Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Wednesday, 9 May 2007
Page: 60

Senator SHERRY (2:01 PM) —My question is to Senator Minchin, representing the Treasurer. Can the minister explain why productivity growth, critical to our long-term economic prosperity, was zero in 2006-07 against a forecast of 2.25 per cent? Is zero productivity growth the best the government can do? If this really is a budget for the future, can the minister also indicate why it forecast productivity growth of only 1.75 per cent per annum over the last two years of the forward estimates? Isn’t this barely half the productivity growth rate achieved during the 1990s? Why can’t the government do better on productivity than we were doing almost a decade ago?

Senator MINCHIN (Minister for Finance and Administration) —I thank Senator Sherry for his question on productivity. Can I first say that at least there is something to be said for the opposition actually focusing on productivity and acknowledging that productivity is important to the Australian economy and important to the future living standards and welfare of the Australian people. In relation to productivity, the Labor Party has been seeking to make much of statistics, but of course there are statistics and statistics. I was surprised that Senator Sherry said, ‘In 2006-07, productivity was zero.’ As far as I can tell, we are in May 2007 and we have not finished 2006-07. So we do not know from the ABS what the productivity outcome for 2006-07 will be, and we will not know for some time.

The last year for which we have productivity figures is 2005-06, when GDP per hour worked in the market sector—that is, productivity—grew by 2.3 per cent, similar to the average of the past decade. According to those same statistics, we had a most peculiar and aberrant decline in mining productivity of some 19 per cent. According to the ABS, mining productivity in 2005-06 fell 19 per cent. That of its own wipes one percentage point off the economy-wide productivity growth figure. If you take the non-mining sector productivity figure for the economy, in the last full year for which we have figures, you have growth in productivity of 3.2 per cent—considerably above the average in Australia for the past four decades.

So the whole basis of the Labor argument about productivity is without any foundation. The statistics themselves establish that productivity is growing at the long-term rate, if you take out this quite aberrant behaviour with respect to mining—which most commentators assume is a function of the fact that you have a lot of investment going in without the output growth that will result from that investment yet coming on stream but you have an increase in employment. That is the cause of this aberrant drop in mining productivity. On that basis, there is no foundation whatsoever for the Labor Party argument on productivity.

This budget focuses on the importance of maintaining Australia’s productivity. We have invested substantially in education to ensure the future productive capacity of the Australian workforce. We have invested substantially in transport infrastructure in this country to ensure that we can sustain the productivity of the Australian workforce. Most importantly, we have brought in far-reaching industrial relations reform. If there is one thing that is an absolute prerequisite for productivity growth it is flexible workplace relations.

If the Labor Party were interested in productivity, the absolute last thing they would do would be to re-regulate the labour market. On that score, I will quote Heather Ridout, who I think would be acknowledged as one of the more modern of the employer group representatives. She said:

Kevin Rudd talks a lot about productivity, but this reregulation—

his re-regulation of the labour market—

will lower productivity.

So, Senator Sherry, if you are interested in productivity—and I accept that you are—go and talk to Mr Rudd about productivity.

Senator SHERRY —Mr President, I ask a supplementary question. If the Minister for Finance and Administration reads page 1.5, table 2 of his own Budget Paper No. 1, he will see that productivity is zero. Doesn’t the same budget paper forecast declining productivity for Australia beyond 2007-08—after your industrial relations reforms? How can it be a budget for the future if the government’s own forecasts show productivity going backwards? Read page 1.5 of your own budget paper. Doesn’t this highlight that the government has squandered the once-in-a-generation $300 billion mining boom and instead has gone with a budget designed to be a clever, short-term election fix?

Senator MINCHIN (Minister for Finance and Administration) —What we know for sure is that if Labor were to be elected at the next election, productivity would go backwards because of their disastrous re-regulation of the labour market. Listen to what Michael Chaney of the Business Council of Australia said:

Despite claiming to support policies that will lead to continued productivity, the ALP has clearly ignored consistent and strong business representations about how productivity and jobs growth is achieved in the economy.

That was the greatest slag the opposition could ever have from the business community, who are responsible for productivity—saying you know nothing about how to increase productivity in this country.