Monday, 28 May 2007
Appropriation Bill (No. 1) 2007-2008
The appropriation bills are always a great opportunity for members in this place to put on the record some of our views about not only the budget but government policies, our own policies and, I suppose, the current state of affairs. In particular tonight I would like to talk about some industry policy, where Australia is heading in the future and the lack of vision of the government. The government talks about a whole range of things but in the 11 years it has been in power it has reaped the benefits of a growing global economy and a great economy in Australia but has not really contributed a great deal to that itself. Basically, with the sorts of revenues that are coming into Canberra, it is almost impossible for government to spend them all—even though it blows billions of dollars on a whole range of things. What I would like to do is focus on some industry issues.
During the recent press launch of the government’s new industry policy, the Prime Minister reminded the gathered media that mining was very important—and that it is. He also said that it was not the only pebble on the beach. Hoorah for the Prime Minister! He has finally come on board and realised what the rest of us have known for quite some time: that there is more to industry policy than just mining. Unfortunately, the Prime Minister’s observations come a long time after Labor, just like the rest of the country, had already formed very strong views in this area and had formed strong policy. The unfortunate part of it, though, is that the government needed to have understood this much earlier, to have put some policy in place and done something about it.
We have creaking infrastructure that cannot quite cope with the resources boom globally. Now what we are seeing because of that is the states often left to carry out massive infrastructure investment on their own when they just do not have the capacity. When they turn to the federal government, the federal government has a great opportunity but just does not contribute. We are seeing the outcome of that now with the potential loss of mining jobs. Believe it or not, there is a potential loss of mining jobs in an era of a resources boom because mines have overrun their capacity to export. We have got so much coal building up, so many of our resources building up, that mines may possibly have to shut down or at least slow down operations, meaning that miners could lose their jobs. That is an incredible outcome after years of being warned not only by the states but also by federal Labor that more had to be done. The federal government decided to play the game of politics and just not get involved. That was certainly not good enough.
What it means is that this government is out of touch and out of ideas. After 11 years, it cannot come up with a new idea. It cannot come up with some decent industry policy that will see us through the next 20 years. It is one thing to inherit a good and growing economy. It has been growing for 16 years. You have to understand that the Howard government has only been there for 11—it inherited a good economy. You cannot stop a global boom. But you have to leave a legacy; after more than a decade, you need to leave something. This government needs to leave something for the next 20 years, and that is what we are not seeing. That is the great danger we face: that in these great economic times people are blinded by the good fortune that they inherit but then do not invest for the future. Good times end. They might not end for a while, but they will end. When that cycle finishes—and it may not be that the mining boom or the resources boom will end; I think that the demand is going to stay there for a long time—profits will not be as big and there will not be as many jobs created out of it. Other technologies will be developed in the next decade. There is a whole range of issues that we have to deal with, and this is where you need a government that puts some thought, time and effort into the future rather than just harping on about the past and the things that it has inherited.
We need a government that not only talks about innovation but is innovative. There is no doubt that the innovative capacity of our manufacturing services sector is also important and Australia has to invest properly in our capacity to innovate. We need an open economy. We need to make sure that we are out there competing with the rest of the world. I have said in many places that the greatest issue we have in Australia today, as China and India develop as nations, is one of manufacturing. Basically, they can make things cheaper than us. We will never be able to compete on wages—there is no way that Australia should or could ever compete on wages—but that is not the biggest threat. That is just the perceived threat today. The threat tomorrow is that they will out innovate us; they will beat us at our own game. Australia’s great history has always been that we have had great ideas, great innovators and entrepreneurs. Because of our isolation and remoteness from the rest of the world, we have always been able to do things just a little bit better in a whole range of ways. It has kept us punching well above our weight. But what we are seeing is a complacent government that does not look that far ahead. The fear I have is that if we do not put those sorts of policies in place very soon we are going to see some negative outcomes.
Back in February this year in a speech to the Australian Industry Group, the Labor leader, Kevin Rudd, made his own observations stating that in the 21st century innovation policy was actually industry policy. This is the difference between the Howard government and a Rudd led Labor alternative government. The ALP is thinking about the future. We are thinking about how to pull all of those different threads together and present a coherent economic vision while the government does nothing but play catch-up.
In this context I want to raise the issue of the recently released Productivity Commission report called Public support for science and innovation, and add a couple of interesting thoughts in that debate concerning innovation and productivity in Australia. The commission’s report formulates a clear and concise rationale for public support for innovation and science on two broad principles. Firstly, the best rationale for public support of innovation and the sciences is the spill-over effect. Quite simply, that means that by investing in particular areas you get much more spillover into the rest of the economy and the rest of industry than just where you particularly invest. It is an important point that government should understand: that investment in innovation, in skills, in training and in education, while it is long term, is a good thing. It actually is an investment and not just a cost.
