Andrew Laming (Bowman, Liberal Party, Shadow Parliamentary Secretary for Regional Health Services and Indigenous Health) Share this | Link to this | Hansard source

Our terms of trade have peaked, our commodity boom as far as new starts go has probably flattened and now we have the great challenge in this country to have a responsive economy that can direct resources to the areas where it is most productive. We are here today for the IMD competitiveness survey, which shows, despite all the rhetoric we heard from the previous speaker, who gave us absolutely no figures and no data whatsoever—from all that dataless evidence, a free zone of political talking points that you could have easily substituted the political party and then read out the rest. When you take all of that away you are left with a party that is unable to provide any data at all to explain why we have fallen through the floor in competitiveness.

We operate as developed economies in effectively a peloton. At the head of the pack we can do very little about the winds that strike the entire group, such as a GFC, but we can as governments and as industry within an economy work to keep ourselves at the front of the pack. That is what every government should strive to do. It should be its No. 1 objective—to unshackle its citizenry so they can have spare money in their pockets to do the things they want to do and not be constantly molested by a government that cannot keep their hands out of the pockets of everyday citizens. So what do we have? We have a government that over the last five years has done just that. This IMD competitiveness data shows us that and spells it out word by word, criteria by criteria—and nothing from the other side has rebutted that.

We now understand the metastory around the GFC. It is simple: we started with a large Howard surplus and we were able to buy our way through the worst of it. We had strongly regulated banks, with four of the top 22 in the world, and they were not attracted to the highly sophisticated financial products that the rest of the world got their fingers caught in. Finally, we had a mining boom that just kept pumping out the resources that most of the world needed, and they kept buying, thank you, forward contracts. That got us through. No matter how much that side of politics keeps telling you it was something to do with the pink batts and the school halls, it had nothing to do with it whatsoever.

But now we have a government that has the hide to come into this place and say, 'You know what, we got you through the worst of the GFC due to our doing,' and in the same breath cannot explain why we have suddenly fallen through the floor in competitiveness and we now rank just above Syria. There is a reason for that. We will give you these reasons, because they are numbers that cannot be refuted—and these numbers have been accumulating for some time.

We operate in a competitive region of the world. We are surrounded by economies like South Korea—which was mentioned by the previous speaker—China, Japan and even Hong Kong. Where are the free-trade agreements with those massive economies? No, no, no, we're doing a big go-slow on FTAs, that's right. We even repudiated the notion of having one with Hong Kong. They have managed to sign up to a few, many of which started under the Howard government, but the move towards free trade agreements has been extremely limited. Add to that spitting in the eye of our nearest major neighbour, Indonesia, around beef exports. How can we have a mature relationship with this great northern neighbour when we treat them as we have under this government?

The recipe is fairly simple, isn't it? We remain competitive by driving manufacture; we remain competitive by keeping our economy as diversified as possible; we remain competitive by supporting our SMEs, by having fiscal discipline and, of course, social cohesion. But most of all you need to export stuff. It is that simple. You have to educate your people. But what have we seen? Money ripped from universities—not millions or hundreds of millions but billions ripped from universities. So we will not be lectured by the other side of this chamber about a smart economy.

These basic lessons about deploying money to productive infrastructure is exactly what they ignored over here. This is the government that did not spend one cent on health infrastructure with their stimulus package. For Infrastructure Australia's $20 billion we can barely see what they have built. Go to Queensland. We have a promise for light rail on the Gold Coast and that is about it. Where has the rest of it gone? The money has evaporated. It is a government that cannot even put the NBN on their balance sheet. It is an off-budget item, because allegedly they are going to make money out of it some time after 2025.

This is a government that does not understand how important regulatory reform is, improving our tax systems, and they obviously do not understand how to keep our labour force as productive as possible. It is the people. It is not enough to put your hand over your heart and say how important workers are and collect their union dues. You have to do more than that to keep this economy productive.

