Kevin Rudd (Griffith, Australian Labor Party, Leader of the Opposition) Share this | Link to this | Hansard source

My question is to the Prime Minister and refers to his claim that employment growth explains poor productivity in the Australian economy, due to the addition of less productive workers to the workforce. Is the Prime Minister aware of comments from Reserve Bank Governor Glenn Stevens in a speech late last year when he said about the Australian economy:

… this addition of less productive workers isn’t enough to explain the extent of the slowdown in overall productivity.

Prime Minister, is Mr Stevens wrong?

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I think Glenn Stevens is a first-class Reserve Bank governor, and he has spoken a great deal of common sense in the testimony he has made. He certainly understands more about productivity than the Leader of the Opposition does. I have had the opportunity to look at a report released overnight by the OECD. This report has something very interesting to say about two subjects of great interest to the Leader of the Opposition—namely, productivity and labour market regulation. I listened to the Leader of the Opposition very carefully, in an interview with Fran Kelly on the ABC Radio National program this morning, and he seemed to be arguing a number of things. One of the things he was arguing was that Labor Party policy would make our workplaces more productive. That is what he was arguing—that we really need to wind back the industrial relations clock so that we can wind our productivity forward. The problem with that is that it was blown out of the water overnight by none other than the OECD. In table 2.1 of the report, when it spoke of the possible links between labour market policy and productivity, it had this to say:

Strict statutory or contractual employment protection for regular workers impedes flexibility and slows the movement of labour resources into new high productivity activities.

What that means is that if you bring back the unfair dismissal laws, you will deliver a very serious blow—

Opposition Members:

Opposition members interjecting—

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I know the sound effects man doesn’t like this, but if you bring back the unfair dismissal laws, which Labor has pledged to do, according to the OECD this will strike a blow at the movement of workers into high-productivity activities. I thank the Leader of the Opposition for concentrating on productivity. He is demonstrating yet again an abysmal misunderstanding of some fundamental economic concepts.

Michael Keenan (Stirling, Liberal Party) Share this | Link to this | Hansard source

My question is also addressed to the Prime Minister. Would the Prime Minister inform the House of Australia’s recent productivity performance? How does this compare with the historical record?

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Stirling. I know he is very interested in, and well informed about, productivity. I am very happy to inform the House that when the government assumed office in 1996 the level of unemployment in Stirling was 9.4 per cent, and it is now 5.2 per cent. The member has asked me about trends in relation to productivity. In answering that question, I recommend that he not take the advice tendered by the Leader of the Opposition on Radio National this morning. What the Leader of the Opposition was doing this morning was deliberately using different figures in relation to the claims that he was making about productivity. If you listened very carefully, just on the surface it sounded okay. He said that between 1993 and 1998 we were running at annual average productivity growth of 3.3 per cent, between 1998 and 2003 that fell to 2.1 per cent, and then he went on to say: ‘If you look at Mr Costello’s Intergenerational report, the projected annual productivity growth for the decade we are currently in is only 1.5 per cent per year.’ The problem with that is that he was using figures that were measured by different measures of productivity. The first two figures measured productivity movements in the market sector of the economy, and the second figure measured movements in the entire economy.

In pointing out the duplicity of the Leader of the Opposition, I would have thought that the best authority I could quote was in fact the Productivity Commission itself. On its website, the Productivity Commission describes the difference between the two measures. The Productivity Commission says this:

Whilst productivity can be measured for the economy as a whole, productivity in the market sector of the economy provides a more accurate indication of aggregate productivity. The market sector is where output can be reasonably well measured—by market transactions … In ‘non-market’ industries, such as government administration, outputs are typically measured in terms of expenditure on inputs.

What the Leader of the Opposition has deliberately done is to take what is by definition a measurement of productivity that would yield a low result and compare it with measurements of productivity which by definition would yield higher results. In the process, he has deliberately set out to mislead the Australian public in relation to this issue. He did not disclose this in the interview that he gave this morning. He must have known—or after the interview he would have been told by his advisers—that he had misled the Australian public. Once again we have the Leader of the Opposition faced with the dilemma of confessing to one of two sins: is he ignorant of what productivity represents in this country or, if not ignorant, has he deliberately misled the Australian public by falsely comparing a set of figures with another set of figures, knowing full well that the measurements and the definitions of those two figures are quite different? Everybody knows that it is difficult to measure productivity in government administration, in health and education services and in services generally, whereas it is very easy to measure productivity in mining and manufacturing. What the Leader of the Opposition did was to conflate the two in the interview this morning to give a completely false impression and to continue the process of deceiving and misleading the Australian people on what he says is the centrepiece of his economic attack on the government. The Leader of the Opposition ought to lift his head from his papers and face the reality that, again, he has deliberately deceived the Australian people.

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

My question is to the Prime Minister. I refer to the Prime Minister’s statement in parliament on 26 March this year:

Working families in Australia have never been better off.

How can the Prime Minister claim that working families in Australia have never been better off, when last year Australians withdrew $135.5 million from their superannuation early because they were unable to meet reasonable and immediate living expenses—four times more than that withdrawn in 2001?

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

My view about the position of Australian families is that I recognise that some Australian families, no matter what the state of the economy might be, are finding it difficult. I accept that, but I would point out to the member for Lilley that, if you look at the overall figures, you see that they are very strong. We do have a 33-year low in unemployment. The spokesman for Treasury matters on the opposition side belongs to a party that boasted about the fact that real wages fell when it was in power. You actually boasted—

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

We put the policy in place and you opposed it.

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

Don’t get too excited!

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

We put the policy in place and you opposed it.

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

The member for Lilley has asked his question!

John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Link to this | Hansard source

You boasted about the fact that you drove workers’ wages down. It was a passionate conviction. They fell by 1.7 per cent when you were last in office, and they have risen by 20.8 per cent in a shorter period of time.

But let me deal with the question of the alleged indebtedness of the Australian community. I point out to the Leader of the Opposition and to the shadow spokesman on Treasury matters that, overall, personal insolvency in Australia remains quite low. The Reserve Bank of Australia—and this is a very good measure—reports that, as at the end of December 2006, the ratio of non-performing to total housing loan on the banks’ Australian books stood at 0.31 per cent, which is a very small proportion of the market. While we are into comparisons, this compares to a peak of 0.6 per cent of outstanding loans in 1996. So, if you look at the distressed section of the Australian economy measured by indebtedness, you will see it was 0.67 per cent in 1996 and it is now at 0.31 per cent. That suggests to me that things have got better rather than worse over the last 11 years.