LAUNCH OF ‘GROWING TOGETHER’ – LABOR’S AGENDA FOR TACKLING INEQUALITY

March 17, 2016


AUSTRALIAN NATIONAL UNIVERSITY

WEDNESDAY 16 MARCH 2016

INTRODUCTION

I join my colleagues in acknowledging the traditional owners of this land, and I pay my respects to their elders, past and present.

Friends, this month marks 20 years since I was elected to Parliament.

Through two decades in politics, I’ve sometimes ended up on the wrong side of a national election result.

I don’t recommend it.

Losing an election hurts, especially when you lose government.

The days that follow defeat are heavy with thoughts of missed opportunities and unfulfilled possibilities.

Above all, there is the dread that all the good work you’ve done will be quickly undone.

After an election loss, new oppositions have a choice to make.

They can linger in their gloom –

Or they can dust themselves off and get back to work.

Under Bill Shorten’s leadership, this Labor opposition got back to work.

Of course, our first job has been to protect Australians from the Liberal Government’s harsh cuts.

But we also wanted to take a more studied look at social policy in Australia –

To consider what’s working, what isn’t, and how Australians are faring –

So that we would be ready to govern again, with a clear agenda.

Tonight is the culmination of a process that began two years ago, when I sat down with two people I know well: Tony Nicholson and Paul Smyth.

Tony and Paul are among Australia’s best social policy thinkers – and they encouraged me to undertake this wide-ranging review.

Since then, I’ve had hundreds of conversations with leaders in academia, the community sector, business and the union movement.

Many of you are here tonight.

I acknowledge that when Labor was in government, we did not do enough to involve you in policy development.

As we have talked over the past few years –

I have been heartened by the generosity of your time, experience and expertise.

I want to sincerely thank you all for your contributions to this report, and to our nation.

I promise you that this is the beginning of a new conversation with you, and not the end.

Over time, this project has come to be less of a review, and more of a renewal.

A renewal of Labor policy and Labor purpose.

As Paul Keating said, “we are the people who can dream the big dreams and do the big things.”

It does us no good to have a long memory and no vision.

Labor is always at its best when we lead the battle of ideas.

It is in this spirit that I offer you Growing Together.

A new agenda for tackling inequality.

A new approach to social policy.

A new vision for a stronger and fairer Australia.

An Australia where more people are contributing to our growth, and more people are sharing in our success.

Growing Together includes more than 80 ideas and suggested directions for our future.

As Bill has said, this is not an election manifesto. Its purpose is larger and its vision is longer.

Ideas pay no heed to news cycles or election dates, and they outlive governments.

We want this report to spark a new, positive discussion about the shape of social policy in Australia –

And its role in creating a stronger and fairer economy.

I don’t propose to go through the entire report with you, line-by-line, tonight.

Instead, I want to give you the big picture.

To speak about how we see Australia today, and what we believe Australia can be.

 

AUSTRALIA TODAY – INEQUALITY

We are entering our 25th year of uninterrupted economic growth.

In this period, our GDP has doubled, incomes have grown, and we now have one of the highest levels of wealth in the world.

It’s a remarkable record, and one we can be proud of.

But these impressive national indicators mask other, darker realities.

Growing Together shines a light on these realities. 

And in doing so, it tells the real story of life in Australia today.

There is one phenomenon that sits at the centre of this story.

It is inequality, and it is dragging Australia down.

Inequality is slowing economic growth, reducing living standards, stifling opportunity, and weakening communities.

We see inequality in the yawning income and wealth disparities that now exist in our society –

As wages for the middle and working classes stay flat, and their share of national income declines.

We see inequality in the two and a half million Australians, including children, living in poverty.

We see it in the hundreds of thousands of unemployed Australians – who can work, and who desperately want to work, but know nothing of the prosperity and dignity that work can provide.

And the one million more who are underemployed – forced to take less work than they need to live a decent and stable life.

We see inequality in our schools, where students have the intellect and ambition, but not the resources to help them succeed.

We see it in our workplaces, where women are paid 82 cents in the dollar compared to men,

Where families are struggling to balance work and care,

And where older Australians feel they are being shunted out when they still have so much more to offer.

We see it in our communities –

Where, for too many children, their only inheritance is disadvantage,

Where too many Indigenous Australians are denied economic opportunities,

And where too many people with disability are isolated from society.