I promised you numbers; I will give them to you. There was a day once when Australia was more competitive per hour than Italy, more competitive than the UK, more competitive than Canada, but now we have slipped into the region of Norway. That is right, just Norway and Germany are more expensive when it comes to attractive manufacturing destinations. We now sit level with Scandinavia, having passed Italy, Japan, the US and the UK, not just in the last five years but over a decade of slowly, slowly slipping away. But my point here today is that it accelerated—strangely—in 2008. What was happening in Australia in 2008? I have a little inkling here. It could have something to do with a change of government. Let's go down to the evidence. Let's look at just how expensive it is per hour to employ a worker doing exactly the same work.

In Australia we are blowing out, approaching $50 an hour. We were $35 an hour and we were level with the US—no longer. We are 30 per cent more expensive than the US per hour to do exactly the same work. We were once level with Canada—no longer. This is the inconvenient truth; this is your 'Al Gore graph'. You guys need to take these away, jump in a forklift and go up to where it is now to employ an Australian worker. Then let's use an index, so that we call the US base 100, and have a look at it blowing away again. It gets uglier and uglier and uglier. It is now 270 per cent more expensive than the US to do the same amount of work, if we index it back to the year 2000. But my point was that Australia was a cheaper place to do business than the US until 2008 and the change of government. We were a cheaper nation to do business than Canada right through the Hawke and Keating years. They got it right. Let's make no mistake, this is not a party political divide.

This administration has lost control of the economy and lost control of costs. It is one thing to fight for a pay rise. What they do not understand is that you have to improve productivity with it. That is the great economic disengagement. That is what we have not seen over the last five years. When the Labor Party came into power we were indexing, in 2008, at about 104 under Kevin Rudd compared to the US. It went to 117 under Julia Gillard and today we are approaching 150 as an index compared to the US, if you take the US at 100. Then, lastly, there is the multifactor growth average, and that shows Australia actually moving away from Japan—not only more expensive than Japan to manufacture but getting more expensive quicker.

These numbers are ugly: in the business community, 8.2 per cent of people over their Wheaties can bring themselves to say that Australia is an attractive place to do business; only five per cent say that our tax system is working for us; and, as the shadow Treasurer said, 12 per cent regard this as a business-friendly nation. It should be 50 per cent. At least half of the business community should be supporting the work of the government of the day. It is languishing at 8.2 per cent, and if you look at the margin for errors I am sure within that error bar is zero. Basically, you will find no-one, when you walk the streets of this nation, who will say any more that this government is creating an environment that is supportive for business. You do not have to look at rhetoric from organisations which this government does not respect. Let's go the submission summary in the Asian white paper. Even there, the government could not sanitise the horrible fact that some of the most powerful and influential observers of our economy were ringing the bells, flying red flags. I go right to the last page where it says, 'Australia has now fundamentally become a high-cost place to do business.' The submissions were arguing that we are now uncompetitive when benchmarked to other industrial nations, such as New Zealand—that is right, we have actually fallen behind New Zealand as a competitive economy to do business.

Yes, it is a sea of red. And, yes, we have fallen to probably the most uncompetitive place this nation has been in 17 years. Our institutional framework has gone from nine down to 29; our fiscal policy, from 18 down to 24. And do you know what? It is just getting worse. The message to those listening to this debate this afternoon is that there is no evidence this government has the capability to turn this all around. Our relationship with our near neighbours is imperilled. Our communication and our ability to get our economy under control show no glimmer of hope, from what we have seen from this government. What we have right now is a spiralling-out of costs when it comes to wages. And as a place to do business, the rest of the world is simply looking elsewhere. This is one of the great tragedies of the last five years and is something that has to change.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

The member for Bowman went through a number of facts, but the problem is that listeners were not able to see that the member for Bowman employs a fact kaleidoscope. He picks up his notes, he rolls them into a column and then he just twists that paper until it spits out the type of rhetoric that he put forward then. On a whole range of levels he puts statements forward that look great through the fact kaleidoscope but they do not have any bearing to reality whatsoever. There was reference to productivity. We often have this mantra from the other side that says productivity is declining. Yet in March this year Ross Gittins, who is respected as an economic commentator, looked at the national accounts released in December and said:

In case you're wondering, the national accounts showed that, on the simplest measure—gross domestic product per hour worked—the productivity of labour improved by a roaring 3.5 per cent over the year to December.

