I acknowledge the First Australians on whose land we meet and whose cultures we celebrate as among the oldest continuing cultures in human history.
It's great to be in Perth to kick off celebrations for our national day.
And a real pleasure to stand in this magnificent Perth Town Hall.
A town hall with the historic distinction of being the only one in Australia that was built by convicts - rather reluctantly, one presumes - during the controversial period when John Stephen Hampton was Governor of the colony of Western Australia.
Hampton's vigorous public works program, combined with strict financial discipline, advanced Western Australia's development at a time when Australia was being transformed by its first mining boom.
And Hampton embodied the 'can-do' spirit that marks out Australians, and in particular, West Australians.
This is a 'can-do' city in a 'can-do' state.
A state that has outperformed the rest of the nation during the first decade of the 21st century, with a growth rate of 4.1 per cent per year during the past decade, compared to the annual national average of 3.2 per cent per year.
A state that has every reason for optimism as it enters a new decade, with the promise of continued strong growth.
And a state that has every reason to celebrate on January 26 as the nation observes Australia Day 2010.
I want to make special mention of the local celebrations in Toodyay next week.
People in Toodyay have been doing it tough after the fires in late December which destroyed 38 homes.
On Australia Day, local Australia Day celebrations will be honouring the members of the Fire and Emergency Services Authority volunteer bush fire service. The men and women who fought those fires are true Australian heroes - and we all salute them.
Australia Day provides an opportunity to reflect not only on the events of December but also on the past 12 months.
This time last year when I came to Perth, I spoke about the enormous challenge we faced with the worst global recession in 75 years.
The good news is that this state, like our national economy, has been weathering the global storm.
Despite 2009 being a tough year, Australia rose to the challenge of the global financial crisis.
As a nation, we have the fastest growth, lowest debt, lowest deficit and the second lowest unemployment rate when compared with the Major Advanced Economies.
Here in Western Australia, the unemployment rate has risen some 2 percentage points in the last year, reflecting the impact of the global recession.
Nevertheless, unemployment remains below the national average, at 5.1 per cent.
Our response to the economic maelstrom demonstrated what can be done when we all work together - across political and state lines - in local government; in businesses large and small; in unions and local communities right across the nation.
I am profoundly optimistic about Australia's future.
Not because Australia is guaranteed future success and prosperity.
There are no such guarantees in a fast-changing world like ours.
But I'm optimistic because I believe Australians have the determination and ability to seize the opportunities of the future, and tackle the significant long-term challenges we are now facing.
This week I am travelling across the nation ahead of Australia Day in a series of addresses on our need as a nation to prepare for our long-term future challenges.
Analysis of the long-term challenges facing Australia over the next 40 years is contained in Australia's Third Intergenerational Report, entitled Australia to 2050: Future Challenges, which will be released in coming weeks.
On Monday in Melbourne, I discussed how the ageing of the population over coming decades will result in slower economic growth unless we implement the long-term changes needed to move to a higher productivity growth path.
On Tuesday in Hobart, I discussed how the ageing of the population will also create additional long-term budget pressures for all governments unless we act to boost economic growth and therefore revenue growth, through boosting productivity on one hand, and on the other hand implementing our medium-term fiscal strategy to return to surplus.
Yesterday in Adelaide, I discussed why I believe the decade ahead must be a Building Decade - and how important advanced 21st century infrastructure is if we are to move to a higher productivity growth path.
Today in Perth I want to discuss why, with an ageing population, this Building Decade must include the aim of building the best educated, best skilled, best trained workforce in the world.
A workforce with the skills to work smarter and to be the engine room of the nation's long-term productivity growth.
The facts on the ageing of our population revealed in the report are stark.
Today we are a nation of 22 million Australians, of whom 14 per cent - one in seven - are over the age of 65.
By 2050, we will be a nation of 36 million Australians, of whom 23 per cent - one in four - will be over 65.
That is a dramatic change, with dramatic economic impacts.
The economic impact is that it will simply cost more to look after the needs of older Australians - in health, aged care and age pensions.
At the same time, a smaller proportion of Australians will be working, so tax revenues won't keep pace with those rising costs.
