Ms Anna Burke (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for North Sydney proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The urgent need for consistent economic policy to address Australia's declining economic competitiveness.

I call upon those members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

I thank my colleagues for supporting this matter of public importance and I bid them leave to be able to not listen to the speech if they choose. For the families of Australia there is no more important issue than the state of our economy and where we are heading as a nation. As the Treasurer makes a mockery of his own budget and tells Australians that all is rosy, the alarm bells are ringing about the state of our competiveness.

Under Labor, Australia is becoming more regulated and less competitive. Business now has to deal with not only the carbon tax, a mining tax and a fragile consumer sentiment but also over 21,000 new regulations imposed by the Labor Party in just 5½ years of government. The Treasurer does not need to listen to the opposition about the challenge. He does not even have to listen to his own people about the challenge. Peak business leaders and international organisations have been warning now for years that Australia's slip-shod policymaking, our lacklustre productivity growth and Labor's addiction to taxing and spending have gradually eroded our competitiveness.

Today's 2013 IMD World Competitiveness Yearbook, produced in collaboration with CEDA, the Committee for Economic Development of Australia, was a stern wake-up call for all. The competitiveness result is the worst result for Australia in 17 years. Even for our Treasurer this is a new low. But it gets worse: as Australia's competitiveness declines, obviously the competitiveness of countries we compete against is improving. The rankings show that, in labour productivity growth, Australia has dropped from No. 26 in the world to No. 51—and that is out of 60 surveyed. So we are in the bottom 10. The president of CEDA—and one of your predecessors, Speaker, as a Labor Speaker—Dr Stephen Martin, could not be clearer about this, and he said last night:

The key issue is that we are seeing other countries such as China, Argentina and Chile rapidly improve this measure of economic efficiency.

While they are not at our levels yet, they are catching up at a rapid pace and we need to look at productivity-enhancing reforms now rather than when we fall behind.

The full results of this competitiveness survey make for sobering reading. Overall, Australia has slumped from a peak of fourth place in 2004 to 16th place in 2013.

Of course, the government will blame everything, and they will blame others, but whatever they claim cannot be believed. For example, for the survey of key attractiveness indicators, only eight per cent of respondents found that competency of government was an attractive feature of the Australian economy. What does that say about the other 92 per cent? Only five per cent of respondents thought that Australia's competitive tax regime was an attractive feature. Most worryingly, only 12 per cent of respondents said that Australia's business-friendly environment was an attractive feature of the Australian economy. Turning that around, about 90 per cent of survey respondents believed that a business-friendly environment was not an attractive feature of Australia's economy.

To top it off, we now rank No. 43 out of 60 countries in terms of government decisions—that is, helping to make Australia attractive. So we are No. 43 out of 60 surveyed. I dare say that there is number of individual states, like Syria, which may be behind us, but what on earth! We are at the bottom of the league table. I am not too sure how the Treasurer will manage to blame these results on the terms of trade or a strong Australian dollar. These things that were being surveyed are within his control.

On key indicators of government efficiency, Australia plummeted down the rankings when compared to the last year of the coalition government. On fiscal policy, Australia has slumped from a rank of 18 in 2007 to a rank of 24 in 2013. Yet the government keeps telling us that we are in a better position than everyone else in the world—and we are declining even on the fiscal indicator. Our institutional framework ranking also slumped—from No. 9 in 2007 to No. 29 in 2013. So I do not see how any of this is related to the high Australian dollar or the terms of trade. They are just convenient excuses.

Another comprehensive assessment of global competitiveness is the World Economic Forum Global competitiveness report. It shows that in 2012 Australia ranked No. 20 out of 144 countries, and that ranking has slipped four places over the last two years. Australia achieved a No. 1 ranking, best in the world, in business impact of malaria—although I am not sure that the government can take credit for that! It also achieved a No. 1 ranking in secondary education in enrolment—and I think we should all be proud of that. But that was it. Australia recorded very poor rankings in flexibility of wage determination and hiring and firing practices. We had very poor rankings in taxation and the burden of government regulation.

