Sydney
Friends.Parliament sits for the last time today after an extraordinary year in politics.I go from here to Canberra for a historic vote in the House of Representatives.It is nearly twenty years since Professor Fred Hilmer's landmark report on competition policy was handed down.Two decades later, we are finally structurally separating Telstra.Delivering nation-building investment and structural economic reform.Today.So it is a good day to reflect on 2010 and look forward to 2011.But my thinking about next year sits in a longer-term context.So first I want to discuss the economy since 2007 and look forward to the years ahead.
The bare facts of our economy in 2010 are as simple as this.Australia has emerged from the global financial crisis as the world's strongest advanced economy.You know that.But to really understand our economy's future, we need to look at the last three years more closely ...Because Australia's good position today is no accident.
In May 2008 my colleague Wayne Swan delivered the first Labor Budget in thirteen years.We believed then, and in hindsight I am certain we were right, that this first Budget found the correct balance for the economy at that time.Combining a tight fiscal policy with setting aside the money we needed for infrastructure and education.Dealing with the challenges of growth while being prepared for risk.
Then in September that year - barely more than two years ago - Lehman brothers sank.Confidence in the global financial system went with it.And for a time, our country was genuinely threatened with the disappearance of the very means of global finance and exchange.It was our economy's hour of maximum danger.The Government acted. And we got it right.
We guaranteed Australian bank borrowing, so banks could keep lending.We used targeted, timely, and temporary fiscal stimulus to support demand through the downturn.We worked with the independent monetary policy decisions of the Reserve Bank, in the downturn and as the domestic economy recovered.We fought for the G20 to be the broadly representative and widely recognised coordinating council for the global economy, so we could play our part in the world.
Our financial, stimulus and economic decisions, in October 2008 and February 2009 and in the 2009 Budget, were tough ones.Big and bold decisions. Hard calls.Opposed by our political opponents and conservative critics.Controversial then and now.And we got it right.
So that today, we can honestly say, Australia beat the global recession.Growth is over three per cent, business investment is surging ... with 375,000 jobs created last year alone ...... and all with our Budget coming back to surplus by 2013, one of the strongest budget positions in the world.From this position of strength, I want to ensure Australia learns the right lessons from the economic events of the last four years. This is not straightforward.Our country faced a once in seventy-year event in September 2008.So we will not govern in the next few years as we governed in those few weeks.I am deeply conscious of the importance of governing for the long-term.The other lessons I carry with me for the economy's coming years?We made good decisions in the crisis, but we were in a strong position to make them because we had a legacy of more than 25 years of economic reform. So we must walk the reform road.We were able to spend in the downturn which in turn means we must save in the recovery. So the withdrawal of fiscal stimulus from the Commonwealth Government is forecast to reduce real GDP growth by one percentage point in 2010-11 and half of a percentage point in 2011-12.In the crisis we had to move quickly to guarantee financial institutions, as well as fill a hole in private sector demand. The Government intervened where needed, to make up for private sector fragility and paralysis. So in the recovery, we move from intervention to investment - not doing the heavy lifting for the private sector, but rather building the enablers of broad based economic growthWe must learn from "mining boom mark one" as we move through "mining boom mark two". So to ease the pressures on inflation and interest rates and to ease what I call the "patchwork economy", we must deliver investment in economic capacity as well as continued reform.The decision making in the growth phase is just as tricky just as important and just as demanding - in a different environment, our goal of a strong economy and opportunity for all remains.In the global financial crisis, we steered our economy away from the ditch.Now in the recovery, we have to lift the speed limit of the economy.
Through the global downturn, Labor managed crisis well.Since 2007, in the toughest economic circumstances, we have created over 650 000 jobs and doubled funding for school education.Now we have new opportunities with a new Government.We've been dealing with the immediate requirement to form government and working with a new parliament.Australians now have the stable, effective administration they deserve. And the new Parliament is working well, even if a little differently to what we've been used to for so many years.And my Government has an ambitious reform agenda: fiscal consolidation; building capacity on the supply side with tax, superannuation, infrastructure and skills; extending market-based reforms to health and education, carbon and water.We will pursue it with discipline and rigour.First, we must deliver fiscal consolidation.We come to the consolidation task well placed.Australia's debt is lower than any major advanced economy. Our net debt will peak at 6.4% of GDP in 2011-12, while that of the G7 economies will peak around ninety percent of GDP in 2015.And as a Government, we are up to the task.We have already taken savings decisions worth $84 billion since coming to office.But there is no room for complacency.That is why the Government is undergoing the most significant fiscal consolidation in at least 50 years.A shift in the Budget bottom line of almost $60 billion.Between 2009-10 and 2012-13, the budget balance will tighten by four and a half per cent of GDP.Going further, faster, than Peter Costello's first four Budgets. They delivered a total fiscal tightening of 3.1 per cent of GDP - around two thirds per annum of what we are delivering now.This is an extraordinary fiscal turnaround in a 3 year period.And it will deliver a Budget surplus by 2013.In many ways, budget scarcity is a good discipline on Government.I want the Government to look at each decision from every angle.To hold them up to the light. To examine every possibility and every question.To make every dollar go as far as it can.Budget scarcity is also a good discipline on policy advocates as well.It forces everyone - business, unions, advocates and commentators - to recognise the real trade-offs which sustain economic growth and promote opportunity.Second, as the Budget returns to surplus, the Government has a job to do on the supply side of the economy.We are lifting Australia's economic capacity so that we can grow productively through the boom.Cutting company tax.From 2013-14, we will cut the company tax rate to 29 per cent, with a head start cut for small business from 2012-13. The first cut to company tax rate in a decade.Superannuation reform.Over the next eighteen months low income workers become eligible for a government superannuation contribution of up to $500.And we will increase compulsory superannuation to lift retirement incomes and national savings.
