Appropriation Bill – Federal Budget

Jason Clare MP, Member for Blaxland

I rise to speak on the Appropriation Bill (No. 1) 2010-2011 and cognate bills. A budget needs to meet the challenges of today but it also has to build a bridge to the future. There are big challenges ahead. As a nation we are getting older. By the time I am 65 the number of Australians that age or older will have doubled and the number aged over 85 will have quadrupled. That means health care will cost the budget more, the cost of funding the age pension will increase and there will be fewer taxpayers to pay the bills. It is the job of government to meet these challenges. That is why health reform is important, that is why we need to increase superannuation savings and that is why we need to increase the productivity of the workforce and keep more people in the workforce for longer. The budget is focused on all three of these long-term challenges and takes steps to meet them.

Because I am the Parliamentary Secretary for Employment I am going to focus on the third of these challenges: building the skills that the workforce needs for the future. Australia’s unemployment rate is the envy of almost every other country in the world. Unemployment in the UK is now at eight per cent, in France it is 10.1 per cent and in Spain it is 19.1 per cent. Around the world last year 27 million people lost their job. At the same time more than 230,000 jobs were created here in Australia. Just over two years ago unemployment in Australia and in the United States was under five per cent. It is now 5.4 per cent in Australia but in America it is almost double that—9.9 per cent. This did not happen by accident. It is testament to the decisive action we took last year, which was opposed by the opposition.

Treasury data shows that the Australian economy grew by 1.4 per cent last year. Modelling by the Treasury shows that, without the economic stimulus, the economy would have shrunk last year by 0.7 per cent. In other words, the Australian economy would have gone into recession with the rest of the world—and all that that means, including higher unemployment and more businesses destroyed. In my electorate, where unemployment is already the highest in the country at over 11 per cent, unemployment today would be more like it is in Detroit. Experience tells us that industries like manufacturing never really recover from a recession and many older workers never get a full-time job again. That is why what the government did last year was so important. Stopping a recession is the most responsible thing a government can do.

And it reaps other dividends. The budget will be back in surplus in three years time—three years early—and debt is less than half of what was predicted last year. But success brings other challenges. Because we got through the global recession better than most we will face the challenges of recovery sooner than most. One of those challenges is skills shortages. We will see that first in the mining sector and in the construction industry. Changing demographics will also drive a surge in demand for workers in areas like health care and aged care. At the same time, in other parts of the economy there will be job losses and, in some places, higher levels unemployment that will be difficult to budge.

I spent the last 12 months on the road, with Bill Kelty and Lindsay Fox, working in the 20 areas across the country that have been hardest hit by the global recession. From Cairns to Burnie, from south-west Sydney to the south-western suburbs of Perth, they all have one thing in common: the proportion of people who have completed high school in these areas is lower than the national average. That is the common thread. Unemployment in places like these will only get worse if we do not do something about it. There is a reason for that: the workforce is changing. In the future there will be many more high-skilled jobs and many fewer low-skilled and unskilled jobs.

I was in Washington in January and I spoke to some think tanks and employer groups there. They told me that three out of four jobs created in the United States in the next decade will require postsecondary skills—in other words, 75 per cent of the new jobs created in the United States in the next 10 year will require completion of high school plus an extra qualification.

Monash University has done the same research in Australia and they have reached the same conclusion. We know what the workforce is going to look like. The key to building this workforce and cutting unemployment in places like my electorate is the same: education. It is also the driver that will boost productivity and workforce participation. That is why the investment made in skills in this budget is so important.

We are already driving big reforms in our schools and our universities. If most of the jobs of the future are going to require postsecondary qualifications then we have to boost retention rates. That is why we have set a target of 90 per cent of students completing high school by 2015. We have also uncapped university places. As a result of our reforms, there are now 44,000 more students at university today than this time last year. As this budget shows, vocational education is the next stage of our education reform agenda. The budget includes over half a billion dollars to help build the skills that we need for the future. It is broken into the following parts: a guaranteed entitlement to a training place for every Australian under the age of 25; a $200 million critical skills investment fund that will fund 39,000 training places in key skills shortage areas like mining, infrastructure, construction and renewable energy—access to the fund will require industry contribution; a major increase in funding for adult literacy and numeracy programs—one of the key drivers of productivity and workforce participation; additional funding to boost the quality and performance or our top 100 vocational training providers; and the extension of Apprentice Kickstart to help recruit 22,500 more apprentices in the next six months.

Apprentice Kickstart has been enormously successful. It came out of meetings that were held last year with business when I was on the road with Bill Kelty and Lindsay Fox. Businesses I met with said that they needed more help to put apprentices on, and the facts bore it out. Between April and June last year, the number of people starting trade apprenticeships dropped by 27 per cent compared to the same time the year before. So we tripled the bonus that employers get for putting on a teenage apprentice over summer; we increased that bonus from $1,500 up to almost $5,000—a simple idea, and it worked. We exceeded our target of 21,000 apprentices and put on more than 24,000 apprentices.

The number of apprentices starting a traditional trade now is higher than before the global recession. We have done that in one year. To put that in perspective: when Australia went into recession in the early 1990s, apprentice recruitment dropped by about the same amount, but it took 13 years before we recruited the same number of apprentices again—and we have done it in one.