The top five most problematic factors for doing business were, in order: restrictive labour regulations, inefficient government bureaucracy, tax rates, tax regulations and access to financing. It is no surprise that when they come into this place the government get their facts wrong. Today we heard from the Minister for Employment and Workplace Relations, who said that industrial disputation has fallen under Labor and under their Fair Work system, even though there has been more than a five-fold increase in working days lost since 2007. The number of disputes has almost doubled since 2007. No wonder Bill Shorten is not doing the numbers; he counts backwards! This is a challenge Australia faces. We have ministers who cannot count and ministers who have a very dyslexic view of what the real data would suggest—that is, that we are heading in the wrong direction. And clearly we are, but they believe we are heading in the right direction.

Australia must offer consistency and predictability in policymaking. Jennifer Westacott, Chief Executive of the Business Council, summed it up well when she said:

Our costs are too high, productivity is too low, we haven't invested enough in infrastructure and we're drowning in costly, time consuming regulation.

No wonder, with 21,000 new regulations under Labor since they were elected. She further said:

As a result, our competitiveness is declining in a vastly more competitive world. The reality is the great opportunity before us to lock in living standards that are the envy of the world may just pass us by. Business is the canary in the coalmine and nobody will thank us in 10 years time for not calling it as we see it.

'Business is the canary in the coalmine'—how true that is. Not one single business leader in Australia believes the government are doing a good job. They will not stand anywhere near them. They are running 100 miles away from Labor at the first available opportunity. I have never seen this before in Australian politics. Even in the dying days of the Keating government, even at their worst in the Whitlam government, even in the Fraser government, even in the Howard government, never have I seen not a single business person in Australia prepared to stand alongside the government of the day, yet this is now so blatantly obvious. And why? Because under Labor we have had 39 new or increased taxes, many of them never flagged, many of them never consulted on and many brought about by new legislation that sought consultation after the legislation had been introduced and even, on some occasions, passed. No wonder business does not want to be associated with this mob.

We have retrospective tax legislation that goes to billions and billions of dollars of revenue and we have an incredibly aggressive Taxation Office that, whilst it does its job—as it should, quite properly, in pursuing people who are acting unlawfully—as part of its motivation and determination, seems to go after people so aggressively that the only way for those people to be able to settle with the tax office is to pay 'go away' money to it.

But, even more so, this is a government that sees regulation as a substitute for the free market. It sees regulation as the alternative where it cannot spend more money. We have seen 21,000 new regulations under Labor. How many were abolished? One thousand. The government set up a minister for deregulation. No wonder Lindsay Tanner resigned in this place! He was the first minister for deregulation. He was the one who threw his arms in the air and said: 'We've tried that and it didn't work; let's go for the hills. Let's go for it, lads.' We have seen 21,000 new regulations. That undermines competitiveness. Of course, like everything else, we saw knee-jerk reactions. As the Australian Chamber of Commerce and Industry noted in its response to the budget just 2½ weeks ago:

Business is once again asked to bear the brunt of fiscal ill-discipline. A $200 million increased tax burden next year will add to business costs and erode Australia's productive capacity. These are measures that collectively make the country less competitive.

Jennifer Westacott was absolutely right: business is the canary in the coalmine. Two-and-a-half weeks ago the Australian Chamber of Commerce and Industry warned:

These are measures that collectively make the country less competitive.

What happens? Overnight we had the release of the competitiveness report, which shows that we are falling behind the rest of the world. As the Business Council also stated:

The budget hasn't addressed the lack of confidence in the economy. The government talks about creating jobs but hasn't addressed the fiscal fundamentals to ensure an environment that drives investment and supports competitive businesses. This leaves the country with little or no resilience to ongoing budget pressures and future economic shocks …

If Labor, just for one moment, stopped thinking about the next election and started thinking about good policy that best prepares us for the volatility of the world that is going to occur over the next few years, over the next decades, if they started to inoculate us—insofar as you can—instead of just worrying about taking care of their sectoral mates, instead of standing up here and deliberately misleading the Australian people about what is actually happening in the economy, then they might be doing a bit better out there. But they are not. Australians do not trust the government. Australians do not trust the Labor Party.

Exhibit A, the mining tax, comes out of left field. There were five different versions, a heap of different revenue projections, but the Labor Party spent the money and more, even legislated tax cuts and benefit increases and then, from budget to budget, changed its mind and pulled the rug out from underneath everyday Australians.

