Thank you to the Chamber of Commerce and industry, thank you to Kate Carnell, your CEO, for this opportunity to discuss what the Government is doing to strengthen the economy, to create the jobs of the future and to set Australia up for continued long-term prosperity.
And I want to assure you that from the very beginning, this Government has been working to a plan – and despite the headwinds from overseas – we are starting to see the benefits.
Over the past 18 months, the Government’s priority has always been jobs and growth – to give all Australians more confidence in our country’s future.
Our plan means building a stronger budget for a stronger economy because that means more jobs and more prosperity for everyone.
Our plan has already made it easier for Australians to work; easier for businesses to compete; and easier for families to raise their standard of living.
But I should make it clear that a stronger budget or even a stronger economy is not an end in itself.
The whole point of our plan is to give people the best chance to lead the lives they choose; it’s to give you the best opportunity to live the life you want.
From election night 2013 – when I said that Australia was under new management and once more open for business – this Government has been working to deliver more jobs through higher economic growth.
We are making progress.
We inherited a weak economy, with rising unemployment, damaged business confidence and a mining boom that was coming to an end.
Eighteen months on, there’s still much to do but there are clear signs of strength.
In 2014, jobs growth was over three times the jobs growth of 2013 – with nearly 4,000 new jobs created every week.
Household spending is growing at the fastest rate in almost three years and retail sales have risen for nine consecutive months.
Housing approvals are up 14 per cent over the past year to near record levels.
Although commodity prices are falling, export volumes are up by a strong seven per cent in the past year.
Importantly, in 2014, new company registrations – most of which were small businesses – were the highest on record.
More than anything else, this shows that Australian entrepreneurs know that the Government in Canberra wants to work with business, rather than against it.
Fuel prices are the lowest in years, interest rates are low and stable, and we have a lower exchange rate, making our exporters and manufacturers more competitive – and all these factors are contributing to economic momentum.
And as I move around Australia, I have seen first-hand, the real difference that we’re already making for businesses.
In Mount Gambier, I visited the weekly cattle sale – and saw the recovery of our beef industry after the previous government had banned the live cattle trade to Indonesia.
That damage has been repaired, and the industry is now looking forward to the abolition of tariffs on our exports to China and Korea and the near-halving of tariffs on our beef exports to Japan.
Near Perth, I visited Houghton Wines – Western Australia’s oldest and most successful winemaker – and spoke with growers about capitalising on our newly signed free trade agreements.
In Tasmania, I visited Addison Farm Produce – you may have seen the pictures. It’s an onion company – and its produce is delicious, even raw!
Because of changes to freight equalisation, Addison’s will now have a much better shot at exporting.
In Colac, I visited Bulla Foods which is expanding to take advantage of the abolition of tariffs on our dairy exports to China and Korea.
And right around our country, in shops and cafes, in manufacturing plants and transport businesses, I’ve been shown electricity and gas bills that were smaller at the end of 2014 than in 2013 because there is no carbon tax anymore.
Of course, as all of you know, there are challenges.
Iron ore prices have fallen from record highs of $180 a tonne three years ago and $120 a tonne at the election time to below $50 a tonne today.
Since last year’s budget, collapsing iron ore prices – and the consequent write down in tax receipts – have already driven a cut in government revenue of more than $30 billion over four years.
But these challenges are not insurmountable.
Our economic plan is flexible. It’s flexible enough to adapt to the challenges that we face.
Our plan is for a strong five pillar economy: with manufacturing, agriculture, education, and services – as well as mining – because there’s strength in diversity; in our economy no less than in our society.
One important element of protecting Australia from future shocks – a vital element in protecting Australia from future shocks – is budget repair to give employers and investors continued confidence in our country and to reassure them that government is capable of the leadership our country needs.
The Howard government’s budget repair, delivering 10 surpluses out of 12 budgets and paying off all of the government’s net debt, gave us exactly this protection back in 2008 when the global financial crisis emerged.
By contrast, the subsequent government gave us the six biggest budget deficits in our history.
Going into the 2013 election, the then-government said that the deficit would be $18 billion; it turned out to be $48 billion.
As the Intergenerational Report shows, under the former government, net debt was heading to over 120 per cent of GDP, annual deficits were heading to 12 per cent of GDP, and Commonwealth government alone was heading to 37 per cent of GDP.
