Labor’s Economic Agenda - Michael Daley


"From opposition as you consider prospective policies, the past of course, informs the present.  When we’re talking about economic management of the NSW State Labor Government over 16 years, it is important to remember what our record was, what our reputation was at the end of our Government."

Labor’s Economic Agenda

NSW Labor Central Policy Branch (Speech) – Monday 2 May 2014

Michael Daley, NSW Shadow Treasurer

It’s wonderful to be here with my mate, Ed Husic, the Federal member for Chifley and Parliamentary Secretary to the Federal Shadow Treasurer to offer a brief insight into Labor’s economic agenda and then to hear suggestions from you and to take as many questions as time permits.

This is my first public opportunity to personally congratulate Ed on his re-election in a very tough fight and I do that now with great enthusiasm.  Ed, your re-election shows how a local representative, who loves his area and the people within it, as much as he does representing it and who fights tooth and nail to defend it, even against great odds, can win.

There certainly are some very tough aspects about being in opposition. It’s nothing at all like being in Government. The staff members that you learn to rely on in great numbers aren’t there, many of the resources that are helpful and time-saving no longer exist, but all in all it’s a worthwhile experience if you choose to make it so.

It is an opportunity to think about the achievements of our former governments but more importantly to examine those things that went wrong and why they went wrong. 

One of the things Ed and I share now, being in opposition at the same time is the opportunity to collaborate, not only on nights like this – and we do value very much the questions and feedback you’ll put to us both tonight, but in other ways as well.  In July this year, Chris Bowen, has organised a gathering of Labor Treasurers and Shadow Treasurers from around Australia in the NSW Parliament House to ensure we discuss Labor’s economic agenda together.  I’ll be proudly hosting that forum. It will be a great opportunity to forge ahead with the task of formulating Labor’s economic policies going into the next state and federal elections.

From opposition as you consider prospective policies, the past of course, informs the present.  When we’re talking about economic management of the NSW State Labor Government over 16 years, it is important to remember what our record was, what our reputation was at the end of our Government. 

It’s true to say that the reputation of NSW Labor, took a battering at the hands of a small group of selfish people who really let us down. Let’s hope they have a day of reckoning soon, if they haven’t had it already. 

We left government however, with sound policy achievements to our credit across the range of government endeavour. In terms of economic management, we left government with our reputation soundly intact and deservedly so.

In 1995 the Carr Government inherited massive state debt. Carr and his Treasurer Mike Egan set about repaying that debt quickly and thereafter successfully implemented a Labor economic strategy, always with service delivery in mind, that rebuilt a demoralised public sector and delivered services with conscience.

Over the course of 16 years Labor subsequently delivered 14 budget surpluses.  I have to say there’s more than a bit of unfounded fetish with budget surpluses these days.  There are times to run surpluses and there are times to run deficits.  But if you’ve run 14 surpluses and managed to achieve the things that I’ll take you through in a moment, it means that your reputation as an excellent financial and budgetary manager remains intact.  That is our record. 

Mike Baird and Barry O’Farrell inherited a state budget in great shape. That’s the truth of it. They inherited a budget with exceedingly low debt. Nothing compared to what Carr inherited from Greiner.  When we left office in 2011, we left a AAA-rated budget, a state with low unemployment after we’d created 200,000 jobs in the last 2 years of government, sound growth, and around $7 billion in net debt in the general government sector out of a total yearly budget of $56 billion.

Baird doubled the debt figure in his first two budgets with nothing to show for it and had it set to exceed $20 billion in four years. They’ve reduced that trajectory but only through asset sales exceeding $13 billion in just over 3 years and if it wasn’t for the fact that they were embarking on asset sales that make Greiner and Fahey look like complete amateurs in the field of asset flogging,  NSW would have lost its AAA rating quite some time ago.  The only thing that’s keeping net debt low now is asset sales.

Labor left the Coalition with a very, very strong public sector; well-motivated, well trained, very efficient and in many fields, the best paid in the nation.  The best paid nurses in the nation, the best paid police force, 4th largest police force in the English speaking world. Well trained, well paid teachers, bus drivers, firies, ambo’s and engineers, planners and judges. That’s what they inherited and that’s what they have set out attacking from day one. 

