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Restoring Australia's resilience: playing to our strengths: address to the Australian Young Liberals Federal Convention 2011,



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THE HON ANDREW ROBB AO MP Shadow Minister for Finance, Deregulation and Debt Reduction Chairman of the Coalition Policy Development Committee Federal Member for Goldstein

Sunday, 30 January 2011

Address to Australian Young Liberals Federal Convention 2011

Restoring Australia’s Resilience - Playing to our Strengths The devastating Queensland and Victorian floods are a sobering reminder of our vulnerability to unforseen events.

In a similar vein the floods have highlighted just how exposed this government ha s left us if the Northern Hemisphere experiences a double dip recession - Labor's now obvious inability to budget and to provide back-up funds for emergencies has been exposed.

For well over 12 months now the Coalition, the RBA, Treasury, Finance and busi ness have been urging the government to stop its endless spending and $100 million-a-day borrowing.

To take pressure off interest rates. To tackle productivity reforms. To restore some economic resilience, to restore some prudence to their financial management.

The government’s failure to take the tough decisions explains the serious cost of living pressures being felt by millions of Australians.

Sadly, a leopard doesn’t change its spots.

Labor has wasted the last three years, and is wasting the mining boom.

The reason is simple, philosophy matters.

Labor believes in making choices for people. They have been making bad choices.

We believe in people and businesses making choices for themselves, and taking responsibility for their actions.

It’s a nanny state versus the freedom to choose.

And for that reason again, it now looks like the Labor-Green government is going to waste another three years.

Treasury’s post-election advice to the Gillard government confirmed that Labor had indeed lost its way.

Nearly five months later Labor, now beholden to the Greens, continues to lose its way.

Labor remains with no agenda, no coherent policy framework, no real reform program; their values have been vanquished and they continue to shirk all the hard issues.

They are obsessed with the pretence of doing ‘grand things’, instead of kick-starting a reform agenda.

Julia Gillard is drowning in unresolved problems and has provided no direction, no authority.

Her colleagues are all doing their own thing, particularly Kevin Rudd, wh o is playing a totally lone hand. Labor exists as a leaderless rabble.

As a country we are treading water, which means we are going backwards.

Imagine where we will be after another three years of such incompetence and hand-wringing?

Niccolo Machiavelli once wrote: “After a strong prince, a weak prince may maintain himself, but after one weak prince, no kingdom can stand a second.”

Well. Time’s up.

We now need a strong and decisive government which:

- lives within its means, - backs Australia’s strengths, - restores the economic resilience the Rudd-Gillard government inherited and subsequently wasted; and

- a government that will trust individuals, communities and businesses to make their own choices and to take responsibility for what matters most to them.

Global Uncertainty

With increasing financial globalisation over recent decades, we now find that regional pockets of financial instability transmit that instability immediately around the world.

As this phenomenon has developed so too has the influence of government actions on business uncertainty.

The recent global financial crisis (GFC) showed that governments are now among the most influential factors in the markets today; bailing out or nationali sing companies, or pouring hundreds-of-billions or trillions of dollars into economies.

As a consequence, the major advanced economies of Europe, the US and Japan are deep in debt with no obvious exit strategy.

The need now to anticipate the minds of global policy makers has added enormous complexity to the role of investors. This added uncertainty suggests that much greater market volatility is here to stay.

And higher uncertainty is the enemy of investment and growth.

In tackling the global financial crisis, the IMF corralled the G20 group of nations into a massive Keynesian response. This contributed hugely to the subsequent Europe-focussed, sovereign debt crisis, as debt moved from the finance sector to the public sector.

International lenders refused to finance larger and larger budget deficits in southern Europe, forcing the IMF to totally reverse their earlier advice and prescribe spending austerity by these governments.

The implications for Australia of the growing volatility are profound.

Given the highly exposed nature of our economy, with our massive dependence on foreign capital to finance much of our development, we must not allow ourselves to be panicked by the G20 into inappropriate policy moves, as happened with the massive overspend on Australia’s stimulus packages.

The Coalition supported the first $10 billion stimulus package top restore confidence. All the second $20 billion stimulus did was give us now the highest interest rates in the developed world.

