David Hawker (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Lilley proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The failure of the Government to recognise the long term challenges facing the Australian economy and formulate policies to underpin future economic growth and living standards.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

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

It is pretty clear from question time today that we have a government that is not on top of the economic challenges facing this country, absolutely not on top of the issues and unwilling to debate the significant long-term challenges that we face in building prosperity well into the future. We saw today the embarrassment of the industry minister: not one question, not two questions, not three questions, not four questions, not five, not six, but seven questions, and he was mute. He could not tell us whether he had had a discussion with the members of a company, some of whom are very close to the Liberal Party, on a question that goes to the heart of our future economic prosperity: the challenge of climate change and what it means for the future of the economy.

When it comes to climate change, this government has never got it, and today you could see that it will never get it. At least the Treasurer in the past has had the honesty to admit that nuclear power is uneconomic, but he did not have the honesty to provide a submission to the Switkowski review. Was the Treasury consulted about that? No. Of course, the Treasury does not get consulted on any of these things anymore. We have a $10 billion water package which the Treasurer was not consulted on. What we have here is a government that is consumed by smugness and short-termism and is not facing up to the challenges of the future. It has no ambitious plans to build prosperity for the future. It is certainly not up to the challenge of addressing our sliding productivity, slowing growth and declining competitiveness.

It is significant that this goes front and centre to our future living standards, and future living standards are what productivity is all about. But the government is not on top of these issues, and it has been unwilling to debate these issues in the parliament. I am pleased that the Treasurer is here today, because it is time that we had a national debate on how to raise productivity in this country. Productivity goes to the core of wealth generation in this country well into the future, but if the industry minister is as hopeless as he was today, heaven help the significant industries in this country that he represents and that we need to prosper and to grow well into the future.

The Treasurer is fond of saying that we have had 10 years of prosperity and that that is somehow all the work of his good self and the Howard government. I am prepared to say that we have had 15 years of prosperity, and isn’t that a wonderful thing for this country? Let the Treasurer play politics when he says that 10 years is the length of our prosperity, but that is just the Treasurer being complacent and smug. We all know that the Treasurer is very good at claiming credit and very poor at accepting responsibility. He is quite happy to claim credit for the mining boom, but he will not fess up and admit that there are some significant challenges which are affecting future growth and prosperity in this country.

In the last six years, serious deterioration has emerged in our economic performance, and we in this parliament ought to be having a debate about that. That deterioration needs to be recognised, it needs to be explained and it needs to be addressed. But of course, we will never hear about that from the Treasurer—and we certainly do not hear about it from the Prime Minister. In his radio address on Sunday night, the Prime Minister said that the reforms of the last 10 years have given us much of the prosperity we are enjoying. We have been enjoying prosperity, but you would think that he might admit that the mining boom might have had something to do with it. You would think that he might just admit that the mining boom has given the government a bit of a hand in delivering that income boost to this community.

I am prepared to admit that the independence of the Reserve Bank has been absolutely central in our growth over the last 15 years, and that is a good thing, because it was put in place by the Labor Party. We welcome macroeconomic stability. Running budget surpluses over the cycle is important to our prosperity and growth—over 15 years, Treasurer—but that cannot continue into the future if we are not prepared to be honest enough about what is going on in our economic record. The facts are these: in the last six years, there has been a decline in some of our key economic indicators. That is six years in the last 15. The Treasurer wants to crow about 10 years; but let us have a look at what has been going on in the last six years.

In the six years to September last year, the average growth of the volume of Australian exports over 12 months has fallen to 2.4 per cent—less than one-third of the yearly growth rate over the six years from 1994 to 2000. What is significant about that? We are in the middle of a commodity boom—a mining boom. It has been raining gold bars. We are not getting the performance we really need. The average GDP has fallen to three per cent from over 3.5 per cent in the previous six years, and the growth of labour productivity in the market sector has fallen to two per cent from over 2.5 per cent in the previous six years. The growth of GDP per person, or average living standards, has fallen to under two per cent from over 2.5 per cent in the previous six years.

