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Nation building and Australian values: address to the Curtin Institute of Public Policy, Perth: 17 March 2006. \n



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LEADER OF THE OPPOSITION THE HON KIM C BEAZLEY MP

CHECK AGAINST DELIVERY EMBARGOED UNTIL

DELIVERY

ADDRESS TO THE

CURTIN INSTITUTE OF PUBLIC POLICY PERTH 17 MARCH 2006

NATION BUILDING AND AUSTRALIAN VALUES

Thanks for the opportunity to speak at this Public Policy Forum.

Congratulations too on the growing role the Curtin Institute is playing in policy debate. Too often those debates are cosy conversations between Canberra, Sydney and Melbourne. We need to change that.

My faith in the essential worth and contribution of open, vigorous discussion on issues of public policy has underscored and inspired my 25 years in Parliament.

And the reason I’ve been so determined to serve over this period is my belief in two things: nation building and Australian values.

A belief in the vast potential of this country and our people. A belief that the Labor Party I lead can create a more prosperous, more secure Australian nation.

This is what guided my 13 years as a Minister. It’s what drives me today. And it will drive my every waking moment until the election I will win in 2007.

It’s why I believe these past 10 years have been the wasted years. It’s what makes me despair of the Government’s Americanisation of industrial relations, education and health.

These are the things that drive me to defeat an arrogant and out of touch Howard Government, to end the deliberate and divisive erosion of the values Australians hold dear and to build a secure and prosperous future for our country.

There are a lot of public figures who didn’t grasp their opportunity to change Australia. Some have claimed they’re tougher than me … and not many of them are still around.

Think of the Peter Reiths, the Michael Wooldridges, the Ian Sinclairs; the Richard Alstons - and even some on my side of politics. They gave up, succumbed to the pressures of public life.

Not me. I’m still around and I’m intent on delivering the nation building agenda I believe in.

Now, I’m sure it can’t have escaped you that the last few weeks have been trying times for federal Labor.

My response? I refuse to be distracted.

I’m redoubling my efforts. Getting fit for government. Working harder. In every State and Territory, outlining Labor’s agenda.

Talking to Australians about what’s real to them; what’s happening in their lives; about their hopes and aspirations.

That’s why I spent yesterday addressing another challenge long neglected by the Howard Government - the collision between work and family life that mums and dads are dealing with every day.

That’s why I’m coming up with solutions. Like my announcement yesterday that, when elected, I will provide new capital funding to establish new childcare centres on primary school grounds.

It means less time in the traffic and more time for mums and dads - an end to the dreaded ‘double drop-off’ of kids.

It’s also a winner for an economy desperate for skilled workers - making it easier for parents to do more paid work.

There’ll be more good ideas like these as I put together my plan for Australia’s future: my Blueprint speeches and policy releases.

You see, this is my big chance to change Australia - to build our nation - and I’m not going to squander the opportunity.

So let me tell you today about nation building, Beazley-style:

! About making this nation competitive again. ! About making products the world wants, and exporting them.

! About skilling our people up, investing in them. ! About protecting our prosperity and building our community.

Neglected challenges

First, the challenges neglected by a complacent Government.

Now, we all acknowledge that too frequently political issues, business issues, national security and quality of life issues are considered only over the short term.

Whether it’s quarterly financial reporting cycles, weekly opinion polls, nightly TV ratings or hourly news cycles, it’s too easy to have a short-range view. We end up with a close up view of the immediate realities, but only a blurred vision of

where we’re going.

We can become like a driver who is focused on the windscreen, instead of the road that lies beyond it.

But national leadership is all about looking ahead: identifying the risks and challenges that are coming up, and confronting them.

That’s what we need right now in our economy.

I think the good times that many people have enjoyed over several years have dulled our senses.

I fear that we’re missing the warning signs that suggest we face serious risks and threats over the next decade and beyond.

Don’t get me wrong. On this side of Australia, none of us can miss the indicators of economic strength.

! Western Australia's economy has achieved Chinese-style growth in recent years. ! China’s hunger for raw resources has fuelled the highest commodity prices on record, and Australia is surfing a wave of high commodity prices. ! And that is having a direct effect on our economy - to the tune of around

$40 billion extra income every year, boosting profits, incomes and business activity - $7,000 for every Australian household.

