Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Hansard source

In rising to speak this evening on Appropriation Bill (No. 1) 2006-2007 and, in doing so, to support the second reading amendment moved by the member for Lilley, I note that there has never been a federal government that has had such a good opportunity, in terms of the resources available, to build the foundations for Australia’s future. That is what this budget discussion ought to be about.

Never has a federal government had a better opportunity to address the important issues facing Australia today and over the next decade or two. These issues are fundamental to our future. They include intergenerational equity; the struggle of today’s age pensioners, who did not grow up in the superannuation age; and the forgotten people, the blacks and the whites barely surviving on welfare in dysfunctional communities, sometimes in the second and third generations, which is rather topical this evening. It goes to issues such as the decline in our skills base and the need to pave the way for the next generation of innovation and productivity improvements for our future economic security and to issues such as our reliance on the resources sector.

There are the implications of that reliance for the manufacturing, service and related sections of the Australian community and the danger of creating—and this is a very serious debate—a two-tier economy. That two-tier economy would be based on the resource-rich regions in the states versus the rest of Australia. There would be workers in resources benefiting from boom-time salaries and bonuses versus teachers, nurses, police officers, firefighters and all those other hardworking Australians being left behind on fixed incomes—so much for potential reform.

It is important that we actually have that reform, that we keep the pressure on the Australian community to front up to a process of change. For that reason I believe the budget is a wasted opportunity. The result is that potentially we are going to reduce the size of the Australian economy because we have not made the hard decisions that should have been made in this budget. Obviously, one would expect the easy options to be taken by the Howard government in the lead-up to the next election, which would have meant the budget of next year. The hard decisions should have been made in this budget. I raise this because the potential reform has to be confronted.

I want to talk about the seeming lack of support that the budget has received in the electorate. It shows how out of touch the Prime Minister and the Treasurer are with middle Australia, a fact which was so appropriately focused on by the Leader of the Opposition in his budget response last Thursday week. The reason they are out of touch is that they do not know what is being discussed around the kitchen table. I will tell you what is being discussed around the kitchen table, in the streets and in the suburbs of Australia: they are talking about the price of fruit and vegies in the supermarket, the weekly grocery bill, how much it costs to fill the petrol tank and the juggling of family finances to meet the monthly mortgage payment. It is not a question of the level of interest rates; it is a question of the level of debt. An increase of half a per cent in interest rates is probably equivalent to an increase of five or six per cent 10, 15 or 20 years ago. It is the level of debt that counts, not the level of interest rates. The problem in Australia at the moment is that we have lost control of the level of personal debt. Communities, ordinary people, mums, dads and elderly people are suffering.

Yes, the Prime Minister would lecture us that Australian mums and dads got a tax cut, but the truth is they do not feel any better about it. Go and talk to them in the streets, as I have over the last two weekends. They have not just talked about industrial relations but talked about the huge pressures on Australian families at the moment. One of the most serious responses has been from pensioners. They simply say to me in my local streets: ‘We got nothing, Mr Ferguson. We are the forgotten people yet again. Yet we were the people who laid the foundations of the economic prosperity that Australians are currently benefiting from. Why are we forgotten?’ I think it is a very serious question that ought to be responded to by the Howard government.

The same comes from people waiting to see a medical specialist, from people whose toddlers will be old enough to go to school before they can get a child-care place, from people whose teenagers cannot get an apprenticeship, TAFE or university place. They are being told by the Prime Minister and the Treasurer that the economy is booming. But, unless they work in the resources sector or live in Perth, they do not feel they are part of it. That is the truth. Just go around Australia and ask them.

I compare that to the executives at Macquarie Bank. At least one of those executives, as evidenced by public announcements last week, earns $58,000 a day, which is absolutely amazing. I am sure that if you work at Macquarie Bank, Mr Deputy Speaker, you are in no doubt that there is economic boom happening in Australia. They are but the beneficiaries of it. If you work in the resources sector, such as in north-west Western Australia, the average annual mining wage now stands at $85,000 per year. That is up a solid 7.6 per cent over the last 12 months. So they are doing quite well.

It is interesting to note that the average growth of the national wage was substantially lower than in the resources sector. The average growth was only 4.5 per cent, taking the national average annual wage to just under $54,000—interestingly, less than a Macquarie Bank executive earns in a day and just 63 per cent of the average annual mining wage. It is a lot tougher if you work in some of the other sectors such as the accommodation or cafe or restaurant sector, where the average annual wage is just $38,000. That is 44 per cent of the average annual mining wage.

