It's a great pleasure to welcome you to the nation's capital to share in this important Forum.
As CEOs of global companies, you are acutely aware of the opportunities and pressures facing Australia's economy at this remarkable time.
Most of your firms operate in the non-mining sector and so approach the current climate with varying degrees of optimism.
But I want to make this very clear:
Our economy is strong.
Strong investment - low unemployment - low inflation - low debt.
But we are never complacent.
We understand the pressures you face from international competitors.
The impact of a high currency.
The closing of the skills gap with Asia.
The continuous need for greater productivity, innovation and efficiency.
All of this occurring against the backdrop of historic economic change for this nation.
Friends, Australia is witnessing a deep and lasting structural change in our nation's economic fortunes.
We find ourselves located strategically at the right place and at the right time in world history, with the centre of gravity in the global economy shifting emphatically to our region.
As a result, terms of trade stand at their highest sustained level in 140 years.
Per capita GDP in Australia is 10 per cent higher than Germany; 14 per cent higher than the UK and 17 per cent higher than Japan.
Treasury projects GDP growth rising to four per cent in 2011-12, with strong jobs growth over the next two years.
Opportunities in the Asian century
Friends, the rise of Asia is transforming our economy.
One quarter of our exports make their way to China alone, potentially rising to half by 2015.
This is good for Australia because it brings three distinct sets of opportunities:
Direct benefits from mining itself
* Wider benefits from the spread of mining wealth
* And opportunities as the Asian middle class expands.
The benefits of mining are obvious, such as higher wages, dividends, superannuation savings and spending on equipment and services.
Mining-related opportunities are also widespread.
Mining uplifts a whole range of sectors including construction and engineering, transport and logistics, financial and legal services, training and work safety.
Opportunities that many of your firms are well placed to exploit.
Of course, high terms of trade place strong upward pressure on our currency - that is undeniable.
These differential patterns of growth - which I call the “patchwork” economy - cannot be underestimated.
Our trade exposed sectors face real pressures.
And as CEOs heading the Australian operation of multinational firms, I know you want to deliver strong returns to head office, grow exports and gain scarce capital.
But the idea of “hollowing out” because of the high dollar needs to be carefully assessed.
For a start, a higher dollar eases pressure on domestic inflation.
It provides cheaper goods for those firms who rely on imported components.
And the inflow of export income washes right through our economy, creating many more opportunities here on shore.
Output from the services sector alone is projected to increase by about 35 per cent by 2020.
Great opportunities still exist for investors in areas such as:
* Banking, finance and legal services.
* Infrastructure.
* Clean energy.
* Carbon markets.
* Creative industries, especially in the area of NBN content, video games and mobile phone applications.
* And areas of discretionary spending such as personal services and domestic tourism.
There will also be big opportunities in health and aged care as the population ages and medical science advances.
With growing prosperity, our consumption of all these goods and services will rapidly increase.
But opportunities aren't just confined to the non-traded sector.
We can remain competitive in the export market.
Friends, with the weight of global activity shifting rapidly to our region, the Asian middle class will soon equal the size of the middle class in the rest of the world combined.
For Australia, that means strong demand for our commodities and the challenge of finding new opportunities for high-end services and manufactures.
We will need a renewed focus on innovation, on building stronger regional partnerships in education, science and research, and positioning Australian as a global R&D centre.
Moreover we must support the development of firm capabilities that enable businesses to move up the value chain and compete effectively in these markets.
Our economic position will depend on the education and skills of our workforce and managers and continued productivity improvement.
Creating success
Friends, meeting the challenges of the Asian Century forms the heart of the Government's policy agenda.
We know the mining boom will place strain on those firms exposed to currency fluctuations.
Create skills shortages and cost pressures.
Lead to different growth patterns across industries and regions. But structural change is nothing new in any economy; it is a constant throughout history.
Australia has successfully managed shifts on this scale before, and we can do it again.
Macro-economic settings
First and foremost, we must get the macro-economic settings right.
That means getting the Budget back into surplus in 2012-13 so government is not competing with the private sector for the same resources.
That's why we're delivering the fastest fiscal consolidation on record - 3.8 per cent of GDP over the next two years.
It also means fiscal and monetary policy are pulling the same direction, unlike the period between 2004 and 2007 when unchecked public spending fuelled inflation.
We will not make the same mistake.
I'm also pleased to see that Australia is embracing a culture of saving as households and business rebuild their balance sheets.
Household savings rose to 11.5 per cent of income in the March quarter, a level not seen since the mid 1980s.
