Thank you very much, and can I, too, start by acknowledging the traditional owners of the land on which we meet, and in the spirit of reconciliation pay my respects to elders past and present.
Can I welcome each and every one of you to this tax forum, particularly my Federal Parliamentary colleagues. We are here mob-handed to participate in the events over the next two days.
What I wanted to do at the start of this forum was to set the context for its discussions and to outline the principles that I believe we should bring to the discussions in the forum over the next two days.
In doing that, I wanted to talk to you about what's happening in our nation, what's happening in this Parliament House, and what I believe should happen in this room during the course of the discussions.
First, to what's happening in our nation. It's a nation worthy of tribute and we often forget to pay that tribute to the great nation we live in. I want to pay a tribute to the work that we have done together over 30 years of hard economic reform, ensuring that the Australian economy is the envy of the world and is a resilient economy. We've done it together and it's been painstaking work driven by a reform zeal and I want to thank the people in this room for their participation in much of that painstaking work.
I also want to pay a tribute to our nation and to the people in this room and beyond who worked together so that our nation came though the global financial crisis strong. We did it together, each and every one of us, Government playing its proper part, but working with employers and unions, working right across this great land of ours to keep people in work during such a profound global economic shock, and I thank you for the work that we've done together to ensure that our nation came through that strong.
The backdrop to today's discussions, consequently, isn't one of doom and gloom. If we were meeting in almost any other Western democracy we would be having a very different dialogue - a dialogue against a backdrop of high unemployment, of low growth, of great anxiety.
We aren't having that discussion here today because our economy has emerged strong from the global financial crisis. Instead, the backdrop to our discussion is one that is a rich tapestry of opportunities and we need to focus on those opportunities over the next two days.
But like any great era of opportunity there are risks - risks we need to understand and navigate and discuss over the next two days.
So, let me take you to the five factors that I believe are shaping our nation and our economy today, as the backdrop to these discussions.
First, the overhang from the global financial crisis and the continuing volatility that we see in the world economy. Because we came through the global financial crisis strong, we often underestimate its continuing effects on our economy and on the psychology of our nation. We are continuing to see direct, tangible effects for Government and for businesses, but we are also seeing intangible effects on our economy and the participants within it.
There has been a knock to confidence, a greater understanding of risk and a greater feel of what changes in the world economy can bring. Against this backdrop of loss of confidence we've seen continuing volatility on world financial markets, concerns about the sluggishness of the US economy and concerns about the need for Europe to get its house in order.
As a result of all of these factors we do continue to see an economy in which people lack confidence and are concerned about the future. It's important in this age that we are reliable interpreters to the Australian people of the strengths and opportunities in our economy, as well as what is happening in the global economy. It's important that people have a deep understanding of the trends in the global economy, but that we aren't spooked - understanding, but not frightened.
I'm always struck as Prime Minister, as I travel this great nation of ours, how much people are now attuned to movements in the global economy. I think an overhang of the global financial crisis is people are now more strongly attuned to global economic events and to messages of risk and we need to understand that in our discussions today about our economy and about how our tax system can best serve it.
Second, our economy, our nation, is being shaped and reshaped by the Asian century. We are 10 decades in to that century and the story of this century is one of Asian growth.
It means that even in difficult days in the global economy we live in the right part of the world. We have an advantage of adjacency - being in the region of the world that continues to grow strongly.
That presents continuing economic opportunities for us.
The economic opportunities flowing from the demand for our resources is very clear to all of us. As China, as India, as the nations in our region continue to grow, they will be strong demanders of the things that we have to sell - of coal, of iron ore and of resources beyond that. This is a great opportunity for our nation and one we are seizing now, but we also understand that this opportunity brings pressure to other parts of the economy, that the record terms of trade and continuing strong Australian dollar are putting pressures on manufacturing, on tourism, on international education and other trade exposed sectors.
So, the story of today's economy is of a patchwork, and we need in our discussions to be very clear as to what that means for opportunity right around our nation, and what that means for pressures on jobs and businesses in parts of our nation and sections of our economy.
Describing this phase of economic transformation and growth we use the language of boom, but the language of resources boom often gives us the impression that this will be short-lived. Indeed, a lot of this nation's history has been written around resources booms inevitably followed by busts.
We are in a different economic phase, and we shouldn't let the language of boom deceive us. It is a boom. It is a huge opportunity for growth in our resources sector and great opportunities for jobs and wealth creation as a result, but it is likely to be sustained for a very long period of time, and that means that transformations in our economy that it is driving will be deep and occasionally painful.
So, working through our tax settings needs to understand the dimensions of this change and the patchwork economy that is resulting from it.