So understand that there are two Australias at the moment, not just geographically but also related to the occupation you hold down in Australia. It is getting worse. Interestingly, it is not only getting worse in the area in which you work or the nature of the work you do but also, unfortunately, in the wage differential between men and women. We are going backwards on that front.

If you work in accommodation, cafes or restaurants, you cannot get child care for your kids when you need it and you are struggling to pay the petrol bill to get to and from work or to and from the child-care centre in peak public transport hours. You may well conclude that you are not getting a fair shake from the resources boom. That is what they are thinking at the moment when they hear all this talk about the resources boom.

Perhaps it is time, therefore, the question was asked: are Australians at large getting a fair return from their resources? The vast majority of taxation arrangements and strategic industry incentives that were entered into with the resources sector long ago precede the current boom. It raises the question: are they still relevant, when you look at the profits of some of these resource companies? Do we need to think about the regime that is in place from a government policy point of view governing their investment and returns at the moment?

We have seen the Minister for Employment and Workplace Relations full of bluff and bluster over the last week or two threatening to intervene in a New South Wales wages case. He says he is horrified about wage blowouts. What he really means is that it does not matter what is happening in the resources sector, but he does not want teachers, child-care workers, nurses, police officers, firefighters, hairdressers and bakers earning too much money. That is the bottom line: ‘Let’s keep them down, let’s keep them in poverty.’ That, therefore, raises the question: why is that his view of life? I believe it is because he knows that, if we pay hairdressers more, voters will pay more for a haircut. He knows that if we pay bakers more we will pay more for a loaf of bread. Unlike wages growth in the resources sector, we will feel the costs of wage rises in our own hip pockets. That is the nature of the system.

Wages growth in the resources sector is clearly draining labour from every other sector of the economy, putting public infrastructure costs under pressure as a result and threatening the next round of resource investments themselves. No wonder that, when you talk about road construction one year, when you actually come to do the cost estimates 12 or 18 months later it is completely different. It is the nature of the growth in the economy internationally—the price of cement and steel and the price of wages because of the shortage of labour. We are going to start to feel these impacts in our own government outlays in the very near future, just as we are experiencing them now.

Members of the House might also remember my warnings on a number of occasions. They are probably starting to tire of me raising this, but I have to continue to remind the House that, if Australia is not competitive in capital costs, infrastructure, availability of labour both skilled and unskilled, approval processes, the regulatory environment and so on, the big companies—the Woodsides, the Rios and the BHP Billitons of the world—will not wait for Australia to catch up. It is a very tough global market out there. If you lose investment today, then you have lost it forever. Once they start investing in alternative countries, then just by sheer weight and economies of scale they are not going to turn their back on that country in 12 or 18 months time. That is the nature of the resources boom. It is very competitive.

Negotiations about resource prices each year are also getting very tough. Last year we achieved an increase in the export price of iron ore of 71½ per cent. Last week we saw Japan settle potentially on another increase of 19 per cent for this year. The Chinese are going to try to resist that increase and try to make sure it is less than 19 per cent. We will see just how good they are at the negotiating table.

That just shows why investment is very much the order of the day for the purposes of developing these resource opportunities around the world. Our problem at the moment is that we are falling behind because of capital costs and a shortage of labour. We are going to see it disappear and we are never going to be able to get it back. That is a serious problem that should have been confronted in this budget.

These companies are going to take their money and invest somewhere else in the world, somewhere without capacity constraints. The debate not only in Australia but also internationally is about where it is good to invest so as not to have to confront capacity constraints. This effectively means that Australia’s future share in global trading resources will be diminished not just in the near term but for the decades over which these investments will be matured. And that is of real concern to me. Once you make these investments, you are going to basically pursue them for a long period because that is the return period on the cost of capital investment.

Meanwhile, industries like forestry and tourism are starting to struggle. They are starting to struggle to get the basic labour they need to carry on, as is the agricultural and the primary industries sector. They just cannot compete for the labour. Their problem is that we have a government that is not investing in our future in the supply of labour, so they see valuable employees lost to other industries, especially the resources and energy sector. The same story is being told in other businesses and industry sectors all around Australia, as House of Representatives committees inquiring into these issues are now being told on a regular basis. The lid is going to blow off this problem while the government is asleep at the wheel. It is not that the resources boom is about to end; the issue is that the Howard government has not prepared Australia properly for ongoing participation in it.

