Prime Minister
Phil Coorey, Political Editor, AFR: Prime Minister, just, I feel like these are bookends here. A couple of years ago we were at this speech and you were essentially talking about having to throw your conservative economic philosophy out the window to manage with COVID. And now today you're talking about it's now time to return to a normalisation of the Budget and budget settings. And you were quite emphatic about the Build Back Better, which others have called The Great Reset. But having said that, can we seriously go back to everything as it was? And I was interested, you know, in what you're talking about supply chains and taking a greater role in ensuring the supply of critical goods. Andrew Liveris at the start of this crisis a couple of years ago, told the AFR that we, Australia, we drunk the free trade juice and decided that offshoring was the way to go. He said that era is now gone. Do we have to be a little bit more circumspect about our total embrace of, you know, the free market internationally? And do we have to be prepared perhaps to pay a bit more for some products in return for knowing they’re there when we need them?
Prime Minister: Well, Phil, I think there is a recalibration that’s occurring and that's that’s sensible. Frankly the whole nature of conservatism is that, you know, you learn from the things that occur and you, and you make the transitions that are necessary. But the principles that underpin how you manage a Budget, how you grow our economy, I think remain. And those principles are that you need to be obviously mindful of the impact on your Budget of long-term impacts on structural spending. You need to exercise that fiscal responsibility, and where we have had to lean forward in an unprecedented way in recent years that was necessary. The alternative was to allow our economy to completely collapse and decay and not be able to respond on the other side.
And I think one of the key reasons we were able to retain our AAA credit rating, despite the incredible level of spending that had to be undertaken to pull the economy through, is that the ratings agencies could see that these were sensible investments - that they were time-limited investments, they were based on clear principles. Principles that I articulated in this very forum two years ago, and they could see the plan - they could see the plan to get in and they could see the plan to get out. And that's what we've done.
And then every step along the way, I must say, that every time, you know, it's one thing to say you will commit to this level of spending, which we did. That’s actually the easy part. The hard part is actually turning that off. And every time we wanted to turn it off, of course, the Labor Party and the Greens would say, oh no, you can't do that. And we know that they would have spent an extra $80 billion more than the Government would of in not being, having the discipline to turn things off when they needed to be turned off. But we stuck to our course. And I think that's been an important reason why we've been able to maintain the credibility of our fiscal responsibilities, which has been recognised, I think, in maintaining the ratings that we have.
But you're right to say, well, now we need to look at a world that is very different, and we need to look at a world where, you know, as I said, the economy is [inaudible] from global security. And we need to understand that supply chains are as much about trust as they are about efficiency. And this is a point Narendra Modi makes constantly and I often refer to it. And that's why the Quad, I think, has become a very important engine for understanding these critical supply chain issues. It doesn't mean we need to make everything in Australia. I’ve set out in our Modern Manufacturing Strategy - that Andrew had a very, Andrew Liveris had a very keen hand in - that there are some areas where we really need to lean into to achieve scale, and the Modern Manufacturing Strategy is about that. It's about ensuring that in some areas we can really get to scale and that can provide a real income generating opportunity for our country, and support the broader architecture of our economy. But there are other areas where we need to be having supply chains with trusted partners, and we need to build up the strength and durability of those links with those countries.
So I would say it is a more targeted form when it comes to open markets and and trade. I mean, we still have more than 75 per cent of our our trade covered by export agreements. And that's a good thing. And we're deep in discussions with the Indian Government right now about those, and that's all positive and that's all good. But like any business will manage its risk and diversify, Australia needs to be equally careful about that, both in how we manage our supply chains.
And when it comes to the Budget, you know, you've got to get it back to more normal settings. That doesn't mean you need to go through periods of massive cuts and things of that nature. That's not, that's not on our agenda. And that's just not the plan. This is done in a managed transition, in the same way we got the Budget back to balance, which took us, you know, six years to do that. We did that by growing the economy, reducing the rate of growth in expenditure down to less than two per cent over the forwards, which was the lowest level that we've seen expenditure growth at in this country fiscally in 50 years. And then, of course, it had to be increased because of the pandemic.
So, you know, you normalise this over time. You don't do it in one foul swoop. You don't need to go down that austerity path that others sometimes talk about. That is not our Government's fiscal plan. We do not think that would be the best way to manage the Budget. We still have very strong priorities in areas like aged care, mental health and, of course, supporting the National Disability Insurance Scheme. But you can't do that without a strong economy. That's what pays for it.