Over the last year, in most of these measures, we have been doing even worse than the average of the last six years. What this shows is that we have a productivity problem, and it was there for all to see in the September accounts. The September quarter national accounts show that labour productivity has failed to grow since June 2004. That is more than two years with zero productivity growth. Productivity growth actually declined by 1.6 per cent in the previous six months. This is not something that the Treasurer will talk about in this House. I await with interest the Treasurer’s response. What ambitious plans does he have to lift productivity in this community? Unquestionably, he will get up and say that he has got his extreme industrial relations reforms—which, we know, have got nothing to do with lifting productivity. He has so little confidence in his belief that it will lift productivity that he would not let the Treasury do the modelling to prove the point.

Most seriously, multifactor productivity growth, a key driver of productivity gains over the 1990s, has more than halved—falling from an average of 1.6 per cent last decade to 0.7 per cent this decade. This slowdown has seen us slip further behind productivity leaders in the global environment. The 1990s saw Australia catapult from a productivity laggard to a productivity leader, lifting our productivity performance to 85 per cent of US productivity levels. What lay behind that? One of the significant factors involved in that was enterprise bargaining, put in place by a Labor government committed to reform, committed to lifting productivity, committed to wealth creation and committed to a forward-looking agenda.

The Treasurer was in the House during question time pretending that he was the author of the modern superannuation system—which has turbocharged the Australian economy. I have been doing a bit of work on the Treasurer’s record between 1993 and 1996. Guess who opposed the superannuation system for years and years? It was none other than Peter Costello. Yes, superannuation is a fantastic reform. It was put in place by a Labor government. It is one of the great reforms that has enabled this country to face the ageing of our population with some confidence—and we are proud of it. So when the Treasurer comes in here and tells porkies about it, it leaves us a bit lost for words. There is a history of reform on this side of politics.

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

Mr Costello interjecting

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

Absolutely. There is a history of reform: enterprise bargaining, superannuation, national savings, competition policy—all things put in place by a farsighted Labor government; all things which lifted the productivity performance of this country.

That, of course, brings us back to the mining boom, for which the Treasurer is very keen to take complete credit. Through this wonderful 15 years of growth and prosperity that we have had in this country, you would have thought that we could have used this period to do the one thing that was really going to set this country up for the future and lift our productivity and our rate of wealth creation. You would have thought, with the bounty of the commodity boom, we could have found enough resources, both public and private, to invest in the education and training of our people. It was a unique opportunity, squandered by this Prime Minister and by this Treasurer, to invest in our human capital and to set this country up for a period beyond the commodity boom. It was an opportunity that was not taken.

This is where the figures are absolutely damning of the squandered opportunities of the last 10 years of the Howard-Costello government. This government cut public investment in education and training by seven per cent over a 10-year period, when the average in the OECD was an increase of 48 per cent. This country is living with the consequences of that today. We see it in our faltering productivity, we see it in the skills shortages and we see it in the capacity constraints. This government not only has failed when it comes to education and training but also has failed to provide some national political leadership when it comes to infrastructure—doing something about our basic rail, road, ports, transport, communications and broadband, and setting up a national structure which would provide leadership and go to the heart of lifting our productivity and our competitiveness.

That is why Kevin Rudd started this year with one commitment that goes to the very core of meeting the economic challenges facing this country—of lifting our productivity and lifting our competitiveness and setting this country up for a future for our children and our grandchildren. What is that commitment? It is the education revolution. It is the education revolution that starts in the early years, something this government has squibbed on time and time again. There have been massive squandered opportunities. There have been cabinet submissions that have gone up to ministers, arguing for a comprehensive commitment to the early years and the funding of that commitment, and time and time again they have been locked away in the drawer, never to be seen again. Kevin Rudd’s education revolution is going to make a difference in this country. It is absolutely what we need to lift our productivity.

Doing something about the teaching of maths and science in this country is also absolutely critical. Our major trading partners, particularly India and China, are investing massively in basic sciences and in the training of teachers, particularly in maths and science. The government is mute in this area as well. The Leader of the Opposition has put forward positive alternatives in this area—positive alternatives which will lift our productivity and make us competitive.

