(Introduction and acknowledgements)
This year’s election was a vote for stability and certainty in uncertain times.
I’m joined by a large number of my colleagues and I’m not going to call the role tonight, just to acknowledge all distinguished guests who are with us.
But that is what it was about, for me and my team.
A vote for staying the course on a policy agenda that has worked to rebuild our nation’s finances, to retain our AAA credit rating and start paying down our debt, so as not to further burden future generations.
I appreciate Tim’s point about the surplus.
The point of a surplus, is to pay down our debt. It’s not extra money that just lies around, or falls down the back of the couch, has no purpose.
Its purpose is to reduce the more than $19 billion the Commonwealth pays on interest each year on the debt that has been built up, as Josh knows, from 12 years of deficits.
By working hard to get the budget back into surplus and keep it there, we can now pay down that debt, and are.
And we can increase our resilience for the future.
Labor would have us blow the surplus as they did last time, and add to this debt. This will only erode the Government’s ability to deliver on something I hold very dear, guaranteeing the essential services that Australians rely on.
Fixing our finances has been achieved at the same time as rewarding aspiration and enterprise in our economy through once in a generation tax relief, two successive Budgets, allowing Australians to keep more of what they earn.
And it has been delivered alongside the most ambitious international trade strategy in Australia’s history.
We’ve gone from 26 per cent when we were elected, of our trade coverage- two-way, by free trade agreements, to 70 per cent. And we’re going for 90.
And at the same time, we have delivered the biggest rebuild of our defence force capability since the Second World War, we’ll hit two per cent of GDP next year, and we are rolling out major projects across the country as part of our $100 billion transport infrastructure programme rolling out over 10 years.
And we are guaranteeing the essential services Australians rely on, with record funding, not reduced- record and increasing funding, in health, in education, in disability services, in child care, in aged care. All critical areas of need that Australians are relying on us to deliver.
So tonight I want to lay out again how, as a country, under our Government we will continue to successfully navigate the uncertainties of the global economy.
And I want to start by affirming our strong belief that Australia has an undiminished capacity to grow our economy and succeed in today’s global environment. And that achieving this growth remains our priority task.
But as I discussed last year, growth is not an end in its own right. Our economy is about people. Not dollars and cents.
Their jobs, their independence, their aspirations, their health and education services, their security. Financial, personal, national.
When we downplay the importance of economic growth in our national policy settings and are prepared to trade it off as some sort of expendable, we do our people a great disservice. We take from them and we take from their future.
Sure, you know as well as we do, and Australians know there are headwinds and there are challenges, globalisation, trade tensions, geo-political instability, digital disruption and climate change. Challenges are not new, even existential ones. Their existence is no cause for crisis settings.
A panicked reaction to contemporary challenges I believe, would amount to a serious misdiagnosis of our economic situation and our great opportunities.
A responsible and sensible Government does not run the country as if it is constantly at DEFCON 1, whether on the economy or any other issue.
It deals with issues practically, soberly. As you would in your businesses.
I’ve got to say, the appetite for crisis, so popular amongst some these days, on so many issues, reflects an immaturity demanding urgent action regardless of the consequences. Because you know when there is a crisis, you don’t have to dot your i’s and cross your t’s. Urgency takes over reason.
What you get, when you govern like that is the fiscal debacle we inherited that was rendered by the Rudd Gillard Rudd Labor Government that we are still paying for to this day, and our political opponents continue to promote.
If Australians wanted to elect economic panic merchants, then they wouldn’t have voted Liberal.
Our Government will foster the stability and certainty necessary in both our political and economic systems to support jobs, to grow our economy, to protect our environment, to deliver world class services and enable individual Australians and their families to plan for their future with confidence.
They’ve had enough of all the drama.
Let me focus briefly, first on the near-term economic outlook.
Global growth has slowed as you know, as trade tensions, geo-political uncertainty and financial stability concerns have weighed on production and investment around the world.
