Can I acknowledge and pay my respects to the Ngunnawal people, to their elders past and present and always importantly, emerging. And can I acknowledge any serving members of our defence forces and any veterans who are here with us, which is my custom, and to simply say on behalf of a very grateful nation, thank you for your service.
I, of course, acknowledge the Deputy Prime Minister Michael McCormack and the Treasurer Josh Frydenberg and my Assistant Minister Ben Morton who is also here with us today.
For sixty years, CEDA has been part of the debates that have shaped the Australian economy.
Now in 2020, facing the greatest global economic shock since the Great Depression, CEDA is again well-placed to inform the policies needed for Australia’s recovery.
CEDA’s founder, Sir Douglas Copland spoke of chasing what he called the “Adventure of Growth”.
It is a quest that I think aligns precisely with today’s challenge, as we look to recover from the health and economic crisis created by the COVID-19 pandemic.
Today, I want to share some further thoughts on where as a Government we see the economy at this point in the COVID-19 crisis and the implications for the many decisions we need to make in the months ahead.
I also want to take the opportunity to focus on the role infrastructure investment and deregulation will play in our JobMaker plan, building on my recent JobMaker announcement, made here at the National Press Club some weeks ago, on skills, industrial relations, housing and construction and the reform of Federation decision-making.
Australia has shown incredible resilience in the face of our twin crises.
We are saving lives and we are saving livelihoods.
We’ve managed to do better than our fears, and even our hopes.
In Australia, our actions have limited COVID-19 infections to just 7,000, fewer than 500 active cases today, and we have reduced our daily infection rate to less than 0.2 per cent, from a peak of more than 25 per cent.
Sadly, of course, 102 Australians have died.
Mercifully, this is a long way from predictions of hundreds of thousands of Australians contracting the virus, tens of thousands of deaths and a health system in crisis.
Our health response has been undoubtedly world class, bettering those of similar developed and sophisticated economies around the world as you can see from the chart looking at the comparison of COVID cases.
But not just those large developed economies. We are one of a handful of countries that have achieved this level of success on the health front. And as you can see from this chart, it was not a forgone conclusion. As you can see in the early days of the pandemic as it hit Australia, you can see the line there of all the other countries, all heading in one direction – to catastrophe.
And then you have seen what Australia has been able to achieve. Better than not just a few countries, but frankly most of the countries around the world.
This has saved lives.
Our death rate of just 4 people per million people of our population is a fraction of other developed economies. In some cases, their death rate is more than 100 times what Australia’s is.
Our response has followed a uniquely Australian path, as we promised it would. Getting the balance right between our health and our economic objectives, as this new global stringency index demonstrates by comparison.
Closing the borders, quarantining, building our health system capacity, social distancing, sensible restrictions, measured restrictions, and strong testing, tracing and local health response capabilities.
And whereas other countries imposed strict lockdowns, we have been able to keep large sectors of our economy open and functioning, including construction, manufacturing, agriculture mining, as well as large parts of the retail sector, which were not closed.
This has not just yielded enviable health outcomes, but it has limited the economic impact of the COVID crisis and put us in position to emerge more quickly and more strongly.
The recent National Accounts showed that the Australian economy shrunk by 0.3 per cent in the March quarter. Now, while the damage to the economy is heartbreaking at that level, it has been far less than so many other countries, as you can see, by the comparative performance on international growth across major developed economies.
Looking forward, Australia is expected to have the third lowest fall in GDP in 2020 of all economies surveyed by the OECD.
But the hit to our economy, we must understand, is significant despite our relatively strong performance and the road ahead will be very hard. We still have a mountain to climb.
Compared with the mid-year update, it is expected that over $100 billion of economic activity has been lost this year, and that it will take us an estimated two years at least, just to get back to the level we were at pre COVID-19.
And that’s why we have a plan to lift growth, not just for the next few months, just not for now. But the next five years. We need to lift our economic growth rate by more than 1 percentage point above trend to beat the expected pre-COVID-19 GDP by 2025, to catch back up to where we were before COVID hit.
The restoration of growth is also critical to our public finances.
We are looking at a record deficit this year and next, and next. And not just because of record COVID-19 expenditures. Revenues have taken an equally large hit.
And while our expenditure measures have been designed to be targeted and time limited, in accordance with the principles we set out at the start of the crisis, the impacts on revenue will be longer lived as the economy makes its way back.
This will require us to recalibrate our fiscal strategy. This does not mean stepping back from our commitment to essential services and addressing the further needs in aged and disability care. We remain committed to those essential services. And supports within the Australian community.
Such expenditure, where carefully planned and controlled, will support growth and it will boost confidence. But we must be extremely cautious about our expenditure, especially as we navigate our way back from the record fiscal supports now in place.
There will always be a case made for spending more and for spending longer, and there are plenty who are happy to make that case. But it is not a wise or responsible course.
