Matt O'Sullivan (WA, Liberal Party) Share this | Hansard source

Before I pivot to the content of my speech, I want to acknowledge the contribution from Senator O'Neill and thank her for it. It was a powerful delivery and, Senator O'Neill, I want to associate myself with the comments you have made. Thank you very much indeed.

I want to pivot to another discussion on productivity. Today, one thing that has become crystal-clear during the ongoing industrial relations, education and employment inquiry is that this government just does not have a plan to address the rampant inflation or to improve the nation's productivity. So is it any wonder that yesterday the RBA gave a very stark warning that further interest rate rises might be on the cards, saying it now has 'significant concerns' about the outlook for inflation? This is just more bad news for Australian families who, under the watch of this government, are already enduring the worst cost-of-living crisis in a generation. Households and household budgets are being squeezed to the absolute maximum, with high petrol prices, high energy prices, high grocery prices and rental prices hitting fresh records.

With the RBA trying to tame rampant inflation using the blunt instrument of increasing interest rates, the bank needs the government to do its part by addressing fiscal spending. Certainly, trying to swing power back to the trade unions and increase their influence in the workplace won't do anything to encourage workplace harmony or productivity, nor will tampering with the industrial relations framework or trying to remove casuals from the workforce. The government's IR bill is a solution looking for a problem, like draining the ocean trying to catch one fish. Instead of trying to grow trade union membership, this government should be trying to encourage productivity growth across the economy through dynamic policy and regulatory reform. However, this government is in total flux about what to do about productivity. The Treasurer recently learned it is a problem and started mentioning the 'p' word, and we finally heard the Treasurer start to talk about productivity. Even the Prime Minister has discovered that word in his dictionary.

The release of the latest Intergenerational report in August further highlighted the challenges ahead for productivity. It mentioned productivity 370 times. This report shows why lifting productivity levels needs to be urgently addressed. I commend that report and I encourage people to have a look at it. However, for this government, labour productivity is the elephant in the room. The government seems intent on ignoring it and, worse, even isolating it. Doing so will jeopardise Australia's future prosperity, yet the government thinks that only seeing growth in nominal wages alone will ensure people's real prosperity will increase. The peril in that thinking will mean continued high labour costs, and when separated from productivity gains that will only ensure the path of sticky inflation persists. Sticky inflation means Australian families' real family incomes will continue to be silently eroded away.

As the former Reserve Bank governor, Dr Philip Lowe, observed in his July speech, when it comes to addressing labour productivity there has to be a lot of good and sensible ideas about how this can be achieved. He said:

It's not about knowing what to do, it's a political one. And the political challenge is to get these good ideas that are already out there, through our political systems.

One of these 'good ideas' is the Productivity Commission. The government doesn't like us talking about the Productivity Commission, let alone the five-year productivity inquiry it released earlier this year, which the Treasurer has so far completely ignored. This report has become like the classic line from the television show Fawlty Towers, 'Don't mention the war.' Like Basil Fawlty running around his hotel telling people not to mention the war to his German guests, the Treasurer is running around saying, 'Don't talk about the Productivity Commission.' You don't hear anything from him. The five-year productivity report developed a blueprint on how, as a country, we can responsibly grow labour productivity. It is important we boost labour productivity to ensure that national prosperity is shared by future generations and that people's real wages are not gobbled up by continued rampant inflation.

One area the commission's report highlighted was investing in our future skills needs. This is an issue that's particularly important to the services sector and is something that I'm very passionate about. It's increasingly coming to overshadow our economy. As the Productivity Commission noted:

An increasing proportion of jobs require non-routine skills, which typically demand workers with higher levels of education or training … As jobs and tasks change more rapidly, it will become increasingly important that education provides adaptable general skills.

It said:

In addition the services sector now predominates, accounting for 90% of workers, up from 50% in 1900—affecting the skills required in the economy.

While imperative, the emphasis alone shouldn't just be on skilling the nation. Flooding the job market with a highly skilled and able workforce—in and of itself—doesn't address the long-term needs of the nation or, indeed, lift its productivity. That will only lead to further pressures on the labour unit costs. Instead, it must zero in on ensuring the skills and training are tailored to the jobs in demand and the jobs of tomorrow and the jobs that will revitalise and grow our productivity.

The Australian Industry Group reported in its Skills and Workforce Development Survey that 90 per cent of businesses expected to be affected by staffing shortages in 2023, 36 per cent reported that skills shortages will inhibit their business growth and 26 per cent said that total labour shortages—both skilled and non-skilled—will inhibit growth. Critically, 74 per cent of businesses reported they are affected by low literacy and numeracy skills.

Increasing the skilled migration intake will only solve part of the problem. Training new and existing staff will also be a key formula to addressing the skills shortages. So, too, will improving the teaching and education framework that supports it. Simply creating new TAFE places and more fee-free TAFE placements does not fix the problem. Consideration must be given to improved outcomes and pay that is based on results not just placements. Yet that's what we're seeing this government do with its fee-free TAFE places. In fact, we're seeing a lot of TAFE places going to leisure type training courses rather than career type training courses—for example, people doing mountain biking courses because they want to improve their mountain biking skills. And the government is paying for that.

While what we have been pulling out of the ground has contributed largely to our past and present prosperity and we have become very good at doing that, human capital is what will drive the prosperity of tomorrow. Just as we've been blessed with incredible mineral wealth, this country is also abundantly rich with human capital. Therefore, to foster future prosperity we must make sure that the education, skills and training framework is match fit and flexible to be able to adapt and respond to those evolving needs. Releasing these opportunities will pivot our nation to deliver the success that we need over the next decade and beyond. Future generations are relying on us to get this right. As former president Ronald Reagan once said:

There are no constraints on the human mind, no walls around the human spirit, no barriers to our progress except those we ourselves erect.

The government needs to focus on this critical issue. To address productivity, we must see an improvement in the skills that this nation is able to deliver so that, although we are lagging now, we can continue as we have for a long time to be competitive internationally and to address the opportunities before us.