In fact, workforce participation will fall - from its peak of around 65 per cent now, to around 60 per cent by 2050.
In 1970, there were 7.5 people of working age to pay tax and support every person over 65. Today, there are five. By 2050, that number is projected to drop to 2.7.
So we will face higher costs yet slower economic growth - and that is the heart of the economic challenge of an ageing population.
We need to ask ourselves: how can we strengthen growth in the face of this challenge?
Treasury's intergenerational modelling tells us the number one answer is productivity growth.
The Treasury analysis undertaken for the Australia to 2050 report shows that if average productivity growth was lifted back towards the 1990s mark of 2 per cent per year - up from the 1.4 per cent to which it declined in the decade just passed - this would produce enormous benefits for the nation and for Australian families.
On average, every Australian man, woman and child would be $16,000 better off a year in 2050.
We should not think such a change is simple. It will require a great deal of effort, and cannot happen overnight.
And we should remember that the pipeline between productivity-boosting investments and the productivity payoffs will often be several years and even several electoral cycles.
But it illustrates that even a small enhancement in long-term productivity growth will deliver large future benefits.
That is why the Government is already committed to building advanced infrastructure, advancing the education revolution, fostering innovation and creating a seamless national economy through our microeconomic reform agenda.
On Tuesday in Hobart I discussed a further dimension of the challenge posed by the ageing population - the challenge to the sustainability of government budgets.
The task of meeting the challenge of the ageing population has been made more difficult by the aftermath of higher budget expenditure during the late 1990s and in the 2000s, which has locked in a permanently higher spending base.
During the growth period of the 2000s, the average real growth in government spending actually increased to 3.8 per cent, compared to 2.5 per cent during the growth period of the 1990s.
In response to this challenge, the Government has committed to a medium-term fiscal strategy that will help us manage the challenge of an ageing population by delivering a permanent structural improvement in Australia's public finances. The long-term consequence of the Government's medium-term fiscal strategy is that by 2049-50, the Budget outcome will be around 3.5 per cent of GDP better off - or $130 billion in today's dollar terms.
The Government's commitment to fiscal discipline builds sustainability into the Budget and is an important element in preparing for the challenges of the future.
Yesterday in Adelaide I addressed the role of advanced infrastructure in enhancing long-term productivity growth.
In explaining why I describe this new decade we have just begun as Australia's Building Decade, I made three key points.
First, economic evidence - including that cited in the Australia to 2050 report - clearly shows that infrastructure investment contributes directly to a more productive, growing economy.
Second, and despite this fact, measures of Australia's infrastructure investment in recent decades show a trend decline in our infrastructure investment. That has contributed to a growing backlog of infrastructure projects, and an increasing number of choke points that have held back our economic growth.
Third, the Government has made infrastructure a national priority since coming to government:
* by the national government taking a leading national role for the first time in national infrastructure policy;
* by establishing Infrastructure Australia to advise on the long-term planning of our infrastructure needs;
* increasing the national investment in productive infrastructure including a $36 billion investment in transport infrastructure including roads, railways and ports; and
* by tackling regulatory reforms to remove the hurdles to increased infrastructure investment from the private sector.
This afternoon I want to make some specific remarks about the importance of having a highly skilled population if we are to move to a higher productivity growth path and respond to the challenge of an ageing population with a smaller proportion of Australians in the workforce.
It is important to understand that enhancing productivity is about giving workers and businesses the skills, infrastructure and positive business environment to work smarter.
The key points I want to make about the role of a highly-skilled workforce in building Australia's future are these:
First, economic evidence - including that cited in the Australia to 2050 report - highlights that higher levels of education and skills not only increase earnings for individuals, they contribute to higher overall productivity for the nation in the longer term.
Second, despite this fact, Australia has not made adequate long-term investment in education in recent decades.
In addition, we know that during the global economic recession, the number of new apprenticeship commencements dropped dramatically.
This has the potential to worsen the long-standing skill shortages in key industries that will re-emerge as economic growth recovers.
Third, the Government is already taking steps under our long-term plan to advance the education revolution, with the goal of building the best-educated, best-trained, most highly skilled workforce in the world.
