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Transcript 40448

Economic and Security Statement

Photo of Turnbull, Malcolm

Turnbull, Malcolm

Period of Service: 15/09/2015 to 24/08/2018

More information about Turnbull, Malcolm on The National Archive website.

Release Date: 12/09/2016

Release Type: Transcript

Transcript ID: 40448

Location: Parliament House, Canberra

Thank you, Mr Speaker.

Today, I will update the House on important global economic and security developments affecting directly and immediately the national interests of all Australians.

Last week I discussed with other leaders at the G20, ASEAN-Australia Summit, East Asia Summit and Pacific Islands Forum the actions we need to take to secure our long-term prosperity in these times of remarkable opportunity but rapid change. 

There was overwhelming consensus among Leaders that open markets, free trade, innovation and entrepreneurship are keys to reinvigorating global economic growth. 

Our clear resolve was that we must not respond to global and domestic economic volatility by giving in to populists peddling the empty promises of isolationism and the false hopes of protectionism. 

As I said in Hangzhou at the G20, protectionism is not a ladder to get us out of the low growth trap. It is a shovel to dig that hole deeper and make the problem more intractable.

If global economic events over the last decade have taught us anything it is that growth cannot be taken for granted.

We must see the world as it is not as we would like it to be, or fondly imagine it once was.  Policies matter.  And inferior economic policies lead to poor economic outcomes.  It’s that simple. 

Global growth remains fragile, and there is no surer recipe for extinguishing vital consumer and business confidence than putting up economic barriers. 

The G20 leaders agreed that if all countries turn inwards, we all lose.

Now Mr Speaker, Australia has achieved 25 consecutive years of growth. Our economy remains strong and resilient. This is a remarkable achievement, particularly given the global economic headwinds that we have faced. 

The hard work of millions of Australian men and women, and millions of businesses - large and small - lies at the heart of this strong economic performance.

But it is also the result of determined efforts to keep expanding our horizons and to pursue genuine economic reforms.

Great reformers from both sides of politics - including Hawke and Keating, Howard and Costello - took tough decisions to make our economy stronger. 

These reforms were aimed at improving living standards for all Australians. 

A strong economy is not a given. We must remain agile and pursue every avenue of genuine reform; we must make the right policy calls for the times that deliver higher incomes for all Australians.

At the G20, all leaders acknowledged that subdued global economic growth and rapid change is playing into anxiety over industries that are left behind. There is understandable fear about what this means for economic security in certain communities.

The mining construction boom showed clearly that economic shocks do not affect economies - or people - uniformly. 

But this doesn’t mean we should stick our head under the doona.

Leaders agreed that our policy making must be as agile and dynamic as the economy itself where the pace and scale of change is without precedent.

As I outlined to leaders at the G20, the way the Australian economy handled these shocks shows the benefit of policies that ensure our economy is open, flexible and resilient.

Over time the benefits of the boom were spread widely across the population, through changes in share prices and dividend payments, higher wages, movements in the exchange rate and government payments.

Now that the construction boom has ended and the exchange rate has declined, different parts of the economy are benefitting. 

We must recognise the negative impacts of dislocation and make sure we have the policies in place to ease the burden of change, particularly on the vulnerable.

This is why we have committed to establishing a $200 million Regional Jobs Fund. It will ensure areas like the Bowen Basin in Queensland, Geelong in Victoria, Northern Tasmania and the Spencer Gulf in South Australia remain great places in which to live, work and invest.

G20 leaders were clear - in these times when the pace and scale of change has never been greater, genuine leadership means reassuring people and explaining to them how trade, investment and innovation have improved our incomes and livelihoods.

Rather than preying on people’s fears and resorting to political opportunism, we must be steadfast and principled in making the case for reform.

As I outlined to leaders at the G20 meeting, we must focus our efforts on three areas.

The first and most urgent priority is to better communicate to our communities the positive impact of trade, investment and innovation on growth and job creation.

G20 leaders recognised that we live in an increasingly complex and integrated global economy.

Populist sentiment – based on fear, not evidence – is gaining ground.

These pressures are likely to increase as technological advances cause ever greater disruption.

The G20 is in a unique position to make the case for how specific trade and investment measures raise economic growth and living standards.

At the meeting I strongly supported trade ministers’ commitment to developing the best available evidence through the world's leading experts at the WTO, World Bank and OECD. 

Our job as leaders is to set out a clear factual explanation of the benefits of trade which can disarm the cynical and reassure the anxious.

Innovation also has many benefits but these are not always easy to identify or quantify. While some seek to generate fear and misunderstanding when they talk about its impact, innovation can be the great leveller of opportunity and access.

As Jack Ma pointed out when I visited the Alibaba campus in Hangzhou, innovation and technology have put Mum and Dad businesses, startups and young people on a more level playing field with big business in accessing trade and new markets than ever before.

Thirty years ago, a student writing an essay needed to have access to a library - and most did not. Today the world’s knowledge is available online and open to all with access to the internet - the advance of which continues to spread apace.

We also need to demonstrate that all parts of society are reaping the benefits of trade and investment.