Secondly, government funding decisions should seek to maximise the return on taxpayers’ dollars by supporting innovative activities that otherwise would not be undertaken independently by the private sector. That is the principal addition, where you can add on to the private sector where otherwise things would not happen. Basically, what the Productivity Commission does is argue that public support for science innovation should always be aimed at generating the greatest social return, which is a sensible rule of thumb for any government regardless of its political stripes.
But on the innovation front you cannot say that there has been a lot happening. Sure, there has been a little bit in a few areas, and one of the key areas where government has had some great opportunities is the EMDGs, the export marketing development grants. Personally, I think it is a great program and government should support it, and it does support it, but it has diminished. This is one program where we see net benefits and results, really good outcomes. But what has the government done with one of the best programs out in the marketplace? It has wound it back, scaled it back; it has taken some of the money away and made it more difficult.
Some of the funding commitments are remarkably small also. One in particular that I want to raise is a paltry $14.3 million over two years to extend the Building Entrepreneurship in Small Business program for just one extra year. If you have a close look at the government’s commitment to small business and innovation, you will be a little bit surprised here. It talks about it; it just does not invest in it. Australia has 1.2 million small businesses. It does not take a brain surgeon to do some quick mathematics on this to see that any small business wanting to access funds here will really struggle; there is just not enough money. But it is a good program and it should be supported. It is something that we could do a lot better. We need to see some long-term commitment.
The other interesting point is that the government keeps drawing on Labor policy, and we have heard quite a bit of that lately. There is one particular issue I want to make mention of, and that is the Australian industry policy centres, which almost identically mirror Labor’s policy commitment to establishing 10 Enterprise Connect innovation centres to better connect business, people and ideas. So there is a whole range of areas where this government looks to the past, reaps the benefits of the things that have come before, but does not itself innovate or do anything to stimulate ideas and innovation. Ideas in the next decade will be the greatest things we have—new ideas, new ways to do things, new processes, new skills and certainly some things we have not even dreamt of today. But if we do not make the hard decisions today and if we do not use the good economic times we have—the rivers of gold in tax revenue that flow into the government coffers in Canberra—for the great programs and the innovations which support business and the community then we are going to miss out.
Labor, on the other hand, do have a positive agenda. Labor want to build a culture of innovation. We want to support new ideas and we want to do that by strengthening investment in creativity and knowledge generation. We want to focus incentives on business research and development to promote global competitiveness, because at the end of the day our ability to compete with the rest of the world is how we will succeed and how we will create the jobs later in the 21st century. If we want to deliver the best outcomes for exports and economic growth then we have got to support the companies that are investing in those areas. We want to accelerate the take-up of new technology so that Australian firms can access the best ideas from around Australia and the rest of the world. I do not have to repeat them today, but I know there are dozens and dozens of stories that people know, of great ideas, inventions and innovations made right here in Australia, which could not find support. Support could not be found from government or from the private sector and those ideas had to go offshore, only to come back to us in mass numbers. In relation to solar panels, hot-water systems, microwave ovens, black box flight recorders, and a whole range of other ideas, we have exported the ideas but just did not re-import the revenue and the profits.
Labor want to make Australia’s innovation system truly international by supporting partnerships with foreign investment in Australian research and development. We want to make sure we can use government procurement to support innovative Australian firms. We want to make sure we give firms a leg-up, not a handout. We want to make sure they can do things for themselves. We want to make sure we can strengthen publicly funded innovation and research infrastructure and develop a whole range of pathways to assist our universities to achieve these goals. Labor want to make sure we can develop and implement a set of national innovation priorities with a broader focus than the current national research priorities.
We want to strengthen the governance of the national innovation system to support higher expectation of government agencies and business. It is not good enough for government just to provide some programs but not itself take on innovation and new ideas. And we certainly need to look at reducing the bewilderingly duplicated and multilayered bureaucracy—dozens to hundreds of programs for industry that seem to do a range of different things or the same things. If you were to ask anyone in government or the bureaucracy to put it into context for you and give you a document that spelt it all out, I think it would be just about impossible for them because it is so complicated. It is almost as if this government has designed it to make it difficult to get to—to make it so complex and so hard that small business owners and medium sized enterprises cannot quite get their head around just where they might go to get a grant, assistance or R&D funding, so they cannot achieve their own outcomes and give up. So some of the money just sits there in the funds and does not get used.
An interesting thing has happened over a number of years. We keep hearing about some terrible economic times in the past, and how great this government is at managing the economy, but we only hear half the story. That is the unfortunate truth; we only hear half the story. They say how great it is to have all these revenues coming into government, but of course that is from the mining boom. This government did not create a global demand and a Chinese demand for resources. I do not think they are claiming that—it would be interesting to see if they were—but they are only telling you half the story.