While the G20 has potentially much to offer as a forum, we nevertheless must be masters of our own destiny. While there may be comfort in numbers, it can often be short-lived.

The fact is that renewed volatility in global financial markets underscores the risk of massive levels of sovereign debt, and the fragility of much of the developed world.

Australia is highly vulnerable.

If a global financial contagion takes hold, sparked by concerns over sovereign liquidity in Europe, then the commodities boom will again be cut short.

The rapid growth of emerging markets such as China, Brazil and India are fuelling spiralling food, oil and raw material prices around the globe, raising fears of inflation and higher interest rates.

This comes at a time when Europe is balancing a widening debt crisis, and the US is printing money as if there is no tomorrow.

And history suggests that banking defaults are followed by sovereign defaults which prompt monetary responses that end in inflation running wild.

Our response must be to urgently rebuild the economic resilience the Rudd-Gillard government inherited, if we are to build business and consumer confidence, and weather any new world-wide financial crisis.

The response must stop unnecessary and wasteful spending. It must lock in true budget surpluses so we can start to pay down debt. It must back our strengths. And it must embark on a bold productivity-based growth strategy.

Structural Deficit - Living Beyond Our Means

The Rudd-Gillard governments have been spending all the proceeds of the mining boom on today’s budget rather than putting it aside for a rainy day.

It’s like the worker in a car factory who takes out a 25-year, $550,000 mortgage on the strength of an extra $20,000 a year in overtime from a surge in new orders.

While the overtime is coming in he can meet the $47,000 annual repayments.

But when the overtime dries up he will have a $20,000 annual shortfall and realise that based on his regular earnings he should have borrowed $300,000 maximum.

He can get further into debt or reduce his expenses, and pay down his debt by buying a cheaper house.

This factory worker’s household budget has what is known as a structural deficit; that is once the good times have ended he can no longer afford the commitments he made during those good times.

For the Rudd-Gillard government the China resources boom is like the overtime the factory worker once enjoyed.

But boom times don’t last forever.

The Rudd-Gillard governments have won the lottery with the resources boom, and are in the middle of wasting it.

So even if the Gillard government does record a tiny surplus in 2012-13, it will be an illusion; it can only occur because they are spending all the proceeds of the mining boom.

As it is, the flood disaster has highlighted the fact that the 2012-2013 budget forecast had no contingency whatsoever for any unforeseen events.

The ‘so-called’ surplus also ignores the spending commitments made during the boom times which still need to be met once the boom tapers off and revenues fall, commi tments that will very quickly see the budget dive into deficit.

By failing to ‘bank’ the windfall gains, and by making spending commitments that require boom time income to sustain, it means that whoever is in government will spend the remainder of this decade paying off Labor’s structural deficit.

The magic pudding that is Labor’s balance sheet today will be exposed.

The Treasury predicted this in a paper released on 1 October 2010.

If you adjust the budget for movements in the business cycle and return to typical commodity prices the structural deficit remains around $50 billion for the next four years from 2010-11 through to 2013-14.

So these massive deficits confront Australians for the next decade despite China’s two recent booms adding an extraordinary $230 billion to the budget bottom line over the last 10 years.

And remember, it is only after these staggering deficits are paid off that the Federal Government of the day can then start to pay off the $90-100 billion debt created over the last two years.

You can’t pay off debt while your costs continue to exceed your income.

And it is not as though the Rudd-Gillard government has exercised any spending constraint, even if you disregard the panicked and hugely wasteful over-spend on their stimulus prog rams.

Currently, if you exclude the effect of the stimulus spending, the rate of real spending growth is averaging close to 4 per cent over the forward estimates.

Both Treasury and Finance have warned the government that spending all the proceeds of the mining boom will overheat the economy, create a serious skills shortage and exacerbate the structural deficit problem.

And so, this profligacy has played a big part in interest rates climbing over the last 15 months.

Mortgage payments have increased by $6000 a year on the average $300,000 mortgage. At least half of the $6000 increase in mortgage payments can be attributed to this excessive government spending.

A concerted attack on government spending would take some pressure off further rises in interest rates and the strong dollar.

This growth in spending, of course, makes no allowance for major spending commitments cleverly announced for just outside the budget outlook.

