Greg Combet (Charlton, Australian Labor Party, Parliamentary Secretary for Defence Procurement) Share this | Hansard source

I would like to address the appropriation bills in the context of some of the government’s programs for the country and also my own electorate of Charlton. One of the central challenges for any government is the management of the economy and utilisation of the country’s economic capacity for the social progress of its people. That is the Labor way. We are a forward-looking party that looks, in particular, to use economic progress to achieve social dividends. We are a party keen to make progress on both economic and social fronts to make a better and more just society.

In contrast, since entering this place, I have been struck by the somewhat backward-looking nature of the opposition. They appear unwilling to turn their minds to the future economic and social challenges we will face, intent perhaps on defending a somewhat flawed record on economic management. I come to this place keen to be involved in facing this challenge for the future, which I see as essential not only for our present generation but for future generations.

The bills I am addressing today outline part of the government’s plans for the key economic challenges facing the nation. The bills also address another area of my interest, given my role as the Parliamentary Secretary for Defence Procurement—namely, defence matters. I would also like to give an update today on progress that has been made on specific commitments relevant to my electorate of Charlton.

Firstly, though, I turn to the economic challenges that the country currently faces. As I see it, I think there are two key challenges that the government is facing on the economic front. They are the war on inflation, which has resulted from a previous government’s neglect of inflationary pressures that have been building for some time, and the need for strong, sustainable and responsible economic growth in an uncertain international economic environment. These important goals are not always complementary in terms of the policy responses they may evoke. But what is required is a thoughtful and considered approach—and this is not what we received from the previous government.

Instead, their negligent management of the economy has left us with a situation where we have had 11 successive interest rate rises and we are currently experiencing a 16-year high in the underlying inflation rate. Inflationary pressures are still high, as we know. The minutes of the Reserve Bank meeting in February, which were released yesterday, reveal just how much that is playing on the mind of the RBA board. It debated whether the change in the cash rate should be an increase of 25 or 50 basis points, given its concerns. The bank is also predicting that inflation will remain as high as 3½ per cent until around the middle of 2010.

In recognition of the significant challenge that we now face, the new government has released a five-point plan to combat inflation, which also allows for investment in the future growth of the economy. It is a plan that encapsulates both macro- and micro-economic initiatives aimed at addressing demand and supply side inflationary pressures. Firstly, the government will exercise fiscal restraint, as we have heard, to take the pressure off demand. As outlined by the Treasurer and the finance minister, the government will run a strong budget surplus of at least 1.5 per cent of GDP.

Secondly, in the period ahead, the government will be examining all options to provide real incentive to encourage private savings—and that is very important in reducing inflationary pressure. Thirdly, the government will be unfolding our plan for tackling chronic skill shortages in the country—and I will say a little more about that in a moment. Fourthly, the government will provide national leadership to tackle infrastructure bottlenecks. Fifthly, the government will provide practical ways of helping people to re-enter the workforce and to remove disincentives to working—in other words, to lift workforce participation.

For the longer term, the government is determined to deal with the chronic investment deficits on the capacity side of the economy in skills and in infrastructure. As can be seen by the initiatives contained within the appropriation bills, this is more than just an abstract commitment; it is a concrete guide to the way the government will be addressing the challenges we face. But one of the first components and important elements of the bills addresses the need for fiscal responsibility and constraint. It includes the first stage of the government’s Expenditure Review Committee processes. The ERC is essentially fulfilling the government’s commitment to identify reductions, savings and offsets from the previous government’s spending program so that such reductions, savings and offsets may be redirected to better and more effective program priorities. Already the government has been able to identify over $642 million of taxpayers’ money that was being spent unnecessarily by the previous government, generally for its own political purposes.

I want to talk just briefly about one of the types of savings we are talking about, which has been of some interest to me. Within the bills is contained a $30 million saving in 2007-08 due to administrative efficiencies arising from the transition from Australian workplace agreements to collective enterprise agreements and statutory individual contracts. This is just one of the direct costs of the former Howard government’s extreme industrial relations laws and it is evidence too that the system of AWAs was complex and placed excessive burdens and demands on employers and employees. In contrast, Labor’s approach to workplace relations will be far more flexible and, of course, far more fair for employees—and I will be speaking on the government’s transitional Workplace Relations Bill later today. The government’s ERC in a very short time has been able to explode the myth that the previous government was somehow fiscally prudent; of course it was not. There were multiple cases of profligate and pork-barrelling expenditures exacted by the former government that have caused harm to the economy. The fact is that, on economic management, the former government had some serious failures. It was irresponsible and it did contribute to rising inflationary pressures through spending but also because of its failure to address the capacity constraints that are confronting our economy. Notwithstanding a 50 per cent improvement in the terms of trade—a historical increase in the terms of trade for this country and a perhaps once in a generation opportunity to invest in the nation’s future and to address supply-side constraints—the former Howard government failed.