This of course has led the IMF and World Bank to scale back their global growth outlook. As the Governor of the Reserve Bank who is here tonight and I welcome him as well, Phil, is well aware of these trends.
That said, the growth outlook for Australia’s major trading partners sits above these more general global trends.
Central banks, ours included, have taken interest rates to historic lows in response to below average growth and an extended period of low wages growth and low inflation. These are not uncommon in the developed world today, Australia is not in isolation in these areas.
As mentioned, we’re also seeing the effects of prolonged drought across large parts of regional Australia – our farm GDP declined by 8.3 per cent over the past year.
But notwithstanding all of this, our economy has continued to grow.
Not all advanced economies, or those in our region, can tell that story. Germany, Singapore, the US, South Korea have all recently experienced negative quarters.
Yet so far this year, this calendar year, our economy has grown by 0.5 per cent in each of the last two quarters. And the central case forecast from the IMF, OECD, RBA and Treasury is that the economy will gradually pick up from here, and jobs growth will remain solid.
Against this backdrop, it would be reckless to discard the disciplined policy framework that has steered us through many difficult periods, and I’ve got to say most recently and significantly the end of the mining investment boom, which posed an even greater threat to our economy than the GFC.
It is because of this framework that Australia compares so well internationally against those who have allowed taxes and spending as a share of GDP to rise.
The US deficit was up 17 per cent in 2018 to $US779 billion dollars, 3.9 per cent of GDP. Italy’s government debt is 127 per cent of GDP with through the year growth running at 0.3 per cent. Norway has a revenue to GDP ratio of 55.3 per cent; France, 53.5 per cent, both with lower growth rates than Australia.
Treasury’s latest economic forecasts show our Government returning the budget to surplus this financial year.
This will be a significant achievement from where we started. It is the product of difficult and disciplined choices over six successive Coalition Budgets.
While returning the Budget to surplus we have been making the right choices to re‑shape the Budget to better support the economy, now and over the medium to long term.
Our first act after the election was to legislate our seven-year personal income tax plan, starting with immediate tax relief for hard working Australians. Now this relief built on a previous iteration of that planned the previous year, in the 2018-19 Budget, as well as the reductions in tax for personal income tax there was taxes in that year for small and medium sized businesses through a lower tax rate and of course the instant asset write off which continues to this day.
At $19.5 billion over four years, the structural tax relief delivered in our first week in parliament was nominally equal to almost the entire once off cash payment stimulus provided by the Rudd Government during the GFC within a year, but it didn’t have the associated ill-discipline and wasteful impacts of Labor’s poorly targeted measure.
When combined with the structural tax relief provided in the 2018-19 Budget, it is estimated the single year impact in 2019-20 alone of both our tax changes this year is more than $7 billion. More money back in people’s pockets.
These initiatives were part of an ongoing broader structural change to our tax system enabling Australians to keep more of what they earn, this was not a desperate, one off, short-term sugar hit or panicked crisis measure, here today, gone tomorrow. But you pay for it for a decade.
Our response to the economic challenges our nation faces has been structural investment in Australian aspiration, backed by responsible economic management.
As expected, some recipients took the opportunity to increase their spending immediately, others took the opportunity to pay down their debts. Why shouldn’t they, it’s their money. That was the point, backing the decisions Australians wanted to make about their own money.
The result of stage one of our most recent personal tax plan increased the purchasing power of low and middle income earners – both now and into the future.
Stages two and three of our plan, as Tim said, fully legislated will see 94 per cent of taxpayers facing a marginal tax rate of no more than 30 cents in the dollar, including the full abolition of the 37c tax bracket. That’s big.
Our commitment to a tax to GDP cap of 23.9 per cent, when our friends in Norway are North of 50, our speed limit on taxes as I’ve described it, provides the fiscal anchor for a more competitive tax system and, when combined with the fiscal goal of maintaining the budget in surplus, this provides a steady discipline on government spending.
But this is not the only action we have taken.
Shortly after the election, I wrote to all state and territory leaders and I asked them to identify the infrastructure projects that could be accelerated.