This includes Defence acquisitions and significant infrastructure, including $3.57 billion worth of road and rail projects from 2014-15.

There are also annual costs of $1.7 billion for overseas Defence operations not factored into the Budget beyond 2010-11.

Labor’s post-election commitments to the Greens and Independents worth $2.4 billion also remain largely unfunded.

Our Federal Government is living seriously beyond its means.

It’s no wonder they are looking for every opportunity to introduce new taxes.

The Gillard government should own up to the real state of the books and begin a substantial round of spending cuts and reforms to restore the economic resilience inherited by the Rudd-Gillard government; to provide a safety buffer of public savings in the case we need it again.

So the real surplus is one that acknowledges and meets the cost of the structural deficit. At the moment Treasury estimates that to be a decade away.

Backing Our Strengths

At all times the best outcome is achieved if you back your strengths, whether you are talking about the strengths of an individual, a business or organisation, or a country.

This is particularly true at times of vulnerability, as is the case with Australia in a very uncertain world.

To punish our great strengths, our wealth-creating sectors such as the miners rather than encouraging them to do the heavy lifting in growing the economic pie, is a perverse and misguided way to address the two-speed economy.

Labor’s age-old instinct to redistribute monies, even at the expense of damaging Australia’s wealth generating capacity, still remains strong.

In Australia’s case our major strengths, our major areas of comparative advantage, are the mining sector, the agricultural sector and services, particularly the education sector.

i) The Mining Sector

The government’s so-called super profits tax on the resources sector is a tax grab to pay for continued politically indulgent spending, it is not tax reform.

Playing politics with our strengths is a very dangerous ploy.

You don’t prosper by penalising your strengths.

And how are the several measures ear-marked to be funded by the mining tax going to be funded when the mining sector is no longer making so-called super profits?

This could happen sooner than we think.

If there is a double dip recession in the Northern Hemisphere the first prices to collapse will be commodity prices, and projected budget income from the mining tax will evaporate.

The longer-term problem is that Australia’s mining competition in other countries pay much less than the proposed 45 per cent in Australia, with the US at 40 per cent, Brazil at 38 per cent, Canada at 32 per cent and down from there.

Now Australia looks riskier and far less profitable.

There is a growing sense that the government doesn’t understand the nature of investment in a globalised world, nor how key markets work, that they are dangerously out of their depth.

Attracting international investors will be harder going, and not just for mining, now that Australia has gained a reputation for reckless decision making and an appetite for retrospective taxation. Now we have a sovereign risk problem.

The mining tax must be dropped.

ii) Coal

Much of Australia’s prosperity, and in particular Victoria’s, was built over the last 100 or so years on the back of cheap electricity, cheap coal-fired electricity.

At a global and company level it is freely acknowledged that by 2070/2080 the composition of the global energy mix will still have coal at around 70 per cent of the total energy used,

despite generous assumptions about the growth of renewable energy sources and nuclear power stations.

Australia has hundreds of years of brown and black coal.

China is completing the construction of a 500 MWH coal fired power station every nine days, and plans to continue to do so for the next 10 years.

These facts don’t change whether or not there is a world tax on carbon.

Yet, we are now proposing to impose a super tax on coal, in addition to a carbon tax.

We are proposing to penalise one of Australia’s great strengths.

Coal will be demanded and produced around the world for at least the next two centuries, regardless of whether Australia today seeks to regulate and price it out of use.

Many, many thousands-of-millions-of-dollars have been spent on renewables, pink batts and other programs, with relatively little research and development spent on ways to reduce or eliminate Co2 emissions from the use of this massive and cheap energy source.

Carbon capture and storage in underg round aquifers has been exhaustively investigated and is likely to be commercially viable only in exceptional cases.

Research and development of alternative techniques of minimising or capturing Co2 emissions from the uses of coal must be a national priority.

Advanced technology which captures 100 per cent of Co2 from coal fired power stations in fuel produced via blue-green algae, is at the stage of being commercially proven in the United States.

Similar Australian ventures have been largely ignored by this government. Yet success would mean not only solving a major emissions issue, but also see Australia produce a large proportion of its fuel needs.