Due to Labor’s debt, we’re spending $1 billion a month on interest alone – that’s the cost of a new teaching hospital that’s spent every month just to service Labor’s debt.
Though this Government didn’t create the problem, we have taken responsibility for fixing it.
Last year’s Budget, Peter, as you’ve noted, was ambitious.
It sought to fix the Commonwealth’s budgetary problems for a generation:
- to bring our universities into the 21st century;
- to make pensions sustainable for an ageing population;
- to reinforce the work ethic for young people;
- and to make our health system affordable into the future.
Despite the difficulties in the Senate, budget measures already implemented have produced $30 billion of savings over the forward estimates and far greater savings beyond that.
The abolition of the mining tax alone, with the abolition of the spending package that the former government had linked to it, will save the Budget $50 billion over the next decade.
Indeed, the Treasury advises that, at current prices, Labor’s mining tax would not have raised a single cent over the entire forward estimates period.
Now, I used to say that Labor had booked permanent spending against temporary revenue, but in fact, in this case they booked $17 billion in expenditure over four years against a tax that would not have raised a single cent.
They failed to plan ahead, even though the mining boom was already winding down on their watch.
But as the Intergenerational Report shows, despite obstruction in the Senate, this Government has already halved the projected long-term debt and deficit we inherited.
Last year’s Budget, I stress, was part of a broader economic foundation upon which the coming Budget will build.
Besides budget repair, our plan includes reducing business costs, opening up opportunities through free trade agreements, cutting taxes and, of course, building vital infrastructure.
Since the election, we’ve cut business regulation costs by $2.4 billion.
We’re well on the way to one-stop shops for environmental approvals and since the election the Commonwealth has given environmental approval for new projects worth over $1 trillion.
Not only have we signed free trade agreements with our three biggest trade partners covering more than 60 per cent of our merchandise exports, but we are working on an agreement with India and we are optimistic about concluding the Trans-Pacific Partnership.
These agreements are opening up the largest markets in the world to Australian businesses and I know that you are just the people to take advantage of these opportunities.
We’ve embarked on the Commonwealth Government’s biggest ever road building programme and we’re building the Western Sydney Airport after 50 years of procrastination.
We’re rolling out the National Broadband Network on time and on budget.
We’ve scrapped the carbon and the mining taxes and we’re improving the tax arrangements around employee share ownership to assist and encourage new businesses.
Overall, this Government has lowered the tax burden by $7.4 billion compared to Labor.
And unlike Labor, we have no plans to increase taxes on superannuation and will honour our commitment not to make any adverse or unexpected changes to superannuation during this term.
Our goal is always to get taxes down; our constant objective is taxes that are lower, simpler and fairer.
These are the economic foundations that we’ll build upon through the jobs and small business package and through the families’ package that will be the centrepiece of our second Budget.
I want to stress: this year’s Budget will be responsible, measured and fair.
Its focus will be jobs, growth and opportunity.
We will work with all responsible Members of the Parliament to help ensure that Australia is once more living within our means.
We are steadily working our way through last year’s unfinished business while also pressing forward with new elements of our plan.
The deficit will decline every year.
Each year will bring us closer to a surplus – a surplus that means that debt will actually start to reduce rather than simply grow at a slower pace; a surplus that means the interest bill will start to reduce rather than grow every year.
But to achieve all of this, new spending will have to be offset by responsible and fair savings.
That’s why our childcare initiative for families is contingent – it is contingent – on the delivery of savings to pay for it because we can’t have the spending without the saving to make it sustainable.
And our small business tax cut will be more than paid for by not proceeding with the parental leave scheme that’s already been taken off the table.
I should repeat, because it’s absolutely critical: there will be no new spending that’s not offset against savings. As well, there will be no big new spending that’s not directed to making our economy stronger.
Our childcare measures will boost participation – making our economy stronger.
Our tax cuts for small business will boost confidence and cut costs – making our economy stronger.
Our infrastructure spending will save time and make it easier to do business – making our economy stronger.
We won’t just be getting spending down; we’ll be continuing to redirect spending towards measures that clearly strengthen the economy.
Our aim in this Budget is to strengthen the Commonwealth Budget in ways that don’t damage the family budget.
It’s to strengthen our Budget without damaging yours.
It’s precisely because we have made progress in the last Budget that there’s scope in this Budget for good news for families and small businesses.