It is more important than ever before to ensure that policies which have delivered stronger growth and more jobs are seen as fair - a rising tide that not only does lift all boats but is seen to do so.

Growth must be thoroughly inclusive.

One of the keys to maintaining public confidence in reform is stamping out tax evasion and the erosion of our tax bases. 

We are committed to a global economy that supports the aspirations of the many, not the few - it cannot be so unless the system is transparent.

Unscrupulous behaviour, even if it provides companies with short term benefit, is not just against the interests of the community, but ultimately also against the interests of business.

The G20 made significant progress this year. As an example of that, the G20/OECD Base Erosion and Profit Shifting Project has been expanded to more than 80 countries, including some outside the G20/OECD. 

This will improve the coherence of international tax rules and ensure a more transparent tax environment.

Australia is proud to have played a leading role in galvanising the global response to tackle tax avoidance.  Multinationals should be in no doubt of our resolve - while we support lower taxes, paying them is not optional.

The Multinational Anti-Avoidance Law which my Government passed and regrettably Labor voted against prevents companies from artificially shifting profits offshore.

In this year’s Budget we went further and announced a new Diverted Profits Tax to ensure large multinationals will pay a penalty rate tax of 40 per cent if they shift profits offshore.

We have also announced a new Tax Avoidance Taskforce to strengthen the ATO’s audit and compliance activities.

The second agenda item I pursued at the G20 was the need to embrace flexibility and agility as vital elements of economic success.

Mr Speaker, in the two decades before the global financial crisis, the volume of international trade grew at roughly twice the rate of economic growth. 

This trend has now come to an end.

New, opaque, behind the border, trade restrictions continue to accumulate — now hitting 5 per cent of global imports. 

It is vital that we remain steadfastly committed to the principles of free trade. 

G20 Leaders agreed to ratify the 2013 Trade Facilitation Agreement by the end of this year.

This Agreement delivers practical measures to strengthen global trade by removing regulatory and procedural burdens on free trade.

My Government will continue to pursue export agreements and reduce red tape impediments to free trade.

We have already seen the benefits of the Coalition’s export deals with major trading partners - China, Korea, Japan and Singapore.

As an example, in the first six months of this year, there has been a doubling in the value of exports to China of fresh mangoes, fresh cherries, and fresh oranges – tariffs on all of these products have been cut twice already, and are being progressively removed.

Exports of bottled wine have increased by one third since the China Australia Free Trade Agreement entry into force.

At the G20 I continued working towards the implementation of the Trans Pacific Partnership and finalising new trade agreements with our major trading partners - including Indonesia, India, the European \and United Kingdom - to maximise Australia’s opportunities to expand trade and investment.

I encouraged G20 leaders to continue to use their combined influence to support the WTO and make the multilateral system work better – for example, by encouraging the uptake of good practices in trade agreements that create, rather than divert, trade.

My final message to the G20 leaders was that in addition to trade and innovation, we must implement domestic reforms if we want to escape or avoid the low growth trap.

We support the G20’s enhanced structural reform agenda, including the nine priority areas for structural reform, underpinning principles and the development of the indicator system to measure our progress. 

As a result of opening up our capital and product markets to the rest of the world, the long term productive capacity of our economy - the wages, employment opportunities and standards of living, for our children and our grandchildren - will be limited only by their imaginations.

My Government is committed to reforms that will increase productivity, such as investigating how to apply competition principles to health and other human services, as outlined in the Harper Review. 

This is about providing consumers with better information, wider choices and more responsive services. Ultimately, it’s about improving every Australian’s quality of life.  And I note that the Chifley Institute recently acknowledged that these kinds of reforms have the potential to play an important role in the delivery of health services.

Now Mr Speaker, we cannot have economic security and prosperity without regional stability.

The US-anchored rules-based order has delivered the greatest run of peace and prosperity this planet has ever known. Nowhere is this more evident than in our region, the Indo-Pacific.

Decades of peace have allowed us to build strong economic links - improving the living standards of millions of Australians and many more in the region.

South-East Asia’s GDP per capita has more than tripled in the past 15 years.

The clear message I took to the Australia-ASEAN Summit and the East Asia Summit was that continued prosperity into the future relies on the region remaining stable and secure. 
As a group ASEAN is Australia’s second largest trading partner and Australia is ASEAN’s eighth largest trading partner. Bilateral trade was worth almost $100 billion in 2015.
The more we trade, the more we rely on each other, the more our supply chains stretch across countries and borders, the more there is to lose by a disturbance in the security and order on which our prosperity is founded.

Free trade is not just good for jobs. It is good for security.

Openness. Stability. Security. Prosperity – they go hand in hand. But peace, security and order is not a given. We live in an uncertain and complex strategic environment.

And we were again reminded of the fragility of the international security environment during the G20.

On 5 September, North Korea launched three medium-range ballistic missiles into Japan’s Exclusive Economic Zone and Air Defence Identification Zone and, on Friday, while I was at the Pacific Islands Forum in Pohnpei, yet another nuclear test took place in North Korea.

This follows reports of ballistic missile tests every month this year.

