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 back in the Top End to join with you in celebrating our national day. In coming days, people around the Northern Territory will be joining the rest of the nation in celebrating Australia Day, and given a recent survey by the National Australia Day Council found that 90 per cent of those surveyed would like to see more of our Indigenous culture included in celebrations, the Northern Territory is showing us how to do it.
The Executive Director of the Australia Day Council, Warren Pearson, says the Northern Territory is, and I quote : "...quite sensational as a model for the rest of the nation".
From small Aboriginal communities holding their own events, to the larger celebrations in Darwin, Palmerston and the Alice, to the footy match of the year - the Island of Origin - up in the Tiwi Islands, Indigenous culture is very much a part of the NT's Australia Day celebrations. Of course, there are various celebrations that also help create that shared sense of this being 'our' day as Australians - as well as:
* The Australia Day Ute Run in Darwin;
* The family bike ride and cricket games on Groote Eylandt;
* And an event that seems to be emerging as a significant event in many communities - the Thong Throwing competition.
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, Australia was facing an enormous challenge with the worst global recession in 75 years. The good news is that the Territory, 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. The Northern Territory's unemployment rate is below the national average at 3.2 per cent - extraordinarily, 0.8 percentage points lower than a year before.
Our response to the economic maelstrom has demonstrated what can be achieved when we understand that we're all in it together: governments of all persuasions, across political and state lines; businesses large and small; unions and local communities right across the nation. When our backs were against the wall, we all joined together to keep Australia strong, and that has made all the difference.
I am profoundly optimistic about Australia's future, but optimism is not the same as complacency. We still have major long-term challenges to tackle if we are to keep our economy strong and build a stronger and fairer Australia.
We can be optimistic because Australians have the determination and ability to seize the opportunities of the future, and tackle these long-term challenges. 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.
On Wednesday in Adelaide, I discussed why I believe the decade ahead must be a Building Decade - and the importance of our investments in advanced 21st century infrastructure for moving to a higher productivity growth path.
Yesterday in Perth I discussed 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.
Today I will discuss our determination to remove the barriers to work - to help more Australians to participate in secure and fulfilling work, so that we can increase levels of workforce participation and counter the effect of the ageing of population.
The Australia to 2050 report sounds the alarm bells on a major demographic change resulting from the ageing of our population. 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.
This will have a major impact on our economy and on government. 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 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.
The Government is determined to act now on the long-term challenge of an ageing population. The clear message of Treasury's intergenerational modelling is that our response to the ageing of the population must centre on enhancing productivity growth, and I will discuss today, removing barriers to participation in the workforce.
The Treasury analysis undertaken for the Australia to 2050 report shows that if average productivity growth was lifted back towards the 1990s mark of an average 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. On average, every Australian man, woman and child would be $16,000 better off a year in 2050. Increasing productivity involves helping Australians work smarter, not harder - with the benefits of higher skills, advanced infrastructure, innovation and a seamless national economy - all key elements in the Government's commitment to building Australia's future and lifting productivity growth.
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 past decade, 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 is projected to 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.
On Wednesday 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, contributing to choke points in infrastructure around the nation. Third, the Government has made infrastructure a national priority since coming to government, taking a leading national role for the first time in national infrastructure policy; establishing Infrastructure Australia to advise on the long-term planning of our infrastructure needs; investing a record $36 billion in transport infrastructure; and tackling regulatory reforms to remove the hurdles to increased infrastructure investment from the private sector.
Yesterday in Perth I discussed the importance of creating a more high-skilled, better trained workforce to move to a higher productivity growth path. 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.
If we could boost GDP in 2050 by 1.2% through improvements related to education and training, that would amount to around $45 billion in today's dollars, or the equivalent of around $1,200 for each Australian. But despite this fact, Australia has not made adequate long-term investment in education in recent decades - in 2006, for example, we had a level of public investment for education below the OECD average, investing only 4.6 per cent of GDP compared to an average of 5.3 per cent. The Government has begun to turn this around, investing around half a percentage point of GDP more in education in 2009-10 than the levels of the previous Government and a drive for a qualitative increase in education outcomes at each level of the education system. The Government's goal is an education revolution, to build the best-educated, best-trained, most highly skilled workforce in the world.
In the past two days in Adelaide and Perth, I have spoken about the importance of enhancing productivity through building advanced 21st century infrastructure and prosecuting a revolution at every level of education. Today I want to speak about the other aspect of the long-term challenge posed by the ageing of the population - the need to address the projected decline in workforce participation.
I want to make three key points today.
First, the ageing of the population revealed by the Australia to 2050 report will result in lower levels of workforce participation in Australia - despite the fact that we anticipate an increase in workforce participation among working age Australians.
