Rudd all talk and no action on ageing
Written by Julie Bishop Thursday, 21 January 2010
Future generations are facing a massive and growing debt burden(Published in The West Australian 25 January 2010)
There is an old saying that actions speak louder than words.
Prime Minister Rudd gave a series of speeches this past week talking big about the need to boost productivity and to reduce government spending to enable the nation to deal with the challenges of an ageing population.
Mr Rudd has been talking as if this problem has only just come to his attention but it is worth noting the first Intergenerational Report that highlighted this challenge was released by then Treasurer Costello 8 years ago, in 2002, and it was updated in 2007.It is also worth noting that improving productivity was a key plank of Labor’s 2007 election campaign.
The Coalition Government responded in numerous ways to the challenges outlined by the first and second intergenerational reports but its most important achievement was ensuring that all Federal Government debt was eliminated, and that tens of billions of dollars were saved, so that future generations would not have to bear the full cost burden of caring for the current generation as it aged.
The test for the Prime Minister is how he has responded during his first two years in government.
After all, Mr Rudd has known about the challenges of population ageing since at least 2002.
It is a fact that Mr Rudd inherited the best set of accounts of any incoming national government - a surplus of over $20 billion, zero government debt and savings of almost $70 billion.
Within 2 years of assuming office, Mr Rudd has spent the surplus, driven the budget deeply into deficit and borrowed a mountain of money with government debt projected to reach $153 billion in 2013.
To pay off that debt and to pay for the costs of population ageing, Mr Rudd is demanding that Australians work longer and harder.
Meanwhile, his government has been actively working against better productivity.
Very little of the massive expenditure that Mr Rudd authorised in response to the global downturn will contribute to improved productivity.
The Business Council of Australia has calculated that the Government has spent just 14 per cent of its debt funded stimulus package on economic infrastructure.
The vast majority of the stimulus spending has gone on pink batts, schools halls and cash giveaways, while there has been very little expenditure for productivity-building infrastructure.
In his speeches Mr Rudd has also given his education revolution another run, for the third year in a row, since it was announced as part of the 2007 election campaign.
It is now patently clear there is no education revolution, only a Labor campaign slogan.
Spending $16 billion on school halls and promising a computer for every student in years 9 to 12 (yet to be delivered) is no substitute for quality teaching and will do little to improve educational outcomes.
Research shows that the single most important influence in a student’s education, apart from their parents, are teachers.
Giving school leaders autonomy over staff selection, performance pay, rewards for teaching in the most disadvantaged schools and training specialist primary school teachers in maths, science and Asian languages – now that’s an education revolution.
Neither Mr Rudd nor his education minister Julia Gillard can claim to have improved educational standards in this country.
Mr Rudd has also re-announced the national broadband network as means of enhancing productivity.
This proposal estimated to cost $43 billion has not been subjected to a cost-benefit analysis, it has no business plan, nor any guarantee that it will be viable.
Given the advent of high-speed wireless technology, there is serious doubt whether Mr Rudd’s taxpayer funded fibre broadband network will ever materialise.
If it does, there is a serious risk it will be a white elephant.
When Mr Rudd was tested on his microeconomic reform credentials, he failed it by refusing to remove barriers to competition in the market for cheaper imported books.
One of the most significant drivers of productivity is a flexible and adaptable labour market.
If the Government believes it has completed labour market reform with the introduction of its Fair Work laws, it is seriously mistaken.
Reports that workers in the services sector including aged care will be forced to take significant pay cuts and that employers are facing higher costs under Labor’s award modernisation system have made the Government’s promise, that no worker would be worse off and no employer would face higher costs, sound very hollow.
The Rudd Government’s mega-bureaucracy Fair Work Australia has given an early warning of how Labor’s new laws will work, and that is to essentially take Australian workplaces back to the 1970s.
In a recent decision Fair Work Australia knocked back a genuine collective agreement reached between workers, two unions and the employer because it didn’t fit the Government’s template.
This is a revival of the old restrictive laws that stifled innovation, flexibility and productivity in the past.
With unions flexing more muscle, Mr Rudd should also be reminded of the case study of Rio Tinto’s 40 year experience in the Pilbara .
Through industrial sabotage, days lost through strikes, restrictive work practices and inflated costs, Western Australia was at risk of losing significant export dollars in the iron ore trade as Japanese steel mills, frustrated by our inability to guarantee supply, looked to alternative suppliers.
When Rio Tinto introduced individual contracts and negotiated directly with its employees, there was an astounding turn around, with greater workplace flexibility, more pay, real productivity gains and a restoration of our reputation as a reliable trading partner.
Had there not been this industrial relations circuit breaker from union power, Rio Tinto could not have made the necessary investment in its mine, rail and port infrastructure to capitalise on the mining boom through China’s economic growth.
The Australian Chamber of Commerce and Industry (ACCI) has pointed out that productivity gains followed major policy decisions by Labor and Coalition governments of the last 25 years – such as reform of employment laws to make workplaces more flexible, floating the Australian dollar, deregulating the finance sector, reducing trade barriers and making the Reserve Bank independent, among others.
ACCI has warned that further productivity gains would require difficult and potentially unpopular decisions.
Mr Rudd has shown no appetite for reform requiring difficult decisions.
His agenda on productivity is hopelessly misdirected and there is a yawning credibility gap between his words and his actions.
Australians already face a future of higher taxes to pay off Mr Rudd’s massive debt.
As Labor’s debt continues to grow, there will be a greater burden on future generations.
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