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I acknowledge the traditional owners of this land on which we meet, I pay my respects to elders past and present.
I’m delighted to be here to launch this impressive, comprehensive and very timely report.
‘Choosing Opportunity’ continues the fine tradition of the McKell Institute as a leader in the national policy debate.
It equips progressives with new arguments – and new information.
The value of this document lies not in its sentiments – but in its evidence.
Because this is no mere collection of high-minded pronouncements, or unfunded ideals.
No simple catalogue of grievances.
This report is both a snapshot of modern Australia – and a map for its future.
A book of ideas aimed at building a stronger, fairer and faster-growing economy –cementing a united and prosperous society.
I’m pleased – and proud - there are so many recommendations in here which accord with Labor’s comprehensive 2016 economic program:
- local jobs and apprenticeships
- reforming negative gearing
- defending renewable energy
- protecting penalty rates
- needs-based funding for schools
- affordable university
- equality for women
- stronger TAFE
- greater investment in infrastructure
- and universal, accessible Medicare
Correctly – and importantly - this report presents each of these measures as economic levers.
Creators of growth - not programs paid for by growth.
In other words, a central hypothesis of this report is that fairness drives growth – it is not the aftermath product of growth.
Fairness in fact drives growth.
This is the big policy door all of us need to keep pushing in order to open the debate.
I say ‘pushing’, because there is the deadweight of neo-Liberal orthodoxy, the active resistance of vested interest to overcome.
There is a stubborn fixation in the national debate that the ‘economy’ is really made up purely of headline numbers and an ideological embrace of free markets at any cost.
As soon as you venture beyond the top-line indicators and the invisible hand, the rest is just nanny-state and big government.
We saw that during the recent election campaign when Ministers and commentators argued with a straight face that Labor’s policy to deliver the Gonski reforms, needs-based funding for school education would not deliver any substantial economic benefit until 2095.
The conservatives and their supporters mounted the ludicrous argument that a child starting school this year, receiving the resources and individual attention to get the best possible education – wouldn’t make a difference to Australia’s economic performance until they hit the ripe old age of 84.
Instead – we were led to believe that we should just rely exclusively on a submarine-led recovery by 2050.
The same tone pervades the current whispering campaign being run against the National Disability Insurance Scheme.
Familiar voices bemoan the ‘expense’ – the price tag, ignoring the fact that, as PwC found – the cost of disability services without the efficiency and consumer-centred model of the NDIS would be two to three times greater.
And failing to understand the massive economic benefits of empowering 470,000 people with severe and profound disability and tens of thousands of carers to participate more fully in our economy.
This is a breakthrough, the NDIS, which the Productivity Commission estimates will add a full percentage point to our GDP by 2050.
The same is true for Medicare.
Our publicly-owned, universally-accessible system delivers health outcomes that are twice as good as the private, profit-based American model – and at half the cost.
In our workplaces, Medicare keeps sick days down – and productivity up.
And because it alleviates the cost-of-living pressure of healthcare bills, it is the foundation of a strong Australian middle class.
With Medicare, with education, with every element of this report, we see the same essential truth emerge: fairness is a growth strategy, not a growth dividend.
Inclusion is a plan for prosperity, not one of the benefits.
Good social policy is not just about a strong safety net, and it’s not a matter of charity.
It’s about investing in lifting people back into work, in supporting their full participation in our economy and our society.
And in an age where there is a growing sense of disempowerment, disillusionment and marginalisation, at a time when, around the world, extremists and demagogues from every point of the political compass are yelling that our system is broken, that democracy has failed, that it’s time to tear it down and start again.
It has never been more important to prove to the people who feel forgotten, left-out and left behind that they have a stake in society.
That their efforts will be rewarded – that they can get ahead. That it is still possible to win when you play by the rules.
Fairness is therefore both an obligation and a necessity.
Because those who would make fairness too difficult, make the splintering of our society too easy.
My views on Donald Trump are no secret – nor exclusive.
