Ms Catherine King (Ballarat, Australian Labor Party, Shadow Parliamentary Secretary for Treasury) Share this | Hansard source

Mr Deputy Speaker Scott, it is nice to see you in the chair and I hope it is providing you with some respite from what must be something of a torrid time for you! In debating the Appropriation Bill (No. 1) 2006-2007 and cognate bills for the 2006-07 budget, I want to focus on the Howard government’s economic performance and how their failure to address the key issues of infrastructure, investment and skill shortages, their failure to deal with crucial issues of child care and its contribution to assisting families into the workforce and their failure to lay down a future foundation for economic growth reflect a broader failure of policy ideas and government stagnation.

The government has wasted an opportunity in this budget to lay down the foundations for future economic prosperity. This budget is for the short term. It is a budget that has failed to invest in Australia’s future and the interests of the nation as a whole. It has failed to invest in the skills of our people. Education was not mentioned once in the Treasurer’s budget speech. The government has failed to provide strong national leadership on infrastructure, again taking a piecemeal approach and investing in favoured projects, and it has failed to build incentives and reward for effort into Australia’s tax system—particularly for women returning to the workforce. Coalition members must be wondering what has actually happened. Here you have a budget with some $60 billion worth of spending proposals, including some modest changes to the taxation system, yet in the public’s eye it has sunk like a stone. Despite the fanfare, despite the Treasurer’s hoopla, it has sunk like a stone. Going by the polls this week, the result of $60 billion worth of spending is that you go backwards. The Treasurer would have to be asking himself, ‘What’s a guy got to do? There is $60 billion worth of spending and we go backwards in the polls.’

The Australian public is worried about the future. Those of us who live in regional Australia are particularly worried, because we can see our manufacturing jobs disappearing around us and we can see what rising petrol prices are doing to our local industries. We travel on crumbling infrastructure every day, and we are the first to bear the brunt of any economic downturn. That is why this budget has sunk like a stone. The government has failed to understand that what the Australian public, what those of us who live in regional and rural Australia, were looking for in the budget was not more handouts, not more election bribes but a direction—a vision and a plan to help us create wealth for our future, lift productivity and provide for future prosperity. The government has always been more spin than substance, and the short-termism demonstrated in this budget absolutely shows it again.

The Treasurer’s song and dance routine to sell the budget failed because the public were desperately looking for something else. They were looking for a government with an ambitious economic agenda that would invest in those things that will ensure the next round of economic growth. They know the resources boom will not last, and they are asking the government: ‘What is next? What are you doing to build future prosperity? What are you doing to boost workforce participation and productivity? What are you doing to help us compete with India and China? What are you doing to make sure that we get a chance to get a better job, higher pay and better opportunities for our kids, not lower wages and worse conditions?’ They were looking for a government prepared to roll up its sleeves and get stuck in on these issues, not more of the same patronage, cronyism and short-term crisis patch-up.

The lack of vision and the complacency of the Howard government is starting to reveal itself in the Australian economy, and this is absolutely true when we come to the critical challenge of the level of our foreign debt. The government’s net debt has been paid down, but it is also true that our net foreign debt, already double the government debt of 10 years ago, has gone up 2½ times. It is now worth $500 billion—that is, half a trillion dollars. On current trends, foreign debt will reach $1 trillion in 10 years, an increase from 51 per cent of GDP to 65 per cent.

Australia’s current account deficit is the highest in the OECD, despite record commodity prices. The government tries to argue that foreign debt is private debt, implying that it has nothing to do with the government and, by extension, that it will have no impact on the economy. That is simply not true. As the IMF has said, the build-up of external debt, although mainly held by the private financial sector, could leave Australia potentially vulnerable to shifts in market sentiment. It is our capacity to compete in the global economy and the pressure that foreign debt places on interest rates that is the problem. Add to this the burden that is placed on future generations to service foreign debt, and the government should be extremely worried about it.

Just as worrying is our trade deficit. The trade deficit in April 2006 was $1.1 billion, the 49th monthly trade deficit in a row. That is despite the FTA with the US. Australia has now been importing more than it exports for four years, and it is particularly in manufacturing where there is real concern. Despite the prediction that manufacturing exports will show almost zero growth, there is nothing in the budget to assist our manufacturing sector. Content to ride on the productivity gains generated by Labor’s comprehensive economic reform program of the 1980s and early nineties, the government has failed to position Australia to generate the next phase of productivity growth. That failure is hurting regional economies.

