Dave Sharma (NSW, Liberal Party, Shadow Assistant Minister for Competition, Charities and Treasury) Share this | Hansard source

Australia faces immense challenges. We live in a dangerous and more unstable world, our geographic isolation no longer affords us the protection that it once did, and the liberal international trading system which has done so much to underpin Australian prosperity is under threat. Our Defence Force is underfunded and underequipped, and our economy, once the envy of the world, is stagnating.

Australia is a great and prosperous nation, but this is not the result of dumb luck or mere chance. It's something that we have built collectively, through active choices and decisions taken over decades. Our economic success has been built by hard work, by liberal economic policies, by a thriving private sector, by competition and dynamism, by a willingness to embrace new technologies and new methods of working, and by ensuring that effort, enterprise and risk taking are rewarded, not punished. Unless and until such time as we rediscover those principles, unless and until such time as we get our economy out of its rut and get it moving again, our other national challenges will only grow more profound. We will not be able to modernise and enlarge our defence forces, as we so desperately need to do. We will not be able to modernise or upgrade our infrastructure. We will not be able to continue to fund generous social services and health care. We will not be able to care for communities in need, be they the elderly or those with a disability. Turning a blind eye to the profound economic challenges we face, or pretending—as this government has done over the past three years—that we have no agency or ability to address them, is national negligence of the highest order.

In her address, the Governor-General noted the government's newly found interest in productivity and in a more resilient and diversified economy. It's refreshing to hear this Labor government finally acknowledge the scale of economic challenges facing our nation. At least the era of denial seems to be over. If the Labor government are genuine about seeking to address these challenges, then they will find a constructive partner in the Liberal Party. I'm very grateful to have been appointed as the shadow assistant minister for competition, charities and Treasury by the Leader of the Opposition, and I look forward to working with my colleagues across this parliament to scrutinise, hold to account and support, where warranted, this government's economic policy.

But let's be honest about our challenges. Under this Labor government, we've got lower living standards, we've got higher debt, we've got higher taxes, we've got stagnant productivity, and we've got anaemic business investment. The government now say their ambition for rising wages, growth and productivity requires a unified national effort. Well, this damascene conversion is welcome, but Australians are right to ask: where has this ambition been for the past three years? We've seen GDP per capita—the best measure of family, household and individual prosperity—in sustained decline under this government. It's likely that GDP per capita will not recover to 2022 levels until 2030. That is a lost decade. We've had productivity stagnant since Labor came to office. It currently sits at 2016 levels.

We've had this government take $144 billion in new spending decisions since coming to office and, in addition, spend much of the windfall from high commodity prices. In the last budget, we saw government spending growing at six per cent, four times faster than the rate at which the economy is growing. That is unsustainable. And it's reflected in the jobs figures. Four in five jobs created in the past two years have been in the non-market sector, propelled by government spending. This is the only part of the economy that is actually growing, the non-market sector.

Business investment is close to the debts last seen in the middle of the 1990s recession, over three decades ago. The OECD estimates that Australia has a 30 per cent shortfall in investment relative to economic output, making us the third worst-placed country in the OECD on this metric. Our energy costs are now some of the highest in the developed world when they were once amongst the lowest and formed a key plank of our competitive advantage. Energy is an input into every facet of economic activity, and high energy costs effectively act as a tax on production. This deterioration in competitive advantage is a direct result of the flawed energy transition being pursued by this Labor government.

I now want to turn to productivity, which is the topic of many speeches at present and the focus of the government's upcoming economic reform summit in August. As the Productivity Commission has rightly identified, productivity growth has accounted for 80 per cent of national income growth over the past 80 years. That means that productivity is the basis of higher living standards. It underpins economic growth. It's why this generation of Australians is materially better off, with more opportunities and better health than previous generations of Australians. The only way that today's parents can expect their children to have a better standard of life and more opportunity is if we get productivity moving again.

As Ken Henry noted in his recent Press Club address, unless Labor's anaemic productivity is rebooted, this government will need to raise taxes by as much as five per cent of GDP. That is the pathway we are heading down: a low-productivity, high-cost, high-tax, high-spend economy. Ken Henry further noted that the average Australian today is cumulatively half a million dollars worse off because of the failure to match our productivity performance in the last two decades of the 2000s to that of the 1980s and 1990s. But it's important to understand that our productivity performance is not uniform. In the market sector—the private sector, largely—productivity has increased by 35 per cent since 2000. But, in the non-market sector—the sector which is overwhelmingly government owned, operated or funded—productivity has grown by just two per cent in that period. So that's an increase of 35 per cent in the market sector since 2000 and an increase of two per cent in the non-market sector since 2000. Remember, four out of five jobs created in the past two years have been in the non-market sector.