Second, to counter the effect of the ageing of the population on workforce participation levels, we must support the participation of working age Australians in the workforce. That means we must address the barriers to workforce participation associated with groups in the community where there are lower levels of workforce participation - including women with younger children, people with low educational attainment and those who suffer from persistent disadvantage.
Third, since coming to office the Government has already implemented major long-term initiatives to remove barriers to participation in work and build a fairer Australia. Those initiatives include establishing Australia's first-ever system of Paid Parental Leave.
We have begun the education revolution, to give more Australians the skills and training that will help them find rewarding jobs and stay in the workforce and we are acting to help those Australians most likely to be excluded from the workforce, including unemployed youth, kids growing up in jobless families, people in disadvantaged communities, the homeless, people with mental illnesses, people with disabilities and Indigenous Australians.
The Australia to 2050 report to be released in coming weeks will highlight the core challenge posed by the ageing of the population. The ageing of the population is expected to reduce the workforce participation rate from around 65 per cent now to around 60 per cent by 2049-50, resulting in slower economic growth and slower growth in family incomes.
The good news is that Australia is expected to make long-term progress in lifting participation among working age Australians. The participation rate among those aged 15 to 64 years is projected to increase from around 76 per cent now to almost 80 per cent by 2049-50. This reflects a range of factors, including higher levels of education outcomes in tomorrow's workforce.
However, such an increase in workforce participation will not be enough to offset the effect of the ageing of the population. A key lesson of the Australia to 2050 report for government policy is that we need to continue to take steps now to address the effect of the ageing of the population on workforce participation levels.
The steps we take now to expand opportunity for Australian children and youth today will yield benefits for participation, productivity and economic growth throughout their working lives over the next 40 years, to 2050 and beyond. After all, a child who is 5 years old today is likely to be in the workforce through to the 2070s. That is why expanding their opportunities now is so important to building Australia's future.
To address the challenges posed by lower levels of workforce participation in parts of our community, we must address the specific factors that contribute to exclusion from the workforce - factors that vary among different parts of our community.
In overall terms, Australia's participation rates are not low by international standards. However, parts of our community experience higher levels of exclusion from the workforce than is the norm for other developed nations, and it is clear that there is scope for lifting workforce participation among those groups, measures that will help counteract the effect of an ageing population over the decades ahead.
First, analyses of the causes of lower rates of participation among women have repeatedly highlighted the problem of accessing affordable childcare. While the working age female participation rate has increased from around 50 to 70 per cent over the past 30 years, Australian women's workforce participation during their peak child-bearing years reduces by a greater amount than for women in other leading industrialised countries.
For example, in 2008 labour participation rates for women aged 25- 44 years were more than 80 per cent in Sweden, Iceland, Denmark and Finland, compared with around 75 per cent in Australia.
Second, there is another set of barriers to work for older Australians who wish to remain in the workforce. Many suffer discrimination or find it difficult to access help to make the transition into different types of work that could improve their skills or prolong their participation in the workforce. The Government is committed to improving assistance for older workers who wish to continue working.
Third, low levels of educational attainment also contribute to lower levels of workforce participation, since the economic evidence demonstrates that those who do not achieve good education levels are far more likely to stay on the margins of the workforce, failing to find secure jobs. That is why the Government's is committed to improving access to education, quality health care and employment - because these measures can improve what the Treasury describes as our 'social sustainability, enhancing productivity and workforce participation.
Economic research shows that those who do not have a Year 12 education, or an equivalent non-school qualification, are 18 per cent less likely to be in the workforce than people that do.
Fourth, low levels of workforce participation are associated with multiple social disadvantage experienced in some parts of the community. This means that a substantial amount of the work we need to do to increase workforce participation is the same as the work we need to do to tackle social disadvantage in many parts of our community.
New analysis in the Australia to 2050 report shows that 2.6 per cent of Australians remained stuck in relative poverty, earning less than 50 per cent of median income levels, during the period from 2001 to 2006. That equates to more than 570,000 Australians excluded from the benefits of the mining boom years in Australia, despite the huge boost it provided to our national income, because the consequence of persistent disadvantage - and over time, a factor that contributes to the continued cycle of disadvantage - is that some Australians cannot find and keep a job.
If we can successfully increase the number of Australians in the workforce, we will also be a long way down the track in building a fairer Australia, and tackling the disadvantage that afflicts far too many Australians.
I note that today Patricia Faulkner, Chair of the Australian Social Inclusion Board, released the Board's first annual report on the extent, causes and impact of disadvantage in Australia. Echoing the findings of the Australia to 2050 report, the Board's report highlights the plight of Australians caught in cycles of persistent disadvantage.
The Government has identified six key groups in the community where there is entrenched disadvantage and where there is scope for increasing the level of workforce participation.