It is about time we had an economic debate in this parliament. I am delighted that the Treasurer could see fit to come in today. I hope this remains the case as we go through month after month towards the next election. There is a very clear choice here between the Labor Party—which is committed to long-term policies that will build wealth and prosperity for the future—or more of the same from an ageing government which is out of touch, arrogant, smug and bereft of answers in key areas like climate change.

The fact that this Treasurer has allowed this Prime Minister, year after year, not to consider any discussion of an emissions trading system is reflective of how complacent and out of touch this government is. Imagine how well placed we would be now if we had put such a trading system in place. Imagine how well placed we would be now if the government had taken up our suggestions of well over 12 months ago about renewable energy and about investing in clean coal technology. All of these things are challenges for the future. You see, Treasurer, going carbon clean is the only growth strategy for the future. But the Treasurer has not even allowed his department to do any modelling on climate change. This came out at estimates committees a couple of weeks ago.

So we have a Prime Minister and a Treasurer stuck in the past, out of touch, smug, unable to rise to the challenge of the modern economy—where talent is the modern commodity of growth—unable to invest in the skills and talents of our people and unable to provide modern infrastructure that can be the engine room of an efficient economy. The government comes into this parliament and plays short-term silly political games, as the Minister for Industry, Tourism and Resources played today. We must address and debate these issues right through to the election. (Time expired)

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

I welcome a debate, right through to the election, on economic policy. If the Labor Party is as weak as was evidenced by that speech, I have no doubt how the electorate will make up its mind. I invite members who are here to think back over the 15-minute tirade we have just had from the member for Lilley—former State Secretary of the ALP; long on rhetoric but short on policy. Can anybody think of one policy that he mentioned in that 15-minute tirade that the Labor Party has actually published, costed or announced? No. Fancy calling on a matter of public importance, saying that the matter of public importance is the failure of the government to invest in productivity to deal with long-term economic goals and then to go 15 minutes without providing one alternative policy. You have to have chutzpah!

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

You should go back and read it.

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

No, listening was sufficient, my friend! To ask me to go back and read that tirade is asking me to do far too much—much more than I could possibly deal with. You might get away with that kind of tirade down at the local ALP branch—amongst the faithful on a Thursday night, with the people who have been stacked into the branch—but, when you come into the national parliament and you talk about long-term economic trends and building for the future, you have to do a lot better than that because the people of Australia are relying on the government to keep this economy strong. They do not need bluff, they do not need bluster and they do not need political tirades. They need experienced economic management, and the experienced economic management will not be coming from the member for Lilley, if that is any indication of the depth of his thinking on these issues.

Let us go back to where he began his speech. He said question time demonstrated that the government was not on top of the long-term issues affecting the Australian economy. Is that right? I thought question time illustrated an opposition that was prepared to play populist politics—an opposition which asked the Minister for Industry, Tourism and Resources on, I think, five occasions about secret discussions, which it turned out he had never had, with a newly formed company. And for what purpose? So that the Labor Party could go around and mount a scare campaign on nuclear energy. This might be populist politics, it might be feeding into some grand campaign, but let me tell you what it was not doing: it was not addressing long-term issues in the Australian economy. It was not looking down the track and asking where Australia might get baseload energy from in 20 or 25 years time. It was not talking about an alternative to coal-fired power stations. It was not saying for a moment, ‘We’ll lift ourselves from the ruck and we’ll think about a longer term issue.’ It was cheap opportunism.

I know what will happen. The Labor Party will now run around electorate by electorate and say, ‘Do you know that you might have a nuclear power station in this electorate? Will you rule it out?’ They will go from fear campaign to fear campaign. It is very obvious. But let me tell you this: if you are going to go down the populist fear campaign road, do not come in here with an MPI on long-term economic reform. My friend, you come to the fork in the road and you take one road called populism. You do not turn up and say, ‘I’m interested in long-term economic issues.’ You go one way or the other.

The member for Lilley will always go down the populist road. We know that for a fact. His whole political career bespeaks it. His political career as State Secretary of the Queensland ALP bespeaks the fact that he has engaged in opportunistic politics throughout his career. He can do that and it has its place, and no doubt he will win some votes off the back of it. But the one thing he cannot do is this: he can never stand in this parliament and say he supports long-term economic reform, because long-term economic reform sometimes requires you to stand up and say something that is not popular, to take on vested interests, to take on populist campaigns.

