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Monday, 4 July 2011
Page: 7555

Ms O'DWYER (Higgins) (21:00): One of the big risks to productivity is this government's lack of understanding of the economic fundamentals and how these economic fundamentals intersect with policy changes. This Labor government lacks an aspiration for the Australian people to obtain a higher standard of living and to grow their wealth and prosperity. These are things in which the government could assist by removing those things that would weigh productivity growth down or, worse still, make it negative. While the government wrestles with the short-term political problems of its own creation, it is neglecting the bigger picture. It is failing to put forward a long-term economic reform agenda. When the government talks about economic reform, all it can come up with is the mining tax and the carbon tax. In fact it has predicated all of its 'reforms' on new taxes. But what about real economic reform that targets productivity? Instead of introducing new taxes and calling it reform, why not go right to the heart of what generates our long-term economic growth and target our nation's productivity? As Gary Banks, the Chair of the Productivity Commission says:

Productivity enhancing reform is so crucial to our economic (and social) futures because productivity growth itself - the ability to get more out of a country’s resources - is the mainstay of economic progress.

He also points out that productivity is currently facing a decline in Australia, stating:

Following a stellar performance in the 1990s, driven in large part by the structural reforms initiated in the previous decade, our productivity growth in the early 2000s fell back to its long term average. That in itself is no cause for alarm. But since then it has fallen below even pre-1990 rates. In the most recent year for which we have data, 2009-10, there was only slight growth in (the traditional 12 industry) market sector MFP; though this was an improvement on the previous year when MFP, buffeted by the global crisis, actually fell by 2.4 per cent, something not seen in almost 30 years.

In the March quarter we saw that GDP per hour worked was lower than in the last quarter of the coalition government. We are not simply talking about a slowing in the rate of growth; it is much more significant than that. We are talking about a decline. Eleven years of coalition government delivered an increase of more than 25 per cent in GDP per hour worked. Less than four years of Labor-Green government has seen a fall in GDP per hour worked. So we have a situation where productivity is declining in Australia. We are not getting as much out of our labour and capital resources. If this trend continues and policy is not geared towards helping us improve our productive capacity then we are essentially forgoing a higher standard of living for no good reason.

One of the most effective means of improving productivity is to encourage wider workplace participation. As I have said before in this place, central to employment participation is a flexible workplace system. The union dominated government has turned back the clock, not just BH, before Howard, but BH, before Hawke and Keating. This government has gone so far as to wind back reforms championed by Hawke and Keating, returning us to antiquated system of union dominated bargaining arrangements where you can strike before negotiations rather than after them. I do not propose, however, to focus on this issue tonight; rather, tonight I want to focus on getting more women and more parents into jobs when they are interested in working. This is clearly something which can potentially boost our productivity to a significant degree.

We know that the current ABS measure of unemployment does not tell the full story on what is happening behind the scenes when it comes to our unemployed. What we cannot tell from the headline unemployment figure is how many people who are currently working are seeking more hours but cannot get them. Equally, there are countless women who have resigned themselves from the job-seeking process because they have taken on primary care responsibilities and are unable to find appropriate work. Together, this unidentified group of people represents what the Australian Financial Review has called a 'hidden army of unemployed'. We cannot see them, because they have left the job-seeking process disheartened, but we know they exist. Bringing parents into the workforce or allowing them to work more hours, or to have flexibility in workplace arrangements, are important steps towards greater workforce participation. One of the biggest barriers parents are facing is a lack of quality affordable childcare. This means that work arrangements need to be stretched in order to earn an adequate income to support the family. While the working-aged female participation rate has increased from around 50 per cent to 70 per cent over the past 30 years, workforce participation by Australian women during their peak childbearing years has been reduced by a greater amount than it has for women in other leading industrialised countries.

