Mark Butler (Port Adelaide, Australian Labor Party) Share this | Hansard source

I rise to support the motion tabled by the member for Bendigo because it deals with very serious issues impacting on our economy in macro terms and on Australian businesses and households in micro terms. In particular the honourable member’s motion deals with the major economic legacy left to Australia by the previous government, namely overheated demand compared to capacity, declining productivity—in the last year not the average—and stifled innovation.

Our poor performance as a nation on innovation can be traced back to the decision by the new Howard-Costello government in their first budget to slash the research and development tax concession. Since then spending on R&D has lagged terribly. Through the neglect of R&D practised by the previous government, we see our spending on research and development stuck at about one per cent of GDP. In spite of recent growth in our spending, particularly in the mining sector, we remain at about 15th in the table of OECD nations on R&D spending—a shameful position given our positive economic environment.

In contrast to our one per cent spend in Australia, the OECD averages about 1.5 per cent or 50 per cent more than Australian expenditure. Key trailblazers in the OECD do even better. The US, for example, spends about two per cent of their GDP on R&D, Germany spends 1.75 per cent and countries such as Finland spend 2.5 per cent.

Innovation and productivity have been further stifled by the previous government’s neglect of key supply-side elements of the economy. The previous government had no strategy to deal with the nation’s infrastructure bottlenecks other than to point the finger at state governments. As a result, Australia lagged at 20th out of 25 OECD nations in terms of our infrastructure investment. This was at a time of terms of trade better than any in 50 years, record company profits and employment levels giving a huge boost to Commonwealth tax revenues, but there was no investment in infrastructure at the other end.

The Rudd government by contrast has a very clear strategy, one built around Infrastructure Australia and the Building Australia Fund. Through Infrastructure Australia’s audit of the national infrastructure needs, COAG will be able to develop a list of priorities for the Building Australia Fund. Another key supply-side deficit is in the area of skills and labour shortages. The previous government’s response to this was to pick a fight with the states over whether vocational training should be delivered in TAFE colleges or Australian technical colleges—as if the building mattered. By contrast our budget invests $1.9 billion in skills delivering up to 630,000 additional training places over the next five years.

We have lifted the skilled migration intake by 31,000 in the next financial year. These are 31,000 skilled people who want to make Australia their home, raise a family and contribute their vocational skills to our economy. These are long-term structural responses to serious supply-side constraints in our economy that were ignored by the previous government.

Such a package is critical in turning around the previous government’s poor performance on productivity. Other responses include the funding of innovation centres—including one in my electorate at Mawson Lakes, I am very pleased to say—to support businesses wanting to compete on the world stage. The value added to this debate by the member for Bendigo’s motion, though, is that it gets to the heart of what drives productivity and innovation at a workplace level—a microeconomic response. The microeconomic strategy of the previous government, as was pointed out by the member for Calwell, had a simple name: Work Choices. It was a complete disaster. The coalition has always held to the 18th century notion that you get more from your workforce through managerial prerogative rather than consultation and consensus—the ‘treat them mean and keep them keen’ approach to the workplace. By contrast, the member for Bendigo’s proposal is detailed and thoughtful. It deserves serious consideration by this parliament, including the Main Committee, and the new government. For that reason, I am happy to indicate my support for it.

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