Australia’s persistently disappointing export performance shows that we desperately need new solutions if our nation is to pay its way in the long term. As the Australian Financial Review recently observed, ‘Other than the automotive sector with its $5 billion in exports, there are almost no large-scale manufacturing and no greenfields investments in the pipeline in Australia, where the output is destined for international markets.’

Blaming Australia’s cost of labour for the deficit, as the Howard government does with its Work Choices legislation, is simply wrong. Labour accounts for only 10 to 15 per cent of the cost of a typically manufactured product. The reality under this government, as the Financial Review recently observed, is that, ‘We as a nation decided that we could replace manufacturing, with all its potential for skilled employment and value adding, with services and ever-increasing exports of coal and iron ore.’ Indeed, if it were not for the insatiable demand of China for our energy and commodity supplies, and the resulting higher prices—prices that will not last forever—our trade performance would be deteriorating even further.

According to the Australian Industry Group, the Australian manufacturing sector employs around one million people, equivalent to one in nine of the total workforce. But in the last 12 months alone 60,000 of those jobs have been lost to the Australian economy. Manufacturing is a vital part of regional economies, employing thousands of people and exporting millions of dollars worth of goods. The managing director of BlueScope Steel, Kirby Adams, was recently quoted as saying: ‘Australia is a competitive place for manufacturing, but what is missing is necessary investment-friendly policies in taxation, infrastructure, research and development, red tape and approvals processes.’ And he is absolutely right: the government has failed to address these problems in this budget. There is absolutely no reason why Australia cannot deliver a manufacturing industry which embraces innovation and knowledge. It only needs the leadership and policies to achieve it—leadership that is not being provided by this government.

Regional economies are also feeling the brunt of the Howard government’s failure to address the skills shortage. It is one of the most serious issues facing our economy. Across industries and across the nation, the consequences of the government’s failure and skills policy inertia are being felt. It is not as if the current circumstances should be a surprise to anyone. Employers have been shouting, loud and clear, for over six years that they cannot access skilled labour. But what has the government done about it? Absolutely nothing. It has restricted, not expanded, training opportunities for Australians. The Howard government has turned some 300,000 Australians away from TAFE alone since 1998. The number of vocational education and training students decreased by 6.6 per cent between 2000 and 2004. The 2006 Productivity Commission report on government services shows that recurrent public spending on vocational education and training dropped by 3.1 per cent in 2004. We have the Howard government turning away thousands of Australians from TAFE and universities every year when many of our businesses are crying out for skilled workers.

The government’s solution has been a quick fix of increasing the number of temporary skilled migrants coming into Australia, making it easier for employers to bring in temporary guest workers who are often in exceedingly vulnerable employment circumstances. The government has introduced a new trade training visa that allows employers to import an unskilled worker and place them on an apprenticeship. I cannot help but contrast the growing skills shortage with the rising teenage unemployment rates in regional Victoria. There is something seriously wrong when you have such high rates of teenage unemployment at the same time as local companies are crying out for skilled workers. As I have said previously in this place, it is policy failure on an absolutely grand scale.

The reality is that the government has got the balance wrong. It has been obsessed with attacking the rights of Australian workers at a time when it should have been investing in education and training. My electorate has been forced to bear the consequences of the skills policy failure of the Howard government, as we have seen in the MaxiTRANS case that I have spoken about previously. The government has failed to invest in education and training in this budget.

I have also spoken previously in this place about the need for infrastructure investment to boost regional economies. We all have projects in our electorates that could assist us. In my electorate it is improvements to the Western Highway and the Midlands Highway, investment in freight hubs and rail transport, and investment in information and communication technology. But the government in this budget has continued its ad hoc approach to infrastructure investment while pork-barrelling in National Party and Liberal Party marginal seats and failing to deliver a national infrastructure investment plan. It failed to commit any new funding to any major road projects in Victoria—payback for Scoresby, I imagine.

Labor want to take the politics out of infrastructure funding. In my community, we are happy to have our infrastructure projects stand on their cost-benefit merits but, in the past, we have been overlooked and had our projects bypassed while projects with less cost-benefit merit in Liberal and National Party held seats have been funded. Labor want to establish an expert body, Infrastructure Australia, to take the politics out of infrastructure decisions. We will make it easier for super funds to invest in infrastructure and we will set up the Building Australia Fund to invest in productive infrastructure for the future.

It is the area of broadband that I particularly want to mention in this debate. We are faced with the ridiculous situation in country Victoria where, every time a community or small regional town wants to access ADSL, we have to petition Telstra through their expression of interest system to try to get enough people to signal that they want ADSL before Telstra will even listen to us. Telstra sets arbitrarily high targets and, even when a community manages to get enough signatures, they have to wait until government subsidies are provided to Telstra before Telstra will do anything. High-speed broadband should be available as a matter of course. We are excited if we get relatively slow ADSL, but we should expect even better speeds than that. Australia’s performance when it comes to high-speed broadband is amongst the worst in the world. The government’s answer is to go cap in hand to Telstra to try to reach agreement over funding for what, frankly, will be an entirely inadequate service only available in capital cities.