The anti-coal sentiment of this government and its advisers must change. One of our great strengths is being undermined and threatened through blind ideology.

iii) Uranium

Similarly, blind ideology and internal Labor factional politics is behind the Rudd-Gillard government’s banning of uranium sales to India for peaceful, nuclear power generation.

The decision defies all logic and continues to undermine Australia’s relationship with the world’s largest democracy.

From the perspective of reducing global emissions the Gillard government could do nothing more effective than assisting India to meet much of its rapidly growing energy needs with clean, nuclear power generation.

This is supported by the very stringent conditions India has accepted to enter the international market for uranium for peaceful purposes.

Global non-proliferation would also be greatly strengthened by including India, a country which has an exemplary record on not sharing or selling nuclear technology.

Yet, the Gillard government is more than happy to sell our uranium to the likes of Russia and China.

The Rudd-Gillard government reneged on the agreement by the Howard government to allow the export of Australian uranium to India.

Given that Australia has 40 per cent of the world’s known uranium reserves, this undermining of one of our great strengths is illogical and totally unacceptable.

A Coalition government will immediately reinstate the agreement by the Howard government to allow the export of Australian uranium to India.

iv) Agricultural Sector

Australia long rode on the sheep’s back.

While mining, services, manufacturing and other sectors have progressively grown, agriculture remains a huge strength.

Despite challenging environmental conditions and competition from subsidised overseas goods, our farmers have continuously improved both the quality and quantity of their produce.

Our farmers are among the most innovative in the world.

So as the world’s population grows, and grows more prosperous, the potential for agriculture is enormous.

Already Australian agriculture feeds 60 million people a year and has scope to do much better.

This is evidenced by productivity improvements.

For the 20 years prior to the arrival of the recent drought, and now flooding rains, agriculture led all other sectors in Australia in terms of productivity improvements.

In fact, some of the slow-down in productivity this century must be attributed to the impact of drought on agriculture.

In the past, strong industry and government-funded research and development have underpinned this productivity performance.

The $75 million cut by this Labor government out of agricultural research, to part-fund massive waste in other areas of their budget, is extremely short-sighted. Many of this government’s priorities are sadly misplaced.

This displays ignorance more than indifference, towards Australian agriculture by the Rudd-Gillard governments.

This ignorance is on display in regards to the other critical issue impacting on our agricultural sector, namely, water availability and management.

If agriculture is to reach its potential and restore confidence and some certainty to key areas, particularly the Murray-Darling Basin, the issue of water rights and availability must be sorted out.

The badly botched attempt by the Gillard government to address this issue gives no-one any confidence.

If Australia’s vulnerability in an uncertain world is to be helped by a high-performing agricultural sector, this water issue must be effectively resolved, and as a priority.

Many changes and innovations have driven agriculture’s strong productivity record.

These changes of course include the vast agribusiness component of the agricultural sector.

With the increasing globalisation of business, much change is occurring world-wide with the structure and ownership of agribusinesses.

Given the critical importance of competition in maximising productivity outcomes, government and the ACCC need to be vigilant in ensuring that no sector of agribusiness develops too great a concentration of ownership.

v) Education Sector

Australia’s human capital, backed by the strength of our schools and higher education sector, is often underestimated, but clearly is one of Australia’s top three strengths.

Wise investment in improving the quality and breadth of our educational experience, through all stages of our lives, is critical to the continued growth in our economy and improvement in our quality of life.

The emergence of a major secondary and tertiary international student sector over the last 20 years is testament to the strength of the educational offering in Australia.

The enduring and vast regional networks generated from this international student cohort will be of immeasurable benefit to Australia’s future relationships, particularly in our Asia -Pacific region.

It will significantly aid our further economic integration into the region, as well as assist understanding and respect in our people-to-people and country-to-country relationships.

Maintaining and further improving our educational offerings, depends critica lly on maintaining and further improving the quality and experience of our teachers.

As well as greater community investment in our teachers, this objective will be further advanced by greater management autonomy throughout all of our educational institutions, greater customer choice and greater flexibility to provide incentives and a teaching experience tailored to the preferences of individual teachers.