At the moment, as you know, the child care system frustrates families that are just trying to get ahead.
The Productivity Commission’s report into childcare estimated that roughly 165,000 parents with children under 13 would like to work or to work more but aren’t able to.
All parents do the sums. They work out the additional income of the second parent – mostly mums – going back into the workforce. They deduct the cost of child care and transport and they ask the question: is the extra income really worth it?
Our task is to help with the challenges of having a family, especially when children are very young, so that when parents feel like getting back into the workforce, they can say ‘Yes, this is worth it.’
Because parents hold the key to increasing workforce participation, a key component of the government’s family package will be to make child care more affordable to give families more choices.
But there do have to be jobs for family members to go to.
That’s why we’re making sensible, targeted changes to support small businesses to create more jobs so that we can ease the economic pressure on families.
Australia’s two million small businesses are the engine room of our economy. They’re the source of so much of our creativity and dynamism – and only half of them have employees.
Your ACCI red tape report says that over half of Australian small businesses believe that the compliance requirements for employing people are “very complex” or even “extremely complex”.
So, we are making it easier for independent contractors and sole traders to take the first steps in employing people.
As well, on 1 July, the tax arrangements previously flagged – a general company tax cut coupled with an offsetting levy to pay for a more generous parental leave scheme, won’t go ahead.
I can confirm, though, that the Budget will have measures to cut small businesses’ tax bills in ways that will stimulate investment, boost productivity, generate new jobs and make existing jobs more secure.
We also want to make it easier for all Australians, particularly young people, to access these new jobs.
Everyone who wants to work should get a good start – a start that encourages people to work hard and to build a successful career.
The $5 billion jobactive system announced last month is an important part of that – because it’s about focusing employment services on job outcomes rather than on process and paperwork.
Jobactive includes work-for-the-dole for all younger people who’ve been on unemployment benefits for six months – because they deserve a chance to show what they can do, rather than what they can’t.
But reform doesn’t start and end with the Budget.
In the last two weeks, the Government has released a root and branch review of Australia’s competition policies, laws and institutions with the aim of delivering lower prices and more choice for households.
And we’ve started a national debate on how to make taxes lower, simpler and fairer; and on reforming the federation so that government is more efficient and effective.
As you know, the Productivity Commission is looking at the performance of the workplace relations system and how it might be improved.
And we’ll soon be responding to the Murray report into our financial system.
Over the past few weeks, we’ve introduced a Grocery code of conduct to give small businesses a fair go in a highly competitive industry. We’ve flagged changes to country of original labelling so consumers know more about what they’re purchasing. We’ve reduced the screening threshold for foreign agricultural land purchases and cracked down on illegal foreign purchases of residential land so that people can have more confidence that foreign investment is in Australia’s best interests.
We’re continuing the royal commission into union corruption so that the rule of law doesn’t just apply to one side in our workplaces.
Let me be clear, this Government is committed to reform because today’s reform is tomorrow’s prosperity.
Reform isn’t easy – particularly when our political opponents have walked away from the legacy of their reforming predecessors.
Yes, there will be scare campaigns against everything we take to the next election – as we saw in the last three state election campaigns where Labor campaigned against economic reform.
These campaigns have been so dishonest that, in NSW, the scare-mongering was explicitly rejected by a former Labor cabinet minister and ACTU president.
In Victoria, the government is trashing the state’s economic reputation. It has just decided to spend at least a half a billion dollars not to build a road and to destroy hundreds of jobs that had already been created.
This is bad for Australia but it’s terrible for Victoria.
As you and the other major business groups of our Australia correctly pointed out just recently “governing is not just the responsibility of government, it is the duty of all members of parliament”.
One side of the parliament is committed to governing well; the other side is committed just to getting back into government by any means at all.
One side of the parliament has a plan to build a stronger budget for a stronger economy with more jobs and prosperity for everyone; the other side just has a plan to exploit anything that is potentially unpopular.
In short, one side are builders; the other side, right now at least, are wreckers.
One side is prepared to trust the public’s understanding that difficult decisions are needed, at least in the short-term, if our country is to go forward. The other side is stirring fear and playing people off against one another.
Under such circumstances, it’s good that business, led as it so often is by the Australian Chamber of Commerce and Industry has pledged itself so strongly for reform.
The challenge now is to back the reformers; it’s to support the reform that’s actually on offer so that together we can build prosperity for all of us.
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