Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Hansard source

I rise to speak on the matter of public importance which has been submitted in my name, which relates to:

The Government’s decade-long neglect of training, resulting in the failure to build a modern, competitive economy to ensure the prosperity of future generations of Australians.

The fact is the skills crisis is an inconvenient truth for the Prime Minister. Australia’s skills crisis is hurting Australian families and Australian businesses, and now we know it is hurting the Prime Minister. It is hurting the Prime Minister and that is why he has been forced to act. It is an inconvenient truth that he has had to address, not through conviction, not out of a desire to implement good policy and not out of a desire to ensure more young Australians have the opportunities that they deserve but because he is conscious that the public is highly concerned about the skills crisis and the shortage of training opportunities for so many Australians.

The fact is that, while this inconvenient truth of a skills crisis may not be something that the government wants to acknowledge, it can hardly argue that it is a truth of which it has had no warning. I want to briefly go through some of the warnings that we know our own Reserve Bank of Australia has issued on the issue of skills over some time which for some reason this government has chosen to ignore for so many years. Let us start with the Reserve Bank’s November 1997 Statement on monetary policy, in which was the following statement:

This judgment is consistent with persistent reports of skill shortages and pressure on wages in the construction sector.

The November 1999 statement talked about the fact that there was ‘evidence that the strength of the labour market may be generating skills shortages in some areas’ and referred to the fact that a Department of Employment, Workplace Relations and Small Business survey demonstrated that skills vacancies were ‘at historically high levels’. In a statement on 5 April the governor said:

Pressure for higher wage rises appears to be building ...

The November 2004 Statement on monetary policy said:

... business surveys suggest that a broad range of firms are finding it increasingly difficult to find suitable labour ...

It went on to say:

These developments are consistent with survey data showing that firms are finding it increasingly difficult to attract suitably skilled labour, pointing to the possibility of stronger wage pressures emerging in the period ahead.

Perhaps what is most concerning is that last year we started to get from the Reserve Bank further discussion of the potential macroeconomic impacts of labour shortages. For example, in the May 2005 Statement on monetary policy the following statement was made:

... labour shortages are becoming increasingly broadbased across industries and skill levels. Consistent with this, business surveys indicate that difficulty finding suitable labour has become a key factor constraining output.

So what we have from those persons who are charged with the conduct of monetary policy in this country is an indication that the lack of suitable skilled labour was constraining economic activity. This was continued later that year in the August 2005 statement:

Shortages are becoming more widespread across industries and occupations, but remain most pronounced among skilled workers in the non-residential construction and resources sectors ...

In the May 2006 statement there was reference to an NAB survey as follows:

The ... survey suggests that labour scarcity remains a greater constraint on activity than the more traditional concerns about lack of demand ...

The Reserve Bank’s August 2006 statement said:

Business surveys report that firms are experiencing difficulty finding ... labour, and employers note that this remains a key factor constraining their output.

So it does seem extraordinary to note, if you track back through the various statements on monetary policy from the Reserve Bank, the repetition of warnings to this government about skills shortages in this country and, just as importantly, their effect on economic growth: the fact that skills shortages were constraining output and were reducing firms’ opportunities to exercise their capacity.

What has the Prime Minister done? In the other place, the Leader of the Opposition, Mr Beazley, indicated there was really only one key statistic that people listening to the debate needed to recall: the comparison between Australia and our competitor economies in terms of public investment in education. He referred, as have many Labor people, to the OECD’s Education at a glance report. It is interesting to note that when the OECD says something that the government want to talk about the government certainly trumpet it all over the parliament and in the media, but, when it says something that they do not like, ministers somehow slip away from the topic.

The OECD’s report has shown us that Australia has the rather extraordinary honour of being the only advanced economy in the world that has reduced its public sector investment in education since 1995. On average, other nations, our competitor economies, have increased their investment by how much? It is 48 per cent. What has Australia done? We have reduced our investment by seven per cent. So, over the 10 years of the Howard government, public investment in education has gone backwards while that of our competitor economies has gone forward very significantly on average.

We also know that since the Howard government was elected it has turned away from TAFE 300,000 young Australians—that is, 300,000 people who could have had the opportunity to learn a trade, to learn a skill, have been turned away because of this government’s budget cutbacks in 1996-97, the restrictions on TAFE spending up until 2000 and of course the slashing of university budgets. It was rather extraordinary to hear the Prime Minister’s statement on skills last week. It was one of the more brazen attempts to paper over an issue. On the one hand, he says there is no skills crisis; on the other hand, he throws a whole heap of money at some aspects of the skills shortage in his so-called Skills for the Future announcement.