We are actually sharing in this resource boom at the moment, but we have to secure further opportunities for the future. This is a ‘once in a lifetime’ opportunity for Australia. If we do not take it now, we are going to miss it. There are other countries, especially in the developing world—you need only look at the energy exploration going on in Africa at the moment—that are potentially very attractive for investment, provided there is political stability in those countries. The cost of capital and labour in those countries is much lower than in Australia—which is a serious challenge to Australia.

That is important because we now have major structural problems and inequities emerging in the Australian economy that the Howard government is blind to. We hear at the dispatch box each question time the Minister for Employment and Workplace Relations talking about fairness and national consistency. I simply ask—and perhaps the minister can respond in his appropriations contribution: where is the national consistency in an average annual wage of $56,000 in New South Wales and an average annual wage of $48,000 in Tasmania, your own state, Mr Deputy Speaker Quick? I think it is a fair question. The price of oil, the price of petrol, is the same in each state. The price of veggies and fruit are effectively the same. Just look at the price of bananas at the moment due to the problems caused by the cyclone in Northern Australia—$10 and $11 a kilo. It is putting a lot of pressure on families. That is what families are talking about at the kitchen table.

Where is the fairness in a tradesman’s wage of $45,000 in Western Sydney and the same tradesman’s wage of $100,000 in Mackay? It is in the resource sector. Last week the Queensland Premier and Deputy Premier were in Sydney on a recruitment drive centred on exactly this premise. There are already big disparities across industries and states between male and female workers, and the Australian government’s Fair Pay Commission is not going to fix them. They are just going to get worse. The skills and labour crisis is the most pressing constraint we as a community have. On this debate, it is interesting that in last Friday’s Financial Review I read that Botswana is the only country with a skills shortage that is worse than Australia’s. That is pretty telling. Botswana is the only country in the world with a skills shortage worse than Australia’s. Our problem is that neither government nor industry is doing enough to address this shortage. I believe both must bear some responsibility for the situation we find ourselves in today.

It is an indictment of this budget that so little is being done to fund initiatives to lift Australia’s skills base, because that is the debate. I am pleased to see a number of companies in the resources sector—BHP, Rio and Xstrata, to name a few—now accepting their responsibilities to do more on this front. But we cannot just adopt a culture of buying trained labour from down the road or overseas; we have to do it ourselves. We need to get back to traditional trade training in Australia, to address transferability of trade qualifications and to commence more of our apprenticeships at school for our young people. If we do not do this, we are going to suffer. Where are we going to get the specialised high pressure welding and turning and engineering workers and the science and technology graduates? Where are we going to get the teachers and nurses if we do not invest in this training? We cannot rely on getting people on subclass 457 visas from overseas, aimed at putting pressure on the Australian trade union movement and at keeping wages down. The end result is exploitation in Australia.

It is about time we had a little less talk about our problems in the Indigenous community. If the government actually did something to work with the resources sector to invest in training and the education of those people, then you would create the labour force for these regional, remote and isolated areas of Australia, because that is where these people live. They want jobs, but we as a community have failed to deliver the services that would create the opportunities for them and, in doing so, overcome some of the skills shortages that exist in Australia.

We also have to accept that we have to do more as a nation in energy. We have to start fronting up to the issue of resource security. The Prime Minister is talking about the price of oil at the moment in the context of the nuclear debate. It also means that the gas to liquids option and the coal to liquids option are now serious options for Australia to invest in, provided there is government leadership and a response from the private sector to accept its responsibilities to do this in Australia, just like the industry’s competitors are doing in Qatar. They are doing it in Qatar. Why should they not do it in Australia? Why should we not invest in gas delivered projects to make clean transport fuels for the global market and for the domestic market? It is five years since the government’s own gas to liquids task force highlighted the potential significance of such an industry in Australia. Why is this investment not pursued in the budget, just as we should have pursued the urgent issue of trade training in Australia and more university places for our own young people? These investments by government and the leadership at a policy level actually bring the private sector forward in accepting their responsibilities. Action has to be taken now.

That is what the second reading amendment moved by the shadow Treasurer, the member for Lilley, is about. It is about the lost opportunities in this budget. Where are the child-care places? Where are the public education and training places? Where is broadband for the whole country? What are we as a nation doing to encourage research and development? What are we doing about what Labor achieved in government from 1983 through to 1996 on lifting workplace productivity? I commend the second reading amendment to the House. This is the debate we have not had because of government inaction in this budget. This budget endangers Australia’s long-term economic fundamentals when we have never had it so good in terms of the opportunities that are available as a result of the surplus that exists because of the resource boom. We all like a tax cut from time to time, but it is also the responsibility of leadership to invest in the provision of services that guarantee our future. That is where the government has failed.

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