Australian Industry 2015 Annual National PIR Conference, Monday 4 May, 2015, Hyatt Hotel Canberra

Thank you for having me here today. I acknowledge the Traditional Owners of the land on which we meet and pay my respect to their Elders both past and present.

Distinguished guests, ladies and gentlemen.

Can I start by thanking the AIGroup for inviting the Opposition to contribute to this year’s Annual National Personnel and Industrial Relations Conference.  I would like to pass on an apology from my colleague Brendan O’Connor who was unable to attend today.  He has asked me to also extend his very best wishes for your Conference.

When I think of the Australian Industrial Relations landscape, I think of our values and I think of our objectives.  

I think of the value of equality and the objective of economic growth.  

I think of the value which the Australian industrial relations system has always given, for more than a century now, all the way back to the Harvester judgement, to fairness and equity and equality.  

In his judgement in The Harvester Case in 1907, Mr Justice Higgins referred, and I quote, to "the needs of an average employee, regarded as a human being in a civilised community".  

That, a civilised community, remains a cornerstone of Labor's approach to industrial relations.  

But I think also of our objectives, of the necessity, of productivity growth and competitiveness.  

But this, we insist, is a not a choice between competing options.  

Economic growth and equality are not a trade-off. They are not alternatives. They are not substitutes. Growth and equality are complements. They go together, they must go together.  

That has been the Australian way, and it should remain our way.

A strong industrial relations system not only lays the foundations for a fair and equitable society, it is a key driver for strong economic growth, productivity and national wealth.  

It is Labor’s view that the architecture of the current IR system is sound; and that it is generally serving the interests of workers, business, and the nation’s economy. That is not to say, however, that we can’t always be looking at how we can improve the system.

There has and always will be a tension between what employers and workers want from the IR system. And history tells us that when Government’s lean too far one way the electorate tends to take the initiative to correct the imbalance.

It is Labor’s view that changes to the IR system work best, when they take all perspectives into account.

This is in sharp contrast to the approach of the current government.

This government has taken the radical decision to get rid of tripartite bodies, even those that pre-dated the Howard Government.

The terms of reference for the Government’s Productivity Commission review have done nothing to build consensus. Rather they have highlighted and entrenched differences of opinion.

The government’s legislative agenda is also suffering from their unwillingness to work towards a common understanding of the need for change.

In contrast, Labor is listening to employers and workers, to industry groups and unions; because you can’t come up with IR policy in the public interest only listening to half of the story.

There are many areas where the interests of working people and employers are the same. And it is more useful to focus on what unites us then what divides us.

In its submission to the Productivity Commission Review, the AiGroup cited the most recent analysis of the Australian economy by the OECD noting that Australian economic policy should focus on

“further improving the operating environment for the private sector, most importantly in infrastructure, taxation, labour skills and innovation. Improving educational and labour market opportunities for minority groups would not only reduce social exclusion but also boost growth potential.” 

We agree entirely.

As the Shadow Minister for Vocational Education – and as a TAFE teacher in a former life - I am confident that we can agree we need to improve the way we develop the skills the economy needs.

We must ensure that workers are developing the skills that serve business needs now and in the future.

Our goal should be to integrate learning with work, modern workplaces require ongoing learning and skills development and for workers they need nationally accredited, transportable skills and qualifications to ensure a lifetime of meaningful work.

We should be building on the success of Australia’s apprenticeship model, not cutting a billion dollars out of skills and training.

The Liberal Government is taking a different approach. Their “new” Australian Apprentices Centres will have to do more with $10 million less every year.  This is on top of around $65 million in cuts to other apprenticeship programs.

They’ve cut Joint Group Training from 2016 – a program that plays a critical role in helping small and medium businesses to take on and retain apprentices.  They make connections between employers and prospective apprentices and help to build a strong and successful relationship between the two.

They’ve made a $66 million cut to the Adult Australian Apprentices program, which encouraged mature age workers to reskill through apprenticeships. 

All of which suggests that this Government just doesn’t get what we need to develop the skills our workforce needs in the future.

We also need to ensure that the ‘so called’ soft skills are entrenched in our schools. The skills required to work effectively and efficiently in modern workplaces, including those related to being a member of a team and working with the public and customers – are critical work readiness skills. Young people are no good to business if they don’t have them.

We agree we need to increase productivity, but the way to do it is not through a narrow focus on efficiencies.

Investing in people, science, innovation and technology will allow Australia and Australian business to make significant productivity gains without going down the low road of cutting wages and employment conditions.

While other nations are making long term investments to move economic activity up the value chain and support the development of new technologies, the Abbott Government has massively cut funding for science, research and innovation across the board - and has nothing even vaguely resembling an innovation policy.

Only last week, at a Senate Inquiry initiated by Labor into Australia’s innovation system The Chief Executive of the Australian Information Industry Association, Suzanne Campbell, told the inquiry that innovation is the primary driver of higher Australian living standards but that cuts to government programs have undermined the nation's potential.

Ms Campbell said that 80 per cent of Australia’s research efforts derives from public research institutions such as CSIRO and NICTA, and that cuts to these agencies have disadvantaged future generations of Australians in the global race for innovation and jobs. 

