Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

When we grieve in this parliament, we grieve about such matters as natural disasters, the loss of family and friends, the loss of parliamentarians and other tragedies—although some may suggest that the loss of parliamentarians is rarely a tragedy. Today I want to do something unusual and grieve about the lack of productivity growth in this country. Before those listening come to the conclusion that this is a very arcane debate, let me point out that today’s productivity growth is tomorrow’s prosperity.

Productivity growth is not just about the mighty dollar, though putting more income into people’s pockets certainly does help. We have just heard the previous speaker, the member for Cook, talking about the fight against global poverty. We would all like to join in helping to make poverty history. That is facilitated by growing incomes so that we might have more to share with the rest of the world, particularly with poor countries. Productivity growth, in generating extra income for Australia, also allows us to ensure that young people have the best possible start in life and that there is a genuine sharing of opportunity around this country so that opportunity, through education, is not confined simply to the sons and daughters of the privileged but also extended to the sons and daughters of the disadvantaged in our great country. Productivity growth allows us to protect the environment, to clean up damage that might have been done by previous generations and to ensure that future damage is avoided. Productivity growth is important to Australia’s future.

Let me tell you a story about productivity growth in this country. As a result of the economic reform program implemented by former prime ministers Bob Hawke and Paul Keating, productivity growth during the 1990s surpassed that of almost every country in the developed world, including the United States. To be precise, productivity growth averaged 2.05 per cent per annum, which was a record-breaking decade for Australia, built firmly on the foundations of that comprehensive and ambitious reform program. But, by the turn of the century, Australia’s productivity growth had already peaked. The Reserve Bank Governor observed in October this year:

The various measures of GDP growth per hour worked suggest there has been approximately zero growth in productivity since the end of 2003.

So there was a record-breaking decade built on Labor reforms, then the productivity miracle petered out under the coalition; it peaked around the year 2000 and by 2003 it was approximately zero, according to the Reserve Bank. On 1 November, in the parliament, the Treasurer got up, armed with statistics produced by the ABS to say, ‘Everything’s fine; we’re going really well on productivity growth.’ In fact, he said productivity growth ‘is in line with, or marginally in front of, the last productivity cycle’. So we have the Treasurer saying, ‘Everything’s fine; it’s going as strongly as it was as a result of the reforms of the previous Labor government.’

But a closer look at those figures reveals the average annual growth rate of labour productivity over the last two years has been just 0.9 per cent, compared with the 2.05 per cent achieved as a result of the Labor reforms. The Treasurer did not reveal that the same ABS publication said:

Growth in Multifactor productivity (MFP) was flat in the market sector in 2005-06.

Multifactor productivity is different from labour productivity because it measures the efficiency gains from reform and from technological change and innovation. And the truth, as revealed by the ABS, is that that was flat in 2005-06.

The Intergenerational report, upon which the government relies so heavily and which was released in 2002, assumed that productivity growth would slip back from that more than two per cent per annum achieved by the previous Labor government to 1.75 per cent, which is Australia’s 30-year mediocre long-term average. But productivity has not slipped back from 2.05 per cent to 1.75 per cent. It is approximately zero, or perhaps on some measures a little bit higher than that—but way short of the 1.75 per cent. What is significant about that figure of 1.75 per cent? The Intergenerational report projections are that, based on productivity growth of 1.75 per cent and the ageing of the population, Australia, from the decade beginning in 2010, will have the slowest rate of growth in income per person since the decade of the Great Depression. So slow productivity growth means slow growth in prosperity—the slowest since the decade of the Great Depression. But we have not been doing anywhere near 1.75 per cent in the last few years under this government. At best, in the last couple of years we have been doing 0.9 per cent. And I will predict here and now in the parliament: when the latest productivity growth figures come out with the national accounts they will show negative productivity growth in the most recent quarter. How do we know that? Because employment has been growing—and growing quite strongly—but there has been very little improvement in productivity itself.

The Treasurer boasted that the Work Choices legislation would boost productivity growth. This is one of the great claims of the Prime Minister and Treasurer—that Work Choices will boost productivity growth. But measured productivity growth in the three months following the introduction of the Work Choices legislation was not 1.75 per cent. It was not even zero. It was minus 0.7 per cent. If we add to that negative figure, which may be revised in the current publication, another negative figure, that would be an enormous indictment on this government in its major claim for the Work Choices legislation—that is, in the six months following the enactment of the Work Choices legislation, productivity growth being negative: a disaster for Australia’s economic and social progress.

The Treasurer says that improved labour relations will boost labour productivity. On that he is correct. But Work Choices does not improve labour relations; it sets employer against employee and tips the bargaining table very heavily in favour of the employer. Is it any wonder that the most recent wages growth figures suggest that wages growth for the low paid has actually been negative—that is, the wages have fallen for the low paid in the period following the introduction of the Work Choices legislation?

I draw people’s attention to a report by John Edwards for the Lowy Institute called Quiet boom: how the long economic upswing is changing Australia and its place in the world. Dr Edwards observes that, in the financial year 2004-05, labour productivity actually fell—the first decline in 20 years. So the government was talking about this miracle productivity growth, all of it built on the reforms of the Hawke and Keating governments, and is now presiding over the first fall in productivity growth in 20 years. Where are members of the government? Why don’t they come into the parliament and concede that they have not implemented the necessary reforms to guarantee ongoing productivity growth in this country and therefore ongoing prosperity and opportunity for all Australians, particularly disadvantaged Australians?

We look around and ask: ‘What could be the new reform program that will secure the next round of productivity growth in this country?’ Against the background that the Hawke and Keating governments created the open competitive economy, having opened the door to competition from abroad and home, you cannot open that same door twice. So we cannot do that trick again. So what is the fundamental basis of a future round of productivity growth in this country? The answer is education. Education is the paramount source of productivity growth and the wealth of nations in the 21st century.

But this government’s performance on education is absolutely abysmal. The Prime Minister is on record saying: ‘I don’t know why people are all obsessed with going to university. They should leave school early.’ But the fact is that, as revealed in the Dusseldorf publication released just the other day, the situation of early school leavers is absolutely parlous. Twenty per cent of school leavers who had completed year 12 were not fully engaged in study or work compared with 40 per cent of year 11 completers and nearly 50 per cent of year 10 or below completers. The situation has deteriorated. The number of undergraduate Australian students coming into our universities has flatlined over the last 10 years. This government does not care about education. As a consequence, it is squandering the opportunity that has been given to it by the resources boom, and it should stand condemned for its negligence. (Time expired)