Thank you James for that introduction.
It is good to be back here at Adelaide University.
The focus of your workshop today is an important one.
Because the choices we make today, the response of Government, and the response of politicians more broadly will have profound implications for next generation of Australians.
Australia is an economy in transition as international forces impress change on the domestic economy.
These changes are profound.
And they are uneven.
But the challenges of a patchwork economy also present opportunities.
Opportunities for reform.
Opportunities to spread prosperity.
And opportunities to invest todays windfalls, for tomorrows benefit.
But we know that the success of economic reform is often shaped by the political environment.
This workshop I think rightly is looking at the interaction of politics and the economy.
This is an important intersection.
Where the measure of this cohort of politicians will be the economic outcomes for all Australians.
For this generation and the next.
But we currently are faced with a disconnect.
Where the distance between the challenges that faces us a nation, and the tone of the political debate couldnt be greater.
In responding to the implications of a patchwork economy a circumstance defined as much by the international perspective as the domestic the debate needs to be better focussed on the challenge before us.
So today Id like to take this opportunity just after weve handed down our Mid-Year Fiscal and Economic Outlook to set out how our Government is addressing the patchwork economy, our policy response, and our vision for Australia and its economy.
 
The political context
Id like to start this afternoon by situating the economic policy debates in the political context.
As the title of this workshop rightly recognises, policy never exists in a vacuum.
And nor should it.
The policy choices of governments are shaped by their philosophical and historical roots.
Shaped by the values and the principles that define our political parties, and leaders.
However the policy debates the debates of ideas and vision, the debates of policies and opportunities have been increasingly drowned out in the term of the current parliament.
The political debate has been narrowed by negativity.
And this has the effect of miring the policy debate in the short term.
It keeps attention on the immediate, when tending to the long term challenges couldnt be more important.
Indeed one of the greatest risks before us now a risk all the more heightened by this political environment is complacency.
We know that the failure to respond to the economic challenges of this generation with the reforms required, we may see Australias luck run out.
And the near daily worsening of the European sovereign debt crisis only serves to underline the reform imperative.
But as some in the politics strive relentlessly to narrow the debate, our Government is undertaking the reforms needed to respond to the current challenges, and position Australia for prosperity.
In what has undoubtedly been a tough year we have persevered to deliver the reforms that matter.
We have finally legislated a price on carbon, something that will break the nexus between economic growth and carbon emissions.
The Minerals Resource Rent Tax has been passed by the House of Representatives, putting us one step away from spreading the benefits of the mining boom.
We have delivered a strong Budget that continued and expanded our investments in the productivity enhancing areas of infrastructure, education and skills.
These reforms both build on the Governments response to the GFC that saved 200,000 jobs, and saw Australia avoid a recession.
These actions avoided the destruction of capital we know occurs in recessions and the disengagement of unemployment that disproportionately hits those with low or no skills and qualifications.
This weeks MYEFO again demonstrated our economic credentials as we struck a balance between the uncertainty abroad and the imperative of supporting jobs and growth at home.
But the MYEFO also highlighted the pressures on our economy.
 
The patchwork economy
The idea of a patchwork, or two speed economy isnt new.
It is important to recall that the patchwork economy is a description of the present, and not a plan for the future.
It is also important to recall that economic change has been an ongoing characteristic of Australias history and of our prosperity.
No economy the aggregation of countless transactions will ever be uniform.
Sectors will grow differently.
The composition of firms and labour, capital and investment will all influence the economic output.
This dynamic is constant.
As an open economy, Australia is undeniably shaped by global forces.
As we witness the rise of the Asian century, the implications for the Australian economy will be transformational, and enduring.
This is to be expected as the Asian region increasingly drives the global economy, picking up the slack where Western democracies are in crisis.
The MYEFO released on Tuesday estimates that three quarters of global growth over the next two years will come from emerging market countries.
Aided by our geography and abundance of natural resources, Australias trade patterns have shifted East.
Where trade ties were closely linked to the developed world a decade ago, they have now re-aligned to our region.
To China, Japan, the Republic of Korea, India and the ASEAN nations.
Demand for natural resources has outstripped supply as development in Asia pushes up demand and therefore the prices received for our commodities.
As the Asian economies modernise and invest in productive and social capital, their citizens are enjoying increasingly higher standards of living.
This shift in the socio-economic composition will see the mix of Australian exports respond.
The pull for our resources will continue strongly, but the rise of the Asian middle class will also see demand for services, including education and areas of specialisation. Demand we can supply if we position ourselves well.
At the same time Australian consumers benefit from our trade ties through lower prices for manufactured goods.
These forces are having a profound effect on the domestic economy, as labour and capital gravitate towards the profitable commodity sectors.
These impacts also flow through the broader economy as our economic links with the globe respond to the flows of investment, goods and services.
In particular the floating exchange rate, projects the impact of these flows to all corners of the economy.
Exchange rate movements can act as a buffer during commodity booms, however they can also put pressure on the export sector and sectors under competition from imports that are not experiencing elevated prices and demand.
This is clearly detailed in the MYEFO the Treasurer and I delivered on Tuesday.
The realisation of the these pressures led to the formation of the Prime Ministers manufacturing taskforce, which met yesterday in Canberra, as we witness the high dollar accelerating the structural changes that have been long underway.
This was set out in the communiqu from the forum, where members noted that current economic conditions are challenging for many manufacturers, particularly the effect of the high Australian dollar and competition for skills although the impacts vary across the sector.
And the facts back this up, as manufacturings share of the economy has fallen from 10.3 percent to 8.6 percent over the course of the mining boom.
In South Australia, we know all too well the challenges facing the manufacturing sector.
 