Labor announced in our budget in reply that we will invest $757 million over three years and apply the equity from the $2 billion Communications Fund in a joint venture with telecommunications companies so that 98 per cent of Australian businesses and homes will have high-speed broadband. This is not via a patchwork of ISDN, ADSL and satellite but a high-speed, fibre to the node broadband network across the country. We will work with telecommunications companies to deliver this, not just go cap in hand to Telstra to try to beg them to provide a service that should be readily available.

Child care is also an area that I want to talk about in this debate. It is clearly not a priority for this government. The Treasurer, on budget night, claimed that he would deliver 25,000 new child-care places by 2009. Leaving aside the fact that 200,000 places are needed now, the government, in deciding to lift the cap on the number of family day care and out of school hours care places, has failed to solve the child-care problem.

In those two types of child care there are already unfilled places. In out of school hours care, for example, there are currently 67,000 places that are not filled. In family day care, there are currently 30,000 places unfilled. It is predominantly because local councils and other organisations cannot recruit enough family day care workers to do the job—and at $4 per hour, per child, it is little wonder. Added to the fact that the government has now cut operational subsidies to family day care schemes, which exist to recruit and train family day care workers, it is little wonder that it is hard to find people willing to be family day carers.

Despite the fanfare in the budget, there is no guarantee that any of the 25,000 family day care and out of school hours care places will actually be delivered. The government will run the argument that the number of people now accessing child care has increased, and that is true. There are more people, particularly women, who are participating in the paid workforce—predominantly in casual work, trying to assist with high mortgage repayments and increased costs of living. But, despite an overall increase in the number of people accessing child care, the shortfall in child-care places has blown out and the government has presided over a massive rise in child-care fees.

The real winners out of child care in the federal budget are not parents but the for-profit sector. The government has opened up council and community based family day care and out of school hours care to competition from the for-profit sector, competition that has resulted in massive shortfalls of long day care centre based care that provides care for under-fives. It is that area of care where the major shortages are. Whilst the increase of participation for the for-profit child-care sector has increased the number of long day care places available overall, the scrapping of the operational subsidy by the Howard government’s community based child-care centres has meant that many local council services are no longer financially viable and councils are seeking to divest themselves of their management. It has also resulted in new child-care centres being built by the for-profit providers in areas where they can reap higher economic returns, which has left many areas, including rural and regional areas, with a high concentration of parents seeking child care short of places.

As I said, it is the area of long day care where the shortages are most acute. There was absolutely nothing in the budget to increase the number of long day care centre based places, let alone to tackle the issues of affordability. In Ballarat, we have been relatively lucky. Thanks to the hard work of local parents a number of years ago, we managed to do some work and attract enough private providers into the area to ease the pressure on availability of long day care places. But in Daylesford, in my district, the only child-care centre, a community based facility, has just had to increase its fees for low-income families by $7.24 per hour, an impact that has resulted directly from the federal government’s decision to cut the operational subsidies, as it is a multipurpose centre.

The cost of child care is growing at a faster rate than virtually every other household expense. New government data shows that child-care fees are as high as $90 per day and that average weekly fees for long day care are well above the $200 mark in every state and territory. Combining parenting and paid work is difficult enough at the best of times, and Australians work very hard indeed. Balancing work pressures and quality family time means that modern parents need extraordinary levels of commitment, patience and flexibility and, of course, amazing levels of energy.

Labor has made some initial suggestions that the government could introduce immediately to try and fix the crisis in long day care. They include establishing new child-care centres in areas of shortage on suitable primary school grounds or on crown land, directly funding councils to establish single waiting lists for local child-care places—so that we do not have the ridiculous situation that we had in my community, where I, parents and the local council funded a study to find out the demand for child care in our local area so we could attract private providers into the region—and fixing the child-care rebate so parents can access it earlier.

The government has not addressed in the budget the problems faced by parents struggling to access affordable child care. Without an affordable child-care system, families have little hope of balancing family life and work commitments. Those are just a few of the areas where the government has failed to demonstrate that it has a plan for the future prosperity of the nation. It failed to deliver a plan for Australia’s future; it failed to address the crucial issues of infrastructure, skill shortages, increased participation and productivity; and, ultimately, it failed the Australian people.

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