The carbon tax—what a cracker that has been! We had those incredible assumptions in the budget papers, saying that, amazingly, even though the market price for carbon is going down, the revenue to the government is going to keep going up. In the budget they have a market price that has absolutely nothing to do with the market. What a cracker!

But, of course, there is always more with Labor, whether it be the mining tax or the carbon tax—it keeps going. There are 39 new or increased taxes. I suppose the managing director of Chevron Australia said it all. This is a person who is investing billions into Australia. He said that the high-cost environment erodes Australia's international competitiveness and it diminishes investor confidence and that, as a well-documented example, the recent introduction of the carbon tax has posed another additional cost not borne by overseas competitors. As these costs add up they represent an increasing barrier to investment. He said:

Most industry and political observers suspect further tax imposts … This should worry anyone who is interested in Australia securing long-term investment, jobs and economic development.

Well done, Labor. That is Chevron, one of the biggest companies in the world, investing billions of dollars in Australia, and it is yet another of the many canaries in the coalmine saying that if we do not get this right we will fall behind the rest of the world and our living standards will fall. But that is what Labor does. It is not incompetence, it is not dysfunction, it is basically the Labor way. They do not know how to govern.

Mike Kelly (Eden-Monaro, Australian Labor Party, Minister for Defence Materiel) Share this | Link to this | Hansard source

Gee, how disappointing was that. I saw this question today on the Notice Paper and I thought, notwithstanding the second part of it not recognising the actual economic challenges and what will achieve competitiveness in this economy, that the first part seemed to indicate to me that maybe, just maybe, Mr Eleventy Billion, the shadow Treasurer, may have finally identified that we need to have consistency through this electoral period in terms of the sovereign risk that has been presented by the coalition on the key platforms that business are keeping their eye on. Let us examine the Clean Energy Future package that businesses have made their adjustments on and that we have done all the hard yards of getting in place. There is $19 billion sitting out there waiting to be deployed in investment but, because of the uncertainty that the coalition have created, that money has been held up. Much more could have been achieved under this package if we had had the sort of unity that the member for Wentworth demonstrated in the national interest, but he was undermined and sabotaged in the execution of that. That is the sort of consistency I was looking for.

Instead, what did I see? I saw the sort of consistency that leads us down the rearguard route to shackles on our economy, shackles on our imagination, retrograde steps on the economy—the sort of stuff we saw during the Howard years, in fact. Just to reflect on how we got here, in those 12 Howard years the coalition sought to address issues of fiscal management by selling off the farm. Whatever government asset there was they wanted to sell it, and that is presenting grave concerns for us now as we see the same sort of framework actions being taken to look at things like the selling-off of the Snowy Hydro scheme, which the shadow Treasurer flagged was in their sights.

The mining boom delivered the rivers of gold that also greatly assisted them and they were fortunate in that. But in those times economic management suggests that you need to also manage your surplus situation carefully. It requires investment in things like skills, innovation and infrastructure and education. We did not see that during those Howard years. We saw in those years, the Rip Van Winkle years of sitting back fat, dumb and happy, a low-quality spend. Instead of adding value to the economy, instead of diversifying it, instead of positioning us for inevitable downturns in economic situations, inevitable coming off of commodity prices, what did they do? They set us up for 10 interest rate rises in a row because of that poor fiscal management and low-quality spend. That was the RBA telling the country, telling the coalition, 'You weren't getting it right.' So those Rip Van Winkle years saw a decline in skills, a decline in investment in infrastructure, a decline in innovation.

We were determined to address those issues but we were presented with massive challenges. There was the worst financial crisis in international history since the Great Depression. We had the worst fires and the worst floods in our history. We were presented with the collapse of ABC Learning, with swine flu and equine flu, and we inherited two wars from the coalition, one of which was completely unnecessary and saw the waste of billions of dollars. In my own portfolio of Defence materiel we inherited some other wasteful measures like the $1.4 billion that was wasted on the Seaspray helicopter which never gave us one minute of flying time, or the $40 million that was wasted on the landing craft that did not fit any vessel we had or any vessel we were going to acquire. We addressed all that, put projects on the list of projects of concern and managed the implementation of new procurement processes.