The education revolution extends from early childhood through schooling to vocational education, apprenticeships, university and research - today, I want to discuss specific measures we are taking to boost apprenticeships and counter the fall in industry training in response to the economic downturn.
Analysis in the Australia to 2050 report highlights the link between education and skills and higher overall national productivity.
The Australia to 2050 Report notes Productivity Commission research estimating that improvements related to education and training - early learning, higher education attainment and increases in numeracy and literacy - could raise aggregate labour productivity by up to 1.2 per cent.
If we could lift real GDP by 1.2% in 2049-50, it would mean a larger economy - around $45 billion in today's dollars - or the equivalent of around $1,200 for each Australian.
And OECD research shows that if the average level of education of the working-age population was increased by one year, the economy would be 3-6 per cent larger, and the growth rate of the economy would be up to 1 per cent higher. If the economy in 2049-50 was 3-6 per cent, or around $110 to $220 billion, larger, or the equivalent of around $3,000 to $6,000 for each Australian.
Increased skills and education does not just enhance productivity growth - it also boosts individuals' incomes.
At the individual level, the latest available ABS data shows that there is a benefit to individuals in full-time employment of approximately $100 per week for each extra year of education beyond compulsory schooling.
Those with post school qualifications are also able to work around 7 years longer than those without post school qualifications.
In other words, increased skills and education contribute to both higher productivity and higher workforce participation.
Despite this clear evidence at both a national and individual level, Australia has seen inadequate levels of investment in education and training in recent years.
When we came to Government, national investment in education had not kept pace with the rest of world. Public spending on education in Australia fell as a share of GDP - from 5 per cent of GDP in 1995 to a low of 4.3 per cent in 2004.
The most recent figures show Australia's public spending on education in Australia had risen slightly to 4.6 per cent of GDP in 2006, still well below the OECD average of 5.3 per cent.
The Government has already begun to turn around this gap.
In 2009-10, Australian Government investment on education is expected to be over $35 billion, an increase of around 0.5 per cent of GDP compared to 2006-07 levels.
This investment is critically important to addressing our long-term skills shortages.
In May 2008, the Australian Industry Group was warning that Australia faced a shortage of as many as 240,000 skilled workers by 2016.
Western Australia knows this problem well - before the global recession, several sectors of the economy and especially the mining industry were crying out for skilled workers.
The problem risks being made worse by the global economic downturn.
In uncertain economic times, it's harder for tradies to take on apprentices - and to keep them on.
In 2008-09, as the global recession began to hit, the number of apprentices signed up in traditional trades dropped by around 10,000 over the previous year. By as much as 25 per cent in sectors like construction.
History tells us that it can take many years for training numbers to return to satisfactory levels after an economic downturn.
After the 1990 recession, it took almost a decade for apprentice commencements to bounce back.
Given the time lags involved in acquiring skills and training, the extent of Australia's skills shortages could worsen if, as expected, we experience substantial increased demand for skilled workers in the years ahead.
Supplying adequately trained and highly skilled employees for nation-building ventures like the Gorgon Project will be a major challenge in coming years.
The Gorgon Project is the largest resource project ever proposed in Australia and at its peak will create more than 10,000 direct and indirect jobs.
It is just one of around 80 planned or approved projects nationally.
And the West Australian Chamber of Commerce and Industry estimates that the resources sector added 90,570 jobs across the WA economy from 2001 to 2008.
So we know that the demand for skilled labour is going to soar in the resource sector over the next decade.
And across the board, we know that the jobs of the future are going to require higher levels of skills and training than in the past.
Since coming to government two years ago, the Government has begun delivering a long-term education revolution to tackle skills shortages and prepare today's kids for the jobs and industries of tomorrow.
Despite the global recession, we have never taken our eyes off the ball for the long-term challenge of building the most highly skilled, highly trained, highly educated workforce for Australia's future.
We are committed to a revolution in the quantity of education investment and the quality of education outcomes.
The education revolution extends from an investment of nearly $1 billion in universal preschool by 2013 for children the year before they go to school, a time when investment produces enormous long-term returns - through to every level of education and training including vocational, university and research.
We have increased the Commonwealth's investment in all education sectors over a five year period by 50 per cent, compared to the previous five years.