But the story of the Asian century will be more than the story of this resources boom. It will also be the story of a rising Asian middle class. It is anticipated by 2020 that we will see 1.2 billion people join the middle classes of Asia. That is a huge opportunity for our economy, as those middle classes desire and want to purchase the things that we aspire to ourselves, whether it's the best of food, the best of wine, the best of education, the best of tourism opportunities, the best of legal services, the best of financial services, the best of manufactured goods and beyond, this is a great opportunity for our nation.
So, during this period of our economic transformation there's a challenge for us to nurture the boom, a resources boom, hungry for skills, hungry for people, hungry for infrastructure, to maintain the diversification of our economy during the days of the resources boom and beyond it, so that we are sustaining industries beyond resources despite the contemporary pressures upon them, and we are making sure that we are seizing the opportunities presented by this new, rising, Asian middle class.
Of course, these are the questions we've squarely asked Ken Henry to work through in the Asian Century White Paper, and they form the profound second shaping factor of our nation as we meet today.
Beyond the overhang of the global financial crisis, beyond the resources boom and the patchwork economy, we meet during days when globalisation and the revolution in information and communications technology is reshaping our nation. In this age of mobile capital, we've always got to be conscious of our competitiveness in a ruthless world, and in this age of ever-faster change in information and communications technology, we've got to make sure our nation is keeping up with the best.
The fourth factor shaping our nation is the move to a carbon-constrained future, and despite all the heat and fire in this debate in our contemporary politics, the reality is sensible people from all political parties agree that climate change is real, that we need to address it by cutting carbon pollution, and that the best way of doing that is putting a price on carbon - and we will achieve that in the House of Representatives when it sits next week.
And fifth, the fifth great factor shaping our nation as we meet today, are the changes driven by ageing, being an ageing society, and the changes driven by different burdens of disease in our contemporary society.
We know that our society is ageing. That requires us to do smart things to increase participation in the workforce so that we do not see unsustainable changes in the dependency ratio that close down peoples' abilities to have options and choices as they age, and recognising today that the burden of healthcare falls as a result of chronic disease and disability we need our health system to be more agile and connected in meeting the needs of people with chronic diseases, and we need to do better by Australians who confront a life with a disability, with all of the implications that means to them and their family.
So, they are the factors shaping our nation, the context in our nation as we meet today. The context in this Parliament House is of a parliament that is working and addressing some of the biggest challenges that confront our nation; of a Government that is determined to navigate our nation through this age of change and transformation, driven by two abiding Labor principles: one, of ensuring opportunity for all right throughout our nation; and second, of ensuring that during this phase of economic growth and change we don't leave people behind.
Bringing those principles to our decision making, we have already embarked on a series of major changes to meet the needs of our nation today as it changes, as its economy changes. This includes addressing what I've referred to as the global financial crisis overhang - it means we, as members of the Government, need to be very good explainers to the Australian people of the opportunities in the Australian economy now, of the risks in the world economy, and of what they might mean for us, but also of the resilience of our economy and we are determined to do that.
We are determined to deliver the fiscal consolidation that our economy requires today, and consequently our drive towards a budget surplus continues with determination.
And we are also very motivated to make the best of the opportunities we have on the world stage, including in the G20 and beyond; to have our voices heard as the global economy struggles through what the International Monetary Fund has referred to as a dangerous phase.
Second, we are determined to assist our nation to navigate the opportunities of the Asian century. The White Paper will play a major role, but we have not waited for the White Paper in order to act. We have structured the Minerals Resource Rent Tax because this is the right time for the turbo-charged section of our economy to pay more tax to assist with the other sections of the economy through cuts in the company tax and support to small businesses. It's the right time to grow our pool of national savings through increased superannuation, and it's the right time, too, to be better investing in infrastructure, particularly the infrastructure the mining industry is hungry for.
We're also maintaining our reputation as a great trading nation - out there in the world advocating for trade and trade patterns that will advantage the global economy. This is not an era in which we should turn back to the practices of the past, but as we maintain our role as a great trading nation, we also understand the unfair pressures that can be brought to bear in the Australian economy, which is why we have moved on the anti-dumping regime and we continue to have a good dialogue with business and unions on manifestations of unfair competition.
We are also strongly working with those sectors under pressure as a result of the strong Australian dollar. Whether it's the New Car Plan or whether it's the Knight review of international education, we are determined to work with those sectors of our economy under pressure to sustain diversification during these days of change and in the days that lie beyond the resources boom, however far away those days are.
We're also very determined in these days of change to take a spatial and regional approach to understanding our economy. We use the language of patchwork deliberately because we know that parts of the nation are travelling very differently; that if you journey around this nation you can go to places screaming for more people, screaming for more growth, and you can also go to places that are screaming about continuing high unemployment and there people worry about a future for their kids, so we've got to bring an understanding of regional economic development and space to our work.
