Kate Ellis (Adelaide, Australian Labor Party) Share this | Hansard source

Australia’s long-term economic direction is a matter of significant public importance which will influence the living standards and prosperity of every single Australian in this country. I argue that the Howard government has failed to recognise the long-term challenges facing Australia’s economy and I commend the member for Lilley, the shadow Treasurer, for raising this issue today. It is vital that we take this government to account for their underinvestment in the critical infrastructure, human capital and skills needed to ensure Australia’s future economic growth and competitiveness in a global economy. This is an economic debate that we as a nation must have. As the Leader of the Opposition pointed out in question time yesterday, the 2006 OECD report lists Canada, the Czech Republic, Denmark, Finland, Greece, Hungary, Iceland, Ireland, Korea, Luxembourg, Mexico, Poland, the Slovak Republic, Spain, Sweden, Turkey and the United States as all having higher economic growth rates than Australia. This is something that we must address in the nation’s long-term interest.

In my maiden speech to this parliament back in 2004 I made it plain that one of my top priorities in this parliament would be to work tirelessly for a healthy economy. Prior to entering this place, I had the privilege of working in the office of the South Australian Treasurer and Deputy Premier over a period where sustained investment in vital infrastructure in combination with tight fiscal responsibility turned our state’s economy around. Investment in health, education, skills and law and order by the Rann government was combined with solid economic growth, the delivery of budget surpluses, record levels of employment and the restoration of our state’s AAA credit rating. It has therefore always been with absolute confidence that I have rejected the federal government’s notion that we must strengthen our economy by making workers cheaper to hire and easier to sack. The opposite has been true in South Australia, where our economic growth has come from job creation and creating a business climate that encourages private investment. In contrast to the intensive investment by the South Australian government in infrastructure and in human capital, we have seen a federal government moving in the opposite direction.

South Australia is a small business state, and I am constantly in dialogue with the many small business owners in my electorate about the crippling impact that the skills crisis has had on their businesses. From their perspective, the greatest possible impediment to economic growth and productivity is a lack of human capital and skills. The frustration coming from business owners in this respect is intense and widespread. While I could talk today at length on the lack of critical infrastructure, particularly in my electorate in the area of broadband, it is on this issue of investment in education and in human capital that I would like to focus my attention today.

Let us first have a look at the economic facts. Australia’s productivity growth has been falling. Benchmarked against the United States economy, Australia’s labour productivity fell back from a peak of 85 per cent to just 79 per cent between 1998 and 2005, almost completely losing the relative productivity gains made under Labor in the 1990s. If we are to secure Australia’s long-term economic prosperity, we must address this decline in productivity and look urgently at this government’s underinvestment in education, skills and trades as one of the root causes of this decline.

The government should be well aware of the link between investment in human capital and prosperity. The point has been made in a number of national and international studies, including in a report by the Productivity Commission in 2002, in which it was concluded:

Skills can directly raise workers’ output per hour worked. Secondly, there is a substantial body of opinion that skills in the workforce increase the rate of innovation through fostering the absorption and further development of technologies.

This point was reiterated last year in the 2006 OECD report Education at a glance, where it was stated that a one-year increase in the average level of education of the workforce would increase the economy by three per cent to six per cent and boost the rate of economic growth by one per cent. The potential for Australia’s economy to grow as a result of investment in human capital is clear, yet the Howard government’s expenditure on human capital has been severely lacking. The statistics make this very clear. Australia lags behind 17 other OECD economies on education investment as a percentage of GDP. With expenditure on education of only 5.8 per cent of our GDP, Australia falls far behind countries like our neighbour New Zealand, at 6.8 per cent, and other major trade partners such as the United States, at 7.5 per cent, and the United Kingdom, at 6.1 per cent.

When we look specifically at the investment in our tertiary institutions, they are suffering particularly from underinvestment. Since 1995, Australia’s public investment in tertiary education has gone backwards by seven per cent, compared with an average increase in other OECD countries of 48 per cent. In fact, shamefully, Australia is the only nation that has cut its public investment in tertiary education. This is an underinvestment in our future that we can ill afford to continue. Tragically, so far this has not been an issue that the federal government have been willing to discuss. In question time earlier this month, when the member for Lilley and the member for Perth put a series of questions to the Prime Minister on Australia’s performance in education, the Prime Minister acknowledged the link between education and national productivity improvement but claimed that the improvements needed were either the responsibility of or being held back by the states or education unions. I for one am outraged that on an issue that is so vital to our nation’s future prosperity—so vital to businesses across Australia struggling to find skilled staff—the Howard government dares to play the blame game rather than take significant and urgently needed action.

If we look further into this government’s failure to invest in Australia’s human capital and take the two vital disciplines of mathematics and science as examples, we see that Australia is again being left behind by other nations. At our universities, only 0.4 per cent of Australian university students graduate with maths and statistics qualifications compared with an OECD average of around one per cent. When it comes to maths and science teachers, nearly half of all senior physics teachers do not have a major in physics and around 25 per cent of senior chemistry teachers do not have a major in chemistry. In addition, 25 per cent of science teachers do not have the qualification and around 25 per cent of maths teachers do not have a major in maths. Australia needs to be encouraging the study of maths and science and offer incentives for graduates to take these skills into related occupations, including the teaching profession.

Rather than indulging in the blame game, as the federal government seems intent upon doing, Labor have been looking at what we can do to achieve this. We have proposed reducing the HECS contribution for new university maths and science students, as well as paying 50 per cent of the HECS repayments of university maths and science students who, as at 2009, engage in relevant maths and science occupations upon graduation. These are the positive measures that are vital to ensure Australia is not left behind in these vital areas and that we remain competitive in a knowledge based economy. This government has failed to address these critical issues.

When we look at the area of skills training for our trades, the federal government has again shown a disinterest in placing Australia in a competitive place on the international stage. Rather than investing in Australia and in young Australians, the government has turned its back on them. Since 1998 it has turned its back on over 270,000 Australians wanting to study at TAFE. This means that, for every imported skilled migrant, at least one Australian has been turned away from TAFE. Again, the government is moving in the wrong direction. What we need, and what Labor has proposed, are incentives to traditional apprentices and the creation of a skills account to encourage further skills training in our vital trades.

In all of these areas—in tertiary education, in the vital disciplines of mathematics and science, in skills and training for our trades—this government has left Australia lagging behind our fellow OECD countries. As we move forward into the 21st century we must recognise that education is not merely social expenditure and a drain on the economic resources of our nation; it is in fact integral to our economic growth. On this side of the House we recognise the potential that greater investment in human capital presents to us. We are a nation intent on competing on the international stage as a knowledge based economy, and investment in this area is our best chance to do that.

I call on the Howard government to follow our lead and take the urgent steps necessary to return our international competitiveness on the issues of education and skills. Only when we see the adequate investment in human capital—in our kids, in our schools, in our university students and in our tradespeople—will we reap the economic benefits at our fingertips. If we are to secure this long-term prosperity we must address the decline in productivity and urgently look at the investment in human capital. (Time expired)

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