John Watson (Tasmania, Liberal Party) Share this | Link to this | Hansard source

My question is directed to the Minister for Finance and Administration, Senator Minchin. Will the minister outline to the Senate the importance of productivity in ensuring the continuing strength of the Australian economy? Further, will the minister advise the Senate of any alternative policies?

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

I thank Senator Watson for the question. Senators know that the current economic conditions in Australia are very good news for Australian families, Australian businesses and Australian job seekers—and I acknowledge the gallery, full of future job seekers, that we have here today. When you look at the raft of economic statistics it is hard to find bad news. We have unemployment at 4.2 per cent—

Paul Calvert (President) Share this | Link to this | Hansard source

Senators on my left, including you, Senator Ray, come to order!

Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Link to this | Hansard source

As I was saying, we have unemployment at 4.2 per cent and we have the economy growing strongly. Inflation is well under control as a result of 11 years of very good economic management. As the ABS has reported, all sections of society are enjoying the benefits of our economic management. The share of national income going to the poorest 20 per cent of Australians is increasing under our government.

So, obviously, if you are on the other side of this chamber and you try to punch a hole in that very good economic record you have a problem. So the opposition has looked around for any statistic you could possibly find to imagine that things are not as rosy as they appear. Labor have, for the last six months, latched onto productivity as some sort of economic lifebuoy. And they have been spinning that as a very big issue.

Labor’s problem, of course, is that this is a furphy. Mr Rudd was very badly exposed on this issue on ABC radio last week. I think the interview showed that he may know something about foreign affairs but he does not seem to understand productivity and he does not understand the national account’s measuring of productivity. So his officers prepared a 10-page briefing paper for him to help him understand productivity. It makes very interesting reading. The note, which I have read of course, explains the true situation. It explains that productivity is actually increasing. It explains that recent lags in productivity can easily be explained by the surge in employment under our government. It says that when employment is growing fast, productivity tends to slow, as measured by the ABS. The note also admits that the drought has affected overall productivity but states clearly:

Non-farm productivity has been stronger than overall productivity, and it is showing signs of a sharp pick up.

That is the note from the Labor advisers to Mr Rudd. So Labor’s own advisers acknowledge that productivity is clearly improving. But then the advice goes on to talk about the spin. The memo advises Mr Rudd not to acknowledge that productivity will rise and that he should keep referring to his simplistic analysis of the last budget papers to insist that productivity growth will be zero. We know that did not work very well for Mr Rudd on ABC radio, and, now that his own office has blown the whistle on this spin, it is not going to work anymore.

The other big problem for Mr Rudd of course is that he does not actually have any economic policies to improve productivity. The Labor Party has two big policies: one is to damage the economy on climate change; the other big policy is to restore union power to Australian workplaces, and that would do untold damage to productivity in this country. Just yesterday, as Senator Abetz pointed out, one of our biggest constructors, John Holland, said that Labor’s IR policy would be a disaster for the construction industry. John Holland said that our policies had delivered an $8.5 billion productivity dividend to their industry and were likely to lead to a further 10 to 20 per cent improvement in productivity over the next five years. All that productivity gain would be at risk under Labor’s determination to put the unions back in charge of Australian workplace relations.