Such a path is dangerous and will prejudice medium and longer term capacity to deliver on core essential services like health, hospitals, schools, education, the pharmaceutical benefits scheme, our Social Security supports. Over-extending on the fiscal supports puts those longer term and medium term supportive services at risk.
Our budget will be balanced again by keeping expenditures under control, while boosting revenues through pro-growth policies that lift investment and get Australians back into jobs, just like we did it last time.
Neither excessive austerity, nor higher taxes are the path that our Government will pursue. We will pursue growth and responsible budget management that ensures that governments live within their means and guarantee the essentials Australians rely on, as ever.
Growing our economy all comes back to getting people back into jobs. This is where we must start. And having created more than 1.5 million jobs before COVID-19 hit, we have done it before and as a Government we will do it again, working together with Australians right across this country.
In April, we lost the equivalent of 30 months, 30 months of average jobs growth. Devastating. The job numbers for May, on Thursday, will show, I’m sure, just how large the challenge is. There is still worse news ahead.
The impacts are across all states and territories and, so far, worst in Victoria. Our jobs challenge is a truly national task and is now the primary focus of the National Cabinet, which we’ve agreed to now make permanent.
Recognising the threat to jobs and businesses, we announced JobKeeper and the JobSeeker COVID-19 supplement early, designed for Australia, when uncertainty was at its highest. Once again getting the balance right for Australia’s circumstances, not cutting and pasting from other jurisdictions. Along with other measures, the Government injected some $260 billion into the economy over three tranches, in the space of just three weeks.
For now, businesses have rightly called on this emergency support and it has proved to be an invaluable economic life line, buying them time to come to terms with the impact of COVID-19 and plan their way back. Those plans are now starting to be put in place by Australian businesses, small and large.
The ABS May survey of businesses found more than half of small and medium sized businesses accessing wage subsidies. They have also benefited from cash flow support and the deferral of loan and lease repayments, keeping these businesses alive and keeping jobs in place.
Without these measures, businesses would have simply fallen over, fallen victim, never to open again. This still may ultimately be the experience for some. But for many more, these measures will have provided the bridge that those businesses and their employees needed.
And that is why these supports have been put in place but it is also why they’re only temporary. Left in place for too long, not only will that damage the capacity of the Budget to deal with important essential services, but it will also dull the dynamism of the economy and prevent the adjustments that must necessarily take place to enable new jobs to be created and our economy to move forward.
Similarly, individuals who have sadly not been able to retain their jobs have been supported by an enhanced safety net through the effective doubling of JobSeeker through the COVID supplement and the relaxation of eligibility criteria.
Around 1.6 million Australians are now on JobSeeker, around half accessing these payments over the past few months, many for the first time in their lives.
As you can see, it has been young people who have had the greatest increase in the demand for JobSeeker. This is also true when you include those still employed, but working zero hours.
We know there is a disproportionate impact on women, and younger Australians and those with lower skills attainment which identify key parts of the labour force, key parts of the Australian community we need to focus on as we prepare and plan our way out and make our way out.
These workers are in the worst hit sectors, in particular accommodation, hospitality and retail, where more than 600,000 Australians have either lost their job or working zero hours.
As can be seen from the most recent National Accounts, household consumption of services was what plummeted in the March quarter. Those services are in those sectors that have been most affected that I just pointed to and there is worse expected in the June quarter, when so many businesses had to shut down or couldn’t remain open. And as you can see, non discretionary spending took an absolute hammering, even though spending on essentials actually increased during the quarter.
The good news, and there is good news, because we are aspirational and we are a positive people, the good news is we are now coming back. Australia is opening up again. Australians are once again, as this chart demonstrates, are on the move as States and Territories work together to implement our National Cabinet three-step plan to open the economy. And this is boosting consumer confidence.
JobKeeper and JobSeeker put a floor under the fall in consumer confidence back in March and we have now recovered that lost ground in consumer confidence, both on Westpac and the ANZ indices.
High frequency spending data shows that this is being increasingly translated into increased retail sales. This is good news for those young people and women working in hospitality and retail, who will be the first to benefit from the reopening – and this especially means those people.
Now, while trailing the improvement in consumer sentiment, business confidence and conditions are also clawing their way back. The easing of restrictions and Australians emerging from isolation, confident in the health measures taken by Governments, will continue to drive up demand and indicate to business that they can once again open their doors and make a go of it.
See it’s not just enough for the business is to be able to be opened, they’ve got to have confidence to open, to bring the staff back, to get the orders in, for their inventory. You have to put investments in including through the instant asset write off which Treasury extended out. That requires confidence that people are coming back.
We will be supported by the efforts to boost that confidence, we have made to connect with supply chains that better aid our growth. While global growth forecasts are weak and bleak, those of our major trading partners are much stronger, which is important for the outlook.
