I acknowledge the First Australians on whose land we meet, and whose cultures we celebrate as the oldest continuing cultures in human history.
I'm delighted to join you for the Australian Industry Group's National Dinner tonight and address you for the first time as Prime Minister of Australia.
I'm especially delighted to join you as you celebrate the ten year anniversary of the formation of the Australian Industry Group, through the merger of the ancient factions of the old Metal Trades Industry Association and the Australian Chamber of Manufactures.
The companies represented by Ai Group are strong contributors to Australian economic growth and employment, and we value your role in building the nation's prosperity.
Like its predecessors, the Ai Group has enjoyed a strong relationship with both sides of politics.
I would particularly like to acknowledge the strong and independent contribution to national policy debate made by Ai Group's CEO, Heather Ridout.
We appreciate Heather's constructive input, in particular through Infrastructure Australia, Skills Australia and our Business Advisory Group on workplace relations.
Sometimes Ai Group agrees with the Government.
Sometimes they disagree.
But consistently, we enjoy a genuine constructive engagement.
Tonight I want to discuss how the Australian Government is responding to the challenging set of global economic conditions that we now confront.
It is now a little over nine months since the Government came to office.
The Government's overall plan is to build a stronger, fairer and more secure Australia, to help working families, pensioners and carers facing financial pressures and to prepare Australia for the new challenges of the 21st century.
In the nine months since taking office, we've brought we've down our first Budget, begun our program of national economic reform, and put forward our framework to act on Australia's long-term challenges - including climate change.
The Government has come to office at a time when we are facing some of the most challenging global economic conditions in almost a quarter century.
The global financial turmoil of the past 12 months is leading to a deceleration in growth all across the developed world.
Six of the world's seven largest development economies have recorded zero or negative growth in their most recently-reported quarters (Japan, Germany, the UK, Canada, France and Italy).
At the same time, inflation is rising and the global economy has seen the greatest oil price shock in more than thirty years.
Industrialised economies have seen inflation almost double in the past year, from an average of 2¼ per cent to 4 per cent.
Globally, share markets in developed economies have fallen by an average of around 20 per cent. Our own stock market is also down by around 20 per cent since the beginning of the year.
Around the world, we are witnessing decade lows in consumer confidence - with the lowest confidence levels since the early 1990s in the US and the UK.
The Government moved quickly to respond to the challenges posed by the global credit crisis - dealing with the immediate challenges, such as liquidity in our national financial markets through our actions in the public bond market, and through the coordination of global regulatory responses to the crisis through the International Monetary Fund, the Financial Stability Forum and the G20.
The uncertain global environment has created tough conditions for many Australian businesses, as the latest Performance Indices from the AiGroup for manufacturing, construction and services have shown.
The high value of the Australian dollar has also put great pressure on many exporters - at a time when competition from nations like China and India is increasingly fierce.
Despite all of these economic challenges and the requirement on us all to face up to them, we should never lose sight of the great strengths of the Australian economy.
Australia is better placed than most countries to negotiate the impact of the global economic downturn - although let us be realistic, there will be a number of significant bumps along the road.
Last week we learned that Australian businesses are planning to lift capital expenditure to a record $100 billion in 2008-09, with a 5.7 per cent increase recorded in the June quarter.
Here in our own region, developing economies continue to grow, demand for our commodities is strong, and prices for our commodities are at generational highs.
The 50-year highs in the terms of trade are resulting in extra income flowing into the economy and fuelling strong investment.
Indeed, the June quarter balance of payments today recorded the greatest quarterly improvement in the current account deficit since records began in 1959.
Despite difficult global conditions, many Australian businesses are still thriving, and for many their greatest challenge is still to manage growth successfully.
As we look ahead to 2020 and beyond, there are strong grounds for optimism and confidence in our future.
The Australian Government is committed to steering Australia through tough global economic times to ensure our economy emerges in strong shape.
We have delivered responsible economic management, with a conservative Budget grounded in a $22 billion surplus.
The surplus was designed to put maximum downward pressure on inflation and interest rates.
The Government has also begun to embark upon the most comprehensive microeconomic reform program that Australia has seen since the early 1990s.
In recent years productivity growth has declined sharply - from average annual growth of 3.3 per cent during the productivity cycle of the mid-1990s, to just 1.1 per cent in the current cycle.
That productivity slowdown reflects the long-term neglect of investing in the drivers of productivity - our workforce and our infrastructure.
We must turn that around - because in the long term it is productivity growth that will build our future living standards.
Over the last 40 years, productivity growth has accounted for more than 80 per cent of the improvement in Australia's living standards.
The Government is committed to building our long-term prosperity by investing in five key platforms for future productivity growth - education, infrastructure, innovation, business deregulation and taxation reform.
We have laid out an education revolution for Australia's future - ranging through early childhood education, school, vocational education, universities and research.
