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Wednesday, 11 August 2004
Page: 2019

Dr EMERSON (10:11 AM) —In the Howard government's first budget it cut federal funding for vocational education and training by five per cent. In addition, it cancelled a provision for five per cent real growth in funding. There was the Howard government in its very early days demonstrating to Australia that it was not interested in skills development in our nation. It went further in the second Howard budget—it cut funding again. It cut it again, and it was not until the 2001-02 budget that there were some funding increases. But now we are in the sad situation where negotiations for a new agreement with the states have broken down. The Vocational Education and Training Funding Amendment Bill 2004 reduces the appropriated limit of funds for 2004 and appropriates funds for 2005.

There is an acute skill shortage in this country. Everyone except the government acknowledges it. The government does not want to recognise that skill shortage. Labor does, and Labor has committed to the following: on top of any Howard government funding, Labor will fund 20,000 new TAFE places every year to 2008. That is an indication of Labor's understanding of the skill shortage in Australia and its commitment to doing something real and substantial about it. There are numerous industry surveys that highlight the concern of the business community about the skill shortage. I refer in particular to a survey by the Australian Chamber of Commerce and Industry—a survey of investor confidence from July of this year. ACCI says the July 2004 survey:

... reported for the first time in its 14 years, that the Availability of Suitably Qualified Employees was ... the number one constraint on future investment decisions.

In the survey, the Australian Chamber of Commerce and Industry says:

For only the second time in the history of the survey Business Taxes and Charges ... has been removed from its position as the foremost constraint on investment. Taking number one position for the first time is the Availability of Suitably Qualified Employees ... A much tighter labour market for skilled workers has seen this constraint rise from fifth highest just a year ago to second position in January and April, then finally to first in the current quarter.

While all this has been happening in front of it, the Howard government has been arguing that industrial relations is the main game for business in Australia, whereas business is telling the Howard government and anyone who will listen that skill shortages are the main problem confronting business in Australia. It is not just the Australian Chamber of Commerce and Industry that is saying this—an organisation not noted for its close affiliation to the Australian Labor Party. It does seem to have a fairly close association with the Liberal Party; its head was the party's industrial relations adviser, a former staffer. This is a great democracy and they are entitled to move from the Howard government to head up the Australian Chamber of Commerce and Industry. The point I am making is that they are hardly Labor Party sycophants yet here they are, telling the Howard government that there are acute skill shortages in this nation and the government is ignoring that advice; it is ignoring that advice from the Australian Chamber of Commerce and Industry.

But it is not the Australian Chamber of Commerce and Industry speaking alone. The Australian Industry Group in a recent survey indicates that skill shortages are a top priority. It says:

Member responses to the Ai Group priority survey confirm that current and emerging skill shortages continue to be one of the three most critical constraints on industry growth and competitiveness.

So there is a second industry organisation trying to tell the Howard government that skill shortages are acute in Australia. A third one is the Business Council of Australia.

But the Howard government unfortunately has not been listening. Negotiations for an agreement with the states on vocational education and training have broken down, and we have in front of us a bill which would reduce the appropriation for funding to the states for skills development in our country. In fact, I warned repeatedly in the year 2000 in debate over the GST that the government, although it was talking about an intergovernmental agreement it had with the states not to reduce Commonwealth funding to the states, would renege on that agreement. Indeed, I said time and time again that the government would allow the real amount of tied grants to fall with the passage of inflation without increasing the nominal amount of tied grants to compensate for the increase in inflation; and also that, as the Australian population grew, per capita grants would fall away. The government said at the time, `Trust us; that will not happen.'

You just cannot trust the Howard government, because it has happened and is happening. It is happening in this bill and through the breakdown of negotiations between the Howard government and the states on vocational education and training for funding for ANTA. The Howard government is saying, `The states are getting the GST, so they have to foot more and more of the bill.' So only four years later the prophesy has come true and just about everywhere you look in terms of Commonwealth responsibilities—whether it be in health, higher education, vocational education and training or housing—the Howard government is saying to the states, `Well, you've got the GST, you've got the growth tax and we are in fact going to cut your real per capita funding grants.' That is exactly what is happening and it is happening with this legislation here today.

