Mr PALLAS (Tarneit) —  It also gives me  pleasure  to address part 2  of  the report on the 2012-13 budget estimates released today. I direct the attention of the  house  to  two  aspects in  particular. The  first is  a table  at A7.10.3, identified  as  ‘Responses  classified   as  –support–  where   the  committee recommended  additional disclosure  but the  government  considers that  current disclosure is sufficient’. Recommendation 67 is that  the 2012-13 budget  papers detail the effects of

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enterprise bargaining agreements established  in the 2011-12 period and seeks to include criteria, the second of which is:

(b)  detailing  any  productivity savings  targets  established as  part  of the        process.

I  must  express concern about the response from the government to this  matter. What the government  has  said  is  that  it  supports  the  principle  of  this recommendation but  it has gone on to  avoid the  most substantial  part of  the recommendation. It has said:

  … the estimated financial statements will  reflect the updated estimates for  the impact of the  new enterprise bargaining agreements and any other  factors  having an effect on employee expenses.

But the point here is that it is not the impacts but detailing  the productivity savings that is  critical. If we are  to  have, as the member  for Mornington so rightly has  said,  transparency in the  budgetary and reporting  process,  then nothing more important attaches to the credibility  of the government in its own dealings with its staff than how it assesses  and  values  and  compensates  for productivity  savings.  What the department is doing here is saying that it will not provide — it is a direct refusal to provide — that information in terms of detailing the impacts  and quantifying the productivity savings identified. That is a great discourtesy and  disservice to  the employees  who expect  to have  a consistent means by  which they can quantify and get value for their services in negotiations with the government.

I also want to address the section dealing with the economic reform strategy.

More specifically I address the second of the four pillars identified on page 16 of  the report  —  improving productivity through  the  investment in  economic infrastructure,  skills  reform,  creating   competitive  markets  and  reducing business costs.

This  government constantly cites  productivity as a goal,  but its approach  is misdirected, ideologically driven  and narrowly focused on labour  productivity. It ignores  multifactorial productivity and fails to address the real drivers of productivity  —  that  is,  infrastructure, skills,  innovation  and management practices. Recently  the commonwealth treasury  noted that  labour  productivity growth  accounted  for  90 per cent of income  growth  over  the  four  previous decades. We need to broaden our sources of productivity growth.

I note that the  Treasurer  said  the  following  at  the  Public  Accounts  and Estimates Committee hearing of 4 May:

  It  means  that  we  have had to hold the  wages  policy  at 2.5 per cent plus  productivity offsets.

The point I make here is that if the Treasurer considers that so important, then why  can the  government  not give a  detailed  assessment of  how  consistently productivity is being identified,  calculated and rewarded  in dealings with its own staff?

Earlier  the  Treasurer referred to  Victoria’s productivity in  relation to the national average  for the decade between 2000 and 2010. In fact he was referring to labour productivity, which is just one aspect of an  economy’s  total  factor productivity.  He  said  that it slowed in that decade, but neglected to mention that  this was a broader national trend and that Victoria  slowed less  than any other state.

So when this government says it wants to address  productivity,  it really means it wants to address the single measurement of labour productivity, and  the  way it wants to address it is by holding back wages.

On  24  November  2011  the Treasurer told this house that productivity had been falling under the previous government because  of Labor’s relationship  with the trade union movement. This  is essentially the  argument that the protection  of workers’ rights is the enemy of the economy based on the entirely spurious claim that it undermines a single, narrow economic measure.

A second problem is that an examination of labour productivity  alone  will  not tell us much about the Victorian economy.

See Tim’s speech in Hansard here.