North Korea’s ongoing provocative, dangerous and destabilising behaviour aggravates tensions in the region and threatens peace and security.

Australia strongly condemns these activities from this rogue state, which are clearly in breach of unanimously agreed United Nations Security Council Resolutions.

North Korea’s behaviour shows why it was important that Australia and Myanmar secured the agreement of the leaders at the East Asia Summit to a new commitment to end the proliferation of nuclear weapons, and to work to support non-proliferation.

Such provocation by this rogue state, North Korea, requires action - the Foreign Minister and I will be working with the UN Security Council to support additional sanctions against North Korea.

Mr Speaker, Tensions that have arisen as a result of developments in the South China Sea also have the potential to threaten our prosperity.

Australia’s position has been consistent and clear. We are not a claimant to any territory in the South China Sea. However, Australia has made it clear that it is vitally important that all countries abide by international law to settle disputes peacefully with full respect for legal and diplomatic processes and without resorting to the threat or use of force.

We continue to urge all claimants to refrain from coercive behaviour, militarisation or unilateral actions designed to change the status quo in disputed areas. Such behaviour undermines stability and stifles trade.

And, regrettably, as we saw in Sydney on Saturday night, we cannot be blind to the real threat to our region from terrorism. Daesh is expanding its presence into South-East Asia and the leaders of the ASEAN nations made it very clear that they see Australia as a key partner in countering this threat.

We cannot pretend that Daesh-related terrorism is a distant threat. As I stated in my Security Statement a fortnight ago:
“Unfortunately, the risk of terrorist attacks is rising as our battlefield success against Daesh grows. Whether it is Nice, Orlando, Wurzburg, Istanbul, Jakarta or Sydney - Daesh is inspiring, encouraging and directing many more attacks now than when it was expanding its territory in Syria and Iraq”. 

Yesterday, as we remembered the devastating 9/11 attacks 15 years on, the Sydney stabbing was a reminder of how terrorists and terrorism have evolved and mutated. To defeat them, so must we adapt.

We cannot close our eyes to the reality. There are people in Australia who want to do us harm and undermine our free, open and tolerant society with violence. That is why my Government will continue to proactively reform our national security laws to ensure our agencies have the powers they need to meet the challenges of the evolving threat environment.

This week we will introduce two key pieces of legislation - the Counter-Terrorism Legislation Amendment Bill to, among other things, strengthen our control order regime and the Post Sentence Preventative Detention laws to enable a continuing period of detention for high risk terrorist offenders. 

These measures are designed to deter, prevent and reassure. My Government is absolutely committed to ensuring Australians can go about their daily lives and enjoy their freedoms as their Government and our agencies do everything possible to keep them safe. 

And I was reassured throughout the Summits that the ASEAN leaders are united in their resolve. Leaders recognise the reality of the challenges posed by online propaganda, rapid radicalisation and returning foreign fighters with battle-hardened capabilities.   

Threats of terrorism are not bound by borders, rules or traditional barriers. The digital age means vulnerable young people, some who are only children, are now more susceptible to social media lies and propaganda, and able to self-radicalise online.

At the ASEAN-Australia and the East Asia Summit I urged members to share their understanding of how the internet and social media are being used to spread violent ideology to inspire and recruit our young people in the region.

The fear, division, hatred and violence terrorists seek to bring about puts at risk the region’s stability, its security and therefore its prosperity. That is why I joined with world leaders in a signal of collective political will to counter such weakness and division with strength and unity.  This included ASEAN leaders renewing the ASEAN-Australia Joint Declaration for Cooperation to Combat International Terrorism. 
Australia’s allies and partners expect us to not only be a cooperative participant but a leading voice and player, actively demonstrating the need for, and how to achieve, security and prosperity in our region.

And Mr Speaker, I am providing this leadership.

And through our efforts to secure unanimity on the Non-Proliferation Agreement at the EAS and the Counter Terrorism Declaration at ASEAN, Australia is providing this continued leadership for security and stability in our region.

Mr Speaker, these visits and the consistent themes I heard from global leaders confirmed that my Government’s economic plan is the right one for Australia. 

Our plan boosts exports via free trade agreements

We have established a strong innovation and science agenda that provides tax incentives for startups and encourages entrepreneurship

Our defence industry plan secures the nation and supports innovative Australian companies

We will live within our means and restore the budget to balance as we guarantee funding for all the essential responsibilities of government including health and education.

We are backing small and medium sized businesses with lower tax rates to encourage investment, greater productivity, and jobs and wage growth

We will restore the rule of law in the building construction industry, and our cities and Infrastructure plan provides record investments on road and rail infrastructure, to create more liveable cities and connect regions to markets.

And we must play a strong role in ensuring security in our region.

Our plan lies in stark contrast to the anti-opportunity, anti-growth, anti-investment, anti-jobs policy of those opposite.

Flexible and competitive markets - supported by the rule of law and sound macroeconomic policy framework and regulatory settings - have served Australians well.

Our policies will ensure that in these times of challenge, and of opportunity, we do not get left behind but remain a prosperous, first world economy with a generous social welfare safety net.


Transcript 40448