The Budget - working harder does not mean smarter

Peter Costello’s solution, in this Budget, is that more of us must work harder. Scant regard is had to working smarter, rather than harder. We invest the profits of a serendipitous resources boom in increasing labour inputs in the Australian economy to ease social security pressures on the fiscal bottom-line. We do this by forcing single mothers with a Year 10 education into the workforce, on threat of being forced to “reskill” by digging ditches and planting trees on work-for-the-dole projects. But there’s a flaw in this strategy.

Practice at digging ditches increases a person’s ability in only one skill: digging ditches. And however effective the Government’s schemes are, our 20 million (roughly a quarter of Guangdong’s population) will never beat China at digging ditches.

All of this means that we have to be good at something other than extracting minerals or leveraging our housing equity to buy SUVs. Yet out of $17 billion in additional tax revenues for fiscal 2006, Mr Costello lavished $31.9 million, or 0.19 per cent, on higher education.

The university sector loses $586 million per year because of the Government’s refusal to index funding to growth in average weekly earnings. So, at a time when our top university ranks 16th in the world, with ground-breaking research in biosciences, plasma physics and the delivery of social services, the Treasurer is able to find $32 - count ‘em - $32 million dollars for the entire tertiary research and training sector. The lion’s share went to two institutions, the University of Western Sydney and James Cook University in northern Queensland, which are coincidentally located in marginal electorates.

It must be galling for John Howard to be told by the editorial writers of the Financial Review that “after a decade in power the Government still struggles to match the reform record of … Paul Keating and Bob Hawke”. The only right-wingers silly enough to have John Howard as a pin-up boy are the many who are insufficiently independent of mind to realise that Bob Hawke is the most right-wing prime minister of recent history. Hawke’s achievements in floating the dollar, large-scale privatisation, deregulation and investment in incentives for scientific research and development make Howard look like a socialist.

Globalisation has eradicated low-skilled jobs in developed economies. However, evolution has not kept pace to the point that yesterday’s manual workers suddenly have the abilities in abstract thought and symbolic manipulation to be redeployed in up-stream, knowledge-based jobs. Even more acute than in other developed economies, given our size and sensitivity to international financial events, is the need for Australia to develop high-tech industries and innovative services based on indigenous intellectual property and genuine workforce re-skilling in order to sustain export-led growth. Oblivious as our present parliamentarians may appear, this is the debate we have to have.