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Thursday, 30 May 2013
Page: 4614

Dr MIKE KELLY (Eden-MonaroMinister for Defence Materiel) (15:38): 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.

The DEPUTY SPEAKER ( Hon. BC Scott ): Order! The minister will desist from using props.

Dr MIKE KELLY: 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.