This is a good thing because it means the next phase of growth will rest on firmer foundations.
We don't need another boom marked by excessive credit card debt, unsustainable housing prices and overreliance on home loan equity redraws.
We need solid growth grounded in prudence and commonsense.
Finally - and importantly - we are earmarking proceeds from the mining boom to boost savings and cut taxes.
With support from the mining tax, the Government will lift the superannuation guarantee from 9 to 12 per cent.
This will help raise superannuation savings by $500 billion by 2035.
We will also bring down the company tax rate to 29 per cent, to help those businesses not in the mining boomfast lane.
Building capacity
In building capacity for the years ahead, nothing is more important than skills.
That's why in last month's Federal Budget, we invested more than $3 billion in building the skills the economy needs.
At its heart is our new $558 million National Workforce Development Fund, which will deliver 130,000 new training places for which industry can bid to respond to the news needs of your workforces.
This comes on top of our doubling of school funding since 2007, a 20 per cent increase in university undergraduate places and a doubling of post-graduate places.
I understand that our economy needs more workers as well as more skills.
The Government's participation reforms are carefully designed to meet this need.
From phasing out the Dependent Spouse Tax Offset, beginning with partners under 40, to extending Earn or Learn requirements to 21 year olds.
Targeted wage subsidies - encouraging employers to hire those who have not worked for more than two years.
Strict new work tests for the Disability Support Pension alongside allowing more hours to be worked before payments are suspended.
Plus participation plans for teen parents, new requirements for jobless families, extending income management and developing new place-based programs to support local and regional employment.
I see a real opportunity here, to meet the demands of our strong economy and to include all Australians in the opportunities created by that economic strength.
At the same time, skilled migration also remains an option where domestic labour supply falls short.
The Government has consciously weighted the immigration program towards skills.
That is why we have recently provided 16,000 skilled migration places to the regions.
And enabled streamlined Enterprise Migration Agreements for large resource projects.
We will do our best to ensure the next phase of growth is not constrained by a lack of skills or workers.
Just as Government changes the way we do business in skills and immigration, so the Government is also strongly committed to helping firms change the way they do business through genuine R&D.
In a tight budget, we will see more taxpayer investment in the innovation system than ever before.
In fact our innovation spend of $9.5 billion a year represents a 43 per cent increase on the best efforts of the previous government.
Our commitment to Commercialisation Australia will more than double in 2011-12 to $60 million.
It is a mark of our resolve to remake our economy, and our society, through innovation.
Likewise, we recognise the cost of doing business in a federal system - and we want to make it easier.
We have achieved landmark reforms like a single system for regulating occupational health and safety.
Around half of our Seamless National Economy deregulation reforms are completed or close to completion.
We've also streamlined the nation's 23 different transport regulatory authorities into just three.
Real reforms that will save time - save money - and cut red tape.
Friends, we can't be a productive nation without also building our infrastructure capacity.
The Australian Government is making record infrastructure investments in ports, roads and rail - $36 billion over six years.
We have also announced a new Infrastructure Investment Incentive to encourage up to $25 billion of private and superannuation investment.
The Incentive will support investment in National Priority projects by exempting them from the Continuity of Ownership Test and the Same Business Test, and providing uplift at the government bond rate.
Most importantly of all, we are delivering the greatest infrastructure project in the nation's history - the NBN - that will radically change the way we live, work and study.
Driving productivity, fostering competition among telcos and lowering business costs.
The last phase of the boom saw lower productivity because of infrastructure constraints and skills shortages.
We will not make the same mistake.
Trade and investment
Likewise, we remain committed to the principles and practice of free trade.
Australia will continue to push for a decent outcome in the Doha Round.
And we will continue to pursue high quality bilateral free trade deals with nations such as Japan, Korea, and China, so long as they support the multilateral system.
Australia also remains a globally competitive location open to overseas investment.
We were ranked third on the 2011 Index of Economic Freedom behind Singapore and Hong Kong.
At the end of March 2011, the total stock of foreign investment in Australia was over $2 trillion.
Since November 2007, the Government has approved around 2000 foreign investment business proposals worth over $500 billion.
Over 99 per cent of these were approved, and approved without any conditions.
Only one proposal has been rejected in 10 years.
Foreign investment applications will always be assessed on a non-discriminatory, case-by-case basis.
We are also committed to building Australia as a financial services hub in Asia.
We are actively pursuing a framework that will allow for the introduction of competition in Australia's equity markets, including the entry of foreign operators.