What needs to be emphasised is that this government has had 10 years where it has presided over an underinvestment or, worse than that, a going backwards in public investment in education. It has ignored warnings from the community, from senior economists and from the Reserve Bank. And now it expects us to believe that there is actually no skills crisis while, on the other hand, it needs to spend all of this money on skills. This is catch-up politics that is driven not out of a belief that education and skills development are essential to a productive, high-wage, high-growth economy but out of the recognition that the community no longer believes the government when it says there is no skills crisis. That is the motivation for the government’s approach last week.

The government deny there is a skills crisis but they know the public do not believe it, so they had better throw some money, belatedly, at an area that they have consistently underinvested in over the 10 years of the Howard government. What we saw from the Prime Minister last week was, frankly, nothing more than a desperate attempt to catch up and deal with an issue that Labor has been talking about for years. It is quite extraordinary, as I said, that the Prime Minister says there is no skills crisis yet still provides $800 million to fix a crisis that he does not believe exists.

What is the government’s answer to the productivity challenge of this country? We know what they want in their workplace relations policies. Their idea is to drive wages down and, if workers refuse to work for those lower wages, to bring in more people from overseas. That appears to be the Howard government’s approach to the productivity challenge facing this country.

What is Labor’s answer? We have been saying for years now, particularly on the skills front, that you have to invest in the skills of Australians. The answer to the demographic and economic challenges this country will face in the future is to invest in the skills of our people now. That is because the key mismatch in our labour market is not simply about participation and not simply about demand and supply. The key mismatch is skills. We have over two million people in this country who are officially unemployed, who want more work than they can get, who are underemployed or who are out of the labour market but still want to work. Many of those people simply do not have the skills to fill the available vacancies, and yet we have a government that has continued to ignore the warnings from so many people in this country about the need to invest in skills—a government that has presided over a reduction in public investment in education and has turned away from TAFE 300,000 young Australians. That is the government’s answer to the labour market challenge and the demographic challenge that the country faces.

It is somewhat extraordinary that the package that was announced last week had nothing in it for people under the age of 25. There is absolutely nothing in the government’s skills package that is going to address the issues that affect the people who are the country’s future—the young people of this nation. There is nothing in this package to invest in their future and nothing to help them complete their training. One of the more shameful statistics under the Howard government is the 40 per cent drop-out rate of apprentices in training. The government needs to take responsibility for that. Forty per cent of apprentices drop out of their training. There are a range of reasons for that, and one of them, of course, is the fact that, for many people, those wages are so low.

I do want to congratulate the Howard government for picking up the policies Labor has been arguing for for some time. The government has actually picked up a number of the policies Labor has been putting forward for some time in terms of suggesting additional funding for apprenticeships and additional funding for—I cannot recall the name that the government used for it—the business skills aspect of the funding for apprenticeships. These are the sorts of things Labor has been talking about. I suggest to the government: why don’t you go a little bit further and pick up a whole heap of things that Labor has suggested, because they are good ideas? Why don’t we have specialised trade schools in each school district, making sure that young people in years 11 and 12 have the choice to go to the specialist trade schools? Instead, the government has 25 technical colleges around the country. How many of them are actually up and running? I think we are still in the single digits—is it three, four or five? Every estimates we come to, this great centrepiece of the government’s trades training policy is inching along tortoise-like in terms of actually delivering an outcome. What about Labor’s suggestion of a skills account—$3,200 in the skills account for apprentices to use to make sure they do not face up-front TAFE fees? What about Labor’s suggestion in relation to investment in the traditional trades—that is, things like a trade completion bonus, which would assist in lifting the appalling rates of completion of apprenticeships that have come to pass under the Howard government?

But, no, the government are not interested in this. You might see something before the next election, if they realise that the skills funding they announced last week for the crisis that does not exist actually has not fixed the crisis that does exist. We might see more funding then. One of the suggestions that Labor has been putting on the table for some months now is a trade completion bonus to try and lift the rates of apprenticeship completion, which are so poor in this country.

The AIG, the Australian Industry Group, says we need 270,000 extra tradespeople in this country. The Prime Minister’s proposal is to give a wage subsidy to 10,000 people. That is his answer to Australia’s skills crisis: let us address 10,000 people at a time when the AIG says we need 270,000. Isn’t it interesting that that is around the same number of people who, under the Howard government, have been turned away from TAFE as a result of the budget cuts the government made in 1996-97 and what the government did to growth funding over the decade. The fact is that not only has this government presided over a skills crisis but it is a skills crisis of the government’s making. (Time expired)