Let me give you an example of the kind of reform that you sometimes have to engage in. Sometimes you have to reform the tax system. Suppose you had a higgledy-piggledy wholesale sales tax system on a declining base with multiple rates. Long-term economic reform would say: one universal goods and services tax. I came in here and I said that. I argued it in this place day after day, and I argued it around the country day after day. And Mr Opportunist here was the first person who was running around the country opposing it on every ground imaginable. Why? Not because it was against the long-term economic interest of Australia but because he thought he could eke out populist votes here, there and everywhere.

Let me ask this question: if the GST was such a bad idea, as we heard in this parliament year after year, is there now any political party in Australia promising to reverse it? Are the Labor Party, which opposed its introduction, now promising, if they get elected, to get rid of a GST and bring in a wholesale sales tax? Of course they are not. If they now accept that this was a reform in the interests of the Australian economy, why is it then that they opposed it day in, day out, week in, week out, month in, month out? Why was that? It was not because they were interested in long-term economic reform, and it was not because they were interested in productivity improvements. It was because, whenever they come to the fork in the road, like the member for Lilley they unerringly turn towards the one that is marked ‘opportunism’—the one that leads down into the cesspool of Australian politics.

Earlier, the member for Lilley said that the Australian Labor Party established the independence of the Reserve Bank. Is that right? Did I miss something in relation to economic policy in this country? I recall Mr Keating—Labor’s hero—as Prime Minister and Treasurer, saying that he had the Governor of the Reserve Bank in his pocket. Nothing did more damage to the independence of Australia’s central bank than that. When I announced that the bank would be put on an independent footing, with an agreement between the governor and me on an inflation target, did the Labor Party say, ‘Wonderful reform; we’re supporting it’? No. A press release, released on 13 August 1996, stated:

Labor to seek legal advice on Costello bank letter plan.

The Federal Opposition today decided to seek legal advice on Treasurer Peter Costello’s plan to require the next Reserve Bank Governor to sign a written ‘inflation first’ pledge.

Federal Opposition Leader, Kim Beazley, says preliminary advice available to him suggests Mr Costello’s plan may well be illegal.

I will table that press release. The Labor Party said that what I had done was illegal. Putting the bank on an independent basis with an agreement on the conduct of monetary policy with an inflation target was illegal. They wanted to sue me for doing it. I am still waiting for the writ. Every time there is a doorknock on the door at home, I say, ‘I wonder if that is the writ from the Labor Party, suing me over the independence of the central bank.’ Blow me down, I walk in here and I find that they actually did it before I had even thought about it. This is just not credible stuff. This is cloud cuckoo land. It is wishful thinking by the Labor Party that they established the independence of the central bank.

The member for Swan comes in here and says, ‘We’ve had 15 years of prosperity,’ as if everything good in the economy came from the Labor Party and the rest of us have only been sitting around for the last 10 years. Fifteen years ago, what were interest rates in this country under the prosperity that he boasts of? I know that in 1996 interest rates were 10½ per cent. And 10 years ago, was unemployment 4.5 per cent? No, it was double that; it was over eight per cent. Fifteen years of prosperity! Was the budget balanced 15 years ago? No. Were we carrying no debt 15 years ago? Let me guess. Did the Labor Party bequeath a zero net debt? No, the Labor Party left office with $96 billion worth of debt, a $10 billion deficit, interest rates above 10 per cent and unemployment above eight per cent. And the member for Swan describes that as a great, prosperous society. If we were to take unemployment back from 4½ to over eight per cent, if we were to put the mortgage interest rate up to 10½ or 11 per cent, if we were to run another $96 billion worth of debt and five budget deficits, do you think he would be standing here at the dispatch box saying, ‘Well done, Treasurer, great prosperity’? This is cloud cuckoo stuff.