The dreadful $6-8 billion waste of monies in the Gillard government’s Building the Education Revolution program has not only sold the education sector sadly short , but has undermined the community’s trust in Labor’s ability to manage money.

The $1.7 billion blow-out to date in the BER program is virtually the amount of money Labor plans to raise from its new flood tax, and BER could blow-out further with reports that funds are not sufficient to cover the overall cost of projects.

Under all circumstances a Coalition government will seek to build and foster greater effectiveness across our education and training sector.

Productivity

Kevin Rudd started 2020 with an announcement of his intention to deliver productivity growth of 2 per cent per year.

Yet, 2010 saw the Rudd-Gillard government go backwards on productivity with the re-regulation of industrial relations, the gambling of $50 billion of taxpayers’ money to re -nationalise telecommunications, Wayne Swan’s botched mining tax, the choking bureaucratisation of COAG, the huge loss of competition in the fina nce market, the new taxpayers subsidies for coastal shipping, the chaotic handling of the Murray-Darling Basin management and the billions-of-dollars spent on desalination plants and subsidising wind farms, as well as uncertainty over tax reform and emissions trading.

Much is to be done on the productivity front to reverse this sorry story:

i) Policy politicisation

The policy reviews commissioned by the Rudd-Gillard government, which have preceded any proposed major reform, have either been perceived as being not at arm’s length, not above politics, or virtually ignored, as is the case with the Garnaut volumes on an emissions trading scheme.

As such, the central role in making the case for reform played in the past by independent, high-level public inquiries has been sorely missing.

As a consequence, the reform process has run into the sand.

And under Julia Gillard things have only gone from bad to worse.

The review committee established by Julia Gillard to investigate the merit of a tax on carbon is bound to secrecy, and only ‘true believers’ were eligible to take part.

The obvious merit of a broad-ranging public review of the finance sector, following the global financial crisis, has been rejected out of hand.

The heavy politicisation of the policy reform process by this government has not engendered the necessary community trust and understanding necessary for success.

Under a Coalition government this will change.

ii) COAG

Much of the reform required in the areas of water, energy, business regulation, transport, health, and other economic and social infrastructure, requires the cooperation of the states.

Yet, the much heralded era of cooperative federalism through a revamped COAG, has largely ended in a state of paralysis, buried under a suffocating weight of bureaucracy, and a federal government with a tin ear, where cooperative federalism invariably meant falling into line with the Commonwealth’s great wisdom and wishes.

The fact is Australia is not a one state country, it is a federation of autonomous states; and there is much wisdom and benefit in a country of the size and diverse nature as Australia, maintaining a truly federalist model.

This does not mean we can’t achieve harmonisation of rules where it makes sense, but the essential competitive benefits of autonomous states must be accommodated.

At the moment COAG is a process which invariably establishes the lowest common denominator, if anything is established at all.

A Coalition government will respect the role of the states, and seek to establish approaches which reflect the nature of a federalist structure, such as negotiating baseline positions above which states are free to apply differing provisions for competitive or local reasons.

iii) Transparency and Value for Money

Over the last few decades has emerged a tradition of rigorous cost-benefit analyses of major public investments following the 1965 Vernon Report which poured scorn over the poor investment assessment of public projects and the consequent waste of billions -of-dollars of taxpayers’ money.

Without proper appraisal governments cannot be held to account.

About three years ago, fresh from electoral victory, the then Labor Finance Minister Lindsay Tanner announced that the Rudd-Gillard government would undertake no significant project without a published cost-benefit analysis.

Yet, despite since committing close to $100 billion in infrastructure projects, there’s been no project that has had a benefit-cost analysis. Not one.

It is why Labor has failed so absolutely to provide a convincing business case for Australia’s biggest ever infrastructure project, the National Broadband Network.

This $50 billion project holds major risks for the public balance sheet, for competition and for efficiency.

This arrogant broken promise is a hugely irresponsible act, and is part of Labor’s retreat from genuine micro-economic reform.

Such analyses act as vital insurance against potentially massive waste of taxpayer monies.

iv) Tax/Welfare-to-Work/Skills Shortages

Incentives and disincentives are a most powerful factor in influencing human behaviour.

