Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

I welcome the opportunity to speak on the Appropriation Bill (No. 1) 2007-2008 and related appropriation bills for the 2007-08 budget. Twenty-five years ago the Australian people began what I think is now widely recognised as among the most far-reaching revolutions of our time. They set out on a long and difficult struggle to transform this country. They set out to rebuild the Australian economy as one which could compete with the best in the world. They set out to rebuild the Australian economy as one in which their children would find good, well-paying jobs; in which employers and employees would no longer be at each other’s throats; in which strikes would be uncommon; in which markets instead of governments could set prices; and in which business could compete rather than collude. They set out to rebuild the Australian economy as one of the best in the world.

It was a profoundly important moment in recent history and a supremely ambitious one. After all, a quarter of a century ago Australia was at the bottom of the deepest recession we had experienced since the Great Depression. Under the guidance of the then Treasurer, now Prime Minister, the honourable member for Bennelong, interest rates had hit the highest level they have ever reached before or since. Unemployment was headed to over 10 per cent of the workforce, even though inflation was over 12 per cent. Production was contracting and living standards were falling.

But Australians remembered that this had once been a prosperous country, proudly a full-employment economy with one of the highest living standards in the world. They turned to the task of recovering what we had lost. So we floated the dollar, deregulated banking and finance and cut tariffs. We introduced the accord to rebalance wage and profit shares in the economy and to rein in inflation. Then we transitioned from nearly a century of centralised wage arbitration to a wholly new system of enterprise bargaining. We implemented national competition policy to enhance the competitiveness of Australian businesses and government enterprises.

Australia joined the worldwide recession in the early nineties. Though less severe than the last in terms of output, it was nonetheless deeply damaging. But we emerged after nearly a decade of difficulty, with an economy in which inflation was low, in which productivity growth was accelerating, in which businesses competed on a level field and in which jobs growth was persistent. Fifteen and a half years ago we followed that difficult period of reform by beginning what would prove to be the longest upswing in our history. We then began the long and steady progress towards full employment, towards a well-paid and well-trained workforce and towards an increasing diversity of opportunity for young Australians, which had all along been the aim, the intention, the whole point of our decade-long transformation.

But now, after a 15½-year journey towards full employment, a journey preceded by a decade of the most difficult, contentious and painstaking preparations, we arrive near our goal of full employment only to find that this government has not done nearly enough to prepare us for that arrival. I accuse this government of the most unconscionable want of thought about the inevitable consequences of our long success, of a want of urgency and a clarity of purpose which has quite unnecessarily put at risk and tarnished the quality of everything we have worked for in the last 25 years. This of course is the legacy of the current Prime Minister and the current Treasurer. I see this failure to face up to the future economic challenges as a sad betrayal of Australian workers, businesses and policymakers who have worked hard over the last two decades to build our prosperity.

For at least a decade we knew that, if growth continued as it had been, we would eventually encounter skills shortages and capacity constraints accompanied by the risk of high inflation and higher interest rates. Yet, rather than take the steps necessary to address these constraints, this government sat back and applauded itself with smug declarations as unemployment continued to fall—basking in the sun of the mining boom rather than doing the heavy exercise required to secure our future prosperity. This government applauded itself as productivity growth began to decline, from an average of 3.2 per cent in the mid-nineties to 2.2 per cent at the turn of the decade—and it is expected to reach 1.5 per cent this decade. This government applauded itself as the growth in the volumes of our exports, impeded by this government’s lack of foresight, continued to fall, from an average growth rate of eight per cent a year over the nineties to less than 2½ per cent a year since the turn of the decade. This has occurred in the middle of a mining boom—a shameful record.

This government applauded itself as output growth began to slow, as employers reported critical skills shortages, as the queues of coal ships lengthened outside Dalrymple Bay and Port Waratah and as we began rationing railway rolling stock. This government applauded itself as month by month Australia raked up a record run of trade deficits, despite the most favourable global economic conditions in 30 years and the highest terms of trade in more than 50 years. This government applauded itself as our net foreign debt mounted so that it is now over half a trillion dollars. This government applauded itself as year by year the Reserve Bank of Australia increased interest rates. There have been eight successive interest rate increases from the Reserve Bank of Australia in the last five years—half of these coming since the last election, an election fought by this government on a pledge to keep interest rates at record lows. The Reserve Bank could see where we were heading, even if this government refused to look.