And – given it is the topic of the moment – we see inequality in our housing market –

Where young people are locked out of the great Australian dream.

Inequality should offend us all.

It is contrary to that most Australian of ideals – the fair go.

Inequality is now the highest it has been in 75 years, and getting worse.

In the face of this, it’s understandable that many people are anxious about what the future holds – for their families and their country.

Perhaps for the first time in our history, we cannot be confident that the next generation of Australians will be better off than we are.

We can reduce inequality.

We can help people lift themselves out of poverty.

We can prepare young Australians for the jobs of the future.

But this requires more than empty talk.

A mindless, meaningless repetition of ‘jobs and growth, jobs and growth’

Does nothing to boost jobs or growth.

We need a sober assessment of the problems, and a serious plan to address them.

Growing Together attempts to provide this – to both explain what is happening, and offer a new agenda for the future.   

 

INCLUSIVE GROWTH

In the wake of the global financial crisis, a new international consensus has emerged about the sorts of policies we need to build stronger economies and fairer societies.

Worsening inequality, persistent poverty and disadvantage –

Once seen more as moral rather than economic issues –

Are now central to economic debates.

The old myth that inequality was the price you pay for economic growth has been shattered.

There is now widespread recognition that for economic growth to be both strong and sustainable, it must also be inclusive.

Christine Lagarde from the IMF has said that ‘reducing excessive income inequality is not just sound social policy, but sound economic policy as well.’

And she is right.

The OECD has found that across the developed economies, GDP would have been, on average, five percentage points higher between 1990 and 2010, had inequality not also increased during this time.

When inequality rises, economic growth falls.

This is for two main reasons:

An over-concentration of wealth –

And an underinvestment in human capital.

If more wealth is in the hands of fewer people –

Then the middle and working classes find it harder to make ends meet, and demand is depressed.

That also means they have fewer resources to invest in their children’s future – in education and skills.

This places a limit on their own future economic potential –

But it also puts a handbrake on the national economy.

In an unequal society, we all lose.

And of course, the inverse is just as true. 

Nations that are reducing inequality are growing their economies at a faster rate.

The clear message is this:

Inequality is not just immoral – it is economically irresponsible.

It threatens the fairness of our society and the strength of our economy.

 

And we are seeing this in Australia today.

While we’ve done much better than many other countries in the past –

Recent trends paint a disturbing picture of rising inequality in our country.

Our economy is growing fitfully, but many Australians are not seeing the gains.

As Andrew Leigh has shown, in the past four decades, wages have grown three times faster for the top 10 per cent of income earners than they have for the bottom 10 per cent.

Our friends at the Chifley Research Centre have told us that from the middle of the last decade, wages have not kept pace with productivity improvements.  

Wealth isn’t trickling down, as some like to tell us.

Australians are working harder and smarter than ever before, but this isn’t reflected in their pay packets.

The gap between the very wealthy and everyone else is getting wider –

And living standards for the middle and working classes are falling.

This is hurting our economy, and putting the fair go under threat.

We need to do better.

We need a new era of policy making in Australia –

An era of inclusive growth.

Where we ensure economic growth is broad-based, job-creating, and fair.

 

SOCIAL INVESTMENT

In 1943, Labor hero Ben Chifley spoke of the welfare state that he and other progressive reformers worked so hard to build.

He likened social security to the net that sits below a trapeze artist.

He said:

‘The trapeze artist’s net protects him through the whole course of his flight…The more competent the performer, the less the net will be used. But anyone who has ever seen an artist miss his hold knows what peace of mind the net means… So it is with social security.’

More than seventy years later, this still holds true. 

Any one of us can fall on hard times.

A sudden illness, unemployment, family breakdown –

Each of us is subject to the twists and turns of fate.

From Australia’s wealthiest person to its least –

Our social safety net is there to protect all of us –

It should never be undermined.

But in modern Australia, social policy needs to be about more than just traditional notions of welfare.

We need to expand our focus beyond social protection –

To policies that both protect people from hard times and invest in their future success.

Social investment is a precondition for inclusive growth.

And that is why social investment is central to Labor’s agenda for government.

 

Social investment means giving people the skills and capacity to build better lives for themselves and their families.

Fundamental to this is the recognition that good economic policy and good social policy go hand in hand.

One cannot succeed without the other.

Together, they deliver positive, long-lasting social and economic returns –

Better jobs, higher wages, improved living standards and lower inequality. 