But I think the best way to see what's been happening is this: using the trend (smoothed seasonally adjusted) figures for labour productivity in the market sector, it's been improving at the rate of 0.5 per cent or better for seven quarters in a row.

For seven quarters in a row, productivity was going up, despite what they are saying.

We also heard a statement about costs. I do recall John Howard in this chamber as Prime Minister going on about how wages growth kept going up and up, and that they likened themselves to 'the best friend the worker ever had'. The reason wages were going up was that for years the RBA had warned that side of the chamber that capacity constraints, chiefly in skills shortages and infrastructure blockages, were going to cripple the economy, but they did nothing about it. They duplicated the TAFE system, because they refused to fund vocational education through federal-state agreements. They had all the skills shortages starting to cripple the economy, and wages were going up as a reflection of the reality that there were not enough people around to do the work and costs had to go up to attract labour. That was what they were going on about in terms of costs. These people opposite, when we contrast it in terms of their record, cannot be believed in relation to the types of things that are put forward here.

They talked about the competitiveness report that has been released but I actually think it is worth noting that the other report that has come out through the OECD, the Economic Outlook that has just been released, says we will outperform every single major and advanced economy over the next two years. Take growth this year alone. Our growth will be double the average of the OECD. It says of Australia that we will have growth of 2.6 per cent in 2013, 3.2 per cent in 2014. In the OECD it will be 1.2 per cent—so 2.6 per cent this year for Australia, 1.2 this year for the OECD, 2.3 next year for the OECD, 3.2 next year for Australia. So inflation contained in Australia, employment at 5.6 per cent this year in Australia, and 5.5 next year, and in the OECD 8.1 per cent this year and eight per cent next year. That is eight per cent next year compared to our 5.5 per cent next year. You cannot be competitive if growth in your economy has stalled, if inflation is driving costs up, if unemployment is high. And you only need to look at this, for example, as I have reflected on a number of times: imagine the political discourse in this country if we had Spain's unemployment rate of over 20 per cent—so over 20 per cent in Spain compared to 5.6 per cent here in Australia. If people do not have work, if people have costs going through the roof and if growth is non-existent, you cannot be competitive—and that competitiveness has been brought in as a result of the stewardship of this government given the fact that we have been able to ensure that economic conditions here—as has been reflected—will outperform those of every single major advanced economy over the next two years.

Now in terms of the report that has been released, and it is actually worth while noting that it was done in conjunction with the Committee for Economic Development of Australia, Stephen Martin says, 'There seems to be a general lack of awareness of how good Australia's economy is performing in a global context.' I go back to those statistics that I have related to the House a few moments ago. It is very important that in a global context we are seen as performing as strongly as we are. He continues on to say, in terms of two key indicators, unemployment and economic growth, that Australia's growth is strong and stable compared to other countries', despite others making significant gains as they continue to recover from the GFC and the eurozone crisis and it also highlights our highly skilled workforce—as does the report—and effective legal system. It is clear the fundamentals of our economy are strong and we have a world-class financial system, low government debt, low interest rates—again, low interest rates of themselves are very important too particularly for the non-mining sector as it is trying to deal with one of the biggest handbrakes on competitiveness for Australia, that being the phenomenally high Australian dollar where our economy is seen overseas as a safe haven when it comes to discussions about currency. So it is important to note that.