And the current boom has come after a long, buoyant business cycle of:

! Sustained economic growth; ! Low inflation;

! Rising real wages;

! Record productivity growth during the 90s; and ! Official unemployment rates down to 5 per cent - although we still have high levels of underemployment and working age people relying on income support.

But any student of history will tell you, things can change quickly. And terms of trade booms almost always lead to recessions afterwards.

The risk of a hangover when we wake up after the current commodity boom is made greater by the major structural problems that the Government has been neglecting:

! A record trade deficit; ! The collapse of manufactured exports growth; ! Soaring foreign debt; ! Deep-seated problems in our education and training systems; ! And long-term erosion of our national infrastructure.

The character of our economic growth has changed in the last five years. When you take out the effect of the resources boom, Australia has slipped badly in our performance on global markets.

Export volumes have been almost flat across virtually every category - that’s despite the best period of global economic growth in 30 years.

Admittedly, the global resources boom has become a 21st century Gold Rush. It’s now the principal reason for our economic strength. But if you look at our production figures, we’ve actually had several years of slow growth.

Incomes have risen fast because of these record commodity prices. And this is great for Australia. But it won’t last forever.

This is our challenge. We must focus on strengthening Australia’s economy beyond the current resources boom. I believe the Government has left Australia unprepared. Because the massive trade benefits of soaring energy and mineral prices are obscuring serious imbalances in our economy.

The widening gap where we’re consuming much more than we produce. Between what we’re importing and what we export.

The gap between the numbers of skilled workers going into retirement, and the numbers of trainees and apprentices.

The slowdown of productivity growth, which in recent years has fallen below even the productivity rates we achieved in the ‘60s and ‘70s.

The problem of our households spending more than they earn.

The deterioration in export performance in almost every sector except mining.

The burden of one of the world’s highest levels of foreign debt.

In the past two years, we have seen the greatest increase in foreign debt in our nation’s history. We now owe, in net terms, $473 billion to foreign lenders. That’s two and a half times what it was when John Howard was elected on a promise that he’d bring the debt down.

Yes, the same man who once campaigned with a debt truck has fecklessly driven Australia into a debt trap.

Some argue, of course, that Australia can live with a relatively high foreign debt, because it’s private sector debt, and it can fund productive investment that gives us higher growth rates in the long run.

But this view is now coming under question - because the foreign debt has jumped so sharply in recent years, despite external conditions being overwhelmingly favourable for us. The concern is that, when trade conditions shift and when global interest rates rise, the cost of servicing foreign debt will become a much greater strain on our economy.

Now if that was funding productive investment, it wouldn’t necessarily be a problem.

The trouble is so much of that debt has not been going into new productive investment at all - it’s been underwriting a surge in consumption, asset speculation and mortgages. It means the interest bill has soared to unaffordable levels and Australia is borrowing to make interest repayments.

The burgeoning foreign debt and its interest burden create risks. We simply cannot afford to downplay these risks.

The point is external imbalances can’t go on forever. And if Australia is running record trade imbalances when every piece of fortune is running in our favour, what happens when things turn against us?

Making Australia competitive again

Foreign debt matters because it symbolises Australia’s lack of competitiveness.

It underscores the urgent need to get our trade account back into balance, and into surplus. We must halt the debt spiral.

We must lift exports and make our external position sustainable again. We must start paying our way in the world economy.

That means we must make products and services that the world wants and export them ourselves - instead of letting so many of our best ideas head offshore.

Take one example - Australia once led the world in solar water heater technology but we faltered and failed to commercialise our technologies. Now we lag behind manufacturers in both China and Europe in technical sophistication and account for only a tiny proportion of world production and installations.

We developed world-beating solar hot water technology at the University of Sydney, with a system that could absorb sunlight with great efficiency, and even work in below freezing temperatures.

But we lost the technology to China, which saw its commercial potential and grabbed it. That technology is now a major part of China's booming solar market - a market which accounts for 80 per cent of the world's new solar water heater installations and an even larger proportion of the world’s production.

Australia could have been the Silicon Valley of solar. But when we needed national leadership we didn’t get it. And the story of solar is repeated in so many other sectors, including our higher education system.