First are disadvantaged young Australians, such as those leaving school early and those unable to find secure employment.
Second are Australians who suffer from intergenerational disadvantage - the jobless families in which some 15 per cent of Australian children grow up. Research shows that children growing up in such environments are far more likely over the longer term to have lower levels of literacy and numeracy, weaker educational attainment, lower levels of workforce participation and ongoing exclusion from the mainstream of the economy and the wider community.
Third, in our cities and regions there are communities where there is a concentration of low incomes and disadvantage - a subject that the Treasurer wrote about in some detail in his book Postcode in 2006. For example, Canterbury Bankstown in New South Wales had a participation rate of 56 per cent in December 2009 and Wide-Bay Burnett in Queensland had a participation rate of 54.8 per cent - both more than 10 percentage points below the national average. Often, low income people living in these region have more difficulty participating in the workforce because of a lack of transport to places of work. Some 10 per cent of people with low incomes have difficulty accessing transport compared to only 1% of people with high incomes.
A fourth group of Australians who suffer social disadvantage are the homeless. More than 105,000 Australians are homeless on any one night in Australia, with more than 16,000 sleeping rough. Without secure accommodation, it is extremely difficult to sustain participation in the workforce.
A fifth contributor to lower participation levels is mental illness and disabilities. While mental illness is often episodic, and disabilities may only partial restrict a person's capacity for work, for many Australians these challenges can result in permanent exclusion from the workforce.
Indigenous Australians experience among the most acute social disadvantage of all Australians, and low workforce participation rates - especially those living in remote communities. This is a particular concern here in the Northern Territory. The unemployment rate among Indigenous Australians is around three times the rate of non-Indigenous Australia, with 16 per cent unemployment compared to around 5 per cent nationally on the most recent comparative figures, and just 26 per cent of Indigenous Australians have a non-school qualification, compared to 53 per cent of the rest of the community.
Just as we took decisive action to support families as we confronted the global recession, the Australian Government is committed to addressing the barriers to workforce participation experienced as a result of social disadvantage among each of these groups.
Some will argue that there is no need for governments to make active interventions to bring people into the workforce and that a government has no responsibility other than to allow people the freedom to choose how they live their lives. Such views ignore the reality for people who simply don't have the opportunities that so many Australians take for granted. They ignore the cycles of disadvantage associated with low incomes, low education, family dysfunction, concentration of social disadvantage in particular regions, mental illness, chronic health problems and insecure accommodation.
The reality is that Australians who are caught in cycles of disadvantage cannot make a simple decision to join the workforce and participate in economic and social life. Those who face multiple barriers to participation need additional skills, support and incentives to help them break out of the cycles of disadvantage and take responsibility for themselves and their families. These measures to tackle social exclusion target the group of around 5 per cent of Australians aged 15 years and over who experience three or more types of disadvantage, such as social exclusion, and by tackling these causes of exclusion, we can improve workforce participation and build a fairer Australia.
The Government recognises the challenge of acting now to implement the long-term measures that will reduce barriers to work and lift workforce participation.
The introduction of Australia's first-ever system of Paid Parental Leave from 2011 is a historic step that will significantly reduce barriers to workforce participation for hundreds of thousands of women. The Productivity Commission has estimated that the introduction of Paid Parental Leave could increase the average Australian woman's lifetime employment by around half a year - a significant positive impact. This measure will especially help lower-skilled and lower-income earners in industries where there are no paid parental leave schemes - women at far greater risk of dropping out of the workforce after the birth of children.
The provision of Paid Parental Leave will also help encourage their attachment to the workforce, since one of the conditions of receiving PPL is that prior to the birth of a child, parents must have been in employment for at least one day each week for 10 months.
PPL will operate in addition to the Government's increase to the Child Care Rebate from 30 to 50 per cent, which has already removed a significant barrier to employment for hundreds of thousands of parents. This has dramatically improved affordability of childcare for working families, with ABS statistics showing child care costs of parents fell by over 20 per cent after its introduction. Combined with the existing Child Care Benefit, the Child Care Rebate means that support provided to low income parents can now cover around 90 per cent of their out of pocket child care costs. This is a big leg-up for parents who are low income earners to re-enter the workforce.
It is long overdue. Australia has been one of only two OECD countries without a comprehensive Paid Parental Leave scheme, and it will provide a long-term benefit because one of the clearest findings of labour market research into working age people who are not in the workforce is that disengagement from the workforce often begins because of a lack of access to affordable childcare.
By increasing levels of educational attainment, the Government's commitment to the education revolution will also contribute to higher levels of workforce participation. The Government's early childhood education strategy involves an investment of almost $1 billion to achieve our aim of universal access to pre-school for four year olds by 2013. Educational research shows that participation in quality early childhood education programs can significantly improve long-term education and employment prospects for children, especially those most at risk of intergenerational disadvantage.