I come back to the point I made earlier about capacity constraints particularly in relation to skills and infrastructure. On skills, I refer to the investment we have made in my own area. I am proud of the fact that $140 million has been invested in 67 schools across the electorate of Chifley and we have had trade training centres opening up as well, providing for greater vocational training and improvement of skills in our area. On infrastructure, particularly urban infrastructure, we are proud of the fact that under this government investment in urban infrastructure is the highest it has ever been. Those opposite, when it came to urban planning and when it came to making our cities more effective—particularly for business and in terms of removing congestion and lifting people out of the daily grind particularly as it comes to road and rail investment—vacated the field and we have gone back in to try and work with state governments to fix these things up. On the NBN, for instance, those opposite, who have had this longstanding commitment to tear the NBN apart, now want to charge up to $5,000 for small businesses to connect to the NBN, which, by every account and by any measure that you look at, has lifted productivity in this nation and has contributed significantly to economic growth. Those opposite do not see how it opens up, in terms of export markets, the ability for small business to take advantage of what is there on the world stage. Those opposite, in particular the shadow Treasurer—and I reflect on his contribution—talk about costs. Yet here they are proposing to introduce a scheme that adds to corporate tax 1½ per cent with 3,300 companies levied as a result of that—$5 billion. How is it that putting a levy on those 3,300 businesses in this country makes them more competitive on the world stage? Absolute silence!

Geoff Lyons (Bass, Australian Labor Party) Share this | Link to this | Hansard source

And they love tax.

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

As the member for Bass says, they love tax—and they certainly love putting this levy on. How does that improve competitiveness in this nation? The shadow Treasurer made a remark about free markets and advocating free markets, which I thought was a refreshing change and I welcome his new-found love of free markets. When we introduced a method of moving to a market based price on carbon, those opposite actually wanted to stop that. They want to subsidise polluters—pay $5 billion out of government coffers to polluters—and yet there is this additional cost to the government and also the fact that it will do little, if anything, in terms of cutting emissions and will make it even harder for them to make the bipartisan target we both agreed within this place that we will cut emissions by five per cent by 2020—but no reference to it.

I come to the other thing that they talk about. When they talk about costs, bear in mind the biggest cost in a business is labour. The thing that those opposite had a problem with when skill shortages were driving up labour costs was that the only way they could fix it was to bring in a draconian set of industrial laws that undermined the ability of labour to negotiate enterprise agreements on wages and conditions. Work Choices was their way of dealing with their own inability to rein in labour cost increases because of skill shortages. Those opposite also talk about regulation. The biggest thing that they did, in terms of cutting regulation, was to bring in a GST that made two million small businesses tax collection points across the country. You never hear that from them either. So if you are going to talk about competitiveness, look at their record, look at the way that they performed in government and recognise— (Time expired)

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

Given it is Thursday afternoon, and it has been a long week in this place, I thought I would start with a little joke just to liven things up a little bit. Yes, I know that I could just say that the joke is the other side, but this joke is a little more informative than that, and it also tells a little tale about the subject that we are discussing today. It is a joke that a Scottish friend of mine loves to tell about when he was a kid. His mother would give him a pound and he would go down to the local milk bar and he would be able to get some milk, some bread, some boiled lollies, the newspaper, some bacon, some eggs and a couple of other things that took his fancy. He says that he felt sorry for the kids of today, because when they are given a pound to go down to the milk bar the only things they could get now are some bread and some milk, because CCTV cameras have been introduced.

I have got some laughter from this side of the House—not much I must say!—and I am very pleased to see that the member for Dunkley has raised a smile. I think there was a chuckle from the gallery, but not much more than a chuckle.

Bruce Scott (Maranoa, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Wannon will address the MPI before the chamber.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

I am getting to that, Mr Deputy Speaker. The thing about the discussion today is that the CCTV cameras have caught up with the government. We saw that with the budget. Here we had the Treasurer promising, over 300 times, that there would be a budget surplus. The Prime Minister, I think, had done it on numerous occasions as well—maybe over 100—yet what we saw in the budget was the CCTV cameras catching up with this government.