We did not have that prosperity 15 years ago. We did not have it 10 years ago. We did not have it five years ago. It has been disciplined management and tough decisions that have got this economy to where it is. It has been nine surplus budgets. It has been the repayment of $96 billion worth of debt. It has been an independent central bank. It has been an inflation target. It has been the introduction of the GST, the halving of the capital gains tax, the reduction in capital tax, the reduction in income taxes, the abolition of the FID and the BAD, the abolition of stamp duty on shares and the abolition of stamp duty on marketable securities. That is what has taken this economy forward. On all those things the Australian Labor Party, when it got to the fork in the road, looked at that track which said ‘opportunism’ and went down it unerringly.

The Labor Party would now have you believe that, after they have opposed every tough measure that got us to where we are now, they can be trusted with the Australian economy to take it into the future. Well, they can’t be. It is like the people who live next door to your house. When you want to build a new house and you put in the plans, they oppose them. When you want to lay the foundation, they fill it in. When you have a delivery of the timber, they chase the delivery truck away. When the plasterer comes, they make rude signs at him. When the painter comes, they pour his paint down the drain. And when you finish it all, they say: ‘I’d like to live in that house. That is a good house. I may have done everything I possibly could to oppose its construction, but I would like to take the benefits.’ That is Labor, but it is not the coalition way. We put in place all of those measures to get this economy to where it is now.

This government has increased funding on education very substantially. Funding to schools has increased from $3½ billion in 1996 to over $9 billion—an increase of 160 per cent. Funding for vocational and technical education has increased by 88 per cent in real terms. There are more than 400,000 apprentices in training today—an almost 160 per cent increase since we came to government. There has been record funding for vocational and education training and total sector revenue in higher education. What the Labor Party always wants to do is overlook the fact that we have freed the universities to have private sources of funding—sources of funding which Labor would have banned. Since 1996, total sector education funding in 2005 was at $13.9 billion—up $6 billion.

Somebody is going to say to me: ‘How can you afford to do that? How could you afford that investment in all of that education?’ Let me tell you: when the Commonwealth government was carrying $96 billion worth of Labor debt, we were paying an interest bill of $9 billion a year. When we paid back all of Labor’s debt, we had a saving of $9 billion per annum. We put the Australian government $9 billion a year in front. We paid off the capital and, in interest savings, we were $9 billion a year, every single year, in front. That is what economic management is about. Was it easy? No, it was hard. Did Labor support it? No, they did not. Labor actually opposed the balancing of the budget. They said it would put Australia into recession.

Ten years later, we have seen record job creation and the clearing of debt. We have seen Australia come through the Asian financial crisis, the worst drought in 100 years, SARS, terrorism and war, and we are still there. It was achieved because of the hard work of the coalition government. That record cannot be attacked by the Labor Party. The Labor Party should be judged by their record, and their record was one of complete opposition for long-term economic reform in this country.

Kate Ellis (Adelaide, Australian Labor Party) Share this | Link to 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)

Steven Ciobo (Moncrieff, Liberal Party) Share this | Link to this | Hansard source

It is extraordinary that for the Labor Party the Australian economy, something with which the livelihoods of some 20-plus million Australians is directly connected, comes down to a prewritten speech about university politics by the member for Adelaide, a marginal seat member whose only real exposure to the Australian economy is through the trade union movement—and, no doubt, prior to that, through student politics. The member for Adelaide comes into this chamber as part of the debate instituted by the member for Lilley to talk about the ‘failure of the government to recognise the long term challenges facing the Australian economy and formulate policies to underpin future economic growth and living standards’. The response from the Australian Labor Party to the very motion moved by the Labor Party is some feeble speech about university politics and some kind of waiver on HECS fees. If that is the sum total of Labor’s policy position with regard to the Australian economy, then I would say to the Australian people that they should be very concerned if the Labor Party ever gets their hands on the reins of the Australian economy.

I would like to turn in particular to some of the comments that were made by the member for Lilley. The member for Lilley waxed lyrical for some length of time about how there were some serious challenges facing the Australian economy and how Australians ought to be concerned about the significant decline that he had seen in several key economic indicators. The only decline that immediately sprang to mind was the unemployment rate. If it was not the unemployment rate then it was the level of public debt. We have certainly seen two very significant declines in those two key economic indicators.