The Government is almost doubling the Commonwealth investment in schools over the four year period of 2009-2012, to achieve a target of lifting Year 12 or equivalent attainment from 75 to 90 per cent by 2015. We are investing $1.5 billion over seven years in the Smarter Schools National Partnership on Low SES Schools, to attract the best teachers to schools in low socioeconomic status areas, where young Australians typically lag at least one school year behind the Australian average. The Government is investing more than $700 million in TAFE and vocational education infrastructure, to help attain the goal of halving the proportion of people with skill levels below Certificate III level.
Currently, 43 per cent of the working age population has educational attainment of less than Certificate III level. The Government has adopted the ambitious target of reducing that proportion to 22 per cent of 20-64 year olds by 2020.
The Government has also invested $2.2 billion in higher education to enable an additional 50,000 new students to attend by 2013, with 20 per cent of undergraduate enrolments from low socio-economic backgrounds by 2020. This will contribute to the goal of 40 per cent of all 25 to 34 year olds having a bachelor's degree equivalent by 2025.
The Government is committed to building a future in which, to the maximum extent possible, all Australians participate in Australia's economy and society - by tackling social disadvantage. To do that, we have to give Australians the opportunities, resources, capabilities and responsibilities to learn, work, connect with others and have a say in community life. We need to break down the barriers that stand between some Australians and a job. We need to have as many people who can work in work.
That's why we have targeted young Australians most at risk of exclusion from the workforce through the Jobs and Training Compact. This Compact guarantees an education or training place for every young person under 25 who does not have a Year 12 qualification, or needs to upgrade their skills. In addition, the Youth Guarantee provides an incentive for young Australians to stay in education by requiring that every young person under 17 must be in school or in training in order to receive Youth Allowance or Family Tax Benefits.
The Government has also acted to minimise the impact of the global recession on communities most at risk, applying the lesson of the 1990s recession, where hundreds of thousands of Australians entered a long-term cycle of disadvantage and exclusion from the workforce.
In 2009, the Government implemented a Compact with Local Communities to assist areas of highest unemployment. This Compact has been backed by a $650 million Local Jobs Fund, to support local community projects that maximise local training and job opportunities. This has helped the most vulnerable communities to weather the storm of the global recession, and minimise the extent to which the downturn reduces levels of workforce participation. Despite the economic downturn, the level of workforce participation remains above 65 per cent, near record levels.
The Government is also committed to tackling homelessness, a problem closely related to exclusion from the workforce. The Government has committed to the ambitious, but achievable, goal of halving the level of homelessness by 2020. We have provided an additional $1.1 billion over four years to fund prevention strategies, long-term housing and support services, including services directly focused on helping individuals to reconnect with the workforce.
The Government is tackling disadvantage and low workforce participation among Indigenous Australians through its $4.6 billion long-term commitment to Closing the Gap on Indigenous disadvantage - addressing chronic disease, housing conditions, employment, education and service delivery. One of the most successful models that the Government is supporting in this area is the Clontarf Academics, which help young Indigenous people to achieve better educational outcomes while also developing their sporting talents, and next month I will be giving the second of my annual reports to the Australian Parliament on Closing the Gap.
All of these initiatives - and many others that I have not had the time to discuss today - are intend to assist in giving people the skills, incentives and readiness for work - supporting Australian jobs and building Australia's future. The Government's long-term blueprint to tackle disadvantage will be set out in greater detail next week by Julia Gillard and Jenny Macklin, with the release of our report, A Stronger and Fairer Australia - embodying our vision to build a nation that truly embodies the spirit of the 'fair go' for all.
One Indigenous Australian who represents the Australian spirit to many of us is the filmmaker Warwick Thornton - this year's Northern Territory finalist in the Australian of the Year Awards. Warwick's debut feature film, Samson and Delilah, has won international acclaim and is set to go down in Australia's cinematic history as one of our greats, and I understand Samson and Delilah has been shortlisted for the Oscar nominations in the Best Foreign Film category.
Warwick's passion for documenting the stories of his people will give our nation a great legacy and we wish him well next week when the Australian of the Year is announced.
The depth and breadth of the pool we draw from to select the Australian of the Year finalists reminds us that the Australian spirit is alive and strong in 2010. We are a resilient people who believe in the spirit of the 'fair go', who believe in helping their mate and who have in their DNA the spirit of the 'can-do', where nothing is too hard.
As we enter a new decade, there are significant long-term challenges ahead, but the opportunities are even greater, so let's take pride in what our nation has achieve and pride in what our nation has the potential to achieve in the building decade ahead in this, the land of the fair go.
So it's with great pleasure I ask you to raise your glasses as I propose a toast to Australia.