Investing in infrastructure.A new dual carriageway between the F3 and the New England Highway near Branxton. A $1.65 billion project delivering a new and more direct route between central Queensland and western New South Wales as well as the Port of Newcastle and Sydney.Work is underway, expected to be completed in 2013. Part of our record investment in roads, rail and ports.And skilling Australians.Applications will be called early next year for the Critical Skills Investment Fund's partnership program with industry, which will create up to 39,000 additional trade skills training places in the mining, infrastructure, construction and renewable energy sectors.Part of our new resources and reforms in skills.And the government is extending market reforms to health and education, carbon and water.I want these large sectors of the economy to be more productive now.And I want them to deliver more productive use of our human and environmental capital into the future.Driving efficiency across the hospital system.Legislation is before the Parliament to retain a share of the GST from the states to dedicate to health - part of a compact with the States where the Commonwealth permanently meets sixty per cent of hospital costs.Lifting quality across the education system.My School 2.0 will launch, with new data to show growth in student achievement, new information about school finances and a more accurate method of identifying schools which service similar student populations.Pricing carbon.The Multi Party Climate Change Committee with representatives from the Government, Greens and the Independents has now met twice.The two roundtables for business and environmental/community groups held their first meeting in Canberra this Friday.Reforming water.Last week the Government opened tenders for $300 million of new water buybacks in the southern-connected river system, which includes the Murrumbidgee, as well as the Lower Balonne region of Queensland.This adds to the more than $12 billion committed to water purchasing and infrastructure under the Water for the Future Programme.It's an ambitious agenda for the Government I lead.I know you will judge our reform legacy over a decade, not over a day.As you should.I also know that in all these areas, we are making steady progress - day by day, week by week.As we must.
That steady progress is what gives me the confidence to look forward to 2011 knowing it will be a year of delivery - and a year of decision.The Government will deliver major investments and reforms in the coming year.In particular, rolling out high speed broadband and implementing hospital reform.And the nation will face major debates and major decisions.In particular, putting a price on carbon and lifting participation in the economy.
2011 is the year of delivering high speed broadband.Five "first release sites" in mainland Australia, connecting 12 000 addresses in four states. Construction commencing already this year, with services in 2011.In Townsville, where civil work has begun. In Armidale, where aerial work design is with Country Energy for approval.In Minnamurra in New South Wales, where aerial work is about to commence. In Willunga in South Australia, where a full underground build with boring and civil work is well advanced.In Brunswick, in Melbourne's inner north, where the majority of construction build will use existing Telstra duct network with new pipe layed in areas of high congestion.Testing the rollout in areas of different terrain, housing type and density, demographics, climate, existing infrastructure and other local factors.Joining Tasmania, where the NBN is already operating on 200 km of laid fibre.
2011 is also the year we deliver historic health reform.From July 1, the Commonwealth's share of hospital funding will increase to sixty per cent. The Independent Hospital Pricing Authority will be established and operational. GST retention and dedication to health care will commence.Access to elective surgery will improve as reward payments begin to flow to states. And the Commonwealth begins funding 60 per cent of public hospital research, training and capital.And the first group of Local Hospital Networks begin operating.
So 2011 will be a year of delivery.And 2011 will be a year of decision as well.2011 is the year Australia decides on carbon pricing.The Parliament is now the master of its own destiny. But for the Government, I say we must decide in 2011 on a way of pricing carbon that is supported by a broad enough consensus that it can be legislated.Climate change was first discussed in our Parliament in the nineteen eighties.It's been central to public debate in two successive Federal election campaigns.But a working consensus for action has eluded us.In a system like ours, it is incredibly rare to have a second opportunity at a hard reform which fails in the Parliament. We have one on a carbon price.In May, Professor Garnaut releases his updated report. The Productivity Commission will publish advice on the measures being taken by our trading partners and the impacts of a carbon price on our international competitiveness around the same time.The multi party climate change committee will meet increasingly regularly through the year - expert papers are already being released publicly and discussed in the committee.The Climate Change Commission will carry out its task of bringing together expert opinion and public attitudes.I promise you, no responsible decision maker will be able to say next year that they need more time or more information on climate change.In 2011 there will be nowhere to hide,And 2011 is a year where workforce participation will come to the fore.We'll need to decide that we seriously want to be a high participation economy.An economy where everyone who has the capacity to work has the opportunity to work.And we'll need to decide that we are seriously prepared to change the policies which stop that happening now.It's now eight years since the first Intergenerational Report. Three of the Reports have been released.Yes, that's shifted the public debate and it's made a difference in clarifying the reasons to act. But too little has actually been done.Now, not only is the ageing population making the working age population more important than ever before, but the mining boom is reshaping our workforce as never before too.So in 2011 the debate needs to move from the problems, like ageing population and jobless families, to the solutions, like new incentives and new skills.And the Government will be moving from discussion to decision.
By any measure, this has already been a tumultuous year in politics.A change of Prime Minister in office, the closest election campaign in many decades, the first minority government since the war.
I intend for 2011 to be defined less by politics and more by government.Australians do not face a Federal election next year - or the year after.Australians do not want their Government to campaign.Australians want their Government to govern.We are and we will.So 2011 will be a year of delivery - and decision.
Methodical.Making steady progress on our plans, day by day, week by week.Working hard for all Australians, wherever they live.
Modernising.Preparing Australia for the long-term with modern market-based solutions.Carefully weighing the hard decisions, at the right time, for the right reasons.
Driven by our values and our vision.Hard work, a fair go through education, respect.Opportunity for all, and keeping our economy strong.