But we have not really heard too much more from the member for Lilley about what exactly he was talking about, except insofar as he talks about productivity growth. I have heard the member for Rankin, the member for Lilley and now the member for Adelaide. They have all got a little bee in their bonnets about productivity growth and how productivity growth really underscores the big problems that currently, according to the Australian Labor Party, the Australian economy is facing.

What does someone who is really in a position to judge objectively have to say about productivity growth? I turn to some comments made only last week by the Governor of the Reserve Bank, Mr Glenn Stevens. I will quote from testimony that he produced to the economics committee. He said:

I think all this stuff—

he is referring to productivity growth—

is long-run, grinding, incremental improvements. They are made by businesses, of course. By and large governments cannot create productivity; all they can do is make sure that the overall environment is not somehow inadvertently impeding it. It is the businesspeople and their employees who actually do the things that are needed to get the productivity. That is no easy task and it is a kind of relentless, grinding process. But other countries do it. I do not see any reason why our businesspeople and employees cannot.

That is the view of the Reserve Bank governor. He says governments cannot create productivity; all governments can do is make sure that we get the conditions for business right. In that respect, the coalition government, the Prime Minister and the Treasurer have a proud boast when it comes to getting economic conditions right for the Australian economy. What we know is that economic conditions have never been this good in Australia. The reason they are as good as they are is not, as the member for Lilley asserts, that there has been some kind of resources boom and that is the rationale for the whole thing; it is because of careful, disciplined and responsible economic management.

I would also turn the Australian people’s attention to a body that has a bit to say about the resources boom for Australia. We heard the member for Lilley say that the resources boom was the reason why the economy is going so strongly. There is a very interesting report that the International Monetary Fund put out—the IMF country report on Australia from 21 September last year. The report says:

The results show that increases in export commodity prices were clearly not the main driving force behind the strong fiscal performance of the general government in recent years. In particular, even after the adjustment for commodity prices, the general government balance remains in surplus in each of the past nine years.

So even the IMF refutes the member for Lilley’s claim that the resources boom is all we can talk about. So we know that the Reserve Bank governor says the Labor Party is wrong. We know the IMF says the Labor Party is wrong. And we know that the proof of history demonstrates that Labor’s policies with regard to the economy are an abysmal and total failure. If you need any reminder of that then I would turn to one of the key economic indicators in Australian society—and that is unemployment.

What mums and dads want to know about is whether their sons and daughters will be able to get a job. What the kids of tomorrow want to know about and what those who are studying at universities, TAFE colleges and Australian technical colleges want to know about is whether there will be a job for them when they finish their studies. In this respect, it is this government’s proud boast that it has got economic conditions to the point where we have a 32-year low in unemployment, down to 4.5 per cent. That is the boast of this government.

It is interesting that we hear the Australian Labor Party claim that they spent so much more money on education and training than this government have. We have already heard from the Treasurer that this ignores the fact that they do not take into account total sector investment. I have heard the Labor Party claim many times that they spent so much more money on training. Perhaps there is a simple rationale for this. If you consider that, under the Labor Party, there were a million Australians sitting on the scrap heap of unemployment—there were over a million Australians looking for a job—you might then start to understand why a government that was running a $10 billion budget deficit might start throwing money at training. For every Australian they moved into the training queue, they made sure they did not have one sitting in the unemployment line.

That is the reason why the Labor Party invested so much money in training. It had nothing to do with future proofing the Australian economy. It had everything to do with trying to set the record in a more rosy light when it came to the former Treasurer and Prime Minister Paul Keating. That is the record of the Australian Labor Party. I say to any member opposite that I know that the parents in my electorate of Moncrieff on the Gold Coast—and, indeed, across the length and breadth of this country—would rather that their child were able to move into a high-paying job under 16.8 per cent real wages growth any day of the week than have the Australian Labor Party take control of Australia’s economic levers and turn us back to the kind of economic distress that we had when the Labor Party were last in charge.