I’m pleased to announce that as a result of that process we have been able to bring forward $3.8 billion of investment into the next four years, and that includes $1.8 billion to be spent both this financial year and next year. Not on the never, never, this financial year and next year.
This will support the economy in two ways – by accelerating construction activity, supporting jobs in the near term and by reaping longer term productivity gains sooner.
Every state and territory benefits, with significant transport projects to be accelerated in all jurisdictions – all within our $100 billion ten-year infrastructure investment plan on the way.
This bring forward of investment is in addition to the new infrastructure commitments we have made in drought-affected rural communities since the election, through the Roads to Recovery Program, the Building Better Regions Fund and our Drought Communities Programme.
Since the election alone we have announced around $1 billion in grants and other payments, not loans, grants and other payments to support rural communities and on top of that, $1 billion further in access to zero interest loans for both farmers and agricultural small businesses.
So taken all together, the Government’s actions since the election – legislating the tax cuts, the bring-forward of infrastructure investment and additional drought relief – this has provided significant near-term additional support, this year and next year of $9.5 billion to the economy at a challenging time. We didn’t race it, we planned it. We got it ready, we dotted our i’s, we crossed our t’s. And it’s not ready to go.
This does not include, I should also note, the significant budgeted ramp up in important Government expenditures in health, education, disability services and aged care.
This year and next year an extra $6 billion on top of the Budgets will be spent on health and education, $2 billion extra will be spent on aged care and with 170,000 new participants estimated to come into the NDIS, and Minister Robert’s here tonight, expenditure on that programme will increase by $9 billion this year and next year.
So that’s a lot of investment. That’s a lot of targeted, well thought through expenditure. All being done with a surplus Budget paying down the debt, and as Josh said on Budget night, no new or increased taxes.
That’s what responsible economic management delivers as a dividend.
To continue to secure Australia’s future economic prosperity over the next decade and beyond, we need to do more though to lift our growth potential and performance.
We can’t rest.
Productivity though, I want to stress, because it’s a frightening word to many Australians, productivity is not about paying people less to do more, productivity is about enabling people to earn more from what they do every day. That’s how I measure it. And that’s what our productivity agenda is all about.
I believe there is considerable untapped potential in the Australian economy that can propel this next wave of prosperity.
New technologies changing what is produced, how products and services are produced and where they can be produced. These are opportunities up for grabs, but also new challenges and risks come with it.
The new global economy has disrupted traditional ways for countries to become prosperous.
Instead of moving up a value-add chain based on fixed areas of comparative advantage, countries now look to find their place across different sectors in a rapidly transforming global supply chain.
The disruption age and the greater complexity of modern goods means that research, design, and maintenance are coming to matter more than ever than production. Automation has slowed the relentless search for people willing to work for ever-lower wages.
Greatly diminished communications and computation costs mean the best firms can now reach wider markets, and integrate themselves into business production from further away.
Marketing, management and technical know-how for goods or services can be delivered from anywhere in the planet, including and especially right here in Australia.
And when our countries grow richer, as we have, but not just us, throughout our region there’s a rising middle class. Services are hard to replace with robots as those economies seek more of these services.
Tradable services that use technology to deliver increases in productivity that lift wages, in areas like medicine, higher education, finance, business services. Non-tradable services are more likely to lift jobs, into caring for disabled, human services, supporting older Australians.
The trends that I’ve just described play to the strengths of Australians.
We have a highly educated workforce, sound legal system, strong economic institutions, deep and stable capital markets, one of the best banking systems, if not the best in the world. A modern digital economic infrastructure most recently evidenced by the new payment [inaudible] – as well as access to the fastest growing markets in the world, with the deals to back that up, where we have a strong record of achievement.
So let me touch on now a couple of elements of our economic plan, and how we are going to work to make the most of these advantages.
Our Government’s goal is for Australia to be a leading digital economy by 2030. Our degree of success will be critical to income growth and job creation over the next decade and beyond.
