed the automatic stabilisers to work and the budget to tighten naturally.

Mr Mitchell is not alone. Tim Toohey, the chief economist for Goldman Sachs JBWere, told his clients that the budget is ‘incendiary’. Michael Blythe, Chief Economist of the Commonwealth Bank, referred to the ‘upside inflation risks’ of the budget in moving towards another interest rate hike. Jeff Oughton, an economist for the National Australia Bank, said that in the short term the added inflation risks ‘may be enough to push the RBA into further action’. The Sydney Morning Herald and the Age on 13 May 2006 noted:

There’s no getting away from it: Mr Costello could have used the budget to reduce the upward pressure on interest rates. Instead he chose to add to the pressure.

Stephen Koukoulas, chief economist for TD Securities, is quoted by Ross Peake in the Canberra Times on 16 May, and this really sums up the situation the country now finds itself in:

Whether you or I think the budget had a stimulatory effect on interest rates or not, the futures market said ‘yes’.

A National Australia Bank survey on 16 May showed that almost two-thirds of firms expect the Reserve Bank to add at least another quarter of a percentage point to official interest rates in response to the budget. Sadly, almost 9,000 households in my electorate of Banks are directly affected by interest rate rises. This estimation is based on 2001 census figures, and anecdotally I am aware that the figure today will be much higher. Another 11,000 rented households will be indirectly affected as landlords will undoubtedly pass on interest rate increases to their tenants. Yet this government had in its hand the ability to minimise the chances of an interest rate hike.

I will now turn to the matter of the chronic skills shortage facing this country today—a matter not unrelated to productivity issues and the lack of investment in infrastructure that I have already mentioned. I am not the first to have noted that the budget made no mention of education—specifically vocational education—and that in essence reflects the low priority this government gives to education and training. What I find incredible is that not only this side of the House is calling for the government to address our national skills shortage. The government’s friends in business are also publicly expressing their concerns, which is amazing. Peter Hendy of the Australian Chamber of Commerce and Industry agreed, according to an article in the Age of 11 May, that:

‘the number one complaint’ of investors was the skills shortages.

Heather Ridout of the Australian Industry Group said in the same article that ‘it was disappointing that more progress had not been made’. She said:

These areas are required to build the competitiveness of Australian business and to assist in rebalancing the economy as the current minerals boom begins to fade.

This government has consistently failed to address the national skills shortage. It is not a state secret that Australia is projected to need 100,000 tradespeople by 2010; yet all the government has done is to fund redundant technical colleges, which have produced no new tradespeople and, on current projections, will not have produced anywhere near the required 100,000 by 2010. As far as we on this side can ascertain, the Australian technical colleges will be lucky to produce 300 tradespeople by 2010. Why can this government not grasp a simple equation? Why is there a need to create new infrastructure that is not required? Why not increase funding to existing infrastructure so that turnaround time in addressing industry need is radically reduced?

I note that where the country needs infrastructure development the government again has chosen not to act. Recently the shadow minister for education visited Ballina high school to discuss the proposed Lismore-Ballina technical college. Apparently, the government is threatening to take this college away from the local community on the basis of lack of community support. What rubbish! It is patently obvious what this is really about—that is, the government’s extreme workplace agenda. This government is insisting that staff at the technical colleges be offered Australian workplace agreements. The Prime Minister is not interested in choice. It is inexcusable that the funding of these colleges be predicated on how the staff is paid. The government would argue that, in addition to the unnecessary trade colleges, it has increased skilled migration in order to address the skills shortage. Some would argue that it has increased skilled migration excessively at the expense of young people being provided with training support.

The Australian Productivity Commission released a report on 17 May entitled Economic impacts of migration and population growth. One of its findings is that in no way can increased migration be a long-term solution to skills shortage. On page 170, the report states:

... migration policy is only one component of a broader strategy to address skill shortages and accommodate future labour market trends.

A broader strategy is needed. Australia was built on the backs of migrants. We need and must continue to have immigration as part of public policy. But simply increasing skilled migration is no conclusive response to a skills crisis. This response is typical of the government—short-term and catering to the whims of its friends at the big end of town.

Even the ACCI, on page 169 of the productivity report, indicated that, while migration does make a contribution to addressing labour and skills shortages, it is ‘as a part of the combination of initiatives’. I note that, in its submission to the Productivity Commission report, the CFMEU stated:

The CFMEU is of the strong view that migrant labour should not generally be used to remedy skill shortages in the Australian Economy … [the] dominant focus of governments should be on providing quality training to workers who are already in the country.

In its submission the AMWU stated strongly:

Temporary skilled migration is a substitute for capability building through skills training and in the long term reduces productivity by compromising the long term ability of Australia to broaden its skills base.

On page 168 the report identifies the fact that, in the consideration of long-term skill needs, skilled migration and domestic labour supply need to be considered together.

Under the current government, the migration plan is being abused. The Labor Party recently released a plan to tighten the control of skilled migrant visas. This would require employers to show that they are not laying off Australian workers one day and then applying for overseas workers the next. The ACTU has endorsed this plan and has also written to the government to request the establishment of new bodies to certify employer applications for temporary visas. These bodies would include representatives from job and training organisations, local councils, unions and government in order to ensure that employers exhaust all avenues to employ or train Australian workers before receiving approval to bring in overseas workers. The labour movement as a whole is demonstrating that it will work to maximise all opportunities to ensure that this skills crisis is addressed. The shameful neglect of education and training by this government has led us into a national skills crisis.