Our mining sector has also been able to keep on running. Export volumes and prices are encouraging and will provide much needed income for the country. The same is also true for many other export sectors. And with plans to re-engage international education, and our tourist industry opening up again, at least for domestic travellers, many more can see the road ahead.
As we come out of this COVID crisis, and as we are on this road ahead, infrastructure development will play a critical role in our JobMaker plan. Our Government has already committed nearly $180 billion on economic infrastructure over the next decade, with more than half allocated across the four years of the forward estimates.
This isn’t just the roads and rail that get us to work and get us to school and get goods to markets and ports. It is dams that improve water security and underpin an expansion of high-value agriculture, as part of our 2030 Agriculture Plan. The telecommunications services that keep us connected. The poles and wires which are critical to removing bottlenecks in our electricity grid, improving competition and driving down prices. Defence assets which keep our nation secure and supporting many regional economies with advanced manufacturing.
As we come to the end of this financial year, the Commonwealth will have invested more than $24 billion for infrastructure across key government portfolios. And as we move into 2020-21 we are pushing to do even more.
Since last November, we have worked with state, territory and local governments to bring forward or inject additional investment totalling nearly $7.8 billion:
- That includes $4.2 billion for joint priority projects with the states and territories at MYEFO.
- $1.75 billion in additional funding for Sydney Metro Western Sydney Airport, fast tracking a nearly $11 billion project that will support 14,000 jobs in the heart of Western Sydney.
- A $1.3 billion bring forward of the Financial Assistance Grants program, the Deputy Prime Minister announced recently, providing untied funds for all councils across Australia to use at their discretion. And that comes on top of the support as the DPM will remind you for drought and bushfire recovery assistance.
- $500 million in new funding to establish a new program supporting all councils to undertake local road and community infrastructure upgrades that previously weren’t in their forward schedules. New spending.
Today I am committing a further $1.5 billion to immediately start work on small priority projects identified by the states and the territories as part of our partnership.
As part of this package, $1 billion will be allocated to priority projects which are shovel-ready, and being smaller projects they’re ready to go. And with $500 million reserved specifically to target road safety works. This is an important opportunity to make our roads safer right across the country, not just in rural and regional areas where it is critically important but also in other parts of the country.
Further announcements on specific projects will be made soon. The result being we will have brought forward or provided additional funding of $9.3 billion in infrastructure investment in just the past eight months.
To build the pipeline of future projects, we are determined to get out of the way and speed up progress by improving approvals processes.
One area in which the Commonwealth has a direct regulatory role for relevant projects is through approvals under the Environment Protection and Biodiversity Conservation Act 1999.
According to departmental estimates, delays associated with these approvals alone cost industry over $300 million just in 2019. That’s not good enough.
The Commonwealth has already taken steps to cut project approval times under the EPBC Act. At the end of 2019, approval decisions took 90 days on average. Today they take 40. That is what we’ve achieved this year in 2020.
Our goal is to cut these times by a further 25 percent by the end of this year – to 30 days for major projects.
Ultimately, our objective is the streamlining of Commonwealth and state processes to a point of ‘single touch approvals’.
The National Cabinet has had already – early discussions on how we can achieve this objective, and there is already, I can assure you, a high level of engagement and agreement.
The National Cabinet will come back to this issue very shortly, informed by the current review of the EPBC Act being conducted by Graeme Samuel.
Of course, focusing on Commonwealth approvals won’t do much to deliver projects faster if we don’t also address state processes.
Now when it comes to major projects, focusing on Commonwealth approvals won’t do much to deliver projects faster if we don’t address the state approval processes.
Today I announce a priority list of 15 major projects that are on the fast-track for approval under a bilateral model between the Commonwealth, states and territories.
Joint assessment teams will work on accelerating these projects worth more than $72 billion in public and private investment.
Projects that will support over 66,000 direct and indirect jobs.
Under our new approach this investment, and most importantly, these jobs will be brought to market earlier by targeting a 50 per cent reduction in Commonwealth assessment and approval times for major projects, from an average of 3.5 years to 21 months.
This priority list includes:
- Inland Rail from Melbourne to Brisbane;
- Marinus Link between Tasmania and Victoria;
- Olympic Dam extension in South Australia;
- Emergency town water projects in New South Wales; and
- Road, rail and iron ore projects in Western Australia.
Early examples of this approach are already paying dividends and are encouraging.
I commend the New South Wales government who we have been working with. We are on track to complete Commonwealth assessment and approval for Snowy 2.0 in under two years – unlocking over 2,000 regional jobs.
Successful deregulation has increased competition and economic efficiency, raising productivity and, ultimately supporting jobs and wages.
