Gillard's productivity machine gun

Labor's three-part plan to boost Australia's productivity draws the lines for an ideological battle – but will its 'USI' be enough to convince voters?

The ALP has a new TLA (three-letter-acronym) – the USI.

One can't help wondering if the 'unique student identifier' acronym is pronounced a bit like the 'Uzi 9mm' submachine gun beloved by action movie aficionados.

Under the skills package Labor announced (actually mostly re-announced) yesterday, students will have a single 'USI' to carry around with them as proof of their various training achievements – no doubt greeting employers with Schwarzenegger-esque lines such as "Say hello to my little USI". Oh the fun.

Actually, Julia Gillard's speech yesterday in which she detailed the USI, a new MySkills website to rank training institutions, and a HECs-style system of loans to help young Australians to complete their training years, was deadly serious.

Gillard was yesterday drawing a line in the sand on that most contentious of economic metrics – productivity:

"Let’s be clear... on what productivity means," said the prime minister. "It doesn’t mean taking a few dollars out of workers’ pockets or eroding protections that bring them dignity and security.

"And it doesn’t mean hard-working employees working even harder. In a mature, sophisticated economy like ours, the biggest single source of productivity will come from only one place: capital deepening."

Gillard went on to differentiate between the two forms this will take – physical capital and human capital. Both, for Labor, are sources of productivity growth, and both are preferable in political terms to boosting productivity by reducing wages and/or employment entitlements.

Most educated Australians will wake up this morning with one of those two options buried deep within their political psyche – left/liberal types believe Australia can afford to upgrade the nation's plant and equipment, and its skills base, to stay ahead of our ultra-competitive Asian neighbours. More conservative types believe that only breaking the stranglehold of unions can free up Australia's human capital to be 'flexible' enough to stay ahead of national economies that pay only a fraction of Australian wages, and that capital deepening must be done by the private sector, not the government.

They are chalk and cheese visions for Australia, and only one can triumph at the next election.

With Labor now looking like it will last the distance to 2013, Gillard has time to communicate Labor's 'capital deepening' plans to the business community, and to voters more generally.

There are three legs to the Gillard plan:

– Around $11 billion in revenue will flow over the next three years from the mining tax to help fund the Gillard skills package (the MRRT legislation passed the Senate last night).

– The skills package announced at last May's budget will include a five-year $7.2 billion package of skills funding to be put to the states at next month's COAG meeting; a further "$1.75 billion to support and drive these new reforms"; and "funds unlocked by VET FEE-HELP, potentially amounting to $155 million each year".

– The federal government is funding infrastructure which, Gillard pointed out, includes the NBN, the duplication of the Pacific Highway, upgrades to the national freight rail network, "unclogging our cities" through projects like the $4 billion regional rail link in Melbourne's west, and "linking the rapidly expanding resources sector in New South Wales to Port Kembla via the long-deferred Maldon to Dumbarton freight line".

That's the Labor plan – more skills, more infrastructure and more taxes coming from the resources sector to pay for both.

Countering that vision will be hard work for the Coalition – though it continues to ride high in the polls, the Abbott alternative government will be ruthlessly attacked by Labor and the unions shortly before the next election. Labor will argue that Abbott's plan to repeal the mining tax (and carbon tax), and the spending cuts this will entail, will lead Australia in the wrong direction – less state-funded capital deepening and more 'labour flexibility', which the unions will label the 'return of WorkChoices'.

Abbott's defence is a direct appeal to the small business and independent contractor constituencies, lead by shadow small business minister Bruce Billson (as Ken Phillips described last week: Abbott's small business power tilt, March 14), though Labor is currently pulling out all the stops to woo the same voters (Treachery behind Labor's small business curtain, March 19).

Labor's plan is on the table for all to see and the three legs – skills, infrastructure and new revenue to fund both – form, at the very least, a coherent big-picture plan for the nation.

We won't know the full extent of the Abbott opposition's response for some time. But when it appears, one of the great ideological battles of this decade will begin.

Follow @_Rob_Burgess on Twitter

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