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Tuesday, 14 February 2012
Page: 1291

Mr RIPOLL (Oxley) (19:57): It is a pleasure to have an opportunity to speak tonight about a range of issues. I particularly want to bring forward a positive approach on some of the really great things about Australia, about the Australian economy, Australian people and Australian business and about the way that Australians generally conduct themselves not only in the domestic market but also in the international markets. I think there is a great story to tell and everyone in this place has some responsibility to remind Australians just how lucky we are. This really truly is the lucky country.

There is no era that best demonstrates the luckiness that I am talking about than this era. I firmly believe that, not since the 1950s, the golden era of riding on the sheep's back, have Australians been in a better position. When you compare us internationally, when you look at all our competitors and at our region, when you look at any other comparable economy you can see just how lucky we are. Sometimes that can be lost on people because you hear so much negativity. You hear so much of the bad news that sometimes you forget that there is actually some good news out there and good things.

Tonight I want to talk about that positive agenda. I also want to talk about the good work of the Gillard government, in particular the work we have done over the past four years since we won government in 2007 to help drive the Australian economy and keep people in jobs. I want to talk about how we managed to do that through the global financial crisis and some of the most critical economic conditions that the planet has seen probably ever, historically. I want to talk about how Australia has managed to not only keep its head above water but keep its head well above water and actually do well.

I think the hallmark of any modern economy can probably be found in a whole range of things but, for me, it is two very important things: productivity and innovation. I think those two things really are the central pieces of the economic puzzle that drives any country. Much has been said in Australia about the mining boom and its effect on the Australian economy. I just want to remind people that, while mining is very important in terms of our exports and a whole range of things for our economy, it is not the only part of the economy. To some people that might come as a surprise. As an example, as an employer the mining sector employs only 1.5 per cent of Australians. Where are all the other Australians employed?

They are employed in manufacturing and retail and key sectors of the economy. There are more people employed in the financial services sector than in all the mining, energy and resources sector—oil, gas, coal, iron ore and so forth. So there is a great story to be told about the Australian economy apart from just mining and those things.

The task of any good government, any prudent government, particularly in terms of economic management, is to nurture and ensure that the nation is well placed to take advantage of boom periods such as we now have in mining and resources. But how do we go beyond that? How do we ensure that jobs in the Australian economy are future proofed? How do we ensure that people will have an opportunity to get jobs in what we are calling the new economy? The reality is that the new economy is also part of the old economy; it is where all of those people are working today. It is people in the manufacturing sector, in the automotive industry, in the production sector and in the retail sector. The new and old economies are the same economies. What they are about is the transition. When we talk about the new economy we are really talking about that transition. Where is Australia today and where do we want to be in 25 years time? That is the key issue that should drive any government and it is exactly the issue that drives this government.

A recent global survey of business executives found that 92 per cent of them believe innovation is the main lever for a more competitive economy. I agree with them. Eighty-six per cent of them believe innovation is the best way to create jobs. I agree with them. I think that is the best way to do it. Eighty-five per cent of them believe innovation is the main lever to create a green economy. I agree with them. In fact, so does this government; in everything we have been doing we are in sync with what the business community believes.

But how do we rank compared to other nations? It is no good just to say that you are doing it—how do you compare to your competitors? Recently the Milken Institute, an independent economics firm, released the Milken Institute Innovation Report. The report provides a global analysis of the environment supporting innovation in 22 different countries. The report was prepared for GE—no small company and, for that matter, no small feat—and it ranks countries on seven different indicators. The indicators are industry-university collaboration in R&D; venture capital deals; gross expenditure on R&D; high-tech exports; utility patents; science, technology, engineering and maths education; and, lastly, business environment.

So how did Australia perform compared to its competitors? We performed extremely well. And you should not expect anything different because, do not forget, we are an innovative nation. We are a nation that has always ridden the wave of innovation because we are remote and we are outside of a domestic economy and we are part of the trading world. We are trading nation and we always have been. The findings for each of those categories for Australia go something like this. Australia is leading in the area of industry-university collaboration. Our innovation policy has seven priorities, two of which are aimed at facilitating greater collaboration. And we do very well. So far, this government has committed about $3½ billion to establishing 44 cooperative research centres—government working with universities working with industry. Each of these government sponsored organisations partners a public research facility with an end user and encourages end user driven research.

When it comes to venture capital deals, we scored above average. Australia does better than most. Australia may not be the leader in this area but we are attracting venture capital and we still rate well above average in this area. That is good news. When it comes to gross expenditure on R&D, Australia is a global leader. The government is spending at least 2.2 per cent of GDP on R&D. That is not enough; it is something we need to do more work on. But we certainly do well.

When it comes to high-tech exports we are above average. Again, we do well. High-tech exports account for slightly more than 13 per cent of Australia's total exports. It is another area I think we could focus and do more on but we still do above average. When it comes to utility patents, we are leading against those 22 countries. When it comes to science, technology, education and maths, we are leading the world.