Early gains have been made in the process I established with Assistant Minister Morton last year through the Deregulation Taskforce. This included simplifying business registers, streamlining export documentation and making it easier for a sole trader and micro-businesses to employ people. In most cases, the first ever employee.
The next phase of the Taskforce work will zero in on areas to assist COVID-19 economic recovery.
For example, occupational licensing and registration requirements often vary across states and territories, which increases costs on business and workers who operate or move across Australia. Greater mutual recognition of qualifications and improved information flows between jurisdictions will be vital to allow Australians to take up job opportunities in coming months.
Secondly, COVID has shown that our laws have not kept pace with digital technology when it comes to business communications – for example, by requiring business to use paper for storing information, instead of using electronic delivery or adopting new technologies like blockchain. These laws, too, are ripe for modernisation.
So today I announce that I am bringing the Deregulation Taskforce into my own Department, into the Department of Prime Minister and Cabinet as part of the Government’s JobMaker agenda. This will further drive a whole-of-government approach to how regulatory policy is prosecuted, supporting Assistant Minister Morton.
Our focus applies as much to the culture of regulators as it does to the content of regulations. I’m sure anyone in business would understand that point. This crisis has shown what can be achieved when regulators are pragmatic and responsive, solving problems without compromising safeguards.
As the Treasurer I know would reinforce, APRA in particular working with the major banks, to ensure that we could be dealing with deferral of loan payments and how that effect banks capital adequacy ratios in all these issues, just working constructively together to solve quite a serious problem that was going to have a significant impact on whether businesses could keep their doors open. The attitude of the regulator mattered as much as the regulations themselves.
So I have asked Assistant Minister Morton to report back on ‘lessons learned’ in recent months, highlighting cases where governments and regulators have responded to the COVID crisis and its economic fall-out with urgency and common-sense.
There are many encouraging examples beyond the ones I have mentioned.
Shop trading hours were deregulated in Queensland, Western Australia and South Australia so people didn’t have to spend so long in the queues. Practical problem, practical solution by practical people.
Trucks were allowed to resupply along roads and during hours where they were previously banned. And the sun came up the next day. It was extraordinary.
Steps were taken to ensure unnecessary professional requirements did not block nurses coming back into the workforce. Common sense.
At the Commonwealth level, we fast-tracked approvals for drug trials. Changes were made to the Medical Benefit Scheme to promote the use of telehealth. We cut red tape to allow companies to use overseas standards for hand sanitiser.
Cooperation between business and unions meant employers were empowered to reduce hours and reconfigure tasks that their employees are allowed to do. Keeping people in jobs.
And we reduced financial reporting and other requirements that would have hit firms struggling to survive the shock, as I said. As a result, businesses are able to sign documents with electronic signatures and conduct virtual AGMs.
Far from weakening that performance, this agility has helped our economy function, save jobs and has demonstrated what can be done when necessity is presented. At last Friday’s National Cabinet, I committed the Commonwealth to bring forward further priorities. With specific targets. and I’ve asked them to match me. I expect them to do the same. I won’t be disappointed. Unity of purpose among National Cabinet. To get the jobs back. It’s amazing what unity and purpose can do and we want to keep that going.
The Government of Western Australia already has bills before its Legislative Council to accelerate major projects, reduce red tape, and facilitate bilateral arrangements to remove duplication between our assessment and approval processes. My simple messages to pass the bill. It is good for jobs. It provides a model, I believe, for other states and jurisdictions. And my simple message to the Western Australian Parliament is pass the bill. It’s good for jobs. It provides a model I believe for other state and territory jurisdictions.
The Productivity Commission will also be tasked with informing and developing this Federation wide deregulation agenda, the bringing in of experts and Brendan Murphy, who I now suspect is a household name, nothing I’d expect he never anticipated that in venturing into his career as a public health profession many years ago. But those experts have been incredibly important to our government and to the National Cabinet and governments all around the country. And I have asked the commission’s chair, Michael Brennan, to brief the next National Cabinet meeting on priority areas where we can work on the investment and job creation and I look forward to those presentations and I know the premiers and Chief ministers also do.
In conclusion, Australia faces an immense challenge as we look to recover from our first recession in three decades. Those words are hard to say. For many of us, I think for most Australians, it is still to sink in. We worked so hard to get Australia back on the right track, 1.5 million jobs, a budget brought back into balance and then in the space of days – it shows how important economic resilience must be for the future. It shows how we must never let the tension in the cord slacken when it comes to the important economic changes we need to make to secure the lives of Australians and their livelihoods. We need to return that growth that will ensure real and sustainable jobs, the wages that support families with all of the decisions they want to make. And importantly the essential services that Australians rely on.
Our Government’s five year JobMaker plan charts the way forward for a new generation of economic success. We are weathering this storm. It’s now time to gather the momentum to continue to build the confidence we need to resume Douglas Copland’s great adventure. Thank you very much for your attention.