In our first Budget we allocated $19.3 billion to the Education Revolution over the next four years to help deliver:
* a national curriculum for all students in English, maths, the sciences and history;
* guaranteed funding to both Government and non-Government schools alike;
* a $1.2 billion Digital Education Revolution that over time will provide access to a computer for every student in years 9 -12;
* a $2.5 billion Trade Training Centre program across Australia to help provide robust trade skills for students and keep them engaged in schooling, and
* 630,000 training places over five years through our Productivity Places Program.
On infrastructure, we have begun our reform program by establishing a Infrastructure Australia to help drive investment in critical national infrastructure such as road, rail, ports and high speed broadband.
On innovation, the Government is already rolling out the Enterprise Connect network I first announced at the Ai Group national forum last year - a network that links small and medium-sized businesses to ideas, technologies and infrastructure.
Up to the middle of last month, more than 900 firms had received or applied for Enterprise Connect services.
The Government is building a 21st century innovation-driven industry policy - not the old industry policy based on protection and resisting change, but the 21st century innovation policy that embraces change, productivity and global markets.
On deregulation, we have made significant progress in reinvigorating the Council of Australian Governments with a major reform agenda, including a list of 27 areas of regulatory reform for building a seamless national economy.
We have established the Henry Commission as the starting point for long-term reform of tax, welfare and retirement incomes.
We are working to expand access to overseas markets for Australian businesses - as a strong supporter of the Doha Round at the WTO, as well as making progress on free trade agreements in our region.
The Trade Minister, Simon Crean, has also concluded negotiations for the region-wide ASEAN-Australia-New Zealand Free Trade Agreement.
This is the largest FTA that we have ever negotiated - covering 16 per cent of our trade in goods and services, worth $71 billion.
ASEAN is an enormous market of 570 million people with a combined GDP of more than 1 trillion US dollars.
The ASEAN-Australia-New Zealand market will have a combined GDP of 2.3 trillion US dollars, which is more than twice as large as India - at 1.1 trillion US dollars - and nearly three-quarters the size of China's 3.3 trillion dollar economy.
We will also support our exporters.
Tomorrow, Trade Minister Simon Crean will receive a high-level review into Australia's Export Policies and Programs and we look forward to examining its recommendations.
We're also consulting widely on the design of our Carbon Pollution Reduction Scheme, that will help drive our long-term transformation to a low carbon economy.
However tonight, I would like to focus on the role of nation-building infrastructure in building a stronger Australian economy.
This Government is committed to implementing the single largest infrastructure program in the history of the Commonwealth.
This Government believes in nation building.
That's why the Government is investing in a nation building plan of some $76 billion.
We stand in the great tradition of nation-building Labor Governments that laid the foundations for the prosperity enjoyed by successive generations of Australians:
* The Labor Governments that built post-war infrastructure, training and housing programs for the returning service men and women - as well as the massive Snowy Mountains Hydroelectric Scheme.
* The Labor Government that help build the urban infrastructure needed for the sprawling suburbs that grew up on the outskirts of our cities in the 1970s.
* The Labor Government that began a national investment in our railway infrastructure in the 1990s.
Now, as a new century stretches before us, we must build the infrastructure for a new century and the needs of a rapidly changing world.
Our job isn't just to maintain what was built in the past.
We must build new infrastructure for the 21st century:
* 21st century highways, to help get working parents out of traffic jams and home to their families more quickly.
* 21st century ports, to get our exports to their markets without delay.
* 21st century broadband, to drive a digital revolution for our schools, hospitals, small businesses and regional communities.
* 21st century public transport, giving Australian families more transport options than relying on the car.
* 21st century power stations, as we transition to a low carbon economy.
* 21st century water infrastructure, so we no longer waste this precious national asset.
* 21st century schools, to give kids the world class education for the jobs of the future.
* 21st century hospitals, to give families the quality health care they deserve.
This is a vision that takes us beyond the necessary arithmetic of the Budget.
Beyond necessary tax reform.
Beyond the necessary regulatory reform to create a seamless national economy.
Beyond the predictable economic terrain.
Beyond all of that, to a new program of nation-building - but this time in partnership with the private sector.
We need as a nation to have about us the national imagination to look beyond the horizon.
Not just to hope that infrastructure might materialise.
But to plan for it.
If we look at many of our major cities, they cry out for better long-term infrastructure planning.
Not just for greater convenience.
Not just for greater amenity.
But critically as new generators of 21st century economic activity, where functioning cities are essential to our economic future.
Beyond the cities, our wider national economic infrastructure must function properly as well.
In the long-term, this will underpin productivity, competitiveness, exports and prosperity.
And it will help drive economic growth in times of global uncertainty.
In just nine months of Government, we have committed to a $76 billion infrastructure investment program, allocating funds for transport, utilities, communications, and social infrastructure.
We'll invest $26 billion in roads and rail infrastructure through 2008-09 to the end of AusLink II.
We'll invest $20 billion through the Building Australia Fund in transport, energy and water priorities.
And from this, we'll invest almost $5 billion in a National Broadband Network.
