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Address to the MTIA National Forum 'Imperatives for a more productive Australia', Canberra



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Deputy Leader of the Opposition

Embargo: 4.10 pm Monday, 25 October 1993

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Address by Dr Michael Wooldridge MP:.

Deputy Leader of the Opposition &

Shadow Minister for Education, Employment and Training

to the MTIA National Forum

"Imperatives for a More Productive Australia"

COMMONWEALTH PARLIAMENTARY LIBRARY MICAH

25 October 1993

Canberra

Parliament House, Canberra, A.C.T. 2600 4 0 / 9 3

Mr Bert Evans - Chief Executive, members of the MTIA, distinguished guests, ladies

and gentlemen. It is a privilege to be asked to take part in your national forum, "Imperatives for a more productive Australia".

Today, you have heard a number of eminent speakers put forward their views on a more productive Australia and the forces shaping, or needed to shape, this -imperative.

My jobs is a legislator - one who carries the responsibility for future policy that will '-set the environment in which you must operate in the domestic market and who-will- - -promote, negotiate and argue for-the optimum conditions for you to operate -internationally. I think that Henry Kissinger was right when he said that "developing-policy was like a play" - a play in many parts, which unfolds inevitably once the

curtain is raised.

To declare then that the performance will not take place is an absurdity. The play will go on, either by means of the actors or by means of the spectators who mount the stage.

In our case, the actors are you here today, the spectators are our competitors either here or overseas, and the stage on which we play is the world market.

In Australia's case, we seem to have the following problems:

1 whether the curtain is to be raised at all or do we proceed with our involvement in our particular industry?

2 the numbers of spectators and their strengths or just how strong is our competition and what advantages do they have?

3 the intrinsic quality of the play or the essential nature of industry to Australia's economic status and standard of living.

Let me begin then with the raising-of the curtain on Australian manufacturing -industry. What is revealed?

First, let me state the obvious. It is_vitally important to Australia's future prosperity.

That said, it is also obvious that today there are less businesses operating and; for those operating, there are less people working. Both the recession and the fierce competition from products produced overseas has acted as the catalyst for much of the structural change that has occurred and continues to occur.

This has been painful, difficult and often unnoticed by much of Australia. All of you here today are survivors of that change.

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The culture of manufacturing industries of the past - where employment was narrowly defined, where there were layers of management for approval and monitoring, where there were rigid demarcations between functions and where evaluation, promotion, planning and decision-making were all controlled from the top - no longer exists.

This change in thinking and mode of operation has changed many Australian manufacturing businesses from suburban workshops to transnational businesses.

The challenge for both public policy-makers and business is not just to recognise the radical changes that have taken place in the workplace - such as the type of work, how it is performed and by whom - but to realise the rate of change is continuing to accelerate. And indeed it must continue to accelerate if, as a country, we are to make

the best use of our human resources to gain and maintain the competitive edge. _

The innovation and determination that was shown by our many inventors in the past, together with those who were prepared to risk their capital and labour in what Phil Ruthven calls the "golden age" of Australia, has been mortgaged by a generation who were satisfied with paper profits and a standard of living built on a momentum of debt.

With the world's second highest debt per head of population, the 18th largest debt as a percentage of GDP in the world and the worst debt as a percentage of GDP in the OECD, we have no option but to repair and stabilise our economy.

Government cannot achieve this simply by announcing policy. If rhetoric was all that was required, we would today have a dynamic economy, low unemployment and a manufacturing industry with few concerns. You know that's not the case.

Policy must be relevant and address the causes of our difficulties and industry must be prepared to change, adapt and restructure to take up the challenge. That's a true partnership between government and industry: In this, my portfolio area of Education, Employment and Training is a vital part of government's side of the partnership.

An overview

Partnership implies a mutual dependence and a mutual obligation. Government must accept that its policies should achieve a stable domestic econbthy, that the resources - -and systems of public infrastructure are adequate to serve the needs of business,

maintaining proper control on the performance of capital markets and the quality of financial services and, most importantly, government must ensure that its policies promote competition.

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Business, for its part, must ensure that its enterprises are managed in an innovative, profitable and responsible manner - both to their shareholders and employees. They must invest in research and development, make sure they avail themselves with the latest developments and applications in science and technology, investment in training to maintain the competitive edge and, most importantly, to value and nurture their human resources.

Education plays a vital role in equipping students - not just with-knowledge_and skills but in providing students with a mental discipline and ability to analyse and-synthesise. Our education systems provide the basic training on-which industry can build. The -ability to make the best use of our human resources gives us as a nation, and

individual industries, a strong competitive edge.

In order to produce well and to think globally, we must understand the key elements of competition and apply those elements to our actions - whether that be in government or in business.