We have a proud track record when it comes to ensuring that this country is set up for the future. Another case in point that I would highlight to reassert this is that we have been looking forward to the future. In fact, our concern over the lack of investment in schools and TAFE colleges by state Labor governments directly led to this government making sure that we rolled out the Investing in Our Schools program and the Australian technical colleges. The Commonwealth government—the coalition government—had to introduce these new policies because the Labor Party at the state level, across the east, west, north and south of this country, were doing such an appalling job at providing opportunities for young Australians. Those policies exist because we believe in investing in schools and investing in technical and trades education. The member for Adelaide spoke about TAFE colleges turning students away. A newsflash for the member for Adelaide: TAFE colleges are run by Labor governments at the state level. The underinvestment in TAFE colleges is a consequence of an underinvestment by state Labor governments who are swimming in surplus GST funds. That is the track record of the Australian Labor Party.

I am pleased to be part of a disciplined and responsible government that has seen the Australian economy sustain 15 years of continuous economic growth, that has repaid $96 billion of Labor Party debt and that is saving over $9 billion every year which we are able to invest in schools, hospitals, roads and transport. All of these investments are possible because this government has repaid that $96 billion black hole that was left by the Australian Labor Party. I am pleased to be part of a government that has brought the unemployment rate down to a 32-year low and that sees over 400,000 Australian apprentices now getting job-skilled and job-readied in the workplace. This is a proud track record and it highlights the fact that this government is responsible with the Australian economy—nothing like the 13 years of recklessness that we saw from the Australian Labor Party. We cannot go back there again. The consequences would be the same because Labor policies are still the same as they were in the late eighties and early nineties.

Julie Owens (Parramatta, Australian Labor Party) Share this | Link to this | Hansard source

I am just a humble backbencher. When we talk about the economy, for me, in my electorate of Parramatta, it comes down to two basic groups: families—whether they be married couples with children or without children, or individuals—and businesses. The whole economic argument comes down to whether families and businesses are doing well now, whether the government is improving their capacity to do well in the future and whether the government is leaving holes that some of those families and businesses fall through and thus get left behind.

Over the last 15 years, we have experienced an extraordinary period of growth. It is a period of growth that the world has not seen before and probably will not see again for quite some time. It is not just to do with us. The world is being pulled along by extraordinary growth in China and India, a booming world economy and a more-than-healthy commodities market. It is a once in a generation opportunity not just to grow as a nation but also to improve our capacity to do well in the future, to consider our position in the world, to gear up, to retool, to retrain, to improve our position and to make a real difference in our capacity to prosper in future years.

In some ways it is as if we have inherited an enormous sum of money from a rich Chinese relative. Under the Howard government, we have retired to live off the cash. The problem, of course, is that most Australians are not retired or anywhere near it—certainly the families and businesses in my electorate are not. They are trying to build a future. They are trying to do well now and they are trying to make sure that in future they also have the capacity to do well. This once in a generation windfall—this once in a generation opportunity—which has come out of this booming world economy should have been used to assist those two groups in my community to support their future.

When we talk about the economy and the report card of the Howard government, I do not ask the Treasurer because I do not really want a 15-minute comedy routine and I do not want to hear the crowing about how ‘they have never had it so good’. In my electorate, they are telling me a different story. I listen to those two groups. I listen every day to families when I am doorknocking and when I am out in the electorate. I will tell you what they are telling me. They are more in debt and more vulnerable to economic cycles because of that debt. They have far less security in the workplace because of the extreme industrial relations laws, which makes them more vulnerable to changes in the economy. They are facing rising prices in child care and private health insurance. They are facing interest rates that are among the highest in the OECD and ridiculously high costs of education that are prohibitive for some.

Do they feel that their capacity to do well is improving? No, they do not. What they say to me is, ‘If the economy’s going so well, why is it so hard?’ Why is it, if this country is sailing with favourable winds, that families in my electorate feel that they are sailing against the wind? When I talk to businesses I get similar stories. Do they feel that the government is improving their capacity to do well? No. They talk about skills shortages, about lagging behind the rest of the world in broadband, about infrastructure bottlenecks and about investment in our future in this country relative to what the rest of the world is doing, because, as we are sailing in favourable winds, so are the rest of the economies of the world. It is not just about this economy feeling that we are doing well. It is not just about moving forward. It is about moving forward relative to the rest of the world.