We also managed all of these other massive economic challenges at the same time. For the first time in the nation's history we navigated an international recession without going into recession ourselves. No coalition government or conservative government had ever managed that before in our history. At the same time we preserved 200,000 jobs. During our period in office we have created something like 960,000 jobs in this context of uncertain economic times and challenging situations with the high state of the dollar. We have managed that at the same time as having an inflation rate of only 2.5 per cent, interest rates now at 2.75 per cent and growth of over three per cent. We have seen the situation of unemployment at only 5.5 per cent. No coalition government has ever achieved an alignment of macroeconomic indicators like that. No coalition government has ever achieved the country being at a AAA credit rating of the three major agencies—Standard & Poor's, Moody's and Fitch—never achieved in our history. This government did that, and all of the major economic commentators, all of the major economic organisations, have universally praised this government for its fiscal prudence, its fiscal policy and its achievements in the face of the international circumstances we have faced. All of them have praised our management of the situation.

It is not about simple consistency here, consistency following the same path as the coalition does of wanting to always rely on digging things up and selling them and let someone else value-add them, and then suffering the consequences when there is the inevitable mining downturn. That sort of consistency is not what the country needs. The country needs effective economic management, agile management, responsive management—management that addresses the challenges that are staring us in the face of the competition we face in this region and the world. That competition cannot be faced in the way the coalition want to do it. I mean, it could be: you could look at the sorts of lazy approaches they take to productivity, for example. In the coalition, you always deal with workers as if they were widgets—just some component of the production process. You make them suffer and make them pay the price of delivering productivity by always looking to squeeze more work out of them and cut their wages. That is the coalition's approach: to push down the labour market and engage in a race to the bottom with China and India on wages.

That is not the Labor way. The Labor way is to seek productivity gains in innovation, in sound business management and in a team approach in an enterprise with the workers and management working together to improve work practices and design new processes and new products. That is the Labor way. We want to grow the pie, as the former minister for resources said, not reduce the pie that the low- and middle-income earners would otherwise have to eat. And it is working. Certainly you see stories emerge of job losses, but this economy is in transformation. No-one is reporting, in those major journals of record, the job growth that is occurring in those sectors where we need it. That is why the investment in a clean energy future was so important, and I will come back to that.

Obviously we have seen a theme develop in the coalition's commentary about debt, and obviously they want to ignore, again, the facts of the world, the economic circumstances and the historical situation of management of debt and surplus. They live in a parallel universe where these sorts of facts do not exist. Well, this is a graph of the history of Australian government public debt. Over that time, you will see, we are at one of the lowest points of the apexes in those debt experiences.

Bruce Scott (Maranoa, Deputy-Speaker) Share this | Link to this | Hansard source

Order! The minister will desist from using props.

Mike Kelly (Eden-Monaro, Australian Labor Party, Minister for Defence Materiel) Share this | Link to this | Hansard source

Some of them, of course, have been much higher. We experienced a debt-to-GDP ratio of close to 130 per cent during the Second World War, and during economic emergencies and recessions you always respond with suitable economic strategies to make sure that you keep growth going, promote growth or try to restore growth. The coalition's approach would be to introduce savage austerity, which would send this country into recession without question. Instead, the government has created and navigated a course of prudent, responsible fiscal management that gets the balance right. In other words, we do not seek to come back to surplus at a rate that would send this country into a recession. We create a steady course back to surplus but maintain certain levels of stimulus that are necessary to keep the economy ticking over in a growth track that will then restore the sorts of revenue that the budget has been missing these last few years. That lack of revenue has, in fact, been the sole source of the debt, because with every initiative the government has introduced we have introduced offsetting savings to fund it. So the entire story of the debt, in fact, relates to that revenue situation.