One important area in which it did fail was in relation to skills. The appropriation bills will help to rectify that failure. To give just one example of the inflationary pressure generated by the skills shortages—and the previous government’s failure to address them—I will refer to the labour market in the defence industry, where anecdotal evidence is now demonstrating that wage pressures due to skills shortages are generating potential wage increases in the order of approximately eight to 12 per cent at the higher skill levels. These of course will add to costs in the defence acquisition and sustainment processes.

So we have demand rising faster than supply. There are two ways to rectify this: firstly, we can increase inputs, capital and labour, to increase output to more approximate demand; and, secondly, we can become more efficient at using our inputs so that we produce more with the same inputs—in other words, increase productivity. Increasing skills formation achieves both of these goals. Regular surveys identified the availability of skilled employees as the No. 1 constraint on business investment. According to the previous government’s own estimates, Australia faces a shortage of more than 200,000 skilled workers over the next five years. By increasing skills formation, we will allow businesses to produce more, thereby relieving inflationary pressure. Secondly, by increasing the skills base of the country, we will increase Australia’s human capital, and this will encourage productivity growth—increasing our international competitiveness and allowing us to produce more with the same quantity of inputs, thereby placing downward pressure on the inflation rate.

I am pleased to say that the appropriation bills that are before the House contain a number of measures to tackle Australia’s current skills deficit. Included in these is the establishment of the National Secondary School Computer Fund. The Australian government has committed $900 million for the National Secondary School Computer Fund, which will be delivered over the four years 2008-2011. The fund will allow all Australian secondary schools to apply for grants of up to $1 million, dependent on enrolment and the need to assist them to provide for new or upgraded information and communications technology for their students in years 9 to 12. All schools providing secondary education will benefit from the fund. Funding can be used to purchase computers, data projectors, interactive whiteboards and other information communications technology equipment and support.

The first $100 million of the fund will be directed to schools with the greatest need from June 2008. These schools will be identified by a preliminary survey to identify the number of computers currently in secondary schools. The survey results will facilitate the commencement of the application process for these schools in early March 2008, with applications closing in April 2008. I am encouraging all of the local secondary schools in my electorate to apply, and I know the Deputy Prime Minister has also written to them. That is an extremely important program in the electorate of Charlton, as I am sure it is in many other electorates around the country. Many schools have few computers, poor access to the internet and little capacity for students to learn all that they possibly can from information and communications technology.

Another program designed to address the skills deficit is the government’s Skilling Australia for the Future Program, which is to start in April 2008. This program will deliver 20,000 vocational education and training places aimed at people currently outside of the workforce, thus lifting our participation rate. As members of my electorate and the Australian public generally well know, the previous government failed completely when it came to vocational education. The funding of 20,000 vocational education and training places by the new government will begin to address this problem, but it is just the start. Our commitment will extend past these initial places to cover 450,000 over the next four years. This will significantly help to address one of the capacity constraints that we are currently facing and that the previous government failed to fix.

Developing additional economic, social and innovation infrastructure is also essential if we are to improve the performance of the economy and our quality of life. It will relieve capacity constraints further, increase productivity and put downward pressure on inflation. We are seeing the impact of infrastructure bottlenecks—whether it is clogged ports preventing resource exports or congested roads preventing efficient transportation of goods and services. The arteries of the national economy are clogging up and the economy is feeling some of the strain.

On the other hand, we have all witnessed the economic vitality engendered by well-planned infrastructure developments. The commitment of the Curtin and the Chifley governments to postwar reconstruction and infrastructure development was a significant factor in the postwar boom. Looking at overseas examples, in a more contemporary environment, massive infrastructure investment, most notably in knowledge infrastructure, helped the Republic of Ireland, for example, and Singapore to develop some of the most advanced economies now in the world. The historical and international examples demonstrate the economic benefits of coordinated infrastructure investment—something which the former Howard government did not believe in.

