I acknowledge the Kulin people, traditional owners of the land on which we meet today and pay my respects to elders past, present and emerging.

And at this conference with equity as one of its themes, let us commit ourselves to the task to eradicating indigenous disadvantage in our country

I acknowledge my session counterparts Luci Ellis (RBA), Ian Harper (Melbourne Business School and RBA board), and Karen Chester (Productivity Commission).

This is the fifth time I have been here as Shadow Treasurer. Thats what you get for being the second longest serving Shadow Treasurer in Australian history, now facing my third Treasurer.

Well, I hope this is my last appearance as Shadow Treasurer. I hope to be back next year in a different capacity.

This plenary session theme today is Delivering growth with equity, something which drives Labor.

Growth and equity form two key planks of the Labor mission.

We understand that economic growth is the most effective poverty alleviation program yet invented. It turns aspiration into reality.

Economic growth was at the heart of the Hawke-Keating reforms of the 1980s and 1990s.

Economic growth was also the reason behind the Rudd-Swan agenda of keeping Australia out of recession in the face of the worst economic circumstances in seventy years.

These reforms and Labor policy interventions have underpinned nearly three decades of recession free growth.

And this focus on economic growth will continue under a future Shorten led Labor Government.

Its why weve worked hard in opposition to develop a policy program that will boost investment and growth such as through our Australian Investment Guarantee.

Our $3.4 billion Investment Guarantee will allow all businesses small, medium and large - to immediately deduct 20% of any new tangible, and increasingly importantly, intangible assets with the balance depreciated in line with normal depreciation schedules from the first year.

Its a permanent arrangement, not subject to the annual budget cycle.

And then there is our whole of government commitment to deliver a step change in our economic engagement with our region, which is where the opportunities lie.

Our FutureAsia framework aims to achieve a fundamental, indeed whole of nation, effort to deepen and broaden our engagement with Asia.

Putting in place the right policy settings necessary to engender economic growth also help us engineer improvements to the social contract to ensure improved equity in our society.

But in the time available today, I want to focus on two elements of Labors growth plan human capital and the Federation.

Labors investment in human capital

First, to Labors approach to investments in our most important asset, our people.

If investment in physical capital was the growth model of last two centuries, then investment in human capital is likely to characterise the growth model for the century ahead.

The OECD increasingly points out that sustained competitive advantage is increasingly based on innovation, which in turn is driven in large part by investments in different forms of knowledge-based capital.^[1]

Philip Lowe said recently that instead of relying on our natural endowments of minerals and energy, in todays world, Australias comparative advantage will need to be acquired or built. through innovation, creativity and ingenuity on the back of investing in the skills of our labour force. ^[2]

The link between human capital and economic growth is undisputed.

In a world where human capital is likely to be the go to asset, then we have to have an education system that is fit for purpose.

This is why last week, the Labor party added to its already large investments in human capital.

Our new National Pre-School and Kindy Program will guarantee that every three and four year old access the quality early education they need for the best start in school and life.

This is what Bill has described as the fourth pillar of our education system taking its rightful place alongside schools, TAFE and university.

This is the biggest investment in early childhood education in our nations history.

A $1.75 billion investment.

A big investment, but a necessary one.

Australia now ranks 23rd (out of 30) in the OECD for early childhood education expenditure as a percentage of our GDP we only invest 0.5% of our national income on early education compared to the OECD average of 0.8%.

Australia is below Brazil, Mexico and the Russian Federation in terms of funding for early education.

The United Kingdom, New Zealand and Ireland are already offering at least two years of preschool and China has commenced implementing its plan to ensure children have access to at least two years of preschool by 2020.

Only 57% of Australian three year olds currently access some kind of early learning program well below the OECD average of 78%. So we can do better.

Studies into early childhood have shown that the economic payoffs are substantial.

As Ross Gittins said yesterday, I cant think of any other single initiative more likely to benefit us socially and economically.

There is a strong correlation between children attending early learning and their results in primary school.

An OECD study found children attending more than one year of pre-school scored significantly higher in PISA test scores at age 15 years.

Of course, early childhood learning is not just about getting kids to learn English and reading and writing, as important as these skills are as they progress through school.

Play-based preschool programs, delivered by qualified early childhood educators, have been shown to lift learning and development outcomes for all children, while also closing the achievement gap for disadvantaged children.

Our $1.75 billion investment in early childhood education builds on our:

• $14 billion investment that will transform public schools across Australia giving all children the opportunity to reach their full potential no matter where they live, or how much their parents earn;
• myriad polices to boost skills, such as our commitment to reinvigorate our fledging TAFE system and our comprehensive inquiry into post-secondary education to sort out the current mess of overlap and duplication; and
• our commitment to uncap places at university.

This suite of polices from early childhood, to schooling, to universities and to skills, our human capital agenda and commitment to life-long learning will ensure the next generation of Australians, not matter what background get the best start in life and opportunities beyond.

It is no exaggeration to say that the differentiation of emphasis between us as the alternative government and the current occupants of government benches on human capital and education is, and will continue to be, the key difference in the policy offerings to the Australian people at the next election.

Policies that deliver opportunity for all are likely to be the ones that best stave off the threat of worsening equity and inequality.

Labors reforms to COAG

I now want to turn to another, but no less important enabler of productivity and economic growth.

The operation of our Federation is crucial for future economic reform and ultimately for lifting future living standards.

Any Government which is not thinking of ways to improve the operation of the Federation is neglecting a key area of economic reform.