I would also like to address the fact that the coalition has no plan for the future—no plan whatsoever to meet those massive challenges out there in a dynamic region that we cannot afford to fall behind. Where are the key investments that need to occur there? Let us start with the NBN. A Korean company has invested in a $200 million project in my region, a timber precinct in Bombala. This South Korean company is coming into our region and creating jobs and exciting new opportunities. The first thing it said to us was, 'We won't do that unless you confirm you're going ahead with the NBN.' Why? Because South Korean companies are already out there, linked with high-speed broadband and fibre throughout their economy. The company said it would not set the precinct up without the NBN, because it operates its business in terms of the state-of-the-art machinery that is needed in industry these days to avoid the impacts of labour and dollar costs. That plant operates on remote diagnostics and engineering solutions connected to the company's global operations. That is the sort of opportunity that exists for rural and regional Australia out of the NBN rollout, notwithstanding all of the other massive benefits in education and health as well. There is a company in Cooma—a bold new venture by a young woman named Jane Cay, who has set up a company called Birdsnest, which is now one of Australia's largest online companies. It has 90 employees in the town of Cooma, a great boost for a regional town. Those sorts of opportunities can be amplified, magnified and spread around this country by a proper investment in the NBN.

What do the coalition want to do? They want to buy the old copper network from Telstra, including, as we heard today, some of those pits and pipes that contain asbestos. So they have gone down the privatisation road but they want to go back to the situation where you get all of the downside and none of the upside. How crazy is that—a copper system that is breaking down, that would cost them $1 billion a year to try and keep on life support and that Telstra said in 2003 could not last another 15 years. They want to try and keep it going and shackle us to a capacity that will deny our people with imagination—our entrepreneurs—the opportunity to innovate and take this country ahead.

In addition to that, the ADSL system, as we know now, absorbs something like two per cent of the nation's power. The VDSL system they are proposing would require something like four per cent of the nation's power to pump that power through the copper system and create the 60,000 cabinets that there would have to be on street corners. Instead of achieving the energy efficiencies that we are all driving towards, that would send us backwards massively. I have seen estimates that you might have to build something like three to five more power stations to power this VDSL system. What an insane approach, when we know that fibre to the node achieves massive energy savings.

The Clean Energy Future initiative also is delivering fantastic results. Of course, there are the lower emissions, as we have seen—8.3 per cent in the electricity sector. We are seeing the 30 per cent rise in renewable energy. Coal-fired power is now dropping down from 80 to 75 per cent, which in itself is a great outcome just for the health burden on our economy. I have seen it estimated that fossil fuels generate about $6 billion worth of health costs to this economy. So, through the renewable energy package, we are seeing the transformation to the new economy—an investment in energy security for the future and ultimately cheaper power, because renewable energy will ultimately deliver that.

It is certainly creating a base for start-up companies all over Australia as well. In my own region, there is a wonderful company with a great idea—a local invention by Joe Ruiz-Avila, who created a system that he took to Pambula Engineering. Based on the incentive schemes and support provided by the Clean Energy Future package, they are now exporting their product all over the world, expanding rapidly. They are now going to set up their international research and development hub in Pambula.

These are great results that are occurring in my own region from that package. The most important element to that is the Clean Energy Finance Corporation. How the opposition cannot see the importance of this as a venture capital base is beyond me. It is a party that is supposed to be supportive of new industry, new business, small business, but all they want to do is choke off the availability of venture capital, which we have had a marked absence of in this country.

We have also, of course, introduced Venture Australia and our innovation precincts. Within my own portfolio of Defence, there is a new $120 million package for our Priority Industry Capability Development Fund and our Defence Innovation Realisation Fund. Our investment in the defence industry will generate great investments in industry and manufacturing and great leveraging opportunities across the board for us.

These are great opportunities—great potential that is being realised under our very noses that this coalition would take away from us. They would take away the investment in skills—over $8 billion that has now seen national records of apprenticeships and trainees at half a million and extensions of funding to vocational training through the expansion of the HECS concept. These are great initiatives that arm our kids with the skills they will need for the future.

We have seen the coalition ignore those things but impose their great big new tax in their plan for the future with this paid parental leave monstrosity, which half of their party room rejects. They pose a real risk of consistency down the wrong track—a lack of vision, imagination and courage. We stand for a bright future for Australia that leads and stands in the winner's circle. The contrast could not be clearer; the choice could not be simpler.

Yvette D'Ath (Petrie, Australian Labor Party, Parliamentary Secretary for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

I seek leave of the House to adjourn the MPI discussion briefly to allow the referral of a bill to the Federation Chamber.

Leave granted.