Meeting the challenge
How Governments respond to a challenge like a patchwork economy first requires an understanding of what is driving change.
Responses are also shaped by the political values of governments.
For a Labor Government, our principles are clear.
We are focused on providing opportunity and fairness.
We are also focused on the future.
And we have persevered with our agenda, despite opposition, understanding that the merit of reform is judged by looking to the future rather than todays headline.
It is a mindset consistent with the traditions of Labor Governments past, including the reforms of Hawke and Keating in the 1980s and 90s.
Knowing that a closed and protected economy would be detrimental to growth and prosperity, the Hawke Government floated the Australian dollar and reduced tariffs.
They let the world in, and the nation prospered because of it.
Our economy became one built on innovation and skills, not subsidies and protection.
As a reforming Government they were cognisant of the changes occurring, and the opportunities it presented.
So too, this generation of politicians need to understand the changes occurring and invest in the capacity of Australians to turn that change into opportunity.
To invest the mining windfalls of today in the broader economy.
To drive an energy transformation by placing a price on carbon.
To build the infrastructure that will underpin productivity growth.
To promote participation and inclusion through investing in skills and education.
To turn opportunity into prosperity.
 
No one left behind
But in an economy in transition, there are those who feel they are left behind.
Prosperity, at an aggregate level, often glosses over the individual stories.
While growth in our economy over the coming years is not as strong as it has previously been, it remains at trend.
In a global economy marked by austerity measures and possible sovereign defaults the performance of the Australian economy is strong.
And yet as mining companies post multibillion dollar profits, year on year, some households and non-mining businesses may see little benefit from the boom.
This can lead to a sense of exclusion or insecurity.
The role of Government is to enable Australians to navigate change.
We need to be clear that security does not come from railing against change.
To resist change, is to miss opportunity.
To prepare for change, is to provide confidence to the community.
For our government, skills and participation are the drivers of security and opportunity.
As the economy changes and evolves, one of the risks to both individuals and the economy as a whole is that people lose contact.
Skills and participation are not only the means of connecting people with the economy, but also enabling them to more fully share in the benefits of growth.
As technological and other structural changes in our economy continue to change the workforce requirements, so too our workers must change.
In response to these shifts we need to enable people with the skills to participate.
This is a central proposition for the Labor Party.
As a party born out of protecting the rights and conditions of workers, we need to ensure that they receive security and gain opportunity by having the skills required in todays economy.
In participation we see the distillation of the Labor principles, delivering on the economic and social imperative to provide opportunity.
For our Government, this is delivered through policies in skills and education, in providing all Australians with the capacity to meaningfully engage in society and the economy.
We know that skills and qualifications make a difference.
Labour force participation rates for people with bachelor degrees are 87% compared to 68% for those without a non-school qualification.
The unemployment rate for bachelor graduates is at 2.7%, which is much less than the unemployment rate of 8.0% for those without a non-school qualification.
This is why we are aiming to have 40 per cent of 25 to 34-year-old Australians attaining degrees by 2025.
Under our Government, the university sector in particular has benefited through increased funding, and capital expenditure.
The uncapping of places has also meant that the opportunity of tertiary education is now open to more people than ever before.
This increased funding has also been targeted at increasing the number of low-SES enrolments.
We have focused on raising the participation of students from the poorest parts of Australian society, from about 15 per cent of the tertiary student body now to at least 20 per cent by 2020.
This Government is delivering $5 billion in additional funding to universities over the next 4 years.
Because, despite the strength of our mining sector, our Government sees the future in a highly skilled workforce.
Productivity growth will rely on technological advancements and innovation.
These are the backbone of a modern and resilient economy.
This generation of Australians is living through an extraordinary time. An economic changing of the guard.
With this change comes great opportunity. With this change globally comes great change domestically.
A patchwork economy dictates the experience of change today.
But the future demands much more. It demands that we face change and we turn it into an advantage.
It demands that we position ourselves for the times beyond the resources boom. That we use the boom wisely today. That we invest for tomorrow. That we build a broader, more diverse, more innovative economy. That we envisage and understand and engage in the Asian century.
But most of all, it demands that we are prepared to change. And this is where the political economy can do great good, or great harm.
Because if we think small; if we shrink from change; if our mindset is parochial, not global; then we risk exacerbating the very inequalities we fear this change will bring.
The task of all here tonight is to ensure our polity is up to the task.
Thank you.
 
ENDS