We saw, once again, we were going to get a budget deficit that was going to add to the five largest budget deficits in Australia's history. We saw that net debt was spiralling past $150 billion. Gross debt was $300 billion. The CCTV cameras caught up with the government when it came to the budget, and we have seen it again today. The World Competitiveness Yearbook has come out, and we have seen what it has had to say. The competitiveness result for Australia is the worst in the last 17 years. What has produced this?—21,000 new regulations and 39 new or increased taxes.

What have people had to say about this? If you read Paul Kelly today—the honourable member sitting next to me, the member for Berowra, has pointed this out to me—you will see that even Labor's own economists are coming out to criticise this government. Ross Garnaut warns that tolerating a business-as-usual policy now means the decline in average living standards will be large and the lift in unemployment will be persistent and large. That is what Labor's own economist has to say on this.

Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Competition Policy and Consumer Affairs) Share this | Link to this | Hansard source

Even Stephen Koukoulas could not ignore that.

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

No, I do not think even The Kook could ignore that. Let's have a look at what ACCI has had to say:

Business is once again asked to bear the brunt of fiscal ill-discipline. A $200 million increased tax burden next year will add to business costs and erode Australia's productive capacity. These are measures that collectively make the country less competitive.

Yet are those on the other side of the House taking any notice? No, they are not. Let's look at the examples. Let's look at the mining tax. The government, and the Treasurer in particular, had five goes at the mining tax. And what was the result?—a complete disaster. And how did the Treasurer explain this? I think it is worth reminding the House. Remember that he had five goes at trying to get this tax right. He said:

We brought a super profits tax in at precisely the time the super profits disappeared.

Philip Ruddock (Berowra, Liberal Party) Share this | Link to this | Hansard source

You would have to be smart to do that!

Dan Tehan (Wannon, Liberal Party) Share this | Link to this | Hansard source

You would have to be very smart to do that! Not only did he do that, he then made sure that the government spent money based on the fact that he thought the tax was going to raise revenue.

Today in question time I think we heard the quote to end all quotes, from the Treasurer. He accused us, on this side—and our policies—of stealing from the future. The Treasurer who inherited a budget in surplus with no net debt, who has now delivered us a budget which has a structural deficit which will reach over $16 billion in the coming years and who has presided over net debt reaching over $150 billion and gross debt of over $300 billion, had the audacity to accuse us on this side of stealing from the future.

That is the quote to end all quotes from this Treasurer. His incompetency knows no bounds; we now have the final proof of that. This government has done nothing for the future of this country, and we on our side—if the Australian people have faith and confidence in us and vote us into power on 14 September—are going to have an enormous job to repair the finances of this country.

I was pleased to hear the shadow Treasurer today talk on this MPI, because he will be the one who will have to turn the finances of this nation around, and he will need the support not only of all of us in this place but of the Australian people. The mess that this government has produced is considerable. The realisation of that fact is coming not only from businesspeople but also from economists from the Labor side of government.

I say to the shadow Treasurer: we will all be behind you if the Australian people place their faith in us. We know that the carbon tax has to go. We know that the mining tax has to go. We know that both regulation green tape and red tape need to be stripped out of the Australian business community. We know that we have to get the Australian economy growing. We know that we have to get employment in this country growing. We know that you will not be able to deliver a budget like the Treasurer did this year which says, 'It is a budget for employment growth,' yet when you look at the figures unemployment will go up. We know that you will not be able to say that you have produced a budget for growth when you look at the details of the budget and find that economic growth will actually decline.

We know that you are going to have to be honest with the Australian people. We know that you are going to have to restore the finances of this country to where they were prior to 2007. We have full confidence that you will be able to do that. You can have full confidence that all those on this side will support you in what you need to do. The only way we are going to turn the finances of this country around is to get Australia growing again, to get our cost base down, to get our businesses employing people, to get consumer confidence back and to get business confidence back. That is how we are going to grow this country and that is how we are going to make sure that we remain internationally competitive in a globalised world. We understand the importance of a globalised world and the fact that you have to keep your costs down if you are going to compete. Businesses now not only need to export; they have to be able to compete with imports. They are the facts of a globalised world. That is why we have to become competitive again. The Gillard government has failed us on that account, but I have full confidence that a coalition government if elected will not fail the Australian people on this.

