Ms Julie Bishop (Curtin, Liberal Party, Minister Assisting the Prime Minister for Women's Issues) Share this | Hansard source

The premise upon which Labor bases this matter of public importance is fundamentally flawed. It assumes that any movement in productivity growth in Australia threatens our future prosperity. That simplistic proposition cannot be substantiated. The member for Lilley’s performance failed dismally to make the case for Labor.

Productivity growth is the key source of growth in the living standards of Australians over time. Higher productivity means that we can produce more and so earn more income from the resources that we have available. All the international evidence suggests that the key factors underlying good economic performance are a stable and balanced macroeconomic environment, openness to international competition, well-functioning labour, capital and product markets, and sound investment decision making, particularly in relation to human capital and infrastructure. The Howard government has a strong track record of implementing policies in all of these areas.

A key platform to facilitate strong productivity growth is a sound macroeconomic environment. Let us have a look at what the OECD has said about what is going on in Australia. In its latest Economic survey of Australia: 2006, the OECD said this:

Recent macroeconomic performance continues to be impressive: gross domestic product (GDP) growth since the turn of the millennium has averaged above 3% per annum and, including the terms-of-trade gains, growth in real gross domestic income has averaged over 4%, among the handful of OECD countries achieving such rapid growth ...

It goes on to say:

Australia is now one of the few OECD countries where general government net debt has been eliminated.

I point out that we are referring, of course, to the $96 billion in debt that Labor racked up when they were in office. So the OECD says that we are one of the few OECD countries where general government net debt has been eliminated. It continues:

Living standards have steadily improved since the beginning of the 1990s and now surpass all G7 countries except the United States.

This is for Australia. It goes on:

Wide-ranging reforms, particularly to promote competition, were instrumental in this respect. They promoted productivity growth, most notably in the second half of the 1990s. The greater flexibility engendered by these reforms, together with the introduction of robust monetary and fiscal policy frameworks, has also bolstered the economy’s resilience to a series of major shocks over the last decade ...

Yes, between 1993-94 and 1998-99 Australia experienced productivity growth of about 3.3 per cent per annum, compared to a long-term average productivity growth of 2.3 per cent—in other words, it was exceptionally high. Since 2000 productivity growth in Australia has been 2.1 per cent per annum. That is around the long-term average. That is healthy. The return to long-run average productivity growth since the late nineties reflects the rapid changes in production and employment in specific industries. This is what Labor wants to ignore.

We had a sharp decline in construction activity in 2000-01 following the Olympic Games and the introduction of the GST. You will recall that, at that time, a large volume of construction activity was brought forward prior to the introduction of the GST. The 2003-04 drought saw a drop in agricultural output of 24 per cent. There has been a very rapid increase in employment in the mining industry well in advance of increases in mining production. The point is that mining employment since 2000-01 has increased by 65 per cent. Total mining output fell slightly over that period, as declines in crude oil production more than offset increases in other mineral production.

All in all, the result was a fall in productivity in mining of 40 per cent over the last five years, but this is just a reflection of the very strong employment growth in the mining industry. It does not reflect underlying productivity growth in mining that is going to rebound when increased production capacity comes online. Productivity growth in the nineties was high, but do not forget that for 13 years when Labor was in government—including those six years in the 1990s—real wages in this country fell by 1.7 per cent. What concern have we heard for the workers of this country from the member for Lilley? He has not said a word about the workers in this country.

Under the Howard government we have seen real wages increase by between 17 and 18 per cent. In any event, the outlook for a return to productivity growth is looking favourable. The underlying conditions for productivity growth remain in place. In fact the Productivity Commission reported in 2005 that there were also grounds to conclude that productivity growth over the 1998-99 to 2003-04 period would still have been ‘above the long-term historical average had it not been for some atypical, short-term shocks’—and I have referred to a number of them.

The Australian national accounts, importantly, show that the contribution to productivity growth from increases in the education and experience of Australia’s workforce has been stable. The underlying drivers of productivity in the economy are strong competitive pressures and the flexibility to respond to economic shocks. Given the government’s track record and its reform program over the last 10 years, we have provided strong support to both competition and flexibility. Our labour market reform was resisted every step of the way by the Labor Party. Our waterfront reform was resisted every step of the way by the Labor Party. Our tax reform was resisted every step of the way by the Labor Party. Our 2006 skills package was resisted every step of the way by the Labor Party.

The government is going to continue to implement reforms. National water reforms are going to address a century of inefficient water use in the Murray-Darling Basin. We are working in cooperation with the states and territories, through the COAG process, on a national reform agenda covering competition, regulatory reform and human capital investment. But I remind the House that, according to the Australian Bureau of Statistics, the accumulation of human capital—that is, the contribution of skills, education and experience to productivity growth—is the same in this decade as it was in the 1990s. So the premise upon which Labor has founded this MPI falls away immediately.