What a time to be curtailing funding for skills development in our nation. It is not as though the government is doing this just on one front. In another area of acute interest to me in terms of portfolio coverage, the Howard government—and it is hard to believe this—in its award-stripping process has a bill in the parliament to remove skill based career paths as an allowable matter. It says that these matters should not be contemplated in awards. It says effectively that employers under awards should not have any obligation to support the training of their staff—at a time when there are acute skill shortages. I refer to the Australian Industry Group's comment on that. The Australian Industry Group, regarding the removal of skill based career paths as an allowable matter, which is what is proposed in the legislation before the parliament, says in its submission to the Senate inquiry:

While Ai Group is far from satisfied with aspects of the skill based classification structures in some awards, we do not agree that this matter would be more appropriately dealt with at the enterprise level. Skill based classification in awards when appropriately structured are able to assist in elevating skill levels and addressing skill shortages in an industry through linkages with national competency and industry training packages.

Labor agrees. But the Howard government, having had this advice from the Australian Industry Group, is persisting with its legislation to remove any obligation in relation to skill based career paths from awards. So not only is it withholding funding for vocational education and training but it is now also actively seeking to remove any obligation on the part of employers to support the training of their staff—and at a time when there are acute skill shortages.

I refer to some criticism that the Minister for Employment and Workplace Relations has been levelling at the Labor government, particularly of our industrial relations policy in this particular area. Our industrial relations policy would allow skill based career paths to be in awards. We would not be in this government's situation of having highly prescriptive awards where the government is committed to the ongoing process of award stripping.

The minister invoked in parliament yesterday and on Lateline last night commentary of Dr John Edwards, a former Keating adviser and now Chief Economist with HSBC. The minister invoked this advice of Dr Edwards last night on Lateline, yesterday in parliament and several times over the last few days. In respect of the extension of awards beyond 20 allowable matters the same Dr Edwards says that `would not have any serious impact on employment, incomes or productivity'. Yet the minister continues to invoke what he says is criticism by Dr Edwards of our industrial relations policies. This is despite the fact that Dr Edwards on Friday, as reported in the Financial Review on Monday, said he was `reassured by Mr Emerson's commitment to enterprise bargaining with arbitration as a last resort'. That was on the record on Monday, the client note from Dr Edwards was produced last Friday and yesterday in the parliament and on Lateline last night the minister was still invoking Dr Edwards. I was very generous to the minister, wondering whether perhaps he was unaware that Dr Edwards had withdrawn that criticism. But we do know that the minister has a department full of advisers, an office full of advisers and Mr Hanke with his media liaison office, the `ministry of truth'; he would have known that Mr Edwards had withdrawn that criticism last night and yet he is persisting with it.

This is the standard Liberal tactic: you just say it over and over and over again. It does not matter whether or not it is true; you hope that, if you keep saying it, ultimately people will start believing it. The minister and this government must be called to account in respect of telling the truth. Forty-three eminent Australians have finally had enough and called the government to account on telling the truth. I expect fully, notwithstanding what I am saying here in the parliament, that the minister will be here in question time talking yet again about John Edwards's criticism, in the standard Liberal tactic of saying the same thing over and over, even when it is untrue. I seek leave to table a client note from Dr Edwards—the same Dr Edwards—which says in part:

With Friday's release of a detailed policy ALP shadow minister Craig Emerson has gone some way towards reassuring markets that Labor in government would not put the clock back in industrial relations.

He goes on to say:

What Dr Emerson and Opposition Leader Mark Latham appear to be saying is that enterprise bargaining will remain the usual case, and the occasions for AIRC intervention would be few and far between.

Finally, he says:

Incidentally, last week's newspaper accounts of the controversy over Labor's industrial relations policy attribute to us an objection to the proposed requirement on unions and employers to “negotiate in good faith”. We have no such objection and did not express one.

I seek leave to table that document.

Leave granted.

Dr EMERSON —I do trust that the minister, his advisers, his department and Mr Hanke will take note of the fact that that criticism has been withdrawn, but I am not holding my breath. I expect the same repetition of untrue statements from this minister as he has been chortling since he became minister—a litany of Liberal lies.