But even Trump – and his talk of building walls, filling jails, race-based immigration policy and isolationist foreign policy – isn’t the root of the problem.
The problem is, people believe he is the solution.
And that’s not a phenomenon confined to the United States.
Wherever you go, it is easy to find people who pander to prejudice, who appeal to nostalgia, who pretend there is a slogan to solve every problem and that there is a convenient minority to be blamed and demonised.
From the safety of the fringe, it’s easy to promise everything when you don’t have to deliver anything.
A long time ago, the party I’m proud to lead made a different choice.
Indeed the Labor Party was born because the union movement opted to push for change within the institutions of power – rather than simply demonstrate on the doorstep.
I am greatly heartened when I see someone of the calibre of Patrick Dodson, throw his famous hat in the Senate ring, not only as a Senator for Western Australia but to be a Labor Senator for Western Australia.
A vote of confidence in both our whole parliament’s ability to get things done and Labor’s ability to get things done.
And as the McKell report today makes clear – there is a great deal that needs doing.
- Inequality is on the rise.
- The middle class is being squeezed.
- Dignity in retirement is uncertain.
- The gender pay gap – effectively unaltered since 1979 - remains an affront to our national credo of the ‘fair go’.
- Our great regions are too often offered second-class treatment
- And for a generation of young Australians – the dream of home ownership is simply way beyond reach
If we are going to prove that our Parliament and our politics can rise above self-seeking, narrow sectional interests.
If we are going to deliver greater progress, greater security and greater opportunity for all Australians.
We must begin by recognising these insecurities and frustrations are not imagined, nor are they insignificant.
There is a very real alienation between the boosters of change – and those on the receiving end of change.
- cab drivers and Uber
- CUB maintenance tradesmen and contracting-out
- Australian printers and writers and parallel imports
- dairy farmers and milk processing
- Ford and Holden workers and preachers of ‘disruption’
- victims of shonky banking practices and bank CEOs
A headline annual growth figure of 3.3 per cent, should not blind us to the soft underbelly of the domestic economy.
Two-thirds of Australia’s annual growth comes from the contribution of net exports, propped up by mining production.
But Australians employed in the mining sector, represent less than 2 per cent of total employment.
Meanwhile, private investment is still in retreat – having just experienced its largest decline in 16 years – and alarmingly, consumption growth halved in the June quarter.
And despite having an unemployment rate in the high-5s, nearly 90 per cent of jobs created in the past year have been part-time.
There is nothing wrong with flexible work if that's what you choose. But there is a problem when under-employment is at near-record levels, when around a million Australians would like to be working more hours than they can currently find.
The worst possible response to this challenge, this set of circumstances is trickle-down economics - look after the very top and everything else will look after itself.
The clearest illustration of this discredited 1980s form of economics practiced by this current Government is the $50 billion tax giveaway for multinational companies – and the big four banks.
A slavish adherence to an unfettered market approach – ignoring strong safety nets and targeted skills, education and infrastructure programs – is a recipe for anaemic growth, undermined by far greater and growing inequality.
Instead, Australia needs a plan for targeted growth.
Growth that boosts the communities, industries and demographic groups most in need - most missing out.
Between 2006 and 2012, the mining investment boom delivered us 8 per cent capital expenditure, 8 per cent of our GDP in capital expenditure and mining – up from a long-run average of 2 per cent of our GDP.
This was $150 billion extra flowed into our economy – it boosted our export incomes, which have buttressed us in recent times – but the billion dollar flows have stopped.
The national ATM has witnessed a massive withdrawal of capital expenditure.
Replacement income and growth is needed. Now.
And in a low interest rate, low investment return environment, we cannot rely on monetary policy to do all the heavy lifting.
We need a targeted growth agenda:
Working, for example, with the states and private investors on public infrastructure – the ‘missing link’ for jobs, productivity and investment.
Training people with the skills to utilise new technologies.
We need to undertake fiscal repair, budget repair that is fair.
We need to harness the continuing remarkable growth of China- and Asia’s-middle class, and their demand for our services and products.