Let me deal specifically with government's role, firstly. And I believe that there can be no better place to start than with Professor Hilmer's report on National Competition Policy in which he said:

"There is the challenge of improving productivity, not only in producing more with less and deploying scarce assets wisely, but also in becoming better at making and exploiting new discoveries, whether in technology, resources, fashion or ideas. A possibly more difficult challenge is to

develop in a way that creates new jobs and growth rather than see the economy shrinking to an efficient but diminishing core of activity."

That statement effectively addresses the two most urgent problems facing us as a nation - to improve our national economic well-being and standard of living but also to ensure that, in tandem with economic growth, we achieve a country without the deep social divisions that we see in some overseas countries.

There is no doubt that government has been a tardy and often unwilling partner in. --implementing microeconomic reform. For a natiOn -with such a long coastline, I think that our coastal shipping services are a_disgrace. _Our, waterfront services - _while -some improvements have been made - do not help us gain that competitive edge when our goods take longer to unload and cost more than those used by our -overseas

competitors.

Business costs - like the Training Guarantee Levy, payroll tax, fringe benefits tax (especially ones like the recent punitive car parking fiasco), wholesale sales tax and transport costs - must be either abolished or reduced in order to provide industry not with an edge over their overseas competitors but just to bring them in line with

overseas practices. We in the Coalition have understood that for some time and remain committed to that principle.

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I note that the ALP Caucus Employment Sub-committee now concedes that the Training Guarantee Levy is a disincentive for employers. Perhaps the best word on this is David Clark in today's Financial Review

"All those companies offering phoney taxpayer-subsidised training courses and seminars should be feeling rather uneasy - as should hotel operators in Port Douglas, Noosa and Noumea." - - -

Government sets tariffs, something about which there has-been some _controVersy in recent times. By 1996, the vast majority of tariffs will be at 5%.

I can appreciate and understand industry's concern that, in achieving this reduction, - -the micro economic reform and removal of those business costs has not been happening at an equivalent pace. Government has let you down badly here, as it has also failed you in not tackling special interest groups, not legislating proper anti-dumping laws and not seriously tackling the difficulties of "made in Australia" labelling.

For industry's part, let me say that I applaud and congratulate you on the manner in which you have undergone such radical change in order firstly to survive and then to begin to thrive. The pressures on you to increase your efficiency, your production, your quality, to change your management skills and to change, as I mentioned

previously, from a local operation to an international company have been enormous.

The major area of concern that I have, and one of the key issues that we must deal with in the emerging world economic environment, is the question of human resources - those employed by businesses like the ones you represent, those who have been retrenched and those wanting to enter the workforce in the future.

Increasing diversity of those in the workforce today - with the different levels of skill, education, physical abilities, cultural background, lifestyles, personal values, individual needs, ethnic and social differences - have made managing the workforce to achieve•-optimum productivity and efficiency no mean feat:

I was recently given an example about a factory which, late one Friday afternoon just .. as the production shift was preparing -to shut down, received an urgent request, from a regular customer that they had received an overseas order that had to be completed that weekend but they had just realised that they would have insufficient materials to -

complete the order. A decision had to be made if they would continue to operate the plant to provide the customer with the needed materials. The decision was made to provide the service to the customer.

This level of service and quality paramount to competitiveness can only be achieved with a cooperative workplace.

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I agree with Dr David Jamieson, President of the Jamieson Consulting Group, that for industry to be flexible, to maintain quality, to be service-oriented to customer needs and therefore maintain their competitive edge, management must have five basic skills:

empower others - ie to manage more as a colleague than as a boss - and encourage participation and share accountability;

2 develop others - ie through a system of mentors and providing opportunities for growth - to delegate responsibility and individually tailor training needs; -3 value diversity - ie understand diversity as an asset;

4 work for change - ie support employees by adapting policies, systems and practices to help meet their needs;

5 communicate responsibility - le by questioning and providing ongoing feedback.

These are what Professor Michael Porter from the Harvard Business School calls "the presence of advanced and specialised human resources". These, together with the latest technical infrastructure, are critical to achieving competition within industry.

While there is no doubt that Australian industries that have become internationalised have become highly competitive in that process, Professor Porter demonstrated from studies that "global success arises from a process that is often highly localised". He states that the prerequisites for internationalisation are a strong home base, where:

customers are sophisticated and demanding of overseas trends;

suppliers and related industries are internationally competitive;

there are capable and fiercely competing local rivals. -It is frequently the dynamic small firm who can reap economies of scale and I believe that, as a small nation of only 17 million and a small trading nation i lwe should .1. remember that "big does not necessarily-mean bountiful". It is often .better to focus on a quality core business and do that well.. Going international does not offs6t- - -fundamental weaknesses at home..

Transport and communications

In a country as vast as Australia, advances in the technology of transportation and communications have led to a decrease in costs, made services more reliable and have opened up many new possibilities. Commercial jet aircraft and super tankers with bulk containerisation and satellite communication have all aided business and aided the process of internationalisation.