We have yet to imagine properly the full transformational economic potential of a 21st century cutting edge high speed broadband network - the ultimate technological capacity to bring markets closer and to finally overcome the tyranny of distance that has been Australia's lot since the earliest days of European settlement.
We'll also invest $15 billion in education infrastructure, through the Education Investment Fund, trade training centres in schools, computers in our classrooms, and by investing in our universities.
We'll invest $11 billion health and hospitals infrastructure, through the Health and Hospitals Fund and other programs.
Through these investments, we are building the foundations of the nation's future prosperity.
We're already rolling up our sleeves and starting on projects right now:
* We are turning soil, mixing concrete and upgrading the Ipswich Motorway in Brisbane.
* We have funded 896 schools to plug in 116,000 computers and get students connected.
* We have funded 100 schools to start planning and building their new Trades Training Centres.
We've already established Infrastructure Australia to audit the nation's infrastructure needs and development a national priority list.
And we've already begun work to reform infrastructure sectors, through national heavy vehicle regulations, better rail safety laws, and developing national guidelines for public private partnerships.
Infrastructure policy is a national priority for this Government because infrastructure constraints have been holding back our economy for too long.
Infrastructure constraints are a drag on economic growth, they hold back productivity, they add to inflationary pressures, and they part of the reason we saw ten consecutive interest rate rises under the previous Government.
The cost to the economy of inadequate infrastructure will rise if we do not act now.
According to CEDA, if we can remove infrastructure bottlenecks we can lift our economic performance.
We could potentially raise Australia's GDP by 0.8 percent per year.
We could increase exports by 1.8 per cent, increase business investment by 1.2 per cent, and lower the consumer price index by 3.2 per cent.
But achieving those long term dividends will require investment now - and not just from the Commonwealth.
State governments, their corporations, and the private sector also have critical roles to play.
State Governments now have serious, long term capital works programs.
In 2008-09 alone, the Queensland will spend $17 billion; NSW Government will spend $14 billion; Western Australia $8 billion and Victoria $4 billion.
According to ABN Amro, investment in public infrastructure over the next decade will be $380 billion - including $255 on economic infrastructure and $125 billion on social infrastructure.
ABN Amro forecasts that some $80 billion of investment in public infrastructure over the next decade will be undertaken through public private partnerships.
This makes the development of national PPP guidelines and rigorous assessment of project contracts absolutely critical.
The National Broadband Network, for which we are currently in a competitive assessment process, could be one of the world's largest ever deals involving the public and private sectors.
Putting Commonwealth, State and private infrastructure activity together, we are looking at a real driver of long term economic growth for Australia.
It is a core part of our vision of Australia's economic future - nation-builders, together building a nation.
We do not accept the dogma of the previous Liberal Government that this is not the proper province of the national government.
The Government believes that the tens of billions of dollars of revenue from the mining boom should have been invested in Australia's long-term productivity capacity.
And while those revenues continue to flow, that is what we intend to do.
According the Ai Group's own Construction Outlook, infrastructure and mining-related activity is fuelling engineering and commercial construction work.
Consider that in 2009, private sector construction work is forecast to hit $92 billion - double what it was just 5 years ago.
There is big growth in road and rail projects, sewerage and water supply projects, electricity generation projects and mining construction work.
Activity levels are their highest in 16 years.
According to the latest Access Economics Investment Monitor, all up there are currently more than $600 billion worth of projects underway or in planning in Australia.
This is 21st century nation building - and a core part of the Government's plan to see Australia through the economic challenges that lie ahead.
The road will not be smooth.
But the road can be navigated by a clear cut plan that sees us to our destination - a stronger economy with world class skills and world class infrastructure for the future.
Building Australia's future prosperity requires strong leadership, responsible economic management and a plan that tackles the nation's long term challenges.
As we move forward, the Government especially values our policy partnership with the AiGroup as a leading voice for Australian business.
Business is a crucial partner if we are to achieve the economic reform that's needed for the nation's future prosperity.
This is a Government that has already demonstrated that it will listen to the business community.
We took on board Ai Group's priorities in framing this year's Budget.
You called for raising investment in education and training - and we delivered with our investments in Trades Training Centres and the 630,000 new Productivity Places.
You called for us to deliver on infrastructure - and we delivered, with $41 billion allocated to new nation-building investment fund: the new Building Australia Fund, Education Investment Fund and Health and Hospitals Fund.
You called for the implementation of the promised personal income tax cuts - and we delivered.
You called for a boost to innovation and export facilitation programs - and we've begun that task with the Enterprise Connect network, and we'll be considering further measures following the reviews of the National Innovation System and our Export Policies and Programs.
We have, as one of your own publications noted recently, begun to “join the productivity dots for the Australian economy”.
Many of these challenges have been neglected for a long time by successive governments.
Tackling them successfully will take time.
But one thing is critical - that short-term politics doesn't block that long-term plan for the nation.
As a nation we need to look to the long term with ambition, confidence and with determination.
I know that is how the Australian Industry Group approaches the great policy challenges of the future, and I look forward to partnering with you as we carve out a strong economic future for Australia.