You do not even have to listen to business to find out that things are not what they should be. You only have to look at the single best indicator of future capacity, and that is productivity growth. The national accounts for the September quarter show that productivity has failed to grow since the June quarter in 2004. But that alone is not the whole problem, although that is six months of a lack of productivity growth. Productivity has failed to grow since the June quarter in 2004. That is more than two years with zero net productivity growth. But this slowing is not even recent; the story is worse than that. The annual labour productivity growth slumped to 1.6 per cent this decade compared to 2.7 per cent last decade. So, while we have been sucked along by the commodities boom, what we do not see underpinning this apparent prosperity is the conditions that our business needs to do well. We know that that lack of productivity growth has been caused by the failure of the government to invest in education. (Time expired)

Luke Hartsuyker (Cowper, National Party) Share this | Link to this | Hansard source

I must say I am absolutely surprised that the member for Parramatta and the Labor Party could consider our current economic position as some form of happy accident blown along by favourable winds. It really is quite astounding. The member for Lilley has no credibility in economic matters. The member for Lilley has no credibility at all. He is just pursuing policies that are nothing more than rank populism. When it comes to economics, when it comes to sound policy, the member for Lilley, or the supreme rooster, really has nothing to crow about. He is a member of a party that trashed the Australian economy, that left us with $96 billion worth of debt and that pushed interest rates through the roof and threw a million people on the scrap heap.

This government have done the hard yards. We have not been using these favourable winds, as you say, to somehow blow into some wonderful utopian harbour. We have got the budget into surplus through hard work and through the hard work of the Australian people, we have repaid Labor’s debt, we have reduced unemployment to 4½ per cent and we have put in place policies that are going to ensure Australia’s future. We believe there is no future in unemployment, no future in high interest rates and no future in high government debt. The overwhelming body of evidence shows that a more flexible labour market produces superior outcomes for employers, employees and the economy.

But what do the Australian Labor Party propose to do? They want to reintroduce unfair dismissal laws. How is that going to make this country more productive? They want to re-regulate the labour market. How will more regulation make the economy more productive? We are in an economy that is running at capacity. We are pushing the speed limits. This government is implementing policies to smooth out the bumps in the road, to allow the economy to operate at a higher level of speed and to allow it to employ more people. It is dragging the long-term unemployed into the workforce and it is increasing the participation rate, and the ALP wants to turn back the clock. The ALP wants to re-regulate. The ALP wants to lower the speed limits. Lower speed limits mean higher costs to business, increased inflation and increased interest rates. That is what the sort of strategy that the Australian Labor Party is proposing is going to bring to this country.

On skills development this government has introduced the Australian technical college concept—providing quality trade type training to students in years 11 and 12. We have implemented the Skills for the Future program—upskilling mature adults, providing the ability to get into mature age apprenticeships, providing for more engineers and providing for tradespeople to increase their skills. These are tremendous policies. Yet what does the Labor Party think of the Australia technical colleges? Like every reform we introduce, they oppose it. If we propose a reform that will improve this country, they oppose it—just like Australian technical colleges. They are against that.

This government believes that climate change is an issue which is a real challenge to this nation. But we believe it has to be approached in a responsible way. If we are going to implement the sorts of policies that will take this country forward and ensure our future, our response to climate change has to be sustainable. The Australian Labor Party is tending to adopt a sort of magic pudding approach, where miraculously you can reduce greenhouse gases, you can save the world and it will cost no-one anything—not a dollar. It is all going to come for free—just listen to the member for Kingsford Smith. It does not seem to cost anything, or at least he has not worked that out anyway.

Labor’s climate change policy has three pillars: firstly, destroying the coal industry; secondly, ratifying Kyoto; and, thirdly, praying for renewables. It really is a magic pudding policy. We believe that the Kyoto protocol certainly is not the solution to climate change. It fact, the NUS Consulting Group study on electricity costs showed that, for instance, in the United Kingdom in the year 2005-06 electricity costs to commercial consumers went up 41½ per cent. Many of the European countries encountered huge increases in power in 2005-06. But the member for Kingsford Smith does not seem to know what climate change is going to cost. This government believes we need a balanced approach. We need continued economic reform. We have to meet the challenges of climate change on a basis that is economically sustainable.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The time allowed for this discussion has concluded.