I have met a lot of apprentices over the last few weeks and a lot of bosses. Three stick in my mind. In Bayswater North in Melbourne I met a bloke called Paul. He builds state-of-the-art fibreglass fishing boats. He told me he was planning to put on an apprentice over summer. Apprentice Kickstart meant he put on two—two young blokes called Ryan and Mitchell. In Penrith in Western Sydney I met a young bloke named Jack. He has been doing a pre-apprenticeship in carpentry at the local TAFE there for two years before finally picking up an apprenticeship. He is an outstanding young man. His boss David told me that Apprentice Kickstart made all the difference. It
helped him to put Jack on.

In Coffs Harbour, on the mid-North Coast, the team at Bushmans Bakery make great meat pies. They also make great apprentices. Dally has run the company for over 20 years. He told me Apprentice Kickstart helped him put on more apprentices as well. More importantly, he told me the story of a young bloke who works for him. Dally tries to put on apprentices who need a bit of help. This young bloke had dropped out of school and had been in trouble with the law. He is not a Kickstart apprentice. He has been an apprentice there now for over two years. Dally told me that this young bloke told him, ‘If I didn’t have this apprenticeship, I would probably be a nohoper.’ This budget extends the Apprentice Kickstart program because it works and because of the difference that an apprenticeship can make.

Recruitment of apprentices is only part of the challenge; completion is the other part. Too many apprentices do not finish their apprenticeship. Fifteen years ago, about 65 per cent of apprentices completed their apprenticeship; today it is about 50 per cent. There is an enormous lost opportunity here. It costs businesses money, it costs apprentices time and it costs us the skills that we desperately need. Apprentices drop out for a number of reasons: expectations, employment conditions and the quality of training are all big factors. Pre-apprenticeships and school based apprenticeships are an important part of the solution, and so is mentoring. We recently announced $10 million for mentoring services to help apprentices complete their training and secure jobs.

The budget also provides funding to move from a system with fixed time frames to a competency based training system. It is another important reform that will help to tackle skills shortages without undermining training quality. The potential impact of the reforms that we are undertaking in education and skills is enormous. The more skills we have, the more we are likely to earn and the longer we are likely to stay in the workforce. The more skills an economy has, the stronger and more competitive it will be. Last week the Deputy Prime Minister released some economic modelling from KPMG Econtech. It shows that, if our reforms in education and training are fully implemented, it will boost employment by more than 500,000 each year and boost economic growth by about $4,000 per person per year every year for the next three decades.

I thought the Liberal Party understood this. In the opposition’s last few years in government, skills shortages drove up inflation and interest rates and strangled growth. In December last year, when the new Leader of the Opposition was appointed, when he was putting together his shadow cabinet, he gave two of his shadow ministers responsibility for apprenticeships and training. So I was genuinely shocked a few weeks ago when they announced that they were going to cut investment in both. The opposition have now said that they will cancel the Productivity Places Program, which is providing 711,000 training places across Australia to help those out of work to find jobs and those with jobs to improve their skills. They have said they will cancel the Trade Training Centres in Schools Program, which is delivering new trade training centres to every secondary school that wants one. They said they will cancel the computer in schools program, which will provide a computer to every school child in years 9 to 12 by the end of 2011. They said they will cancel the Smarter Schools teacher quality program, which includes paying our best teachers more to work in schools that need them most—schools like the ones in my electorate.

If this policy was ever implemented, the impact on the economy would be enormous. It would mean that almost 400,000 fewer apprenticeships and training places would exist. It would mean that 1,800 trade trading centres around the country would not be built. It would mean that 120,000 students would miss out on the most important tool in the workforce today—a computer. It would mean kids in places like Blaxland would continue to miss out. At a time when skills shortages are already re-emerging and when the jobs of the future are going to require more
skills and not less, this would make things worse.

Already 45,000 Australians miss out on a training place each year, 60,000 leave school and do not go onto a job or further education, and 360,000 young Australians do not have a higher school certificate or a certificate II qualification. The Leader of the Opposition’s solution, apparently, is to cut off the dole to people under 30 and send them off to the mines. In April, the Sydney Morning Herald reported that the Leader of the Opposition was developing a plan to relocate unemployed people to Perth. There is only one problem with this idea: the Liberal Party has tried it before and it failed. In 2006-07 and 2007-08, the department of workplace relations ran two separate pilots aiming to relocate job seekers from areas of high unemployment to Perth. It did not work.

Mining is a highly skilled industry. The shortage is not workers; it is skills. The proof of this is Kwinana in south-west Perth. A couple of kilometres away is the Australian Marine Complex, where work is ramping up on the Gorgon liquid natural gas project. Very few of those jobs are being picked up by young people who live in Kwinana, where teenage unemployment is through the roof. These are young people who live in Perth, who live in WA, and cannot find work in this industry. It is proof that you cannot just put someone on a plane and expect them to find a job. The problem is much deeper. It requires real investment in skills and real investment in education, which is what this budget does.

The challenges ahead are not hard to see, but they do require hard decisions. That is why this is an economically responsible budget. It will help to build a bridge to the future we want, not one dictated for us—one where health care is affordable and of a high standard, where people can retire with enough superannuation for a comfortable and secure retirement, and where we have the workforce we need to drive a strong economy. This budget and the response to it reveals that there is only one party in this place capable of meeting those challenges. I commend the budget to the House.