Our extensive policy agenda encompasses digital access, connectivity, consumer data and competition policy, government service delivery and skills development, trade and global e-commerce governance, as well as the necessary focus on security and privacy concerns.
We have already had some big successes in the Parliament. Introducing a world-first, a new world-leading Consumer Data Right will give customers more control over their data, they’ll get the value from it, because it’s theirs. Empower them to compare and switch between products and services and encourage competition. Consumer Data Right is a key building block for a truly advanced digital economy. And we’ve got one.
We are starting with Open Banking, which will launch next year, and supported by initiatives such as comprehensive credit reporting. We will expand this framework across multiple sectors, including in energy and telecommunications, leading to better prices and more innovative products and services because consumers will be at the centre.
Next year we will conclude our first e-commerce trade agreement with Singapore and we are leading the way in framing new e-commerce trade rules for the WTO.
We are transforming the delivery of government services through the new Services Australia, making more government services easily accessible online and improving the digital experience. We working on our side of things, we want Australians to spend less time dealing with paperwork, in long lines at shop-fronts or waiting on the phone.
To propel our ambition to make Australia a leading digital economy by 2030, I have established a Digital Technology Taskforce within the Department of Prime Minister & Cabinet working across all government departments to deal with this business.
Becoming a leading digital economy doesn’t mean though, let me stress this, becoming a leading digital economy doesn’t mean that we are trying to create the next Silicon Valley here in Australia. And it doesn’t mean that we want to walk away from our traditional industries and jobs. Quite the opposite.
We must play to our strengths.
Australia is a predominantly services, resources, advanced manufacturing and agriculture-based economy – this is where our natural endowments and comparative advantages lie. This is where the majority of our job and income creation will continue to come from.
What we need is for a greater proportion of our businesses in all sectors of the economy to apply the digital technologies at the frontier. I want to see all Australian businesses using the best tools for the job, have the best people for the job, whether these tools are physical or digital. This is as much about a local plumber or a small manufacturer as it is about a tech start-up at a warehouse somewhere.
Operating at the technological frontier in the digital world is a necessity for our trade exposed sectors to keep pace with global competition.
And we know this. Andrew and JS know this, our mining industry is amongst the world’s most efficient and profitable because of its application of leading edge technologies.
They’re tech businesses. Very profitable ones. Very successful ones. I’ll take that.
Technological leadership is less evident in some non-traded parts of the economy or those sectors that are protected from competition by regulatory frameworks. The evidence also shows that big businesses are generally faster adopters of new technologies than smaller businesses.
Yet there is strong evidence that a relatively modest investment by small business to acquire the skills and adopt one of the many products that now exist to digitise their back office functions, book keeping, purchasing, paying employees and scheduling shifts can drive enormous efficiencies in both time and cost.
Research by Alpha Beta shows the average Australian small business only spends around $5,000 per year, or less than one per cent of their revenue, on technology. This is an issue.
The same study reveals that small businesses in the top quartile of digital technology investment have revenue growth around 3.5 per cent higher, and employment growth 5.2 per cent higher, than those in the bottom quartile.
Now when I was Treasurer I asked Mark Bouris to examine what small businesses needed to do to drive their uptake of digital technologies and not surprisingly Mark told me that small businesses don’t come to government for ideas on how to transform their businesses.
Rather, they look to similar businesses that have made a successful digital transformation or to the advice of successful business people, including those with whom they have established business relationships.
Now big business has a role to play here. Many of you provide services to small business or have trusted supplier relationships with small business owners. You have a stewardship over important supply chains.
My challenge to BCA members here tonight is to consider how you can help small businesses make the digital transformation that will set them up for success. Which will set you up for success.
Digitise your supply chain. That’s something you can do. Now it will support strong and stable business relationships and, ultimately, it will be good for the whole economy.
Now we’re doing our bit, our position as a major purchaser of goods and services by undertaking practical measures that encourage small business to adopt new digital technologies.
We talked last year about paying small businesses quicker and I welcome those figures Tim that’s a great success, and to Jennifer as well.
