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Wednesday, 14 February 2007
Page: 199


Mr CREAN (4:29 PM) —I rise in support of the amendment that has been moved by the member for Melbourne. Despite the resources boom that this country has experienced and the record commodity prices, it is our charge that this government has wasted an opportunity of a generation. It has wasted an opportunity to use the proceeds of that boom and the continuing prosperity—the base for which was laid by Labor governments—to invest in our future, to invest in the drivers of economic growth, in skills formation, in infrastructure, in innovation. These are the mechanisms by which we can take this nation forward and secure its prosperity. The government’s claim is that it has been a good economic manager. The fact is that it has not. It has ridden the resources boom but it has wasted the opportunity it has presented.

In the time that I have, I want to try to touch on three important areas. The first is in relation to our woeful trade performance, the second—and it follows on from what the member for Rankin has been talking about—is our failure on the productivity front, and the third, if there is time, the fiscal ill-discipline of this government.

On the trade front, there are some pretty revealing statistics that we need to set the scene. The Howard government has racked up the worst trade performance in Australia’s history. In December, the most recent figure, a monthly trade deficit of $1.3 billion was recorded and this was the 57th consecutive trade deficit. This is the longest uninterrupted period of trade deficit on record.

When Labor were in office—in every year between 1983 and 1996—we were able to average on an annual basis eight per cent growth in exports. How does this compare with what the current government has achieved? Despite a record resources boom, it has averaged a growth of only four per cent if you take the whole 10 years that it has been in office and for which the records apply, and just one per cent over the past five years. That is why the performance is woeful.

If Australia had maintained the rate of growth that we had set in place, instead of a trade deficit of $12 billion, we would have today a trade surplus of $14 billion. That is the wasted opportunity. That is a huge difference. They are the overall figures. If you go to manufactures, our rate of growth was 13 per cent per annum; theirs just three per cent. Thirteen per cent to three per cent: little wonder that we have seen 145,000 jobs lost in the manufacturing sector over the last decade, 60,000 of them since the last election. On the services front, service export volumes averaged 10½ per cent under our period of government in every year compared to the last five years where they have averaged a decline. In this prosperity we are going backwards in service exports.

This poses the question as to why we were able to achieve better outcomes without a resources boom than this government have been able to achieve with one. There are a number of reasons for that. One is their fundamental failure on trade policy. This government do not have a strategic approach to trade, whereas when Labor were in office, which led to that eight per cent per annum growth, we concentrated impeccably on the multilateral round, the Uruguay Round. We formed the Cairns Group. We formed a third force to effectively be the honest broker between the Americans and the Europeans and we achieved the breakthrough.

But not content simply to settle on a successful outcome in the multilateral round, the Uruguay Round, we persisted with the agenda through APEC. We achieved the Bogor declaration, which was an enhancement of the WTO outcome—if you like, APEC was WTO plus. On top of that, we then used the bilateral free trade agreements to enhance the opportunities yet again—WTO plus plus.

But what has this government done? It has essentially reversed the order. It has approached trade policy on the basis of securing bilateral trade agreements not as any part of a strategic trade agenda but as trophies to be obtained to simply demonstrate that people think it is doing something. In all three free trade agreements that this government has reached, our trade position has gone backwards with all countries—including, now that it is two years in operation, the United States.

In all cases, this reversal of order not only has not enhanced multilateralism, it has detracted from our trade performance. It has seen a massive diversion of resources away from the Doha Round. It has not seen any creativity in building upon the Cairns Group structure and recognising the new entrants into the WTO and how they need to be managed. It has failed to embrace or identify and engage with the emergence of the G20 group of nations, which are more of a force, sadly, than the Cairns Group itself.

I think that there is an opportunity this year for this government to start getting its trade strategy right. I am here to offer some helpful suggestions and I hope that it takes them up. APEC is being hosted by Australia this year. This is a golden opportunity for this nation to use that very forum that enhanced Uruguay to now drive Doha. What we have to do is to use the opportunity through the APEC fora—and there are many meetings between now and the September meeting when it is to be held—to really get a united and disciplined front to drive an early conclusion to Doha. This is a mechanism which, if pursued, might achieve that objective. Even if it does not, it provides the unity for being the most effective fallback if Doha were to fail. There is no harm lost in embracing this agenda. It either succeeds in clinching Doha, or it gives us the next best option.

The second point I would make in terms of our approach to Doha is that we have to insist more on the guidelines governing free trade agreements being much more multilateral compliant. That has not been happening. Australia has been negligent in its discipline with free trade agreements. With the Australia-US Free Trade Agreement it allowed carve-outs. Sugar is the classic example. It allowed circumstances in which the rules applying to investment from the United States in this country are a lot more lenient than those which we obtain in terms of trying to get into their country. These inconsistencies are undermining our authority. APEC has a framework in place to produce some discipline for the free trade agreements. Australia has to lead this charge in ensuring that free trade agreements are consistent with the multilateral principles.

The next thing I would argue that the government needs to do is to approach APEC and the openness in economies for economic growth and sustainability within the APEC region from the perspective of not just trade ministers but economic ministers. I say that advisedly. If we just allow the trade opening to be driven by trade negotiators, we run the risk of limiting the real opportunities for growth, expansion—capital flows in particular—between the countries concerned. We need to engage the economic ministers more intensely so that we can open up opportunities for better capital flows and address the issues of deregulation, as well as those issues of regulation which are important in ensuring transparency and accountability. We also need to give much greater emphasis to the services sector and not be preoccupied solely with the agricultural sector.