Like any good investor, good governments should expect a return on their investment.

We invest in big social reforms like the National Disability Insurance Scheme because allowing people with disability to fully participate in our society is the proper thing to do –

And because it will increase productivity, participation and jobs.

We invest in education because it is the right of every child –

And because boosting our human capital is the surest way to a stronger economy and a fairer society.

This is the growth model of the future. It will be Labor’s model for government.

Where social policy is not the poor cousin of economic policy –

But an essential partner in delivering strong, sustainable and inclusive growth.

 

SEVEN PILLARS FOR SUCCESS

Growing Together includes seven key pillars of social investment policy that are essential to our future success.

They are by no means the only areas that require our attention –

But they are critical factors in securing inclusive growth and reducing inequality.

The strength of social investment is its focus on the life course.

That’s why this report details the investments that future Labor governments can make to help build the capacity of Australians through each stage of their life:

  • Maternal health and support for new parents;

  • Early childhood development and education;

  • Universities, vocational training, and lifelong learning;

  • The protection of wages and conditions, so that a decent job can mean a decent living;

  • Helping people to balance the competing pressures of work, care and family life;

  • Supporting, respecting and recognising Australians in their later years;

  • And building stronger communities, improving social cohesion, and giving locals a real say in the decisions that affect them.

One of the mistakes we’ve made in the past is failing to see the critical connections between these priorities.

Growing Together shows how we can bring these different strands of social investment under a single umbrella, with a single mission – tackling inequality. 

To make sure all Australians, across their whole lives, can be active contributors to our economy and our communities.

 

PUTTING JOBS FIRST

For Labor, tackling inequality begins with jobs.

Labor must always put jobs first.

Our first task, every day, must be getting more Australians into decent work with fair pay and conditions.

The biggest cause of poverty and disadvantage in Australia today is unemployment.

In households where the main breadwinner is unemployed, 60 per cent are living below the poverty line.

In households where people are employed full-time, less than five per cent live in poverty.

This tells us clearly that joblessness is the fastest way into poverty, and getting a job is the fastest way out of poverty.

Our unemployment rate is currently higher than its peak during the global financial crisis.

And Australia’s underemployment rate is even higher again, at nine per cent.

As troubling as this is, it is just one part of the much larger picture that is Australia’s jobs challenge.

There are parts of the country – particularly regional communities – where unemployment dwarfs the national average.

There are men and women who have simply given up on looking for work after years of trying – their lives diminished and their spirit broken.

Many Australians are in insecure work – not knowing how many hours they’ll get each week, or how much pay they’ll take home each fortnight.

Some people are exploited through sham contracts, unlawfully low pay, or unfair and unsafe working conditions.

Perhaps most disturbing of all is the state of youth unemployment.

Too many young people are leaving school with no viable pathway into further education or work. 

This is a tragic waste of talent, energy and potential.

A stable job, with decent pay and fair conditions, is the bedrock of a good life.

It is the best protector against poverty, and our strongest weapon in the war on inequality.

A good job should be within the reach of every Australian.

But good jobs are also the foundation for a strong economy.

For generations, Australian prosperity has been linked to the prosperity of the middle class.

When ordinary, hard-working Australians did well, Australia did well.

Job security and decent wages – including a decent minimum wage – have lifted living standards and underpinned our economic growth.

But since the turn of the century, we have seen the connection between jobs and the broader economy begin to fray.

Where once a growing economy was a solid guarantee of growing employment –

Today we are seeing a decoupling of productivity and growth from jobs and wages.

We need a model for growth that doesn’t just focus on capital accumulation for some, but on lifting living standards and creating opportunities for all.

For Labor, that means a commitment to full employment.

Our goal should be making sure everybody who can work, does work, to their full capacity.

Now, there are at least a dozen economists in this room, including myself.

And if you asked each of us to provide a definition of full employment, we would probably all give you different answers.

Tonight, I simply say this:

We should never be completely satisfied with an economy where millions of its citizens are unemployed, underemployed or in insecure work.

We will not achieve full employment with a single policy or a single decision.

But it is a task we should set ourselves.

Our ambition should never fall lower than finding good jobs for all those who want them.

 

Certainly, the employment challenge is very different in modern Australia than it was in the days of Curtin, Chifley and Coombs. 

Today, underemployment, low wages growth, casualization –

Are all contributing to mounting insecurity in employment and in life.