As such, skills shortages, the rising cost of paying disability pensions, Australia’s competitive position, managing issues associated with an ageing population and maximising the incentive and reward for hard work and enterprise means taxation reform, including an overhaul of welfare-to-work incentives, is a very high priority.

Despite this, it is now nine months since the Henry tax review was released.

While pursuing one dud recommendation, a tax on our greatest economic driver, mining, almost all of the 138 recommendations remain in limbo, untouched.

Yet many of the tax proposals warrant serious consideration such as the recommendation to markedly increase the tax free threshold and seriously flatten and lower income tax rates.

Such an approach will encourage those out of the workforce to look for work, encourage those on disability benefits to return to work, and reward and encourage the enterprise of those in work.

The Coalition will pursue that direction of policy.

To that end the Coalition will put a detailed tax reform proposal to the people at the next election, with a view to beginning immediately with its implementation.

v) Industrial Relations

The Rudd-Gillard opposition rode to electoral success in 2007 with its centrepiece policy to remove Work Choices.

This principally meant restoring the “no disadvantage test” to all forms of wage negotiation.

The Labor government was given that clear mandate and has since removed Work Choices.

A future Coalition government will accept that mandate and will not revisit Work Choices.

The concern that is being conveyed by both business and employees is that the Rudd-Gillard government has not only removed Work Choices, but has also reversed key elements of reforms introduced as far back as the Howard government reforms in 1996, and even elements of Paul Keating’s reforms in 1992.

These discarded reforms are considered to have contributed hugely to the strong productivity performance through to the early years of this century, and laid the foundations for the 22 per cent real increases in wages over the Howard years.

The only way to get sustainable real wage increases is to see productivity improvements.

Concern is being expressed that the Gillard changes have gone well beyond Work Choices and are encouraging a return to the inflexible, centralised, union-dominated industrial relations culture of the 1980s - the antithesis of productivity.

Certainly, the swagger of the unions has returned.

Concern is being expressed that the Gillard changes have tipped the balance too far the other way, to the point that the Fair Work Act has made the system neither simpler, fairer nor more productive.

In fact, reports are that employers are finding flexibility diminishing, compliance very challenging and more costly, and a system that is increasingly interfering in the capacity of businesses to reward and organise their workforce to encourage innovation and greater competitiveness.

With interest rates and the dollar rising, and wage pressures growing, Australia can ill -afford to go backwards on productivity in the workplace.

As the Coalition promised at the last election, we will assess the implications of the Gillard reforms during this term. We are relying on feedback from employers, workers and industry groups and the like to confirm these reports.

If we confirm that the changes have in fact tipped the balance too far, we will present necessary changes for consideration at the next election.

vi) Health

Labor’s so-called health reforms centralise more power in Canberra, establish yet another layer of bureaucracy and reinforce the power of public sector unions.

Canberra’s 5,000 health bureaucrats know much about funding states to run hospitals but haven’t a clue about their day-to-day running. Now Julia Gillard wants the bureaucrats to be part of running 762 hospitals.

This is proposed despite state-run hospitals already operating under a huge administrative burden as many states have steadily increased their power over hospitals, often abolishing the critical positions of medical superintendent and matron.

The solution is not more one-size-fits-all administration.

The Gillard government proposal just continues the mistakes of the last two decades where hospital administration has expanded even further, at the expense of spending more money, and spending it better, in the public hospitals themselves.

From a productivity point of view this will take Australia backwards.

Micro-managing hospitals from a distance has failed. To extend that micromanagement to Canberra would be a deeply retrograde step.

Rather than add further layers to the bloated and ineffectual centralised administration that already exists, the opposite must occur, with local hospital boards being established and given true responsibility for overseeing the management and effectiveness of their hospital.

vii) Vocational Education and Training

In the future over 60 per cent of jobs will require technical or vocational qualifications, yet only 30 per cent of the population has these qualifications.

If this is to be corrected we must start by restoring the status of technical and vocational training.

The relentless talking down of technical education through the ’80s and ’90s has fostered a generation of parents who feel that they have failed if their children do not pursue a university education, regardless of the particular technical, creative or other vocational talents of their children.

This attitude has effectively denied many of the recent generations of young Australians the fulfillment and happiness that comes from doing what they do best, and to the best of their ability.