A plan that includes and enhances Australians’ skills, Australian services, technology and opportunities.
I want government to be something better than a mechanism for transferring money from the working and middle class families of this country to vested interests.
We have to ensure people and industries are not left behind.
Right now, there are millions of hard-working Australians who feel like they are working harder than ever, but struggling just to keep up – let alone get ahead.
For the past three years, wages growth has been slowing, stalling in fact in too many households.
Yet the cost of living relentlessly marches on.
When you put a quantifiable, dollar figure on the shift – as this report does – the results are astounding.
In the ten years between 2004 and 2014, Australians who earned between $23,000 and $70,000 experienced 21 per cent increase in their disposable income.
A 21 per cent increase in their disposal income in the last 10 years for those between $23,000 and $70,000.
But between 2014 and 2024 – the forecast is for an increase of just 0.2 per cent.
Or in dollar-terms, if you're earning $50,000 in the last ten years, you'd have $10,500 more over the last ten years.
But in the next ten years, if you're earning $50,000 your growth will be about $100.
Over that same period, Australians earning less than 23,000 enjoyed a 15 per cent increase.
But through to 2024, they are looking at a 4.5 per cent reduction.
Millions of Australians are working harder and longer than they did a decade ago – but have less to go around each week.
Consumer confidence is flat, this is a matter of record.
Purchasing power is falling, again a matter of record.
Parents are worried about whether they will have enough to be able to pass on a better standard of living to their kids.
And I don’t need to tell anyone here, especially not the parents, that the issue of housing affordability is simply not going away.
As this report points out, the cost of the average house here in Sydney is now more than 12 times the median annual income. How on earth will young people ever enter the housing market.
A major reason for the shrinking of middle class disposable income is the growth in the cost of servicing a mortgage.
Yet the Turnbull government is belligerently, obstinately refuses to change their negative gearing policies.
They defend a negative gearing policy that actively contributes to the price of putting house beyond the reach of middle class and working class families.
It does raise the question, when did we become a nation that was happy to spend more taxpayer money subsidising property investment and speculation – than we spend as a nation government on child care, infrastructure or higher education.
Telling people locked out of the housing market that they should just ‘get rich parents’ is not a satisfactory alternative, dismissing legitimate frustrations with the uneven opportunities of the ‘new economy’, or telling people they're just ‘hiding under the doona’ is breathtakingly out-of-touch.
It’s easy to wax lyrical about the benefits of free trade and pour scorn on the evils of protectionism from the comfort of financial security.
Labor values, and will champion, the benefits of free trade – from multilateral processes to market-access agreements.
But we want free-trade to work in the interest of all, not just some.
We repudiate the notion that when some are going well, it doesn't matter how the rest are fairing.
Nothing undermines faith in free trade faster than a flawed agreement that costs local jobs, or puts them in jeopardy.
Nothing is more harmful to the argument for an international labour market than a visa system where imported workers are exploited, or the visa process system is corrupted - and Australians miss out.
It’s time to take a stand against insecure work, rampant casualization and contracting-out which is a race to the bottom.
Our whole system of enterprise bargaining is flat, going nowhere at the moment.
Employers who bargain are undercut by employers who don’t bother.
Acquiescence with no bargaining is too-often the new normal in too many workplaces.
Industry has opted for a wages pause – it is simply not renegotiating.
Important sectors for future growth: retail, tourism and hospitality are focused on the reduction of wage costs rather than productivity.
The future of work is increasingly being defined by the limits of automation, artificial intelligence and robotics.
Put another way, people feel insecure about the future, and their place in it.
‘Choosing Opportunity’ puts a dollar cost $10 billion a year on workplace stress – and a quarter of that sum is due to financial pressures.
The insecurity of losing your job altogether.
Or the fear that unless yours is the first car in the carpark and the last to leave – you’ll never get ahead. A feeling that is particularly acute for women returning from time off with their young children.
And of course, to be reminded by a former Prime Minister that you can never expect equality in representation, this does not progress the nation.