Another issue that I believe could usefully be put on the APEC agenda is the whole question of APEC’s enlargement. We have to engage in that. There are other countries seeking to come into this group. Just as the OECD has had to embrace enlargement, so too should APEC. Australia should be leading the pace in terms of guidelines for consideration of new entrants. But in the process it needs also to look at new governance procedures for APEC. At the moment there is a requirement for unanimity in decision making. My argument is that it is time to look at whether majority decisions or certain thresholds are sufficient to bind the group.

This is what a government that had opportunity in this area should be doing in terms of seizing the moment—if it had a strategy. It is what Labor would do if it had the opportunity now, and it is what Labor did when it had the opportunity prior to that, some 10 or 11 years ago, when it was a driving force in the formation of APEC. Trade policy in this country is a disgrace, and the figures are a demonstration of that disgrace. They represent an underperformance in terms of where this nation could be.

I turn now to the question of productivity. I want to go to the Work Choices debate because I think this is where the government argues that this is great for the economy. The fact is that Work Choices is not good for the economy. Quite apart from the unfairness inherent in Work Choices, the title of the legislation is really the greatest misnomer of any legislation brought into this parliament. It is no choices, it is take the job or take the sack, it is an erosion of collective bargaining, it is a diminution of the influence of trade unions in this country and it is an eradication of the independent umpire. For all of those reasons it is bad.

But it is not only bad on the fairness front, it is also bad for the economy. We have had the assertion that Work Choices is responsible for job growth in this country. The fact is that the great bulk of job increases have come because of the resources boom in recent months. That is on the record. If the argument by the government is right, how is it that there has been slower jobs growth over the months since Work Choices was introduced than before it? That is what the Minister for Employment and Workplace Relations could not answer in question time today, and the avuncular dissembled into stupidity in terms of his response. He could not answer the question and said it was not the responsibility of the government, it was not the government that created jobs, it was business. Technically, that is true, but when it suits them they claim it is the government.

It is not just on the jobs front that their argument fails; it also fails on the question of productivity. The member for Rankin touched on this in part before. Labor achieved strong productivity growth in the period of the low inflation environment that it created for a number of reasons—the opening of the economy, the deregulation of the banking sector, the whole opening of trade that I have already referred to, floating of the exchange rate, the commitment to research and development, investing heavily in education, and getting the year 12 retention rates up, which are a huge impetus in terms of economic growth in this country. But the period that Labor was in office also saw centralised wage fixing replaced by collective bargaining linked to productivity. I heard the Treasurer yesterday claiming credit for having ended centralised wage fixing. He did not. But this is another case of the Treasurer always being pretender to the policy when it works but never having the wit or wisdom to understand how to implement a change.

The fact is that the system that was deregulated and moved to collective enterprise bargaining saw the biggest step up in productivity growth Australia has ever experienced. Between 1990 and 1996 annual productivity growth leapt from 0.7 per cent to 4.1 per cent—a huge jump. That trend in strong productivity actually continued for the first four years they were in office. Why? Because they inherited our system and could not change it.

Remember the early attempts, the Peter Reith first wave of industrial reform that he could not get through? The system pertained, and it worked and it drove productivity. So, up until 2000, that huge jump in productivity was sustained. But, once this government started meddling on its terms with its ideology on industrial relations, what did we see? We saw the full effect on productivity when the productivity level plummeted to an average of 2.3 to 2.8 per cent a year, and to just two per cent a year over the past five years. Great achievement! All because of this ideological drive and its perception about industrial relations.

The point I am making is that the reason Labor is trusted on industrial relations more than this government is not only the fairness argument; it is also the economic impact. Labor’s approach to industrial relations is not just fairer, it is better for the economy. If you compare the productivity growths of Australia and New Zealand over the same period, when New Zealand went to an individual based system, the workplace agreement system that this government is so besotted with, and we were developing our collective bargaining system, you will see that productivity growth in Australia was substantially higher than that in New Zealand, and the figures attest to that. So my point is that this government has no strategy in its approach to industrial relations: it is ideology, it is mean-spirited, it is wrongheaded and, in particular, it is bad for the economy.

The final point I want to make goes to the question of fiscal discipline, and we saw a classic example last night of the fiscal profligacy of this government. We saw the Minister for Finance and Administration lounging back in a chair, admitting that a $10 billion expenditure had not even been to cabinet, and we heard the head of the finance department, Dr Watt, saying some words to the effect that they ran a quick eye over it. What sort of discipline is that? If this were Labor making a claim on the budget of a billion dollars a year for the next 10 years, we would be pilloried daily by the likes of the Treasurer and his acolytes in the press for being economically irresponsible. The finance minister was lounging back in that chair, saying that it is no big deal, that it is only a small proportion of the budget outlays. What irresponsibility! Has this been submitted to the charter of budget honesty? It was not even submitted to its own finance department until the last minute to get the quick eye over it. This is a government that wants to lecture us about financial responsibility, a government that wants to say that it has got a charter of budget honesty to keep governments and oppositions honest! It is the most dishonest piece of legislation ever introduced by this government and it is treating it as a joke, with no respect whatsoever, and we saw the finance minister last night on display, attesting to that point.

So, whilst these appropriations must of course go through, we take the opportunity in this debate to point to the wasted opportunities. This is a government that has ridden a prosperity wave. This is a government that has inherited significant continued growth in its surpluses, but it is a government that has squandered them. It is about time it changed its direction. I know it will not, so we must change them and give us the opportunity to—(Time expired)