But the labour market is also changing in ways we couldn’t have imagined even a decade ago. 

More than ever before, our future success depends on how skilled we are.

New technologies are transforming the types of jobs Australians have, and the way those jobs are performed.

This offers huge opportunities.

Future economic growth will come from high-skill industries, with high-wage jobs.

But there are also huge risks.

CEDA predicts that nearly five million of the jobs currently performed by Australians will be replaced by machines in the next ten to twenty years.

Australians who don’t have the right skills for these jobs will be further marginalised –

Leading to even greater inequality as more and more people are left out of the modern labour market.

These dramatic changes mean we need to equip Australians with new skills and capabilities.

 

QUALITY EDUCATION ACROSS LIFE

But our school and higher education systems are falling far short of what is needed.

75 per cent of the fastest-growing occupations will require skills in one or more STEM subjects.

Yet not enough students are completing these subjects at school.

We are currently 17th in the world when it comes to student performance in maths.

If we finished 17th on the Olympic medal tally, there would be a national outcry –

And the government would throw the kitchen sink at improving the situation.

A government with no plan for education is a government with no plan for economic growth.

Global institutions like the OECD have said loudly and clearly –

The best weapon against inequality is education.

When children get a good start in life,

When young people are well prepared for high-skill jobs,

When adults have opportunities for retraining and lifelong learning,

Then our human capital is boosted, inequality is lowered and economic growth is more secure.

Labor understands this –

And that’s why our plan for better schools is at the heart of our social investment agenda.

We also recognise that a high-skill, high-wage economy needs more university graduates. 

That’s why Labor has rejected the Liberals’ deregulation of undergraduate fees –

And why a Shorten Labor Government will introduce a new Student Funding Guarantee –

So that university is affordable and accessible for all young Australians.

And it’s why we’ll fix our broken VET sector –

With a National Priority Plan for TAFE, backed by a funding guarantee. 

To lay the groundwork for this –

Today Bill and Sharon Bird have announced new Labor policy, drawn from the recommendations in Growing Together:

An intense, independent review of the funding, governance and standards of the VET sector –

To improve quality and completions –

And embed the critical role of vocational education in Australia’s economic success.

 

CONCLUSION

Friends, tonight Bill and I have spoken to you about the priorities of the next Labor government –

Tackling inequality, delivering more inclusive growth and preparing Australians for the jobs of the future.

There is much, much more in this report that I haven’t been able to speak on –

I hope in our discussion now we can cover some more of it.

And I hope each of you will, in your own time, go through the report and reflect on its findings.

 

Again, I want to sincerely thank you Bill – as well as Tanya Plibersek and Chris Bowen – for creating an open culture of ideas and policy debate inside our party. 

A major project of this kind is a big thing for an opposition to undertake – and I appreciate your support and your faith in me.

And to my colleagues –

Brendan O’Connor, Kate Ellis, Catherine King, Kim Carr and Shayne Neumann –

Big social issues are never addressed in a single portfolio.

Thank you for your contributions – and for seeing that tackling inequality requires us to work together.

It’s not always the done thing. Often, portfolios can become policy silos.

We have opened up the process, and our policy making is stronger for it.

If we are to grow together, then economic and social policy must work together.

Chris Bowen and Andrew Leigh understand this, and their support has been invaluable – thank you both.

As has the contributions of the new generation of Labor reformers –

Jim Chalmers, Clare O’Neil and Andrew Giles.

My thanks also to Michael Cooney and the Chifley Research Centre –

And to my friend Wayne Swan, for your pursuit of inclusive prosperity.

Growing Together is Labor’s agenda for social investment policy – both before the next election and beyond.

But it’s also a statement of Labor values.

Labor believes in putting jobs first.

We believe all Australians deserve to benefit from economic growth.

We believe in a society that protects and invests in people.

Underpinning our values is this simple maxim:

If you work hard, you will be rewarded.

If you fall behind, you’ll get the help you need.

In Australia, you are responsible for your own success –

But you are never on your own.

 

Tonight, Labor offers a choice.

A plan to tackle inequality –

Or a path to more division and exclusion.

The high road to inclusive growth and prosperity –

Or the low road to austerity and mediocrity.

If we make the right choice, we have every reason to be confident in Australia’s future.

We can be an Australia where more people are contributing to our growth, and more people are sharing in our success.

An Australia where we are growing together.

Thank you very much.

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