HOST: David Lipson is at that economic forum in Brisbane. He spoke to the Finance Minister, Penny Wong, and began by asking about what the Government is doing, and can do, to boost productivity.
WONG: Thats a very, very, good question. Its the one that were grappling with in the discussions this morning. And, certainly, I thought the Governors comments were really insightful. And one of the things that the sessions have focused on this morning is: what are the priorities in terms of productivity reform? Obviously, skills is a key one. And that point was made in the panel earlier that investing in our people, lifting the skills base, making skills as relevant as they can be and improving peoples capacity to do different things is one of the key ways in which you improve productivity.
LIPSON: Why do you think its slowed in the last six to eight years?
WONG: I think Glenn Stevens put it well when he said lots of different economists have different views about that. But there are a range of different reasons for that. Many of those are about past policy and, arguably, the failure to invest in skills earlier by the past Coalition government. But I think, rather than looking at what we havent done, lets think about what we can do now. And thats the kind of constructive, forward-looking conversation that were having today, and the one that Im interested in. I certainly think investing in our people is key. But there are a range of other things. Deregulation, making sure regulation is efficient and fit for purpose another of the discussions that well be having today that I obviously have some responsibility for and is another key driver of productivity.
LIPSON: Wayne Swan believes that the mining boom has contributed to the slowing in productivity. Glenn Stevens said that if you take mining out of the equation, we still see this slowing in figures. What do you think?
WONG: I think that certainly, if youre in a capital intensive phase, if youve got to build the mine before you can produce out of the mine then obviously thats going to affect your productivity figures. But I think the key thing is, what do we have to do now? Weve got certain settings in place. Largest investment in skills that weve seen for the country, more people in universities than ever before, almost a doubling of schools funding. These are all good reforms. And I think the things we need to do now are... how do we build on that? And I think thats why the dialogue today is so useful.
LIPSON: The unions would be worried about wages. What would be your response to them?
WONG: Actually, we had a very good conversation between different participants in this discussion, about wages. And I think everybodys making the point, when we talk about productivity we dont mean lower wages and lower conditions and we cant mean that. We have to be a highly skilled, highly innovative, high wage economy. Thats what we have to be and our focus is: how do we continue to build that?
LIPSON: Glenn Stevens also pointed to the exchange rate. Weve heard the Government speak a lot about the pressures the high Aussie dollar has placed on certain sectors, exporters mostly. But he has pointed out that we shouldnt wish for a lower Australian dollar too soon. What messages should we be giving?
WONG: I think the message is that a high dollar is a difficulty for many firms, but its also a reflection of the strength of the Australian economy. So we cant wish it away. So, rather than trying to wish it away or railing against it, what we have to say is, what do we need to do to adapt to a world in which the Australian dollar is higher? Adaptability is the key strength that we have to find in a world where we have a higher dollar. And thats the way you secure prosperity in the years ahead.
LIPSON: What do you say to the naysayers of this economic forum whove described it as a talkfest that wont deliver any outcomes?
WONG: Its interesting isnt it? I always think dialogue is a really useful way not only to find the answers, but to also make sure you bring people together to deliver the answers. So, governments are criticised when you dont have the dialogue and then were criticised when we do. Look, I just point to our history: the Tax Forum and the Business Advisory Forum before the Council of Australian Governments. Both of those forums, I thought, were really useful, and got people talking to each other rather than past each other, and they also both yielded key policy reforms. And thats a good thing.
LIPSON: Penny Wong, thank you.
WONG: Good to be with you.
ENDS