A recent example is our commitment to pay invoices to small businesses that use e-invoicing, not 20 days, within 5 business days, 5 business days. That’s where we are going now, a year later. Cash flow is king for any business – particularly small business – so this is an enormous incentive for small businesses to switch to e-invoicing.
Cash flow and payment times was a major theme as I said last year, now whether it be government, large business or small business – if we have the systems and procedures in place to pay on time and pay more quickly, well everybody wins, everybody wins.
Another part of our economic growth, and I appreciate your patience tonight, because I’ve got a fair bit to say about where we’re taking this economy and this is the right audience, I want all Australians to understand another part of our growth plan is to remove the regulatory barriers and bottlenecks that prevent Australians from investing and creating jobs.
Now it’s not particularly sexy stuff for the newspapers but I tell you what, it’s incredibly important in driving down the costs of doing business in this country.
Recently when I was at the inauguration of President Widodo for his second term it was the only thing he spoke about, was cutting the costs of regulation in his economy.
So since the election, working with Josh as Treasurer, Josh Frydenberg as Treasurer, Ben Morton my Assistant Minister has led the revitalisation of our deregulation agenda.
I want to thank the BCA for its contribution to defining the priorities of our Deregulation Taskforce.
And after just a few months we are already making real progress.
Our initial priority areas have been, reducing the regulatory burden on food manufacturers with an initial focus on exporting – you want to do dereg, you’ve got to get in to the detail. You got to get right under the hood.
Secondly, making it easier for sole traders and micro-businesses to employ their first person; and thirdly getting major projects up and running sooner. We’ve been working away on that since I announced this process back in July [inaudible].
Currently, fewer than 1 in 10 food manufacturers are exporters. And through a package of measures, the Government will make it easier for food businesses to export.
Firstly, a new trade information service will make it easy for businesses to find the information they need about how to export, practical information, and connect them with the many support services there to help them be successful. With speed to market critical for food exporters, we will also make the Trusted Trader programme and Known Consignor border facilitation programs more attractive to food exporters. Get them into these important programmes.
And we will modernise the export certification process, to a state-of-the-art digitised system to reduce the paperwork, save businesses time and reduce overseas border delays.
Getting more Australians into work has been a signature achievement of our Government.
Each year, around 150,000 sole traders and micro businesses employ someone for the first time – it’s a big step. It’s bold, it’s courageous and it’s nation building.
Employing your first person is an indication of success and a desire to grow. Yet it can be frustrating to put it politely, and time consuming. The owner of one IT start-up reported to our Taskforce that it took them two months to work through the regulatory steps in taking on an employee for the first time.
The Government will make it easier for small and micro businesses to employ people by developing a single, online employer service that will guide businesses on all the things they need to do – reducing time, costs and risks.
To further encourage business formation and to make it easier for business to interact with government, we also going to modernise Australia’s business registers, which I know has been a great source of frustration.
The new business registry system will upgrade and consolidate 32 separate business registers into a single system, allowing businesses to view, update, manage and maintain their data in one location and to transact with government in one place. This investment will form the backbone of further business deregulation initiatives and service delivery enhancements.
Now the third area of our regulatory congestion busting agenda is getting major projects off the ground sooner.
Again, we have taken on board what businesses have been telling us.
Environmental approval processes for major projects are overly complex, duplicative and they take too long.
As in other areas, digital technology gives us the opportunity to make these processes faster and simpler.
Our Government is taking the first step towards a nationally consistent digital environmental assessment and approvals regime.
We will partner with the Western Australian Government to develop a system that will reduce approvals times, allow project proponents to submit a single application via a single online portal, track its progress and access a database of biodiversity studies relevant to their project.
I want to recognise the role companies such as BHP, Rio Tinto and Fortescue have played in the development of the biodiversity database.
It takes approximately three and a half years for a complex major project to navigate the State and Commonwealth environmental assessment process. It’s estimated that this timeframe could be reduced by between 6 and 18 months through the better use of technology.
So that’s what we’re going to do.