In this budget there is no new money for TAFE. The overall percentage of the federal budget spent on vocational education and training was further reduced. A program to encourage apprenticeships in rural and regional areas had a $13.7 million cut. A $38.5 million program aimed at getting more women into traditional trades such as construction, automotive engineering and mining was abolished. A $23.2 million program for providing IT skills to low-income older workers was abolished. Overall, the percentage of the national budget spent on vocational education is 0.73 per cent, a drop of 0.2 per cent from the last financial year. The budget projects that this will drop to 0.67 per cent in 2009-10. How can this government expect the Australian people to think that it takes the skills shortage seriously?

We know that 300,000 people, primarily young people, have been turned away from TAFE over the 10 long years of this government. Now the government is allowing apprentices in from overseas and providing business incentives to take them on. These people are sent to regional Australia, where youth unemployment is already too high and wages too low. Worse still are the employment conditions for these apprentices, who must accept whatever wages and conditions are offered. That is not fair on young people and not fair on the overseas apprentices. That is why a federal Labor government will abolish overseas apprenticeship visas.

A federal Labor government will build from within to encourage and support young people to take up apprenticeships which will realistically address the national skills shortage. Labor will get rid of TAFE fees for the traditional trades and set up skills accounts to help families save for training, with an initial deposit of $800 a year for up to four years. Younger students will be encouraged to try their hand at a trade with a trade taster program. We will increase the number of school based apprenticeships and establish a $2,000 trade completion bonus to encourage kids to complete their courses.

The skills crisis in Australia is not simply about the shortfall in the actual number of tradespeople. The ramifications are much broader than that. There are many companies that are not able to increase production despite increased demand for their product because of the lack of skilled workers. This impacts directly on Australia’s productivity.

In this year’s budget, social security represents 41 per cent of expenditure, health 18 per cent, defence 8.13 per cent and education 7.57 per cent. Sadly, it seems that this is the first time that defence spending has been higher than education spending. I am reminded of a tea towel I have in my office in Revesby produced by the Women’s International League for Peace and Freedom. It says, ‘It will be a great day when our schools get all the money they need and the air force has to hold a cake stall to buy a bomber.’ I suspect our education sector will be holding cake stalls for as long as this government is in office.

I wish to turn my attention to the issue concerning families in my electorate, and that is child care. In 2004, I conducted a survey in my electorate on child-care needs. At that time, 87 per cent of local families had difficulty finding child care, 60 per cent of families said there were insufficient child-care hours available and 57 per cent said they were still on waiting lists. The situation has not improved since then. The sad reality is that this comes as no surprise. The government sees child care as a cost for families to bear. Labor believes that child care is a crucial investment to make. The coalition has encouraged and in this budget continues to encourage a market oriented approach, not a family oriented approach. Targeted investment in child care leads to economic growth through increased workforce participation and ultimately productivity.

Figures released on 6 February 2006 by the Australian Institute of Family Studies indicated that there are more than 250,000 women wanting to work but unable to do so because of a lack of suitable child care. Another 16,500 women want to work more hours but are not looking for work due to child-care and family factors. Under this government, child care is hard to find and even harder to afford. Over the last year, child-care fees have increased by 12 per cent, five times the consumer price index.

This is a smoke and mirrors budget. The government has tried to give the appearance of creating child-care places while actually giving up on supply problems. This leaves parents and providers to struggle with the actual problems which plague the system. There is not a single extra child-care place guaranteed in the budget, and the cost issue has once again been ignored. The issue of quality child care does not feature in the government’s thinking at all. Good quality, affordable child care is a prerequisite for those parents who want to work. This government has gone some way to addressing cost issues by subsidising parents, but, as we know, there are many parents who miss out on the child-care subsidy. This includes parents from Arndu St Paul’s Preschool in Oatley. I spoke on 15 February this year about the concerns the preschool had raised with me.

There are many steps this government could take to ensure that child care is more affordable. It has essentially ignored the issue, particularly for those families who are on low incomes. Child care and other family friendly provisions in agreements around Australia are under threat because of the government’s extreme new industrial relations system. Child care and other work related costs are huge barriers to mothers who want to return to work or increase their hours. Without government assistance, they cannot and will not participate in the labour force. This leads to skills shortages, loss of superannuation and other poverty traps for women.

So, to coin a phrase, what are the alternative policies? Labor believes that women and their families must be given financial assistance to remove these barriers so that they are able to return to work. Labor believes that the way of the future is more family friendly workplaces and more family friendly provisions. Labor in government will rebuild a fairer industrial relations system that will guarantee employers and employees the right to negotiate child care and other family friendly provisions in workplace agreements without the threat of prosecution. Labor wants top-quality, affordable child care for all families who need it and believes that child care needs to be a positive education experience for kids as well as supporting working parents.

Labor has already made some practical commitments to help working parents: directing capital funding to new child-care centres on primary school grounds and other community land; providing a single child-care waiting list so that parents can get a place as quickly as possible; better planning regarding the location of child-care centres; and pushing the government to fix the child-care rebate. This budget is a wasted opportunity. It represents careless policy making and implementation versus political expediency.

I will finish with one matter that really grates with me, that is, some of the superannuation changes in this budget will see members of parliament over the age of 60 and others who draw superannuation paying no tax on their superannuation payout. I know that a lot of my colleagues in this place think that is a great thing. I think it is obscene. I should be paying tax on my superannuation irrespective of my age when others in the community are more needy. This shows the priorities of this government. This budget primarily looks after the top end of town and the well-off. They get the bulk of the money.

This is one area where I cannot go without putting my view. I do not need a tax-free superannuation payout over the age of 60, and nor does anyone else in this place. We should be paying tax on that. The Treasurer hails it as one of the greatest reforms. The greatest reforms on superannuation were brought in by former Prime Minister and former Treasurer Mr Keating—and they should be built on by this government. We should not have a government do as they have done in this budget.

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