Peter Costello (Higgins, Liberal Party, Treasurer) Share this | Hansard source

It does have long lead times, yes. If you take children who are, say, starting secondary school and you give them a better education and a better post-secondary education, you will, hopefully, get a pay-off in 10 years in relation to productivity.

But there are also some things that can lead to better output per person in the more immediate term. Of course, one of those is a better industrial relations system. If you allow people to so change their patterns of work and to have incentive for higher output, you are going to get better output per person and better output for each individual enterprise. I do not think there is any doubt that a decentralised system of industrial relations will promote productivity. I do not think there would be any credible observer—not the IMF, not the OECD, not the Treasury—that would argue against a decentralised industrial relations system. The only institution I am aware of in this country that argues against it is the trade union movement—because the trade union movement wants to control workplaces. And, of course, its political puppet, the ALP, is forced to go along with the ACTU.

Earlier today the Reserve Bank Governor made a speech, and I want to read to the House what he said in relation to the current economic position. He said:

Compared with what we expected a year ago, then, growth has turned out to be stronger, employment higher, but underlying inflation a little lower, and wages growth has been steady in the face of unanticipated labour market strength.

This is quite a favourable set of outcomes, and should prompt us to ask how it all fits together.

So how does this fit together? He went on to say:

But my guess at present is that at least some of the explanation for these better-than-expected outcomes probably has to do with changed behaviour in the labour market.

Despite, on most counts, the tightest labour market conditions for a generation, growth in most measures of labour costs has remained well disciplined for the past two years or more, after a mild acceleration earlier.

Wages are rising quickly in some areas, but quite slowly in others. That is, relative wages are changing, adjusting to the forces at work on the economy, but without, so far at least, a serious inflation of the whole economy-wide cost structure.

This looks like a text-book case of adjustment.

That is what the Governor of the Reserve Bank said today—‘a text-book case of adjustment’.

I have been making the point for a long time that, if your terms of trade are strong and some of your industries are doing well, you can afford increased wages and increased costs in those industries. But what you cannot afford to do is take settlements out of profitable industries and pattern bargain them or piggyback them across to other areas of the economy. That will result in general inflation. That is what has always happened in Australia in the past, and that is why a terms of trade improvement has invariably led to recession, inflation and its consequences in this country.

What has kept us going now is that we have a better system of industrial relations. I have compared the economy to a Formula One racing car. You have a growing economy. You have got 4.2 per cent unemployment. You have got in some cases full employment and labour shortage. But you can keep inflation moderate on a good industrial relations system. But if you want to put in the driver’s seat of that Formula One somebody who does not know how to handle it, somebody who brings back in an industrial relations system, it could threaten the whole delicate balance.

If you had wanted to know about a fearful example of what could be in store for Australia, you should have listened to the Leader of the Opposition on AM. It was painful. It was clear he does not know what productivity is, it was clear he does not know what creates it and it was clear that once you ask him a question off the ACTU script he is on his own. He is somebody on his own, but this time driving the Formula One motor car; he is somebody on his own, but this time running the Australian economy—a fearful event, almost embarrassing for those of us who were listening to it this morning.

If you do not want to listen to me and you do not want to listen to the Reserve Bank governor and you do not want to listen to the IMF and you do not want to listen to the OECD, could I plead with you: do not listen to the ACTU. Why not listen to Paul Keating, Labor hero, who takes responsibility for everything that is good in the Australian economy? He said on Lateline:

... the Labor Party [has] come back with something that will take them further back than the legislation I put in place in ’93.

They do not have a policy.

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