The bills before us also provide funding for the establishment of Infrastructure Australia, in recognition that there is a great need in this country for a nationally coordinated approach to further infrastructure reform. I have been a long-time advocate for such an approach—and I believe it is critical if we are to enhance Australia’s economic performance and raise national productivity. Infrastructure Australia will help drive investment where it is needed most, ensuring that it fuels the nation’s productivity capacity and not inflation. It will also allow for infrastructure decisions to be made on the basis of need, not on the basis of pork-barrelling marginal seats.

Infrastructure Australia will be charged with identifying and coordinating the provision of national infrastructure. It will also help develop a strategic approach to meet infrastructure demands, including a stocktake of the adequacy and capacity of infrastructure, effective management of the infrastructure and factors influencing user demand, a comprehensive planning framework which identifies further demands and challenges, a regulatory and pricing framework which encourages increasingly efficient use of infrastructure and timely investment in new and updated infrastructure where that is the best option. The members in my electorate clearly understand the need for a coordinated and sensible approach to infrastructure planning, and I am glad to be able to report to them that the government is working hard to implement such an approach.

Another feature of the bills concerns the establishment of the Enterprise Connect program. I am very pleased about this commitment. This model, which draws on the best features of QMI Solutions and the manufacturing advisory service, will become an essential tool for innovative businesses. Businesses will be able to access Enterprise Connect centres to find and adapt the latest research and technology, get help in solving identified problems, work out how new processes can help their business and cut through red tape to identify sources of government support for their activity.

Given my commitment to the manufacturing industry over a long period of time and the importance of that industry to the Hunter region, I am delighted that $100 million of the funding will be devoted to a manufacturing network. This will increase the productive performance of manufacturers, thereby increasing our global competitiveness. I am also very pleased about the $20 million commitment to the establishment of the Clean Energy Enterprise Connect Centre. The centre will help make Australia’s clean energy small- and medium-sized enterprises export ready, with benchmarking of services, practical assistance and access to prototyping and testing facilities. As most of the clean energy technologies will involve significant amounts for manufacturing—for example in photovoltaic cells, wind turbines et cetera—this is an extremely important initiative.

While I might be a little biased, I can think of no better location for this centre than the Hunter Valley. It is an area that has led the country in understanding the challenges and has embraced clean energy technology. It is an area that is suffering from the downturn in traditional heavy industries. It is home to the CSIRO Energy Centre, which sets a new benchmark in ecologically sustainable design by showcasing energy generation initiatives.

GP superclinics are also a feature of the appropriation bills, and I have already outlined a number of things about that elsewhere. This is an extremely important component of the appropriation bills from the standpoint of my electorate of Charlton. There is a real need in my electorate to improve the ratio of GPs to population, which currently runs at one to 2,000. It is extremely difficult for many people to get to see a doctor. Once completed, a GP superclinic in my region is expected to include an after-hours service, a chronic disease management service and a range of allied health services, including physiotherapy and podiatry. I am looking forward to working with other health agencies and representatives in the electorate to get the GP superclinic established in a location identified as soon as possible.

I wish to turn to some of the defence measures contained within the appropriation bills. The bills provide for stage 2 of the Enhanced Land Force initiative. The ELF initiative will see the establishment of two additional infantry battle groups, each comprising an infantry battalion and supporting command and control, combat support and combat service support capabilities. The funding allocated in these bills is for phase 2 of the Enhanced Land Force initiative, which raises the second battalion. This second battalion will be raised by reraising 8/9RAR as the second motorised infantry battalion in south-east Queensland with operational capability by 2010. In my time as Parliamentary Secretary for Defence Procurement, I have gained an appreciation of the increasing importance of our Army in the future strategic environment. So I am very pleased to support this aspect of the bill.

We also, in these bills, provide for two measures that will help our troops currently serving overseas. For our troops serving in Iraq and Afghanistan the government is providing nearly $70 million to enhance the protective capability of the Bushmaster infantry mobility vehicles that are used to support our operations there. We are also providing $12.4 million to enhance the surveillance capability of the ADF in support of our operations in Iraq. I am very pleased that these are contained in the appropriation bills and to indicate my support for them.

I conclude by saying I am very pleased to see the wide range of initiatives contained within these bills. I am also very pleased about the number of different programs that will benefit the people of my electorate of Charlton. I commend the bills to the House.

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