We need a nation that once again values a high quality technical education as much as a university degree.

A responsive and flexible culture in the workplace is fundamental to the Australia of the 21 st century, and as far as vocational and technical training goes, is based on choice, access and industry involvement.

Choices in training drive innovation and quality, fill training gaps as training organisations compete to meet industry needs, and provide individuals with control over where they get their training, how they get their training and at what level.

But choice can be illusory if it is not matched with access.

Access should be tailored to individual circumstances, whether on-line to regional centres, on-the-job in small businesses or manufacturing plants, after hours, at home or within the more traditional training environment.

True choice also requires industry involvement in the training agenda to ensure that it is relevant and effective, that it meets not just the demands of today but tomorrow.

The characteristics of choice, access and industry involvement, along with self -esteem, incentives and portability will drive our training programs to be responsive and relevant, in the TAFEs, private training and community training organisations.

The nation’s 74 TAFE colleges, across 1,386 locations, teach more than three quarters of a ll vocational and technical students. The leading TAFEs are typically $100 million businesses, with a client base totalling more than 1.4 million individuals, and industry sectors relying critically on their performance.

Australia’s TAFE sector would benefit from greater microeconomic reform.

They need to be more responsive to the users of the system - employers and students alike. That in the end is what microeconomic reform is all about.

To achieve this, TAFE colleges need a measure of autonomy at least equal to that which universities enjoy.

Yet, some state governments still exercise choking centralised control which precludes effective industry involvement, and leads to little meaningful connection with the workplace during training and little experience and training on current technology.

These rigidities have been extended as Labor’s award ‘modernisation’ has now drawn in private training providers that previously operated under individual contracts.

Victoria runs by far the most decentralised model, where TAFEs are able to operate on a commercial basis, removed from centralised control. Others are heading in that direction.

The irony is, the reforms that make the Victorian TAFE system the outstanding performer in Australia started in the mid ’90s because the State had to become competitive again, after the basket case that was Victoria in the late ’80s and early ’90s.

Such TAFEs can be more flexible in delivering courses and training; can adjust to new course demands faster; are able to develop customised curriculum to suit individual and employer requirements; raise the largest amount of revenue, have more overseas campuses, and see significant numbers of students studying for a diploma, or higher.

Increasing the autonomy of TAFEs like they have done in Victoria would breathe new life into a massive training infrastructure, and is essential if vocational and technical training is to have the responsiveness and flexibility needed for the Australia of tomorrow.

A Coalition government will, as a priority, seek to foster far greater autonomy in the management of many TAFEs.

viii) Mental Health

Mental illness afflicts more Australians than almost all other health disorders. Almost half the nation’s population will experience a mental health disorder at some stage in their life.

Countless others will be impacted by mental illness as a family member or friend grapples with a mental health problem.

Studies have revealed that one in five Australians will experience some type of mental health disorder in any given year.

Yet, only one third of sufferers seek help and an alarming 65 per cent of sufferers battle their disorder alone or only with the help of family or a friend.

There is enormous scope to see a strong productivity dividend result if significant numbers of those affected were to seek professional treatment, literally hundred-of-thousands could find themselves more productive in the workplace or able to re-enter the workforce.

As well as a funding need, existing resources could deliver more with greater coordination, targeting and improved accessibility.

The issue of stigma attached to mental illness remains a significant barrier to people confronting their condition.

In conclusion

In conclusion, despite Labor’s ‘fiscal conservative’ campaign rhetoric of the 2007 election, the Rudd-Gillard government has turned out to be a totally different beast.

Mr Rudd’s rhetoric proved to be a Trojan horse for old-style, interventionist Labor - a government that has overseen the greatest growth of government in our lives since the disastrous Whitlam years.

There is an urgency about reversing this interventionist approach which has led Australia to be so vulnerable.

And remember, the mess from three years of Whitlam took over 20 years to fix.

In three short years the Rudd-Gillard government has provided a most powerful reminder that the nanny state doesn’t work.

To prosper as a people, Australians must be free to make their own choices, and take responsibility for how they lead their lives, as long as they do no harm to others.

Philosophy does matter.

[ends]