It’s one of the few non-commodity exports that has performed well in recent years - mainly the result of overseas students studying in our universities. Last year, we earned over $7 billion from education-related exports.

A strong education sector is such a winner for all Australians - for our kids' future, as well as for our trade accounts. Yet no sector has suffered more under the Howard Government than our education sector.

As the OECD's Education at a Glance report last year showed, Australia is the only advanced economy in the world that has actually reduced its public investment in education since 1995.

On average, other nations have increased their investment by 38 per cent. But under the Howard Government, Australia's investment has actually been cut by eight per cent.

Across the nation, the universities are in financial crisis. It's undermining their ability to get adequate resources, maintain good facilities and retain top academic staff.

There's no question that the international student market is fiercely competitive, and if there's a decline in the quality of an Australian education, the market will find out about. And that's what seems to be happening now.

Despite the massive growth in the global student market, we found out this week that the sector is now actually going backwards. This is the long term effect of $5 billion in cuts, in real terms, to the nation's investment in higher education.

It's nothing less than a disgrace. They are killing the goose that laid the golden egg. It is short term and frankly stupid policy. It's got to change.

Training and Investing in Australians

And we must train Australians first, and train them now.

Increasing the number of young Australians completing apprenticeships through incentives including Skills Accounts to get rid of TAFE fees. Introducing the $2000 Trade Completion bonus and encouraging school students into traditional trades through the Trades Taster program.

Only by investing in people can we achieve genuine productivity improvements. Not through John Howard’s ideologically driven industrial relations changes.

There’s simply no economic evidence that the Government’s extreme IR changes will address the slowdown in productivity growth that we’ve seen in recent years.

In fact, the Government refused to release publicly the Treasury’s own research on this issue - after the Treasury concluded that it couldn’t support the Government’s claims.

Once you’ve got rid of restrictive work practices, and you’ve negotiated flexibility in how you organise employees, changing industrial relations law does very little for a nation’s productivity growth.

The real productivity agenda lies elsewhere, in the skills and education policies I believe in:

! Accelerating innovation, especially the adaptation of innovation by individual firms; ! Improving human resource management practices, particularly in the SME sector; ! Infrastructure development; and ! Competition policy.

Protecting our prosperity

Labor’s vision is that if Australia is to grow, to prosper and be secure we must be able to stand on our own two feet in the world.

That instead of squandering the prosperity of the good times we should be protecting our future prosperity.

Making our own way and paying our own way.

Instead of 10 years of neglected challenges, Australia needs nation building leadership. To safeguard national security, rebuild national infrastructure, invest in skills and training, develop an Australian fuels industry, give our kids a healthy future and protect Australia from the threat of climate change.

We must upgrade security where we’re most vulnerable - our airports, ports and shipping lanes; with round the clock Coastguard protection; a Department of Homeland Security; and an Immigration Department that works.

We must rebuild our national infrastructure - conducting a national infrastructure audit to produce a priority list of what needs to be done; optimum conditions for infrastructure investment, freeing up superannuation funds to invest in ports, roads and bridges and harnessing the investment resources of the public and private sectors.

We must protect Australia from being hostage to foreign fuel by building an Australian fuel industry based on diversity; expanding the variety and volume of local product and exploring and developing new fuel options like biofuels and gas to liquid.

We must give our children a healthy future through a coordinated national campaign that includes prevention, early detection and effective treatment.

We must fight the onslaught of climate change: the threat of water shortages and restrictions, extreme weather events, droughts, rising sea levels and damage to national treasures like the Great Barrier Reef and Kakadu.

We must have a binding national target for greenhouse gas emissions and an emissions trading scheme that allows industry to find the most innovative and cost effective mechanisms for meeting that target.

For the sake of our future prosperity and the sustainability of our environment we must position Australia at the forefront of tomorrow’s energy economy.

Conclusion

If we want a secure and prosperous nation these things can’t wait.

Mr Howard’s not a nation builder, but it’s nation building we need.

We have an out of touch Government; obsessed by the past; beset by arrogance, complacency and scandal.

The Prime Minister’s values are American values. Just look at his extreme industrial relations changes and what he’s doing to our universities.

Mine is a different approach. I want a secure and prosperous country that stands on its own two feet.

How do I get us there? Four words. Nation building. Australian values.

Thank you.