Ms GILLARD (4:30 PM) —In speaking to the motion moved by the member for Boothby, it is important that the House notes that the motion tells part but by no means all of the story about the Australian economy. In fact, the motion misses out three of the most important parts of the story: the real story about the role of information and communications technology in the Australian economy; the truth about productivity; and the way in which the GST has mugged the Australian economy. In addressing this motion, I intend to deal with each of these matters.

In relation to information and communications technology, the member for Boothby has relied on statistics collated in an OECD report entitled OECD Information Technology Outlook, and members heard him refer to that report during his contribution. Despite its being dated 2000, it should be noted that most of the statistics in that report are in fact from 1997. However, it is not the age of the statistics that is the key question. The real issue is the failure of the member for Boothby to detail the statistics which give the rest of the story. These statistics were helpfully collated by the Business Council of Australia in its report from February this year dealing with e-business. That report concluded that employment in the information and communications technology sector, the ICT sector, in Australia is, at 2.9 per cent of the labour force, amongst the lowest in the OECD. One has to wonder, as the House sits this week, how low that figure will go in view of the recent spectacular failure of One.Tel. The BCA also concludes that the value which ICT adds to total business, at 4.1 per cent, is the lowest of the 18 countries where data is available. Also, it concludes that Australia's ICT exports are a tiny 4.4 per cent of total exports, with Australia being ahead of only New Zealand and Norway.

Perhaps more disturbing than coming second to New Zealand is the fact that these exports have shrunk by one-third in the last six years, leading to an increasingly negative technology trade balance. The report concludes that Australia is lagging in broadband infrastructure, with only one per cent of Australian households having purchased broadband Internet access, because it is too expensive. It says that the business expenditure on ICT research and development is only 4.9 per cent of the ICT value add, that growth in Australian patents is among the slowest in the world and that there is a chronic shortage of ICT skills, with half of Australia's ICT businesses forced to search for candidates overseas. This is the real picture—a picture of stagnation.

It is interesting indeed that the member for Boothby has chosen to refer to the penetration of cellular phones into the Australian community, because it is the clearest example of the problem Australia faces with ICT. We are among the world's highest users of mobile phones but we do not make them. We are not home to the prestige brands of Nokia, Ericcson and Motorola. This is the problem in stark relief: we are good users of technology but we are not innovators or manufacturers.

In its report, the BCA also concluded that, unlike the US, Australian productivity improvements are not driven by technology. Australian small enterprises, which represent half the nation's output, are dangerously behind in ICT. This brings me to the second important issue dealt with in this motion, which requires a clear answer in this House—that is, the truth about productivity. The member for Boothby asserts that Australia's growth and increase in productivity during the 1990s exceeded that of the US. In a moment I will turn to a proper analysis of that phenomenon, but first let us look at the current Australian productivity story, and for that story let us look at what I am sure the member for Boothby would concede is a very good source—this government's budget papers.

In relation to forecasts for the Australian economy, in the budget we find a forecast for this financial year for growth in gross domestic product of two per cent and growth in employment of two per cent. You do not need a doctorate in economics to conclude quickly that, if there is going to be an extra two per cent of GDP achieved with an extra two per cent in employment, then productivity growth for this financial year equals a big fat zero. Endearingly, we find in the budget papers a statement headed `A More Productive Australia—Policy and Technology'. You would think that this government would be embarrassed by a zero productivity result, but apparently not. But when we look at the details of this statement, we find that perhaps they are a little embarrassed because they certainly are nowhere near frank about the zero figure. Cutely, the statement says, `Labour productivity growth has slowed somewhat in recent quarters.' Indeed, it has slowed—it has slowed to zero. One would have thought you would not use the word `slowed' for a reduction to zero; you would use the word `stopped'.

Against this backdrop, we are asked to believe that productivity growth in the next financial year will move from zero to 2¼ per cent, that figure being derived from a budget forecast of GDP growth of 3¼ per cent off employment growth of one per cent, necessarily implying productivity growth of 2¼ per cent. Why should we believe that? We all know that productivity growth is founded on skills and development investment, on innovation and on capital investment. When we look at those things, we find that the budget did nothing for skills development and training and we are unlikely to see a bounce-back in capital investment, given the average annual growth in real private new capital expenditure in the last three years has been minus 5.1 per cent.

In relation to innovation, the member for Boothby referred to the much vaunted Backing Australia's Ability statement which the government made earlier this year. We should note that, of the promised $2.9 billion, only $159.4 million will be spent in the coming financial year. All the rest is to be spent in the out years. So there is to be no big spike in investment in innovation in the coming 12 months and no reason to assume that we shall see a growth in capital expenditure or in skills and development, given that the budget does not address those questions. That is the productivity story of the Howard government—productivity growth at a big fat zero.

Before leaving productivity, I would like to refer to the same Reserve Bank paper that the member for Boothby referred to, produced by David Gruen and Glen Stevens. I think we have to accurately ensure that their conclusions are before the House because they do compare the productivity growth of the United States with that of Australia, and they say:

Then they go on:

We are in a very different circumstance from the US when it comes to being technology leaders. Unlike the members opposite, I am not content for Australia to be just a technology user and a technology follower.

Finally, let us turn to the way in which we know the GST has mugged the economy and its effect on ICT and the productivity story. The day the budget came out—the budget that told us about zero productivity growth—another very important document came out that tells us about the strength of the economy. That document is the Dun and Bradstreet review of small business bankruptcy and debt claims. It was reported in the Australian Financial Review. That report says:

So we have seen a huge increase in bankruptcies. Then we see that the spokesperson for Dun and Bradstreet predicts:

There we have it. At a time when small business could have been gearing up to make better use of ICT, they have instead been struggling with the disaster which is the GST.

In conclusion, the member for Boothby's motion concludes that Australia is not an old economy. I do not think that the old economy new economy divide is a useful tool, but we can say that we are lagging in ICT, productivity is in crisis and the GST has mugged the economy. (Time expired)