And we've got to be working to sustain the boom with all of the settings in skills and infrastructure that implies, as well as appropriate work on immigration, and we have determined to be guided by that work through the resources round table which brings together participants in the resources industry.
We are also continuing the human capital revolution which I started as Deputy Prime Minister and which is driving us now. In these days of globalisation, even with our natural endowment of minerals wealth and other assets, we increasingly compete on the world stage on the basis of knowledge and capabilities. To ensure that we can always hold our head up high in that competition, we need to be continuing our human capital revolution, from the earliest days of learning for our smallest children through the days of school, through the days of skill acquisition in apprenticeships into the days of university. That reform agenda will continue unabated and the next tranche of major reforms in the human capital revolution is the skills work we have embarked on with states and territories to be delivered using the $3 billion that we set aside in the May budget.
We will address our carbon constrained future through the carbon pricing legislation next week, but also by working with industry, with unions, with all sections of our economy to unleash the forces of a clean energy future, and I believe this is an age of great possibilities for us.
And we have continued to use our market-based reform tools to ensure that we better provide services, whether it be in health or whether it be now in the journey towards a National Disability Insurance Scheme.
This is the Government's reform agenda to meet the great reshaping of our economy and our nation which is going on today, but it has been partnered with a major tax reform agenda as well, and my colleague, the Deputy Prime Minister, Wayne Swan, will explain to you what has been achieved in tax reform to date, but I would just put an emphasis on one part of what we have achieved in tax reform, and that has been the deliberate decision we made as we put a price on something that we want to see less of - carbon pollution - to put an extra value on something we want to see more of - participation in work.
That is no accident. We have deliberately structured that reform so that it triples the tax-free threshold to send the clearest of possible messages to Australians that we value work and we want them as participants in the Australian economy to see a greater benefit from their labours, whether they be someone on a welfare-to-work journey a woman making a decision to return to work after a period of caring for children. This is an important reform and it is spelling out to you the kind of principles that we bring to tax reform.
So, against that backdrop, what's happening in our nation, what's happening in this Parliament House, what's happening in the Government offices here and what is driving us as we do our work as a Labor Government, we now come to the deliberations in this room, and these deliberations will be wide and they will be broad but I do want to say something to you about the priority I put on the discussions over the next two days.
I want to make sure as our economy is in this time of change that during the two days of this tax forum we are clearly turning our minds to how we can ensure that the tax system does not inhibit the changes we need to make. I've explained some of the forces that are reshaping our economy. Those changes are experienced by individual businesses and individual workers. People will need to adapt in order to prosper, and I want to make that our tax system is not sending them perverse messages as they seek to adapt and change. Indeed I want our tax system to facilitate that change. We have to have a tax system that positions us to take full advantage of the opportunity that growth in our region presents, a tax system that enables us to see the innovation in our businesses that we will need as our economy becomes ever more flexible and ever more responsive to the new opportunities that present themselves. This is a key challenge that faces this tax forum during its deliberations over the next two days.
Now, there is no attempt here to constrain the discussions, but I do want to remind of some things that the Government will bring to bear in its understandings of the work of the Tax Forum and how the discussions today should be taken forward.
First and foremost, we will, over the next two days, be talking about tax, but we shouldn't forget that tax, it has to be raised fairly and it has to be raised efficiently, no-one on their deathbed ever says I wish I'd spent more time with my tax accountant. We understand that, so - fairly and efficiently.
But in raising tax we shouldn't lose sight of the purposes that it's used for. We will be talking about tax, but let's not forget that tax is the money that enables us to be a society together, whether it's meeting our needs for defending our nation or whether it's ensuring that a child can get an operation in a hospital or a disadvantaged kid can get a great start in life through a great education. We need to bear both sides of the equation in mind.
And whilst there are no fetters on what you discuss today, there are two things that will always guide this Government in proposals it takes forward. We are a Labor Government, and that means we will never agree with increasing the tax take or tax burden on the poorest in our community - never have, never will, and no proposition that advocates for that will be taken forward by this Government.
Second, we are a prudent Government, a Government determined to return the budget to surplus, so things that cost have to be paid for, and it is not properly paying for things to say I'll do the spending and someone else can pick up the tab. I'm absolutely sure if you turn to the person next to you and said ‘What about I race down to the shops and spend $1,000 and you give me the money to do it?', you'd probably have a fairly difficult conversation at your table.
Well, life is like that in Government, too. Money spent has to be paid for, clever ideas about spending money have to be managed with clever ideas about where that money is coming from, and that is a challenge for this Forum over the next two days.
Can I conclude by wishing each and every one of you two days of good discussions. We are going to be here in force as a Government and indeed as Parliamentary representatives during the next two days, eager to tap into your insights, eager to hear your perspectives, eager to shape a work agenda that is practical and capable of being taken beyond this room.
Thank you very much.