Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

This is just another economic myth of the Prime Minister designed to detract attention from the fact that the government has no plan to build prosperity beyond the mining boom. In a candid interview with the Financial Review on 18 December last year the Treasurer admitted that the government’s workplace laws ‘don’t create jobs; the economy does’, and he is right. The Australian economy is being swept along by the strongest global economic growth in more than 30 years and China’s appetite for our commodities and resources has helped take our terms of trade to their highest level in more than 50 years. So it is not surprising that it is in the mining states of Western Australia and Queensland and in the Northern Territory that employment is being driven. Those two states and the Territory are driving about half of all employment growth, despite the fact that they make up less than one-third of the labour force. While the mining states have seen the greatest benefit from the mining boom, other states have also benefited. As the Reserve Bank noted in its Statement on monetary policy released this month, the increase in Australia’s terms of trade and:

... the associated increase in national income has benefited all states through such channels as higher dividend payments to shareholders, increased demand by the resource-rich states for goods and services from the other states, and higher government revenues.

Labour market economist Professor Bob Gregory has also argued that the major source of jobs growth is not Work Choices but the strong growth in the economy which, in his view:

... is mainly driven by China, both through cheaper import prices and stronger export demand.

That is a view supported by Treasury secretary Ken Henry, who argued in his March departmental speech to staff:

Much of our recent macroeconomic and fiscal success is based on past reforms, assisted by the terms of trade.

If you ever wanted to see a slap in the face for the Treasurer, that is certainly it—a complete repudiation of the rubbish line he has been running in this House about the impact of Work Choices. Yet the Prime Minister continues to pass off the benefits of the mining boom as benefits from his industrial relations laws, as does the Treasurer. The reality is that much of our current employment growth has been generated directly or indirectly by the mining boom. The government is never far back when it comes to claiming credit for things really associated with the mining boom.

Earlier this month the Treasurer sought to claim that the massive tax windfalls generated by the mining boom were a product of his good economic management. The Treasurer attempted to mount the argument that the benefits of the biggest terms of trade boom this country has seen in half a century were somehow quarantined to company tax paid directly by the mining sector. That is complete economic nonsense and flies in the face of the view expressed by the OECD, his own department and many respected economists. As the OECD noted in its Economic Outlook report of last week:

... those countries that are major commodity producers (particularly Norway, Canada and Australia) have benefited from a tax windfall resulting from high commodity prices.

Another slap in the face for the Treasurer. In making these claims, the Treasurer ignores the boost to income tax collections from stronger employment and wage growth, not just in the mining sector itself, but also in other businesses serving it, like construction. He ignores higher capital gains tax from higher dividends paid to shareholders of mining companies, but also other companies that they do business with. He ignores jobs created in the finance sector, which provides the capital for infrastructure projects, and in the booming residential housing sector and so on. These sorts of claims are a reflection of a government that has been all too content to squander the benefits of the mining boom on things like $1.8 billion of political advertising over its 11 years, rather than investing the profits of the boom in future prosperity.

The government has also argued that its industrial relations laws are necessary reforms that will lift productivity and living standards. Yet the government has not once—I repeat, not once—asked its own key economic policy agency, the Treasury, to model the benefits. Why would that be? Why would you not ask the Treasury to model the benefits? Because you would not get the answers that you wanted. That is why the Treasurer has not asked Treasury to do that modelling.

In February this year the Treasury confirmed yet again that the government had not bothered to ask for an analysis of the government’s industrial relations changes since their introduction. The reality is that there is no available economic evidence that suggests the government’s industrial laws will lift productivity growth and future living standards. What we do know is that, since Work Choices was introduced in March last year, productivity growth has pretty much stalled. In fact, the Treasury is projecting that this financial year productivity growth will be zero. That is yet another economic fact that the Treasurer has chosen to ignore. The Prime Minister has further argued that winding back his industrial relations laws—ironically the very thing he is now purporting to do—would damage the economy, weaken our capacity to compete and destroy jobs. It is a claim that is completely bereft of substance. It is not backed up by any empirical evidence. In fact, it is about as credible as his 11 denials of a taxpayer funded climate change ad campaign in the parliament over the last few days.

I know facts and straight talking are something the Prime Minister is not entirely comfortable with, but here are the facts. Labor’s industrial relations system will take a middle path. It will be underpinned by workplace level collective enterprise bargaining, where employees and employers can directly bargain over employment conditions and productivity improvements. We know that an economy operating under an industrial relations system based on workplace bargaining can generate strong productivity growth. Over the five years after Labor engineered the shift from centralised wage fixation to enterprise bargaining in the 1990s, productivity grew at the rapid pace of 3.2 per cent per year. In the five years after the Prime Minister introduced AWAs, productivity grew by an average of just 2.2 per cent a year. As I have said, since Work Choices was introduced, productivity has barely grown at all.

The government’s industrial relations laws reflect a narrow economic agenda. They are not the pathway to higher productivity. They are not the pathway to higher living standards. They do not build prosperity by undermining security. You do not create wealth by cutting wages and conditions of hardworking Australians. You create wealth by building a strong economy, by investing in the skills of your people, by boosting productivity through modern infrastructure, technology and innovation and by getting the incentives right in the system. These are all important elements of a broad and balanced middle path that will achieve higher employment, productivity and living standards.

The real risk to Australia’s future does not lie in Labor’s middle road in industrial relations; it lies in the complacency of this government over the last decade to invest in the drivers of productivity and growth. But, of course, rather than fronting up to our core economic challenge of turning around our flagging productivity growth, the Treasurer has instead been tying himself in knots with arguments about Labor’s industrial relations policy. The Treasurer has asserted that winding back Work Choices would cause sharp wage rises and fuel inflation. But one of the government’s key claims about Work Choices is that it would lead to higher wages. The Treasurer cannot claim that Work Choices causes higher wages and then complain that winding it back will cause higher wages. That is a nonsense. His central strategy seems to be that, if he shouts loudly enough, if he employs enough theatrics and bombast in the parliament, all these illogical propositions will suddenly become logical.

After last year’s failed leadership bid, the stakes are very high for the Treasurer at the moment. It is not surprising that there is no allegation too desperate, no logic too flawed, no claim too dishonest for the Treasurer to try on. He is really pushing the envelope of credibility right to the edge these days. In fact, almost daily, we see the Treasurer making a new sacrifice of his credibility on the altar of electoral advantage—for example, the Treasurer’s recent claim that Labor will reimpose a centralised wage fixation system. This is patently dishonest and he knows it. Labor will not be going back to centralised wage fixation. After all, it was the Hawke and Keating governments which moved away from nearly a century of centralised, arbitrated wage fixation in this country. It was this move by Labor which stopped the damaging wage spirals of the previous decades, the last of which was on the current Prime Minister’s watch as Treasurer in the Fraser government.

We face big challenges as a nation. There are the competitive challenges associated with the rise of China and India and of addressing climate change, to name a few. We are only going to get the Australian people—employers, employees, small business owners and public institutions—to make these changes and meet these challenges if they perceive that the rules are fair. If people think that the rules are rigged in favour of one side or the other, there will be a backlash and we will lose the support of the community for change. It is a backlash our community cannot afford if we are asking employees to play a part in meeting the challenges ahead. (Time expired)

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