As the Prime Minister acknowledged in her address to the Australia Day reception at the start of this year, analyses of the causes of lower rates of participation amongst women have repeatedly highlighted the problem of accessing affordable child care. This is absolutely true. But what has Labor done about it? We were told that there was a crisis facing working families and that hundreds of new childcare facilities were required. Before the 2007 election, Labor promised to build an additional 260 childcare centres. This was supposed to be the government's solution to the 'double drop-off'. After promising to build these additional 260 childcare centres, this government has now done a triple-backflip-with-pike and announced it will build only 38. The government promised that it would deliver, and the women of Australia took Labor at its word. Unfortunately for them, this ended up being just another item on the long list of broken promises and failures in policy. At last reckoning, only three childcare centres had been constructed in three years. At this rate, an average of one a year, we have another 35 years to go.

In the 2010 budget, the Gillard government made a decision to stop funding the Take a Break program, TAB, a program supported by federal and state governments to provide occasional care to parents. It delivered practical services to families that did not require full-time care but did require a childcare service on an occasional or ad hoc basis. This program was a great example of federal and state cooperation to deliver vital services to the community. These services ceased as of 30 June 2010, and parents who relied on these services were forced to make adjustments to their work arrangements. The original funding mix was 70 per cent Commonwealth and 30 per cent state government. Since the discontinuation of the TAB program, the Victorian government did its best to continue to fund the program for an extra year, until 30 June 2011. But of course this placed a significant strain on the Victorian state budget, particularly the one that blew out thanks to the legacy of the last Labor government.

The current Victorian Minister for Children and Early Childhood Development, the Hon. Wendy Lovell, has said that the Victorian government will continue to fund the program until 31 December 2011. The Victorian government has formally requested that the Gillard-Greens government renew its commitment to the program—but to no avail. If the Gillard-Greens government is serious about its childcare commitment, it will reinstate funding for the TAB program and allow the states to continue to fund their share of the program on a sustainable basis.

It was a coalition government that introduced the childcare rebate in 2005—the most significant reform introduced in this area, and one that has had bipartisan support for many years since its inception. We went to the last election with a policy of reintroducing indexation of the childcare rebate. For those parents receiving the maximum childcare rebate, this would have provided a benefit of around $300 per year for every child in care, and the coalition is currently committed to reinstating the $12.6 million of occasional care funding cut by Labor.

Labor is also making child care more expensive through their rushed National Quality Framework, which they have committed to rolling out from January next year. This framework will increase cost-of-living pressures on families that are already under significant financial stress. Industry predicts that the impact of this new regulation will be between $12 and $22 a day. Other surveys have predicted that the cost of the new regulatory scheme will impact the cost of child care by, on average, $13 a day. Any way you cut it, it is significantly more than the 50c to $1.70 figures that the minister is so fond of quoting.

On 30 June the Productivity Commission released its draft research report Early childhood development workforce, which went further. It said that the costs would be significantly increased if this quality childcare framework was introduced. It said specifically:

In practice, it is likely that the majority of the increased cost will be shared between governments and parents. The Australian Government will fund up to half of the increase in costs through current child care subsidy arrangements, the Child Care Benefit and the Child Care Rebate. However, parents are likely to pay the majority of the remainder of the increase.

The impact of this increase will not be felt evenly—disadvantaged children often come from disadvantaged backgrounds, and many forms of disadvantage place additional pressure on family budgets. In the absence of appropriately targeted additional funding, the increase in ECEC costs will see some children have reduced access to, or be withdrawn from, ECEC services, many of whom would have stood to benefit most from these services.

It could not be plainer than that. In my seat of Higgins and in the municipality of Stonnington there are 21 council-run and private childcare providers. All of them will be impacted, just as every family who uses them will be impacted.

To put an end to Labor's short-term view of the economy we need a vision that will encompass our long-term productivity needs while giving everyone the opportunity to participate in work and in society. Labor has failed to provide this vision time and time again.

Tony Abbott announced a much more comprehensive paid parental leave scheme that would better meet the financial needs of Australian families. The coalition announced a much more generous scheme that also undertook to provide 26 weeks with full superannuation, compared with Labor's 18 weeks and no superannuation. Our policy provides maximum social benefits, whereas Labor's scheme falls short of delivering real outcomes. Labor's pattern of failure is a pattern that Australian parents can do without. We will continue to advocate for our superior economic policy.