These announcements focus largely on helping businesses navigate existing regulatory environments they operate in.
We know there is a much bigger task out there. And the Taskforce will report back in the new year on initiatives focused on regulatory design and reduction and will move into other sectors as well.
Now as I announced straight after the election, the Minister for Industrial Relations Christian Porter is undertaking a comprehensive and methodical ‘fresh look’ at the operation of our industrial relations system.
The discussion papers being released by the Minister provide the opportunity to bring forward evidence on aspects of the IR system holding back growth and high-wage jobs.
There is a persuasive argument that greater flexibility in the length of enterprise agreements can play an important role in attracting investment in major infrastructure, resources and energy projects. With approximately $250 billion of new project capital in the investment pipeline – with the potential of more than 100,000 new jobs – it’s hard to deny the scope for shared gains for companies and their workers.
Similarly, I would hope we can make progress on reducing the system’s overall complexity. While the number of awards has reduced, it appears that they have not become simpler – indeed many believe that they have become more complex.
And the degree of administrative clutter associated with the compliance regime and the enterprise bargaining process can also detract from business improvements that can arise from working together for mutual benefit and ensuring that people get paid what they should be paid.
Provisions that add unnecessary clutter to agreement-making and award compliance have been identified in past reviews of the Fair Work Act, including under the former Labor Government. But I again underscore the obligation on the business community and I welcome Tim’s offering to marshal the evidence and make the case for change.
Strong engagement is also needed on skills. I welcome Tim has highlighted that at the top of the BCA agenda. And we share this commitment.
We hear loud and clear the message from business – that our Vocational Education and Training (VET) sector is not meeting your workforce needs.
I’m not going to throw more money into a system that is not working, we are going to fix the system so we can invest better in it.
Informed by the outstanding report delivered by Steven Joyce, Commonwealth and state and territory governments are working constructively, they are working together to develop and implement our reform road-map. And Minister Cash will be meeting with her state and territory counterparts this Friday to advance that agenda.
Similarly, there is much more we will achieve through greater collaboration on a practical environmental agenda with the business community.
Taking action on climate change to meet our responsible emissions reduction targets, not economy destroying ones – establishing a world leading waste management sector, reducing plastics pollution in our oceans, realising a sustainable and truly circular economy, protecting and improving our soils, delivering sustainable management of our water resources and our waterways, developing new energy sectors such as Hydrogen as well as progressing major energy projects like Snowy 2.0 and Battery of the Nation.
Through these initiatives and more I have no doubt we will demonstrate to the world that it is possible to solve local, national and global environmental challenges, without sacrificing livelihoods and jobs in our traditional industries and regional communities, while creating new economic opportunities to support future jobs.
That’s our plan.
And I look forward to the opportunity to go into these issues in greater detail on other issues on another occasion.
So ladies and gentlemen, I thank you for your patience. Our economic plan backs our traditional strengths and it seeks out new opportunities in these more challenging economic times.
Reducing the cost of doing business by cutting red tape and getting rid of costly and unnecessary regulation.
Equipping Australians with the skills they need and the skills for businesses who employ them to be successful.
Building the infrastructure our economy needs to grow. To get people home sooner and safer.
Expanding our export frontiers and immersing our companies in new global supply chains. Particularly in our regions.
Making sure our businesses are positioned to get ahead and not get left behind in a global digital economy.
And aligning and better focussing our efforts in research, science and technology to accelerate and commercialise the advances we make.
Combined with our strong and disciplined budget management, led by the Treasurer, our plan will continue to support a stronger economy to guarantee the essentials Australians rely on.
Now is time to once again demonstrate our irrepressible optimism as Australians, declaring our confidence in our future, through our actions. To stick to the plan. To invest. To employ. And to work together to meet and beat as we will, as we have always done as Australians, the challenges that are ahead.
That’s the optimism, that’s the stability, that’s the certainty that Australians voted for on May 18, and that’s what we intend to continue to deliver, as promised.
Thank you very much for your attention.