There’s no going back to the days of a job for life.
The same desk, the same lunch and a gold watch at 65.
We know from your report, the average stay in a job these days is just over three years.
I do say, as someone who was elected Opposition Leader in October 2013 - I’m very conscious of that. I did my best to change jobs.
Your report points out the realities of the world of work we inhabit.
- 2.5 million Australians receiving no paid entitlements.
- 3 out of 4 people working today don’t meet the ten-year requirement for long-service leave.
And - more than two decades after it was introduced - twelve per cent of employers don’t pay any superannuation at all.
For a handful, this is probably a matter of honest oversight.
But too many are using contracting provisions to avoid the obligation.
Young people in particular tend to miss out.
This might seem a minor hassle at age 20 or 25 – but it’s a slow burn which leaves people tens of thousands of dollars worse off over their working life – and less secure in their retirement.
This report also emphasises the importance of penalty rates in a modern workforce.
Cutting penalty rates is often portrayed as the last frontier of industrial reform - it is certainly the last matter which unites this Government - it is the Auld Lang Syne of a thousand Liberal fundraising lunches.
Inevitably the wage-cutting chorus is led by people who’ve either forgotten what it’s like to work unsociable hours – or never had to. People who have never had to rely on penalty rates just to help ends meet.
But as Choosing Opportunity makes clear, penalty rates are an essential feature of industrial architecture and our workplace safety-net – particularly for rural and regional Australia.
In our country towns, the median household income is around $600 less, per household, per week.
Penalty rates are essential to bridging that gap – helping families make ends meet, helping businesses attract and keep good staff and ensuring demand, confidence and money to spend in the High St.
Cutting or eliminating penalty rates would leave retail and hospitality workers in the regions alone worse off - between $370 million – and $1.55 billion.
Money that can ill-afford to be taken out of regional Australia's economy.
There is a great deal more in this report that I would like to touch on.
But the bigger picture is really this. The Global Financial Crisis – and its aftermath – re-set the international economic debate.
The GFC laid bare the flawed orthodoxies and arrogant certainties of institutions ‘too big to fail’ and individuals too rich to get caught.
And as nations around the world found that the bitter pill of austerity was no cure for their ailments, the search began for a new economic model.
A method for tackling inequality.
For building prosperity by extending opportunity.
A way to grow an economy ‘from the middle out’, rather than the top-down.
And for once the Australian story – which has held us in good stead for a century, a strong safety-net - Australia received its share of global attention.
We received attention not just because we were unique among the advanced economies of the world, we weathered the storm and avoided recession.
But because of the great Australian story of fairness, which has always been the secret of Australia’s economic success.
Our nation has helped people rise above their circumstances, knowing their advancement enriches us all. The view that someone else's misfortune is not somebody else's responsibility - it is all of our responsibility.
This has held true ever since the early days of the last century, when the world knew Australia as a ‘workers paradise’.
A ‘social laboratory’, undertaking ‘radical’ experiments:
- like the vote for women
- a fair day’s pay for a fair day’s work
- compensation for workplace injuries
- and a decent pension
And it’s true of the way, at our best, we build for the best in the world:
- The world’s best retirement savings system
- The world’s best universal healthcare
- The world’s best National Disability Insurance Scheme
There is an economist whose work would be familiar to many of you, John Maynard Keynes, who once wrote:
The difficulty lies not so much in developing new ideas as in escaping from old ones.
Our task is not just to advance a new case for targeted growth and inclusive prosperity.
But to discredit, disprove and debunk – once and for all – the old, tired notion that Australia has to choose between fairness on one hand and growth the other.
Achieving the targeted, sustainable growth we need in the years ahead, depends on building an fair society - an egalitarian nation.
A nation investing in the skills, health and security of our people.
Choosing Opportunity arms us with new proof and new perspectives in this debate.
And I look forward to carrying them forward.
Congratulations on a great piece of writing and research.
Now, let’s get on with putting the theory into practice.
Let's get on with winning the next election.