What we do know is that, while the government has been claiming that it is so good, on the really important factors that are going to determine our standard of living and our lifestyle in the next two decades we have actually been going backwards. That is the sad truth. If you have a look at productivity—and probably the key indicator in any economy about where you are going into the future is your capacity to become more productive—then you see that Australia does not do too well. When we left office, productivity was growing at an average of 3.2 per cent, which was not too bad. It actually put us in a strong position. If you look back—and the economists or anyone else who has looked at it will tell you this—you will see that it actually set us up today. It was that productivity growth. What has this government done with that 3.2 per cent growth? It has reduced it. Productivity is now down to 2.2 per cent and is expected to fall even lower to 1.5. What that means is that we are dumbing down. It means that industry will not be able to compete. It is not competing now. We are lucky that there is a resources boom and we have got the resources because if we had to compete globally on other things, including our own productivity, our capacity to improve what we do, make it better, make it faster and make more of it, then we would be struggling.
So that is the half-truth you get from the government about the good economic times. But you do not get the other half: that we are falling behind the rest of the world. That is something that this government refuses to acknowledge or address, and I think in the future that will be looked upon very badly. This government applauds itself on a whole range of things. It says it is the great economic manager, but you have just got to have a look at the record run of trade deficits. Despite the most favourable global economy and global conditions in 30 years, we cannot seem to pick up the ball. We just cannot seem to get our game right. We keep going backwards. Our trade deficits are getting larger and larger.
This government is very proud of saying that it has no debt. That is right; there is no government debt. But to my mind it has transferred it to the community. It is the poor punter out there and it is the electors who have got the debt now. Government has managed to transfer its debt and neatly place it into peoples’ homes. Homeownership debt is through the roof; it has never been higher. Credit card debt is out of control. Everywhere the government applauds itself. It is a 50 per cent story, a 50 per cent truth. Yes, it is true that the government has got no debt. But who cares that the government has got no debt? I am actually much more worried about people in my electorate whose household debt has tripled or quadrupled since this government has been in power. That is a debt they have to live with every day, and it is causing a whole heap of strain in homes.
There have also been eight successive interest rate rises. We keep hearing about interest rates back in Labor’s day, but the government only tells you half the story. It is a 50 per cent truth. The reality was that, compared to the rest of the world, interest rates in Australia, while they were high as a number, were not that bad. As a number they were high, but how much was it hurting your back pocket at 17 per cent at that peak for three months? Let me tell you: a whole heap less than it is hurting you today at 6.5 or seven per cent, because today the equivalent to 17 per cent is about 7.5 or eight per cent. That is the reality today. People are going bankrupt and losing their homes now. Home bankruptcy and mortgagee repossessions have quadrupled in the last quarter. Ask the government why under its policies with supposedly such low interest rates people are losing their homes faster than they have ever lost them before. How can that be? The numbers simply do not add up. The reality today—the 50 per cent truth of this government—is that it says interest rates are low but we have had eight successive rises. We have had four just recently. Interest rates just keep going up under this government. They do not need to go up much because every quarter per cent today is equivalent to two or three per cent back in the nineties. That is the reality, the 50 per cent truth. We have had warnings from the Reserve Bank. We have had former Reserve Bank governors coming out and telling the real position once they were no longer in their positions in their office and saying just how bad this economy is for a lot of Australians. We should not forget that about the 50 per cent truth this government always talks about.
This is a government that has been great at fudging the books. It has been great at passing the buck. It has been great at looking the other way when it comes to skills and training. Why is there a skills crisis today and why is the government clamouring to build ATCs and do something about skills? Because it just did not do anything about it before. For 10 years it just sat there and did nothing, and now it is saying, ‘Oh, my God, we need to do all these things.’ This is incredible. This is a government that has ripped money out of education and health, and now we are seeing the real outcomes of having Labor’s Commonwealth dental health program axed back in 1996. It was not a lot of money back then but it has caused a lot of pain for ordinary people today. That scheme needs to come back, and Labor will be putting that back.
Of course, Labor supports income tax cuts, because the long-suffering taxpayer deserves a little bit back from all the taxes they are now paying. They are now paying more tax than they have ever paid. Higher education needs to be on the agenda. We also need to see trade skills back on the agenda. We need to see this government seriously look at infrastructure. I will not go on about infrastructure in Queensland in the small time that I have left. But after 10 or 11 years of doing absolutely nothing, what is government doing today? In the last throw of the dice before an election, this is the government that rocks up with a giant bag full of cash—taxpayers’ money—and says, ‘We’re here to help; we’re going to do something for you.’ But I think most people have woken up and said, ‘But where were you for the last 10 years? Where were you when we were crying out for funding for desperately needed safety upgrades and urgent upgrades on federal roads?’ You cannot blame the states for federal roads. In reality, this is a government that is missing in action; it is a government that is out of ideas; it is a government that has lost its way; it is a government that is tired; it is a government that no longer has an idea about what it ought to do in the future; and, in my book, it is a government that is out of time.