Our future productivity depends of course on strong economic management. The coalition has a strong record in this area over the past 10 or 11 years, and that has only been possible due to the economic skills, credentials and experience of the Howard government. The opposition are talking about an education revolution. Let us have a look at their ‘recession revolution’. Let us have a look at what they did when they were in office and left families and businesses hurting as a result of their management of the economy. Their economic vandalism threatened our future prosperity. When Labor were last in office, Australian government debt was over $96 billion, almost $100 billion, after five successive budget deficits. They can talk about embracing budget surpluses now, but when they were in office there were five successive budget deficits. They had privatised Qantas and the Commonwealth Bank, yet they still managed to plunge this country into debt.

Interest rates for homeowners peaked at 17 per cent; they averaged 12 per cent under Labor. Unemployment reached almost 11 per cent; there were almost one million Australians unemployed under the last federal Labor government. Inflation averaged more than five per cent and, as I said earlier, real wages for the workers of Australia fell 1.7 per cent over the 13 years of ‘hard Labor’. This shameful record hit the average Australian hard. It damaged small business and it destroyed the confidence of this nation.

What was happening to education at that time? In higher education under Labor, unmet demand—that is, the number of eligible students who applied for a place at university—reached an all-time high. Students could not get a place at university, but at the same time they could not get a job. There were one million Australians unemployed and, if they wanted to get a place at university, unmet demand was at its highest level in decades.

Through the hard work and leadership of our experienced Treasurer and our experienced Prime Minister, the coalition has repaired most of that damage. The Australian economy is in its 16th year of economic expansion. Inflation remains moderate and the unemployment rate is at a 30-year low. We have paid off the $100 billion debt. That is worth repeating: we have paid back Labor’s $100 billion of debt. From the interest that we have managed to save alone, we can invest more money in education—as we have done—training, hospitals and infrastructure.

Think of the average interest rate under the coalition. It is just seven per cent, saving homeowners thousands of dollars in repayments, money they can put towards their children’s education and training. Unemployment has dropped to a 30-year record low of 4.5 per cent. In a week when we are celebrating 4.5 per cent unemployment, the lowest in decades, Labor starts criticising the government for its management of the economy. This is just ridiculous. More Australians than ever before are finding work and becoming productive members of our society, and, as I said, real wages have increased by some 17 per cent.

The member for Lilley said our funding for education is only 5.8 per cent. Under the Howard government it has increased as a percentage of GDP from 5.5 to 5.8 per cent. It has increased at a time of a booming economy. Our GDP is growing rapidly, faster than any other OECD country, and we have still managed to increase our investment as a percentage of GDP. In other OECD countries the percentage has declined over that period. The OECD also refers to the fact that the take-up rate of education in this country is above the OECD average. For example, 35 per cent of 19-year-olds in this country are in some form of tertiary education. That is about seven per cent higher than the OECD average. Overall, 31 per cent of Australians aged between 25 and 64 have some form of tertiary qualification. Again, that is about seven percentage points higher than the OECD average.

Labor continues to quote OECD figures selectively. Funding for tertiary education did not decrease by seven per cent between 1995 and 2003, and Labor knows it. The figures that Labor quotes exclude three-quarters of our funding for vocational education and training. They ignore the taxpayer subsidies for our university students. If we use the OECD figures, Australia’s tertiary expenditure increased by 25 per cent in real terms between 1995 and 2003. But Labor continues to focus on figures that are out of date. These figures only come up to 2003. They exclude the Backing Australia’s Future reforms in 2004, which will see the sector $11 billion better off over the decade. They ignore the $560 million in last year’s budget for higher education and the $837 million in the Skills for the Future package.

This is borne out by the fact that our universities, for example, are in the best financial position they have been in for a very long time. Their total revenues have increased by over eight per cent, to almost $14 billion. Their operating result increased by 36 per cent between 2004 and 2005, to almost $838 million. Total federal government funding increased by over nine per cent in the 12-month period and net assets increased by over seven per cent. So our universities are benefiting from the increased government funding.

Labor have no credibility on the issue of university funding. State Labor governments are ripping off our universities to the tune of more than $150 million in payroll tax. Our state Labor governments are taking more out of our universities than they invest, so, until such time as federal Labor call on state Labor to stop ripping off our universities, they have no credibility whatsoever on the issue of university funding.

Let’s set the record straight on schools funding. As I said in question time today, state governments have the primary responsibility for funding state government schools. It is self-evident—they are state government schools. The Commonwealth supplements that funding, but, if we look at what happened in the state governments’ 2006 budgets for schools funding, New South Wales increased funding for state government schools by 3.9 per cent; the Commonwealth increased it by 10.7 per cent. If the state Labor government in New South Wales increased funding at the same rate we did, there would be almost $500 million more in state government schools in New South Wales. Across the country the state and territory governments increased funding for their schools by less than five per cent; the Australian government increased the rate by over 11 per cent. If the states had matched the Commonwealth funding increase, there would be an extra $1.4 billion in state government schools. (Time expired)

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