Rudd pitches 'productivity pact'

By a staff reporter

Prime Minister Kevin Rudd has outlined an "unapologetically optimistic" vision for Australia's economy, advocating a new "productivity pact" between unions, government and business to manage the transition from the resources boom.

Mr Rudd said "the fact is in 2013, the China resources boom is over" and flagged a "crossover point" for the national economy.

"The truth is, if we are to drive a new national competitiveness agenda we need to have government, business and unions working as much as possible together - pushing in the same strategic policy direction for the overall wellbeing of our national economy," he told the National Press Club in Canberra.

"The core of this new national competitiveness agenda must be a common agreement among us all that we must lift our annual productivity growth rate to 2 per cent or better for the future."

Mr Rudd said the nation faces new global and national economic circumstances which demand Australians implement "a new national competitiveness agenda with a new sense of national urgency".

"These global factors frame the new economic challenge that Australia faces today: how to protect our jobs and living standards given that global growth is sluggish and now the Chinese resources is slowing,"  he said.

Mr Rudd outlined several key areas in need of policy improvement; domestic electricity price regulation in Australia; unintended rigidities arising in the labour market; Business productivity; government regulation of business; education, skills and training; infrastructure; and small business.

The restored leader said the economy was transitioning from an investment intensive phase in minerals and resources to a new phase focussing on other sectors, including the trade sector.

"Managing this economic transition is now a core task of national economic policy," he said.

Mr Rudd said Australians were seeking a discussion of "clear positive economic policy direction."

Electricity prices too high

Mr Rudd said he had met with the Business Council of Australia and the ACTU a number of times since he was returned as prime minister on June 26.

High on the agenda was electricity prices, which he said were too high by global standards.

"This affects the competitiveness of all firms large and small. Of course, it also affects individual consumers," Mr Rudd said.

"But before you all start reaching for your revolver on the carbon price, let's be rational about this - the carbon price at present contributes less than 10 per cent to national electricity prices."

Mr Rudd said the primary reason for electricity price hikes was national electricity regulation, which allowed excessive rates of return for publicly-owned transmission and distribution utilities which in turn were "cash cows" for various state and territory governments.

"Reforms are needed for the supply of competitively priced gas for Australian businesses and households," he added.

Rudd lashes absent Abbott

Mr Rudd delivered a scathing assessment of Mr Abbott toward the end of his Press Club address, saying his non-attendance at the proposed debate highlighted the fact he "just doesn’t understand economics". 

"Today, I wanted to debate the future of our economy," Mr Rudd said.

"Mr Abbott’s absence has made such a debate impossible."

Mr Rudd had challenged opposition leader Tony Abbott to a debate on debt and deficit at the National Press Club, however Mr Abbott declined.

He said the debate was the chance for Mr Abbott to defend his observations about the "debt and deficit crisis" under Labor.

"Instead, Mr Abbott decided to cut and run," he said.

"Run away from the facts."

"But keep pumping out the fear."