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It is up to government to ensure that Australian businesses are not disadvantaged because of built-in costs their competitors don't have.

Computerisation has helped industry in its planning of supplies and has been _ responsible for the "just in time" system, thereby lowering costs. It has helped industry in a more efficient use of transport and in data transmission and finance

control but computerisation has also been responsible for "downsizing" of industry.

Social function

I have spoken previously of the responsibilities of management in dealing with their workforce on a daily basis and of a partnership between industry and government in the pursuit of achieving that competitive edge. I would now like to talk about another sort of partnership - a partnership to achieve a social cohesiveness.

Since becoming the Deputy Leader and having responsibility for the portfolio of Employment, Education and Training, I have travelled widely, talking to many diverse groups.

I have been made aware of many of the concerns raised here today for industry, and by industry, and I have a strong commitment to see this country become more competitive, more productive, reduce our national debt and raise our standing of living.

I also have an equally strong commitment to ensure that the ever increasing widening gap between the "haves" and the "have nots" in our society is not allowed to develop into a permanent underclass of people denied the opportunity of employment.

As Deputy Leader, I have spent much time talking to business. I fully understand your responsibility is to your shareholders, just as my primary responsibility is to my electorate. However, just as industry and government need to have a partnership in the goal of international competitiveness, so too do We need a partnership in .

confronting the challenges of our society and being advocates for change. - _ - -Business has skills of goal development, fostering creativity, Skills of analysis and planning - all of which are vital if we are to tackle an issue such' as long-term . unemployment.

Take education as another example.

It was Ernest Boyer, President of the Carnegie Foundation for the Advancement of Teaching, who said:

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"If a health epidemic were striking one-fourth of the children in this country ..., if we had heaps of garbage on the curb, a national emergency would be declared. But, when hundreds of thousands of students leave school every year, shockingly unprepared, the nation remains for too lethargic."

He could be talking of Australia, for added to our budget and trade deficits is the -deficit of highly trained and motivated people needed to become a competitive world • class workforce.

Today's debate in education centres on the changes that need to be made to improve the system of education - a system which is increasingly troubled by the demands of providing a quality education to all, at a time-when a growing number of students are . economically disadvantaged.

The questions that debate raises, and the solutions it seeks, have a direct impact on Australian business as it struggles to stabilise domestically and compete globally.

If our education and training systems continue to mismatch job skills with a rapidly changing workplace, the cost to business is lost productivity, reduced quality, further job losses and costly remedial training programs.

In spite of the traumatic economic and social changes this nation has undergone in recent times, we still depend on "the cream of the crop" students to carry us through. That may have worked in the past but it will not work in today's or tomorrow's economy. Many students today leave school unemployable. Many others are costing business now and will continue to cost business thousands of dollars before they can become productive and may never be productive enough to take their place in an internationally competitive business.

You would never tolerate margins of error in your business of the order that many of our education institutions produce in our students. In your own interests and those of achieving a thriving economy and a socially cohesive society, you must not accept this position either.

Future trends

There are two major changes that will affect us in the future. The first is our orientation to Asia and the second is the changing nature of politics.

First, it has been said that the tyranny of distance Australia faces in competing in the EC and North American markets has been overcome by the advantage of proximity in competing with the markets of Asia.

It has been our good fortune to share a geographic region with some of the most dynamic economies in the world.

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I would like to add my congratulations to MTIA for establishing an office in Jakarta -the first time any employer organisation has established an office outside Australia. I would like to offer my congratulations and good wishes to our distinguished Indonesian guests who took part in the signing of the memorandum of understanding

this morning.

I'm sure both these measures will enable Australian business to take advantage of the significant opportunities available and help to forge a closer working relationships between the two countries.

Within my own electorate, I have a significant Asian population. We have vast cultural and linguistic skills of our many Asian migrants and we have only just begun to use these to assist Australian business in Asia.

If Australian business is to continue to operate successfully in the highly competitive ASEAN markets, it will be important for government to play its part.

One obvious way that government can help is to provide business with easily accessible information about the regulatory framework within which business must operate to assist in the internationalisation of business.

Conclusion

I began today by comparing the development of policies to address the changing needs of our manufacturing industries to "produce well" for both the domestic and global markets by comparing them to the production of a play.

Our play today has an international cast, with a central plot of good versus bad practices, underlying themes of survival of the fittest and social responsibility, and an invitation for audience participation. The cast was smaller than originally anticipated but committed and in good spirits.

However, today we have only witnessed one act. of this play. There are still changes to be made to the script and many of the actors will change before the final act. -It is my hope and intention that while I remain in public life I will do all I can to ensure that this production will be the result of a dynamic partnership with a cast of many thousands instead of only a few. --

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