Our public trading enterprises that have been sliced and diced and sold now, were in terrific shape when the Coalition took office. They were efficient, world’s best, delivering very good dividends for government with a unionised workforce.  The Tories hate that.  They’re in the process of attempting to dismantle it.

One of the mistakes we’ve made in the last few years was our failure to defend our reputation in the provision of infrastructure. People say “oh Labor didn’t do very after the Olympics”.  Well on the way in here , in the car, I just jotted down some of the things we did and keep in mind it’s an incomplete list.

But consider this: we completed Sydney’s orbital road network, building the M7, and the M5 east.  We signed the contract for the M2 widening, construction almost completed now, we built the Cross City Tunnel and the Lane Cove Tunnel.  When we took government, there were something like 30 sets of traffic lights between North Sydney and the Victorian border.  By the time Carl Scully had finished with it, I think there’s was one set left and it’s a couple of hundred metres from the Victorian border.  It too may be gone. It’s been a while since I've made it that far south!

Who could contemplate Western Sydney now without the upgrades to Windsor Road and the bus ways that serve the West so well?  We spent more on the Pacific Highway than any State or Federal Government that had come before us.  We built 37 new police stations, we re-built or refurbished every single major hospital in NSW.  We did the Olympics on time and on budget with a unionised workforce.  We started the South-West Rail Link which is now a year ahead of time and under budget. We built the Epping to Chatswood Rail Line and in the last year of our 16 year government we spent more on infrastructure than the Liberals in their first budget.

So we’ve a very proud record on infrastructure.  I don’t think we did enough to defend it. 

The Global Financial Crisis came in 2008. We dipped into deficit and then brought the budget back to surplus within one year and we didn’t have to sack a single public sector worker to get the budget back into surplus.  That’s something that I’m very proud of.  This fact stands in contrast to what Baird and O’Farrell have done.

Apart from all of those economic indicators, the social dividends were delivered in full by Labor.  We achieved educational outcomes that were the envy of the nation, reduced waiting times in our hospitals, delivered research partnerships between hospitals and universities, built a fair workers’ compensation system, delivered fair workplace outcomes in partnerships with the unions, fostered workplace safety, provided access to housing and delivered on environmental outcomes in spades as well as enjoying the lowest crime statistics ever, delivered by a police force we re-invigorated. These are the things that Labor delivered in 16 years. Achievements that we’re proud of.

When Labor forms government there’s a quiet pride in that achievement, of in being back in government, but more than any other feeling that abides in us it’s this – that we’re glad to be back in a position to help our people.  Attacking the Liberals is a secondary amusement.  Our primary focus is our people.

When the Tories get elected, they're a different beast entirely. Their DNA activates as soon as they take government. They immediately display what I call an outraged sense of entitlement. Everything Labor did has to be dismantled; quickly and angrily. Just because we built it. No calm and purposeful execution of long-considered policies. Demolition.

In 2011 they marched into office and that was the way of it. First the economic war began with a conjuring trick. A budget black hole that didn’t exist.  Abbott and Hockey are mimicking O’Farrell and Baird.

Then $8 billion of cuts. $3 billion to Health and $1.7 to Education as a start. All the while debt was ballooning. Public assets were sold on ideology, not merit.

Then the attacks. Scapegoats found. 15,000 government workers sacked. The Industrial Relations Commission, Labor’s independent umpire, gutted. Wages were cut. Workers’ “compensation” laws enacted that punish the most vulnerable and deny compensation. Then public housing construction and maintenance were reduced, now at Millers Point, evictions. The environmental programs of Labor were laid into.

All the while nothing else was happening! Barry O’Farrell was bogged. By government! They do nothing with gusto except dismantle things that are intrinsically Labor.

They run government like a corporation. People are economic units. Plenty about the balance sheet, but nothing about balance. Scorched earth government with no eye to the future.

Labor will inherit a cold, hard show when we take government. We must be ready to reshape it.

The first task will be to look again to the proper provision of services. That’s the core of state government. Our purpose in delivering these services will be to partner with business and the union movement to foster a strong state economy, a strong state budget and to deliver vital services efficiently, but always with a view to social equity and justices. One eye on delivery, the other on opportunity. For everyone.

We must be flexible. We must anticipate change. We must be ready for the future.