It is this growth in government spending which is driving the creation of non-market sector jobs, crowding out the private sector and hurting our overall national productivity. But, even in the market sector, productivity performance has been patchy. In construction, for instance, which is worth highlighting, labour productivity has gone backwards in past decades. In the past two decades, for instance, labour productivity in dwelling construction has fallen by 33 per cent in terms of the number of houses built. This means it takes more workers more time to build a house than it did two decades ago. We are getting worse at building homes. If you want to know why we have a housing affordability crisis, part of the explanation lies in this figure.

Let's not forget that one of the very first acts of this government when elected in 2022 was to abolish the sole industrial umpire in the sector, the Australian Building and Construction Commission, the ABCC. Since that time, the unchecked, militant, unlawful and intimidatory tactics of the CFMEU and other emboldened construction unions have added an estimated 30 per cent to construction costs in Australia over the last three years. That's a tax that we all pay. It's a tax that our state governments have to pay if they're undertaking major infrastructure projects, but it's also a tax we all pay if we're seeking to renovate our home or buy a new home.

One of the most troubling figures to emerge in recent days—which, I think, spells out the economic malaise we're in—is that, today, more than 50 per cent of Australians rely on government for their main income, whether it's through public sector wages, social security benefits or subsidies. This is because we have seen government spending surge, going from 24 per cent of GDP to 27 per cent of GDP in just a few years. That's a figure that was last seen in the early 1980s, and there is no end in sight. This is strangling the private sector and increasingly turning Australia into a mendicant society, one that depends on government spending for its livelihood.

This government has now announced an Economic Reform Roundtable to take place in the third week of August. This is a welcome recognition, at least, that the Australian economy is in poor health and that we have an urgent need to address its ailments. Hopefully, it means the era of denial is over. But this summit has to be more than a ritualistic or formulaic exercise. It must deliver outcomes.

But you cannot say that the initial signs are promising. We've had the Prime Minister and the Treasurer rule out industrial relations changes. We've had the Prime Minister and the Treasurer effectively rule out any ambitious tax reform. We've had government ministers talk about giving unions a right of veto over the deployment of productive technology in the workplace. We've got trade unions having been given four out of the 24 spots available at this Economic Reform Roundtable.

One of the demands from the ACTU and trade unions—these are the people who will occupy almost 20 per cent of the seats at this roundtable—is to abolish the Productivity Commission. That's right: abolish the professional, independent, expert body that advises the government on how to improve productivity. The union suggestion is that this body should be abolished as a way to somehow improve our productivity. Another of their demands is to give trade unions a veto over the deployment and use of artificial intelligence in the workplace. Their final demand is a shorter working week, not offset by productivity increases, by increased workplace flexibility or by the deployment of new technologies—just a shorter working week.

It doesn't augur well, and it has echoes of the Jobs and Skills Summit in 2022, which was, as business frankly concedes now, a complete stitch-up. It was used as a vehicle by the government to pursue dramatic changes to our industrial relations system, which has taken us well back beyond the era of Paul Keating. It's basically destroyed the system of enterprise bargaining that he helped introduce, and it's destroyed the very notion that workers in an enterprise can negotiate with their employer and trade off flexibility or productivity for material wage gains or better working conditions.

I want to turn briefly to competition, because competition is an area that must be addressed by this roundtable. Australia is being held back in too many sectors by weak competition. A lack of competition in these sectors is hurting not only the workers in those sectors, who are not able to sell their labour more effectively to other bidders, but also consumers. We have welcomed the government's work through the competition taskforce, and we remain ready to support important competition reforms.

But what have we seen on the government's agenda? Well, one of their first acts last week in the parliament was to seek to enshrine penalty rates in law, remove flexibility and make it more difficult for workers to negotiate higher rates of base pay by offsetting penalty rates—something that many workers have pursued over the years. We've also seen ministers talk about giving unions a veto over the deployment of artificial intelligence. And, again, the only area of tax reform the government seems to be pursuing is a novel, untested and, frankly, nightmarish tax on unrealised gains in super accounts, something that has never been done before in Australia, which will almost certainly act not only as a tax on those individuals who have self-managed super funds with balances above the amount but a tax on early-stage investment.

We will hold this government to account for its big talk on productivity and economic growth. Australia is a great and prosperous nation not by chance but by choice. Our economic success has been built on hard work, on economic liberalism and on reward for effort. But weak productivity, a lack of competition and anaemic growth are all major challenges for Australia, and we cannot afford to sit by or think we can regulate or tax our way to prosperity. If we want to remain a high-income, high-opportunity country, we need to get serious about economic reform. That means less red tape, more competition and greater innovation so that we can restore our economic strength and leave the country in better shape for our children.