The fact is Australia desperately needs a new round of productivity growth—a second round. The first round of productivity growth was created by Labor's comprehensive economic reform program of the 1980s and early 1990s. That first round created an open, competitive economy. As a direct result of those economic reforms, Australia has enjoyed a record-breaking decade of productivity growth, where we have outstripped every country in the Western world apart from Finland but including the United States. Productivity growth in Australia has exceeded that of the United States over the last 10 years. Labor in government recognised that today's productivity growth is tomorrow's prosperity, but the truth of the matter is you cannot open up the economy twice. Once the door is open, it is open.

The Intergenerational Report produced by the Howard government in 2002 made a dire forecast. It said that, due to a combination of the ageing of the population and faltering productivity growth, growth in per capita GDP, which is a measure of living standards, will be so slow from 2010 onwards—from the next decade onwards—that it will be the slowest rate of economic growth per person since the decade of the Great Depression. Due to this poisonous combination of the ageing of the population and faltering productivity growth, that Intergenerational Report forecasts that Australian productivity growth from 2005, next year, will revert to its 30-year mediocre long-term average. That is, the advisers to the government, the Commonwealth Treasury, are advising the Howard government that from next year onwards Australia's productivity growth will slump. They are not alone; in publications from the Productivity Commission there are indications of a concern about faltering productivity growth.

You would think that in those circumstances the Howard government would be examining the ingredients, the necessary policy changes, to secure a second round of productivity growth—that very important second round of productivity growth so necessary to heading off the Intergenerational Report forecast that per capita GDP growth from 2010 onwards will be the slowest since the decade of the Great Depression. And we know from the Australian and international literature that the new sources of productivity growth—that vital second round of productivity growth—in Australia and around the world will be ongoing competition, which was created by Labor, and investment in skills and innovation. They will be the major sources of productivity growth for any country in the 21st century.

That highlights the complete inadequacy of the Howard government when it comes to responding to the skills shortage, because this legislation does not provide any additional funding for skills development in this country. When the Howard government went on its $52 billion pre-election budget spending splurge, I asked members of the parliament: how much extra did the government allocate in the budget for skills development in Australia? The answer is zero; not one cent. Such is the government's understanding and commitment to skills development in this country and such are its priorities that it could not identify one extra cent for skills development in Australia.

I refer to some of the literature that is a damning indictment of the government over the last 8½ years. A paper from the Productivity Commission dated December 2003 and entitled `Sources of Australia's Productivity Revival' identifies and confirms what I have just said—that is, the major source of productivity growth in the last decade in Australia has been the opening up of the Australian economy, which was done by the previous Labor government. The paper says:

... the estimates suggest increases in productivity growth of the following orders of magnitude in response to changes witnessed in the Australian economy since the mid-1980s—

when the Hawke government was in power—

half a percentage point from increased openness, three-tenths of a percentage point from domestic R&D and two-tenths from ICT-related innovation.

There you go: productivity grew half a per cent from opening up the economy—that is 50 per cent of the growth—30 per cent from domestic research and development, and 20 per cent from innovation. How did skills development contribute to productivity growth in the last decade? Remember that this government has been in power for 8½ years. The answer is in the same paper. It says:

... the weight of evidence suggests there was a slower rate of accumulation of human capital in the Australian workforce in the 1990s, which all else equal would have detracted from a productivity acceleration in the 1990s.

The Productivity Commission is warning that skills formation in the last few years has detracted from productivity growth. It is the major source of new productivity growth around the world, yet it has detracted from Australia's productivity growth. Similarly, Gary Banks, Chairman of the Productivity Commission, in a speech called `Australia's economic “miracle”' says:

But there appears to have been no significant acceleration in workforce skills in the 1990s. In fact, the evidence shows a faster increase in skills in the 1980s.

That is a damning indictment of the Howard government from the Productivity Commission. The Howard government have failed even to recognise the problem, let alone address it. OECD analysis titled The policy agenda for growth indicates that policies to increase work force skills generate growth. That is the conclusion of the OECD, of economists around Australia and of the Business Council of Australia, which calls for extra investment in skills development in Australia. What have the government done in response? Nothing—there is not one extra cent in the budget for skills development in Australia. They want to strip it out of awards, they want to take Australia down the road to low skills and low wages and they want to turn their backs on the major source of productivity growth for tomorrow's prosperity: skills development. Only a Latham Labor government would be committed to creating 20,000 new TAFE places and skills development in this country. (Time expired)