Over the last two decades there have been significant compositional changes to the NSW economy.  The services sector which includes activities such as financial and insurance services, professional, scientific, technical, health care and social assistance, accommodation and food services and arts and tourism has steadily increased.  The services sector now accounts for around three quarters of the NSW economy.  Other sectors like mining, although still significant, have declined.

Thanks to the Keating reforms, the Australian economy is vibrant and open to the world. Sydney is truly a global city. This openness brings both opportunity and challenges. How will Labor’s next NSW government grasp these opportunities and respond to the challenges?

State Governments can play an important role in developing and maintaining a strong economy and in fostering a sound employment market. 

Education is a key.

We know that an individual’s earning abilities later in life are often directly attributable to their earlier educational outcomes. The increased challenge of globalisation must sharpen our resolve in this area.

Every 3 years, the OECD embarks upon an international test called PISA, the Programme for International Student Assessment. The 2012 PISA tested the skills of about 510,000 fifteen-year-old year old students across 65 nations. The test lasts for 2 hours. You can’t study for it and you can’t fudge it.

The last PISA showed that although Australia still performs very well, relative to certain Asian nations, we are declining. PISA is not the be-all-and-end-all, bit it’s a reminder. To stay sharp.

Cutting $1.7 billion from schools and TAFE in NSW is a sure-fire way to stifle future generations and nobble productivity in Australia’s most important state.

When Labor takes government we will make education our key. We will properly resource schools and TAFE. We must properly support teachers with postgraduate training and development and we must get back into skills and government apprenticeships in a meaningful way.

We should also keep an eye on whether the national curriculum is working for NSW. At present it is, but we can’t allow ourselves to be dragged down in the future by states that might not perform as well as NSW. As far as I'm concerned, that’s a continual work in progress.

A great education is a long term investment in national productivity. But it doesn’t end with education. We need to explore other ways. Productivity is not just about working harder or longer, or until you're older.

Carefully planned and targeted infrastructure enhances productivity. NSW Labor will continue to explore new and innovative ways to partner with business to deliver vital infrastructure projects as we have in the past. That’s why we support initiatives like building a second airport for western Sydney. Instead of thousands of people travelling hours towards employment; move employment towards them. And in addition to that, build housing where jobs and people are.

One of the game changers that has continued to emerge are superannuation funds that are becoming increasingly available to fund infrastructure. This is a part of the Keating legacy. 

The superannuation pool in Australia now exceeds $1.7 trillion and is projected to increase to around $6 trillion in the next decade and a bit. Only around 8% of these funds are invested in infrastructure in Australia.  It’s not a panacea for government expenditure on infrastructure, but it’s a resource that is available. We intend to use it.

R&D, technology and innovative partnerships with business will also play a role in fostering a strong economy and striving towards full employment. Businesses are not looking for handouts, they want certainty and in some cases a partnership with government. If the NBN is delivered without being dumbed down too much by Malcolm Turnbull, it will play a role in massively enhancing the NSW government’s service delivery, particularly in areas like health, education and communications.

Labor must also to continue to be the champion of the environment. Not simply because it’s the right thing to do, it’s about good economics as well. And it doesn’t have to be about cost. It can and should be about opportunity. There are over 25,000 people employed in the renewable energy sector in Australia and the numbers are growing. There are almost 3000 employed in the wind sector alone. That’s why I shudder when I hear environmental numbskulls like Barry O’Farrell say he hopes no further wind turbines are approved in NSW.

There has been around $18 billion of investment in renewables in Australia since 2001. It’s an investment in the future.

Last year the Chinese government legislated to cap the total tonnage of coal that can be burnt in China in any given year. For them it’s an environmental necessity, but they will readily convert that into a global economic opportunity. They are launching themselves into renewables and that in itself will create a global shift.

No one a decade ago really envisaged the explosion in rooftop solar in NSW. It has changed the electricity market in Australia. When it is eventually joined by affordable power storage facilities in homes and businesses, it will turn the electricity industry in this country on its head. The Germans know it’s coming and are preparing. So are the Chinese. So should we and we should not simply be purchasers in this space, we should be designers, innovators and traders.

The future is an exciting place and as NSW Labor’s next Treasurer I look forward to working with you to help in securing it for our people.