Reforms that will deliver relatively large productivity benefits involve policy levers at the state level, whether housing affordability, skills, and increasingly productivity in the non-market sector such as in health and education.

Proper economic reform will embrace Federalism reform, not shirk it.

More transparency and accountability infused into our COAG architecture is fundamental to confronting Australias growing vertical fiscal imbalance which instead of encouraging cooperation, has turned into a blame game between the states and the commonwealth.

This approach has underpinned 5 years of wasted opportunities and policy drift.

Over recent years weve had:

• a bungled Federation white paper process instead of starting a national conversation it remains aborted and unimplemented;
• A Tax Discussion Paper process that lived a short life; and
• Then more extreme developments such as the creation of splinter groups like the Board of Treasurers which due to the Prime Ministers abrasive style as Treasurer was created by Liberal and Labor State Treasurers and does not include the Commonwealth Treasurer.

I was disappointed at first that the state of relations between the commonwealth and the states had got so bad that the states saw this is as necessary.

But Ive come to see the Board of Treasurers as a positive development, as be it one born from less than ideal circumstances.

A properly resourced body could add to the quality of the federalism discussion, much like National Governors Association in the United States.

Provided its scope is clearly defined its operations well organised it could bring added efficiencies to the Commonwealth State economic, financial and administrative arrangements.

It could, for example, enable states and territories to share best practices and harmonise codes and regulations.

Reforms such as these do not need to be initiated at the Federal level. Instead they can be readily identified and furthered by the Board of Treasurers.

The complacency of the last few years followed the abolition of the former COAG Reform Council in 2015 the only independent COAG body tasked with assessing COAG-level performance through independent and evidenced-based monitoring and reporting of the performance of all governments.

The performance frameworks established by the COAG Reform Council positively influenced government activity in a number of ways.

They triggered systematic data collection across jurisdictions, but just as importantly, the Reform Councils work also catalysed investment in and attention to, new reforms.

We now have a Prime Minister that thinks COAG meetings are about eating Tim Tams instead of discussing important issues for the nation.

There is now no independent COAG institution overseeing and informing COAG reform priorities and agendas tasked with collecting good and comparable data and robustly tracking progress of reform priorities.

The Productivity Commission does produce a high level Performance Dashboard on COAG National Agreements.

This is good, but its not sufficient to deal with the increasingly complex problems confronting the Federation.

A future Labor Government will do better.

Thats why we are announcing today that we will establish a new independent COAG Economic Reform Council that will be given more autonomy in its remit to examine, track, and report to COAG on long-term reform priorities.

We believe a new independent COAG Economic Reform Council will get more buy in from the states and create a greater shared sense of responsibility than the current arrangements.

The independent COAG Economic Reform Council will:

• Collate and collect consistent and comparable data from the states, territories and the Commonwealth to inform policy co-design and analysis, helping to track progress and performance; and
• Support the development of agendas for two formal COAG meetings a year and the regular Council on Federal Financial Relations meetings.

More transparency and better data around reform activities at the state and commonwealth level is crucial, and is essential to not only track the performance of current agreements, but also to help inform future reform priorities.

The Federation Discussion Paper specifically commented that A more robust, comprehensive, and transparent data collection and performance reporting framework, across all levels of government, is needed.

Better data collection was also identified as a key objective in the first 5-yearly Productivity Review produced by the Productivity Commission.

It specifically recommended that (in relation to health) Australian governments remove the current messy, partial and duplicated presentation of information and data.

The new independent COAG Economic Reform Council will operate at arms length from Government and will be overseen by a Board of up to six well qualified members, with the Chair appointed by the Prime Minister (after consultation with the States).

The Council will be supported by a well-staffed secretariat that would seek to include secondments from all state governments.

We made it clear last year when announcing our plans to address housing affordability that a key element of improving housing affordability was that we needed to get more out of our COAG National Agreements.

Improved housing affordability is being impeded by supply side policy levers at the state level, such as onerous planning regulations.

In this regard, the COAG Economic Reform Council could be tasked by the Prime Minister to look at ways in which the Commonwealth could better influence and support the states making changes to their planning laws which would lower the cost of housing and increase housing supply.

But it doesnt stop at housing affordability.

Given policy areas like health and education are expanding their share of the Australian economy, delivering these services as efficiently and as productively as possible will deliver even bigger economic benefits than former more traditional areas of reform.

Labors substantial new investments at the Commonwealth level particularly in health and education will necessitate the need for reform goals to be met by the states.

This is why new COAG Economic Reform Council might examine restructuring payments to the states to include incentive or reward payments, which helped drive reform in the 1990s and were used successfully until mid-last decade.

I say to the states and territories a future Labor Government will work with you, not against you.

There will always be a need of course for difficult conversations between a Federal Treasurer and their state counterparts. But the spirit of goodwill, cooperation and shared endeavor must be at the heart of the Federation.

A new independent COAG Economic Reform Council is a down payment that signals our intentions to engage in a more cooperative Federalism, something we believe will underpin a future reforming Labor Government.

Conclusion

In conclusion, in this age of rapid change and transformation, I cant think of a more important area of policy to get right than investing in human capital.

And there is surely no better way to deliver growth with equity.

Our record investments in human capital together with a better functioning and more cooperative Federalism through a new COAG Economic Reform Council are just two areas of action under a reforming Shorten Labor Government.

A reforming Government with a strong mandate is, in our view, what the country needs and what we are keen to deliver.