The Secretary to the Department of the Treasury repeatedly warned this government what 15 years of expansion would mean. Two successive heads of the Reserve Bank of Australia warned this government what a prolonged economic expansion would mean. They warned that, unless we addressed the skills shortages, the lack of capacity and the infrastructure constraints, it would mean slower output growth and the risk of higher inflation. The secretary to the Treasury warned that it might mean that manufacturing in other sectors of our economy must contract to make way for the expansion of mining. And still the government did nothing, lying back while the alarm bells went off. And, yes, its advisors are still warning. The Reserve Bank told this government last month that inflation would inevitably accelerate in 2008. The certain consequences will be still higher interest rates if this government is re-elected. It warned that our skill crisis had worsened and was further constraining output. The secretary to the Treasury told his officials two months ago that Australia was at a point where there was a serious risk to inflation from policy interventions by this government unless it turned its focus to lifting our nation’s productivity capacity.

But the warnings were unheeded by this government and this Treasurer. The preparations were not made. The opportunities were lost and squandered. This government applauded itself as, year by year, it became more and more evident that climate change was not only having a discernible effect on the planet but having a particularly difficult effect on Australia—on our farmers, our rural towns, our water supplies and our ability to sustain agriculture. For this government, climate change was not an issue for the Australian government; it was only an issue for foreign governments. For this government, skills training was something that the states alone should worry about. And, of course, for this government, education was something that the states alone should worry about. Infrastructure, we were told, was fine—and, where it was not fine, it was something for the states alone to worry about.

Riding high on 15 years of economic expansion and on the strongest world economic environment in three decades, this government was content to collect the money coming in and to hand it out in a cynical pattern of electoral manipulation. It refused to look ahead. It refused to lead. It refused to ensure that when we did arrive at near full employment we would have the policies in place to ease our capacity constraints, to sustain the growth and skills of our workforce and to permit this long and hard-won expansion to continue for decades to come.

Instead, it was prepared to bask in the prosperity which resulted from earlier policy struggles, earlier hard reforms and, more recently, the mining boom. It was prepared to encourage employers to drive down wages and conditions as if the final goal and end point of all our work over the decades had been the destruction of Australian living standards, not their improvement. But it did not have the foresight, or it was not willing, to take the steps necessary to prepare us for the inevitable consequences of this long-term expansion. That is exactly where we are today. We knew where we were heading, and as shadow Treasurer I have been warning of this for the last 2½ years. Now I am told by the government that we are remiss in our duty in not objecting to parts of this budget—in not opposing the income tax cuts, in not opposing using what might otherwise have gone into the Future Fund as a new fund for higher education, in not opposing some more spending on child care, and in not opposing some new spending on road and rail infrastructure.

I want to make it perfectly clear today that I do not oppose those measures. I support them; I welcome them. They are not enough; they are very late. It was five minutes to midnight before this government woke, but, after all, it is a start on exactly what Labor has been demanding for at least the last three years. So we are not going to complain about the government’s quasi conversion to our agenda. But I do say this: after a decade of neglect, when it comes to the productive drivers of our economy, these measures are not nearly enough. If we are to secure future prosperity we must direct our efforts to expanding the productive capacities of the nation. This means lifting productivity so that our economy can grow faster for longer without fuelling inflation and higher interest rates. It means taking the handbrake off our economy by tackling the infrastructure bottlenecks which are frustrating supply, and it means investing in the skills and training of our people.

It means tax reform. I am delighted that the government have adopted Labor’s policy set out two budgets ago. They condemned us at the time we put the policy forward. They have adopted it in this budget, and they still condemn us for supporting initiatives we put forward two budgets ago. What a tangled mess they weave when they practise to deceive! The same can be said, in some ways, for education. Labor believes that Australia must aspire to become the most highly educated and skilled nation on earth. Getting there will take foresight that last week’s budget simply did not contain. The budget was an eleventh-hour bid by the Howard government to reclaim lost ground and to steal some of Labor’s clothes. No-one was fooled.

For Labor education is something that we believe in. It has been a core value for over 100 years. We believe it is an end in itself and we see it as a great generator of opportunities for individuals, but we also recognise its importance to boosting national productivity. I was astounded to hear the Prime Minister dismissing this idea as a ‘soulless and narrow form of national economic service’. It is a measure of how out of touch he is about the demands of a modern economy and the aspirations of Australians, who believe in educating themselves and their children to get ahead.

Labor also welcomes new assistance for apprentices in this budget, but the government’s commitment to three more Australian technical colleges will not address our skills crisis. By the government’s own admission, Australia will face a shortage of 240,000 skilled workers by 2016. And the Howard government’s response to this crisis, its Australian technical colleges, will still only produce their first qualified tradesperson in another three years and will have fewer than 10,000 students by 2010. So it is clear that the Howard government does not have a plan to deliver the skilled workers it needs right now, let alone the skilled workforce it needs for the future. In contrast, Labor’s plan is for the next decade and beyond, not just the next six months. It is led by our most recent policy to invest $2.5 billion in our schools to help build or upgrade trade facilities, to lift school retention rates and to help provide real career paths to trades and apprenticeships.