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

It is another extraordinary day in the parliament of Australia when the Australian community has been assessed as No. 1 in terms of the wellbeing index and is in the top 20 of the global competitiveness index, as it has been for many years, and it is also a day so dire that we have to have a matter of public importance to address the appalling situation of being in the top 20 countries in terms of global competitiveness and No. 1 in terms of the happiness and wellbeing index. But that does not mean that we should ever relax about improving the circumstances that Australia finds itself in. In fact, we should not; nor should we pretend that labour market reform alone is the answer.

Yesterday, a friend of mine came to visit. He was wearing a brand-new pair of jeans that he had bought at Target for $8. Someone grew the cotton, picked it, shipped it, wove it, took it to a factory, made the jeans, exported them, brought them to Australia and sold them in Target, and all the people along the way, all the middlemen, made their profit, including Target, and the jeans cost $8. It is absurd to think we could compete with that.

We could completely throw out any labour market regulation. We could halve our wages. We could wipe out all of the overtime and all the penalty rates. We could reintroduce 12-hour days six days a week and we still could not compete on the basis of labour price with those countries that can produce a pair of jeans from scratch and sell them into Australia with Australian wages at this end for transport, packaging and accounting. We simply cannot compete on that. We can only compete in this country on the power of our minds.

We have more power in our minds, more assets in our brains, in this country than we have under the ground, by the way, far more. For the people on the other side of this parliament to walk into this chamber and talk about global competitiveness is the height of hypocrisy. They were in government for 12 years and did not make any serious moves to improve the level of the capacity of our minds. They did not make any serious moves to improve the quality of education from primary school right through to tertiary education—in fact, under them it went backwards.

I want to firstly talk about university education. In the whole of Western Sydney, the proportion of people from low-socioeconomic status who went to university went backwards during the time of last coalition government. In the biggest boom we have ever had, the biggest boom the world has seen when there were rivers of gold flowing from the growth in China and from around the world, they did not make one move to improve the capacity of the poorer people in this country to get a tertiary education. When they lost government in 2007, three per cent of people in Western Sydney went to university and 5.2 per cent Sydney-wide went to university. In Western Sydney, we were just over half the rate of enrolment and that number got worse over the 12 years of the Howard government.

It took this government to come along in the middle of a global financial crisis and decide that education was actually the future of this country and that if you want to be globally competitive you need to do something about it. So don't you dare come in here and talk about competitiveness after you spent 12 years wasting people in this community by not providing them with an opportunity. You did nothing in your 12 years to improve the competitiveness of this country in terms of education—nothing. We have started to turn it around.

The funding for the University of Western Sydney has grown by nearly 68 per cent in the five years that we have been in government and it will continue to grow. Real funding per student across all universities has grown by 10 per cent since we came to government in 2007. Under this system, the number of supported students at the University of Western Sydney has increased from 25,800 to 32,000 in the first four years of this Labor government and the number of people from low-socioeconomic status areas has grown by 31 per cent over those four years. What we saw from the opposition during the biggest boom we have ever had in terms of Australia's global competitiveness was nothing. They pushed us backwards on tertiary education. We saw the same with primary and secondary education.

A person could have enrolled in school in the first year of school, and graduated, in the 12 years that the Howard government was in power. Twelve years of schooling under the Howard government and what did we see? When Bob Hawke became Prime Minister in 1983 the high school retention rate was 30 per cent. When Labor lost government it was 80 per cent. One in five people was not finishing high school when the Howard government came to power in 1996. What was the figure 12 years later? Eighty per cent. In 12 years a child could have started school and finished school and still no difference.

Debate interrupted.