Tuesday, 19 June 2007
Questions without Notice
My question again is to the Prime Minister. I refer to the Prime Minister’s answer to the last question when he quoted the Reserve Bank Governor. I also refer the Prime Minister to this statement by Glenn Stevens, the bank governor:
… over short periods productivity is not an easy thing to measure … so I would be wary of drawing strong conclusions based on [a] snapshot. … there are quite careful measures of productivity which can be made over longer periods.
I also refer to Mr Stevens’s statement that these measures show ‘quite a slowdown’. Prime Minister, is the Reserve Bank Governor wrong, just like you have just said the BCA is wrong?
The person who is wrong is the Leader of the Opposition; it is not the Reserve Bank Governor. The Leader of the Opposition, in a flash of candour, says that you cannot extrapolate from a short period, but that is exactly what the opposition has done. The productivity growth in the Australian economy for the year 2005-06 reflected the long-term average of 2.3 per cent. It was only in the early part of 2006-07 that there was a temporary fall in productivity. The explanation for that is best contained in some testimony given to the Senate estimates in February this year by Treasury officials. I remind the Leader of the Opposition, in reading out the Treasury testimony, that fundamentally productivity is output per worker. Therefore, you have to measure levels of employment with levels of investment and levels of output. This is the key to this whole debate. This is what the Treasury had to say to the Senate in February 2007:
… the level of productivity in the mining sector has been falling through this mining boom. We have seen massive increases in employment in the mining sector, but so far increases in output are relatively muted compared to the employment growth.
… … …
So part of the slowdown in productivity that we have seen in the last several years is in fact due to that shock. The economy is adjusting, and you would expect over time that that shock would unwind and we would run at a higher rate of productivity.
What has happened is that the Leader of the Opposition has lighted on a particularly short period, explained by the very phenomenon to which the Treasury officials refer—
plus the impact of the drought. Out of that, in his ignorance, he has tried to extrapolate a long-term decline in productivity. He is wrong to do that. He has deceived the Australian people in trying to do that. It has taken a leaked document from his own advisers to expose him for the fraud that he is on this subject.