And that brings me to the Higher Education Endowment Fund. Additional funding for higher education in the budget is also welcome, but it comes after a decade of neglect which has seen government funding to universities fall from 0.9 per cent of GDP in 1996 to just 0.6 per cent today. The government’s Higher Education Endowment Fund has merit, but let us put it into perspective. With its initial funding it will provide $300 million per year to upgrade university facilities, spread across each of our 38 universities. Mr Howard’s claims that this is the education revolution we have been calling for are simply not matched by the amount of money that will be delivered.

The government’s endowment fund has also destroyed any claims that Labor’s actions have undermined the Future Fund’s ability to meet its target of funding public sector superannuation liabilities. For months the government has been railing against our plans to re-invest in our national communications infrastructure the $2.7 billion of Telstra sale proceeds that had been notionally allocated to the Future Fund. The Treasurer claimed that our investment for the future was ‘stealing from the future’. That is the kind of rhetoric you would expect to hear from a government that is short on vision and ambition when it comes to our country’s future. But the Treasurer’s credibility has been categorically undermined by the government’s own financing mechanism for its Higher Education Endowment Fund. By taking $5 billion from the surplus that had otherwise been committed to the Future Fund the government has reduced the funds available to meet future public sector superannuation liabilities.

That brings me to infrastructure. Not only does the budget fail to invest the bounty of recent times in building our skills capacity but also it fails to address capacity constraints in our infrastructure, which is frustrating supply. As I travel around Australia, businesses and people constantly tell me how unhappy they are with the state of our roads, our ports, transport, our water supplies and our broadband speeds. This government has ignored persistent calls from businesses and industry groups for infrastructure planning and development to be nationally coordinated. The government still does not have a national infrastructure coordination body, which Australia needs to better plan our infrastructure needs and to help overcome the current infrastructure shortfall—a shortfall estimated to be in the order of $90 billion according to the Business Council of Australia. After the budget, the Business council stated:

... the key issue still appears to be the lack of long-term integrated planning to drive investment to address ongoing bottlenecks.

Labor is absolutely committed to providing national political leadership on infrastructure.

Both Labor and many in the business community also share a clear and common objective of pursuing reforms that will take the handbrake off our economy and allow Australian businesses to compete in an increasingly competitive global economy, and we need all Australians—those in the boardroom and in the lounge room—playing their part if we are to have further economic reform. Ensuring that working families do not bear a disproportionate burden from these economic reforms is part and parcel of this process. Equally, Labor recognises that businesses need flexibility when it comes to managing their employees. Labor will not be going back to centralised wage fixing. After all, it was Labor which moved away from nearly a century of centralised, arbitrated wage fixation in this country. Labor’s industrial relations system is about balancing the flexibility needed by business with security needed by employees and their families. It will be underpinned by workplace level collective enterprise bargaining where employees and employers can directly bargain over employment conditions and productivity improvements. We believe this is a critical way to drive productivity at the enterprise level. Alternatively, individual employers and employees may agree on common-law individual contracts that will continue to provide upward flexibility from modernised awards. There is a strong debate over the future of industrial relations in this country, but Labor is determined to work through the detail of the transitional arrangements to ensure we get the balance right for business, working families and the nation.

Securing Australia’s long-term prosperity also requires decisive action on climate change—something that was missing from the budget. The budget had a thin green veneer, but it failed to map out a comprehensive plan to substantially reduce Australia’s greenhouse emissions and protect our economy. Instead of decisive action, all we had from Peter Costello and John Howard were predictable attempts to divide the Australian people by pitching the economy against the environment. Of course, the economic reality of the 21st century—which they simply fail to grasp—is that a strong economy is predicated on a healthy and sustainable environment. This government’s inaction on climate change is endangering our future prosperity.

There were some welcome initiatives in this budget, and Labor is happy to endorse them. But, if we are to turn the prosperity we now enjoy into long-term economic security for the nation, we need more than short-term politics. It is time that we recognise and address the underlying weaknesses of our economy, stemming from this government’s failure to address capacity constraints in our economy and to invest in the drivers of productivity. It is time we recognise the threat that climate change poses for our economy and take the steps necessary to protect our environment and secure future prosperity. It is time for a Labor vision. (Time expired)

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