PM defends Labor’s productivity plan and budget

PM says Australia ‘needs to lift our game on productivity’ and warns high inflation, rising interest rates and tight financial conditions could spark a two-year global economic slump.

Prime Minister Anthony Albanese on Friday will say “Australia needs to lift our game on productivity” to ensure that future economic growth is sustained over the long-term. Picture: AFP

Anthony Albanese will defend his government’s plan to lift flatlining productivity and warn households and businesses that high inflation, soaring interest rates and tight financial conditions could deliver two years of global economic pain.

Speaking at the The Australian-Sky News Economic Outlook forum on Friday, the Prime Minister will reject Coalition claims the May 9 federal budget added to inflation and contri­buted to the 12th cash rate hike in just over a year.

Amid growing recession fears on the back of stagnant GDP growth, climbing interest rates and a record decline in productivity, Mr Albanese will ­declare “Australia needs to lift our game on productivity”.

 

“As a country, we need a smarter and more strategic approach to productivity than the self-defeating model that says Australian workers should be expected to do more with less – or work longer for less,” he will say.

“Too often, the economic debate about boosting productivity is conducted only in the very narrow terms of things that governments should be abolishing or eliminating or undoing.

“Now, of course, we should always be looking for efficiencies, we should always be mindful of unnecessary barriers or overlap.

“But in the decade ahead, all of us need to think much bigger than this.”

Following warnings from ­Reserve Bank of Australia governor Philip Lowe about persistent inflation and the risk of further rate hikes, Mr Albanese will argue that the budget “focused on making sure fiscal policy works with monetary policy – not against it”.

“Because we know interest rate rises put pressure on mortgage holders and small business. And we know inflation is ­regressive. It hurts those with the least, the most,” he will say.

“So the best thing we can do to help working Australians is to take the pressure off inflation, create jobs and get wages ­moving again.”

As industry groups push back against the government’s same job, same pay industrial relations changes, the Labor leader will call on business to help maximise an economic growth plan based on “optimism and urgency”.

Prime Minister Anthony Albanese and Treasurer Jim Chalmers ahead of the May 9 federal budget. Picture: Martin Ollman/NCA NewsWire

He will say working with the states and territories – rather than picking fights with them – will contribute to the “common interest in building a stronger economy”.

“This is especially important at a time when the global economic outlook remains highly uncertain. The combination of high inflation and rising interest rates will see the weakest two years for the global economy in over two decades, outside the GFC and pandemic.

“Tight financial conditions following recent bank collapses abroad are adding to the risks. Australia is not immune to any of these challenges – but we are extremely well placed to navigate them.”

Mr Albanese will tell the forum Labor is not in government to “occupy the space” and is focused on supporting people through adversity while building Australia’s long-term prosperity.

“We approach this task with optimism and urgency. Optimism born of the belief that if we act with purpose and determination, Australia can shape the future. And urgency driven by the understanding that if we drag our feet or turn our backs, the future will shape us.

“As I get around the country, I sense that same optimism and urgency among the business community too. The clear understanding that there is a moment here we cannot afford to miss.”

Mr Albanese’s growth priorities are led by the clean-energy transformation, breakthroughs in artificial intelligence and quantum technologies, diversifying future exports, developing green hydrogen, steel, aluminium and ammonia, training the future workforce, powering advanced manufacturing jobs and strengthening the care and support economy.

He says the private sector has an integral role to play in supporting the government’s plan to harness the productivity-boosting power of tech. “I’m sure the business community will – as it always does – show leadership here, through competition and innovation and best practice.

“In many of these fields business has been ahead of government over the past decade. And I think a big part of the reason we’re making new national progress is because finally government is working with business, not holding it back.

“We need to think about ways technology can empower workers. Freeing people up from the routine parts of their job – basic data entry, record keeping, paperwork – and giving them back that time to focus on producing and innovating and caring and educating.

“There are substantial productivity gains we can achieve if businesses have the confidence to adopt new technologies earlier and more widely, and Australian workers have the skills to use technologies more strategically and effectively.”

As households and businesses brace for record winter energy bills, Mr Albanese doubled down on his core election promise to make Australia a “renewable energy superpower”.

“The clean-energy transformation is … the biggest element of our economic growth plan: reducing input costs for existing businesses, powering a new generation of advanced manufacturing jobs in our regions and suburbs, creating new export markets for valued-added renewable technologies.”