Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

My question is also to the Minister representing the Treasurer, Senator Conroy. Can the minister outline Australia’s recent productivity performance. Can the minister advise the Senate how the government intends to increase productivity to deal with the inflation challenge.

Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I thank the senator for her question. Productivity is the key to achieving sustained improvements in living standards. The higher our productivity levels, the faster our economy can grow without fuelling inflation and causing higher interest rates. But neglect for the long-term drivers of growth and the existence of capacity constraints has seen Australia’s productivity growth steadily fall away. The average annual productivity over the last five years has been lower than in any other equivalent period in the last 16 years. The latest national accounts show that, in the last year of the Howard-Costello government, there was no productivity growth at all. It was zero.

The previous government lacked the foresight to invest in our future economy. They neglected education and skills and refused to lead on critical national infrastructure. This has contributed to current inflationary pressures. The coalition has always put their short-term political interests ahead of the national economy and the long-term economic interests of this country. Their short-term political gains and reckless spending were pushing even harder on the accelerator when they should have been directed towards finding a higher gear.

Either that or they were in blatant denial about the existence of the problem in the first place. The former Treasurer flat out denied that the downward trend in productivity growth actually existed. Can you believe that? He actually tried to mount the argument that it did not matter. There is no need to take my word for it; reports released by two of Australia’s leading business associations highlight the damage done to the economy by the misguided priorities of the previous government. I know it hurts some on the other side, but let me quote to you from the budget submission of the Business Council of Australia highlighting in stark terms the former government’s wasteful spending. It said:

Spending, buoyed by record revenue, has risen rapidly, but it has largely failed to be directed at meeting the needs of a capacity-constrained economy.

The recent report from the Australian Industry Group highlighted the effect of the coalition’s failure to invest in the drivers of productivity. Let me quote to you from that:

The most comprehensive measure of Australian productivity growth presents a profoundly depressing picture of sustained retreat from the sparkling performances of the 1990s.

That is from the AiG report, How fast can Australia grow?, released in February this year. Everyone could see that the productivity growth was in decline and needed to be addressed. The RBA could see it. The Treasury could see it. The BCA could see it. The AiG could see it. Everyone but those opposite could see that complacent denial is no way to run an economy.

The Rudd government will not make the same mistake. Improving productivity is at the heart of our economic agenda to address our long-term economic challenges and to deal with inflation. The government’s first budget will restore fiscal discipline to cut wasteful spending and create room for more critical promises. The establishment of Infrastructure Australia will prioritise and fast-track a more productive economy. Our plans to roll out an additional 450,000 skilled training places will make—(Time expired)