And we are currently working to develop a Funds Management Passport to support the cross-border marketing of funds across the Asian region.
Australia's investment door remains well and truly open.
Labour market reform
Friends, I want to say a word about labour market reform.
Our Fair Work reforms have made huge changes to the way Australian companies do business:
We have replaced State-based industrial tribunals with a one-stop-shop for the private sector workforce and rolled 4000 awards and instruments into just 122 modern awards.
Most importantly, we have put enterprise bargaining back at the centre of industrial relations, where it should be.
We have consciously promoted enterprise rather than individual negotiation because it is in workplaces that inefficiencies can be addressed and new ideas embraced.
And let's be clear about the results.
The evidence is clear that wage pressures are not leaking from high wage industries like resources into other areas of economy.
The Labour Price Index rose by 3.8 per cent over the year to March 2011, unchanged from the average annual level over the last five years.
Enterprise bargaining is working as it should to ensure that the wages paid by firms and sectors reflect their unique needs.
At the same time days lost to industrial disputes continue to fall.
Pricing carbon
But friends, alongside all these policies stands the profound challenge of shifting our nation to a low pollution, clean energy economy.
This is one of the greatest reforms of our history and one of the greatest reforms for our future.
Two weeks ago, Professor Ross Garnaut released his final report on climate change.
13 of Australia's most prominent economists described a carbon price as “a necessary and desirable structural reform of the Australian economy.”
With our abundance of renewables and our skilled workforce, Australia is well equipped to make the transition.
A carbon price will drive innovation to find better, less polluting ways of producing energy, goods and services.
In fact, Treasury modelling shows a carbon price will see gas-fired electricity generation expand by between 150 and 300 per cent by 2050.
Treasury's modelling shows the non-hydro renewable energy sector is projected to be six times bigger than it is today.
In short, dirty energy will become more expensive and clean energy cheaper under a carbon price.
The opportunity for some of the firms represented here today will be enormous.
Navigating the ‘new paradigm'
Friends, I know there some in the international business community who wonder if there ever will be a carbon price.
They are rightly concerned about the fractious state of Australian politics at the present moment.
So let me conclude with some observations.
These are certainly unusual times.
Yes we operate in the circumstance of a minority government.
But we remain committed to driving an ambitious policy agenda.
Despite all the doubts, our agreement with the Greens and Independents is working - and is working well.
Of the 112 Bills presented to Parliament since last September, all 112 have passed, including the Flood Levy Bill, loudly decried by our opponents and now sitting quietly on the statute books.
Not only has all our legislation passed.
Every amendment not supported by the government has failed.
In other words, a 100 per cent success rate in the Parliament.
The other key issue is the scope of our reform agenda, the most comprehensive since the Hawke-Keating era.
That our agenda is so full reflects our vision for the nation and the lost decade inherited from our predecessors.
It is necessarily broad and ambitious.
Friends, I spoke before Christmas about 2011 being the year of decision and delivery for our agenda, and I meant it.
This is a year of hard policy grind.
But a year that will ultimately pay rich dividends for our nation and its people.
The year of decision and delivery is now very close to paying off:
Our landmark health agreement was signed at COAG in February and the final details are now being worked out.
The NBN legislation has all passed, the Telstra agreement is close to signing, and fibre roll-out is underway.
The Murray Darling Basin plan is being worked through methodically, with genuine consultation designed to deliver a balanced policy outcome.
Our changes to superannuation and financial services are in the final stages of consultation and fine-tuning.
Our plan to break the people-smuggling business model through a regional processing system is likewise in its final stages of negotiation.
The architecture of the Minerals Resource Rent Tax has been agreed and the first draft legislation is now out for public comment.
And, of course, our carbon package - including assistance to industry and households - will be released soon.
We are substantially closer to completion on all these policy issues.
Reforms that all represent major structural reforms for Australia's future.
Reforms being purchased through the deliberate expenditure of political capital in the nation's long-term interest.
This is not the time for turning or trepidation.
We are on track.
On track to ensure that the year of decision and delivery will end with success.
In a dynamic and competitive world, we can afford nothing less.
Conclusion
Friends, I hold this confidence because Australia has done great things in the past and we can do great things again.
We are entering an age of opportunity.
An era of growth where the risks are greatly outweighed by the benefits, provided we get the big calls right.
Our settings are right.
Our policies are right.
It's time to hold our nerve.
Walk boldly on the road of reform.
Build a more productive Australia.
And meet the Asian Century with courage and confidence.