It is not in the interests of the economy to cut funding to the CSIRO, an organisation that has, amongst its many achievements delivered the world Wifi.

The reality is Australia is never going to be a low wage economy and nor should we strive to be. The idea of cutting the minimum wage in real terms for the next 10 years is an absurdity that only the Institute of Public Affairs and the Commission of Audit could propound.

Labor believes that a decent minimum wage is one of the cornerstones of the Australian economy – that is a reason for our relatively low levels of inequality.

Figures released by the Australian Bureau of Statistics in February 2015 showed annual wage growth has slowed to 2.5 per cent – the weakest since the ABS began collecting this data in 1997.

The Per Capita report Paradise Lost? The race to maintain Australian Living Standards released a fortnight ago stated, the solution to weak wages growth will come through boosting productivity, and investment in transport, broadband and education.

Internationally, it has been suggested that wage stagnation cannot be explained ‘solely by weak economic growth [but also by] a widening gap between growth in wages and labour productivity’.

Further, the ILO, OECD and World Bank have noted that ‘while the financial crisis and weak recovery have been a large factor in the slump in consumer demand in many countries, a long- term decline in the labour share has also served to put a limit on consumption, as labour earnings are typically the main source of income for most households.’

A decent minimum wage is fundamental to the Australian safety net.

It also provides a foundation for the determination of award wages, and may, in amongst a range of broad factors, provide support for low and middle income families and their consumption, with the flow-on benefits to economic growth more generally.

As a rule, low-income households save very little and consume more of their income than high-income households. The Reserve Bank has confirmed that the highest 20 per cent of income earners accounted for 80 per cent of total saving, while the bottom 20 per cent were actually spending more than they earned, on average.

At the same time we have seen declines in the minimum wage bite, a growing gap between wages and productivity and a declining labour share of income, household income inequality in Australia is growing.

According to the Australian Treasury, an increase in the Gini coefficient shows that ‘income distribution in Australia has become more unequal over the last 30 years.’

The ILO, OECD, and the World Bank found that ‘on average, an increase in income inequality by 1 Gini point lowers yearly GDP per capita growth by around 0.2 percentage points.’

A decent minimum wage is not the only way to address inequality, but it is an important part of the solution.

Recent research from the OECD, the World Bank and the IMF has focused on the connection between economic growth and equality and concluded that inequality seriously damages economic growth. Growth spells are shorter in unequal economies and income re-distribution can assist in stabilising sustainable growth.

Like the AiGroup, the Federal Opposition supports an appropriate increase in the minimum wage.

We want business to be profitable. And we want business to create jobs. But not at the expense of decent, fairly paid jobs.

And our conversations with businesses around the country tell us that many businesses think that way too.

Many employers understand that one person’s employee is another person’s customer.

I think we can also all agree that business and consumer confidence is critical to a flourishing economy.

Before the election the Treasurer was talking the economy down. But it was the hit to business and consumer confidence after the Government’s first budget which has really done the damage.

It wasn’t long ago that Australia was recognised internationally as a strong economy, one of the only economies in the developed world not to fall into a recession post Global Financial Crisis.

A week out from the budget, it would be remiss of me not to hold the Abbott Government to account.

With one week to go, both business and consumer confidence are still down and the Abbott Government presides over an unemployment rate that has been over 6% for far too long.

There is still not a hint of a real plan for jobs.

Instead the Government is proposing a dull, complacent budget when really, now is time to secure our future.

At a time when stability and balance is needed; when a carefully considered, long term budget is crucial, the Government is swinging from pole to pole with firstly a tough and unfair budget, and now a dull one.

In the upcoming budget you will hear terms and phrases such as ‘integrity’ and ‘commitment to fairness’, but let’s be clear, such poeticism will not overshadow the fact that this government, in the name of fiscal rectitude, is targeting the lowest paid Australians through its unfair budget policies.

Policies that are also counter to our long-term interests – like $100,000 university degrees.

Instead of leading the country, the Government is sending out confused messages about what we really need.

When once the budget deficit nearing $40 billion was a ‘budget emergency’, now the Government speaks of ‘progress’ and ‘sunshine’.

The Australian people are craving a positive agenda from this government. A narrative for the future supported by responsible policy, but they aren’t receiving it.

We need a holistic and forward thinking vision and to map out how to reach it.

We need to stand in the future and pull society towards it so as to be prepared and ready for the obstacles that may face us.

While Labor will always believe in core values that give Australia its unique identity, we want to move beyond the simplistic notion that Australia is a lucky country. Australia deserves recognition as a productive economy, not because we are lucky, but because we built the base for economic growth in an equitable society and we will continue to nurture it.

We could change in a way that disregards the living standards of those less fortunate. Or we could create a prosperous and inclusive society that leaves no one behind.

We support collaboration in an attempt to build a dynamic and innovative Australia

That’s why I’m pleased to be standing before you at this industry group summit.

Like the AiGroup, we will work with all partners for a sensible and viable outcome.

Thank you.