When it comes to the business environment—the regulation business climate and red tape—believe it or not, for all the complaints you hear, we are leading. This is a country that is good for business. That is why we have so much inflow of capital. That is why people want to invest in Australia. That is reflected in why Australia's currency is so popular. Why is Australia's currency hovering at above 106c to 107c to the US dollar? It is because people have confidence in our economy, confidence in this government and confidence in where our currency sits, and they invest in that currency. Unfortunately there is a downside to that, of course: that makes our exports more expensive. But it does demonstrate the point I am trying to make here tonight.

It goes on in a whole range of areas, demonstrating just how much Australia either does well above average, punches above its weight or actually leads the world. This can be demonstrated not only in the work that was done for the Milken report but also by the way that for most people the global financial crisis was something that they read about in newspapers. It happened in another country or was a far distant thing, because for a lot of people and a lot of businesses it just did not happen in Australia. But the reality is that it did not happen because there was enormous government intervention. Government intervened. What we did was put forward an enormous stimulus package to make sure that people kept their jobs, to make sure that Australian business not only survived but thrived, to make sure that the economy remained strong and to make sure that for all intents and purposes people felt as little impact as possible. Often you will hear people skate over the issue. In Australia, they may well do that. They may skate over the issue, because we did not really feel the full impact. If you compare us to Europe then it is a different story. All you need to do is look at any European country and just see the mess that some of the countries are in right now compared to where we are.

After four years of a good Labor government and a re-election, you can see the impact and the effect of good management, including good economic management, and it is there not in rhetoric but in the numbers. It is there in the data and in all the evidence: nearly record and very, very low unemployment rates not just compared to the rest of the world but compared to any time anywhere—certainly compared even to domestic rates in Australia. We have managed to do these things through good, sound management and good, sound policies. This government has a great story to tell.

There is nowhere near enough time for me to go through all of the great stories tonight, but I do want to take you through some of them, because I think some of them stand out a lot more than others. When it comes to education reform, when it comes to assisting schools and assisting communities, when it comes to the environment, when it comes to managing the economy in particular and in a whole range of other areas, Australia does well domestically and does very well internationally. That is because we are actually focused on these issues.

As I said, the Gillard government recognises the importance of innovation. We have a clear innovation agenda that responds to the needs of business. In December, a new $249 million industrial transformation research grant was announced. This will help stimulate links between university research and business innovation. This is the core of how you actually create jobs. This is how an economy continues to grow and continues to provide for its citizens. The government's R&D tax incentive is also encouraging companies to undertake genuine research and development by doubling assistance rates for small to medium enterprises and increasing assistance to large enterprises by a third. Already 8,500 companies have registered to take assistance out of this program.

I talked earlier about productivity and why that is so important. Any measure of a good economy in the end has to measure productivity also. Simply put, we have to do more with less. That is the reality of any economy: each year you have to just do a little bit better. It does not necessarily mean working harder; it just means working a little bit smarter. If we are to compete, it is a truism. We will never compete against some of our neighbours on labour costs. For anyone who thinks that somehow there is some magic wand so that we can compete in that area, I am sorry to have to tell you this, but you are just wrong. The only way that we are going to compete is on technology, on innovation, on using our smarts, on using natural advantages or on taking advantage of the things that are right here in this country, including really good, skilled people. This is where we have advantage, whether it is locality, skills, innovation, venture capital, good governance or actually the systems that we have in place. Innovation and productivity go hand in hand. They are linked and, in my view, are inseparable. Productivity is actually a measure of economic output relative to inputs. The most straightforward way of measuring it is labour productivity—that is, the total output of the economy, real GDP, divided by the number of workers or number of hours worked. Increasing productivity is the main way that society can improve its standard of living. The evidence of that can be seen across any country or economy, but there is a slight distortion in Australia which sometimes gives you a false impression of where our productivity is. Often you will read in media reports that we are losing the productivity battle and that it is actually going down. Again, it depends on which figures you look at.

Productivity measured in Australia is skewed by Western Australian wages in particular, because of the mining boom and what is happening in Western Australia, and to some extent also by the data that is coming out of Queensland. But if you take that into account and normalise it across the economy, it gives you a different picture. It actually shows that Australia is not only innovative but is increasing productivity year on year. It is a small increase, but it is an increase. That is the secret, if you look behind the data, of why we are still doing so well. Why did we manage through the GFC? Why did our economy get through that? Why do we still have people in jobs? Why are so many jobs being created? Why is the economy so strong? If you have a look behind all of that, you will see that that is the reason.

According to the ABS, the annual productivity growth fell from 2.1 per cent in the 1990s to just 1.5 per cent in the 2000s. The reason will not be lost on anyone if they have a look at who might have been running the country between those good years and the not-so-good years—I think it might just be a little bit obvious. There are a number of factors that may have contributed to this fall compared to the slowdown in other OECD nations, but Australia has certainly maintained its productivity. While slightly lagging the United States in the 2000s, it was at a higher rate than in the rest of the OECD nations. So Australia has worked hard.

I will finish on a simple note. It is a note of caution, a note of attention as to what is happening in this economy. We can easily be blinded by the mining boom. I do not know how long the mining boom will go on. I hope it goes on forever—for five years, 10 years, 15 years, 20 years. Let the mining boom reign in this economy, but at the same time this is our opportunity to do the right thing by every Australian and get benefit out of the mining boom, to tax the mining industry properly and make sure that we account for the future and future jobs. (Time expired)