The Government is increasing the Commonwealth's investment in school education alone to more than $62 billion in the current period from 2009 to 2012, compared to $33 billion in the period 2005 to 2008 - a nearly 100 per cent increase.
We are also undertaking major reform of the $6.4 billion vocational education and training sector in Australia.
VET is a major part of our education system, with close to 5,000 providers and 1.7 million students.
The Government is committed to an education revolution in the VET sector. Already we have provided $2 billion funding for 711,000 new training places over five years through the Productivity Places Program.
The Government will also soon introduce legislation to establish a national quality and standards regulator for the VET and higher education sectors.
Better national regulation will unlock key data about the performance of providers, the value of qualifications and the quality of teaching to give students the information they need to make the best choices.
We are also targeting our efforts where they can make the greatest impact. Here in Western Australia, we estimate that current training partnerships with the State Government will deliver 23,470 places for jobseekers and 52,009 places for existing workers over the next five years.
We are also tackling the specific problem of the fall in apprenticeships - and we are getting results.
Last year the Government committed to investing $145 million in our Securing Apprenticeships and Traineeships initiative to support out-of-trade apprentices and trainees, helping them to remain connected to the workforce and to maintain their investment in training.
To date more than $41 million has been paid to 22,600 employers supporting around 34,000 apprentices.
This investment supports the expansion of the national skills base by ensuring apprentices and trainees can complete their training.
We've also invested $20 million to support 4,000 pre-apprenticeship places - to give young people the experience they need to decide on a career in a trade.
And we have provided an immediate $80 million incentive for employers to take on a young apprentice.
Over summer this year, we are more than tripling the first year bonus to employers through the Apprentice Kickstart program.
This program increases the incentive for employers who take on traditional trades apprentices from $1,500 to $4,850 in areas on the National Skills Needs List - like carpenters, welders, cooks, electricians, joiners and hairdressers.
Apprentice Kickstart began on 1 December last year and will run until 28 February this year - or until 21,000 apprentices have commenced.
Today I can inform you that we are getting results.
Today I can confirm for the first time that most recent sign-ups for new apprenticeships, in December 2009, show an increase of more than 50 per cent compared to the same time last year - with 4,400 trade apprentices being signed up across Australia.
That is 1,500 more than in December 2008 and 1,200 more than in December 2007 - before the global downturn began.
And by last week, we had a total of 6,421 trade apprentices signed up. Apprentice Kickstart is a good choice for 2009 school leavers - it's a pathway for young Australians to a secure and exciting future. It's a good choice for employers - it's an investment in skills that will be vital during recovery.
This is government action at work, building Australia's future skills and future productivity.
This afternoon I have addressed a number of major national policy priorities that are important to building Australia's future.
Equally important is the work that Australians are doing every day to build Australia's future - from people working hard in their local communities, to those who serve Australia in uniform, to those who dedicate their professional life to medical research, relieving suffering and improving the lives of Australians.
Such contributions are not always well recognised - and that is why it is a good thing that 50 years ago this year, we established the Australian of the Year Awards - to recognise such contributions.
Western Australia's finalist for 2010 is a world leader of research into a disease that affects many older Australians and their families - Alzheimer's.
Professor Martin has made breakthrough discoveries in his research alongside Professor Colin Masters and a team of German scientists - the first significant breakthroughs since the disease was first diagnosed in 1906.
Professor Martin's work at the Sir James McCusker Unit for Alzheimer's Disease Research has helped make it possible to identify and treat Alzheimer's at an earlier stage, and he is currently working to develop an even earlier diagnostic blood test.
Professor Martin - we wish you the very, very best for your work and for next week's Awards.
Australians always embrace a challenge.
Whether it is medical researchers.
Or pioneers like Edward John Eyre who in 1841 arrived in Albany walking from the east across the Nullarbor Plain.
Or the men and women who have built this vast state into a powerhouse of the national economy.
We love a challenge.
And as a nation, we have some big challenges ahead.
But we can tackle them and in the decades to come, continue to be the envy of the world.
So with pride in what our nation has achieved, let's roll up our sleeves and get on with our work.
As we look with optimism towards the future, I ask you to raise your glasses as I propose a toast to Australia.