Phil Coorey, Political Editor, AFR: Ok, PM. On the other element of your speech. You’re keen for a business-led recovery, which gets us back to the pre-pandemic economic settings. There's no shortage of recruits in this room, I would suspect, who are willing. And I point out the BCA’s pre-Budget submission had a few ideas. One of your, one of the criticisms of the Government has been a lack of reform, and I understand you, obviously you've been busy with, you know, managing the pandemic and stuff. But if you do win the election, do you, do you have any aims, do you have any aims or goals to sort of undertake any form of reform, be it tax, or to at least have a look at it through a review? You know, other than just managing the economy, will there be scope beyond the pandemic for a reform agenda from your Government?
Prime Minister: Well, Phil, I don't accept the premise of the question, and I never have. I know there are some who attend the Summit and may even sponsor it who think that economic reform in this country is about putting up the GST and putting up and putting on a carbon tax. Let me be very clear again - I have no interest in putting up the GST or putting on a carbon tax. I don't think that's certainty. I just think it's higher taxes. We've cut taxes. Small business taxes are at 25 per cent. We are abolishing, and have legislated to do so, an entire tier of the personal income tax system. Ninety-four per cent of Australians will pay no more in their marginal rate of tax than 30 cents in the dollar. That hasn't happened in generations, in generations.
The reforms, in particular, that we put in place to spur us through the pandemic on the instant asset write-off, which has been a policy of this Government for many years, and we've supercharged it during the course of the pandemic to bring in investment. And one of the most exciting things I've seen through the pandemic is I’ve walked into businesses and the first thing they want to show me after the apprentices they’ve kept on is the the new kit that they've been able to install in their manufacturing plants because of the instant asset write-off. I mean, look what Visy’s doing out there in Western Sydney, their recycling plants.
I mean, we have been on the tools when it comes to reducing taxes in this country for many, many years, and our reforms are in place. And so not only on that front, but whether it's been the lower tax agenda, the regulatory reform agenda. I've set out the five points. I mean, the investment in infrastructure. I mean, we are building, we are more than almost, more than a quarter of the way through building the Western Sydney Airport. I mean, people talked about that for, since the 60s. Our Government’s actually doing it. I mean, you go out there, it's, I encourage you to go out to the viewing platform. What is happening with the building of Western Sydney Airport is transformational. Now, plenty of others talked about it. I mean, my, the Leader of the Opposition actually went into Parliament on the basis of building it. But was Infrastructure Minister for six years and didn't lay a brick on it. We are actually doing it. And so on infrastructure, on skills - we have the highest level of skills trade training in the country in economic recorded history. Our work on net zero by 2050, with the $20 billion of support to go into the plan to actually achieve that, and transform our energy economy over that generation and make sure Australia is, continues to be an energy powerhouse exporter into the region for decades and generations to come. The data and digital economy reforms, which I went into some considerable detail at the Forum last year. I mean, that is transforming our economy and will put us in that top 10, and we're well on the way to do that. And we've just spent quite a bit of time talking about how we're completely turned on its head how we support manufacturing in this country. Now that might not be increasing the GST or putting on a carbon tax, but I can tell you, for this economy, for the threats faced, for the threats that we face, and the merger between economic security policy and national security policy, that's the reform agenda for this generation. We don't need to get all retro.
Phil Coorey, Political Editor, AFR: Given we’re squeezed for time PM, but I do need to ask you this. I’d just like your thoughts, and again, it's of interest to people in the room, on immigration. We had a cap of overseas, of 160,000 net overseas migration I think went negative during the pandemic. Some people in this room are calling for a catch up. And then to settle to a, to a level higher than the 160. What are your thoughts on that? Do we need to play catch up on immigration, or do we just let it restore, or do we need a higher cap? And what are the political considerations you take into account when you, when you're asked these sorts of questions?
Prime Minister: Well, I think there’s some practical considerations first, Phil. And as a former Immigration Minister, I know this area very well. You just don’t turn the tap on and all of a sudden, 160,000 people turn up next week. This takes time. It will take time, just like it will in the tourism market, just like it will in the student market for these in-flows of people to build up again. And that will take some time. So I don't see us threatening the caps that have been in place, certainly not in the year that comes, and we'll monitor that very closely.
I mean, take the international travel industry, for example. I mean, the travel industry has been decimated over the last two years. And while those who are free, independent travellers, you know, just book online and do all that, and that's a much bigger part of the travel market than it used to be, there is still a huge part, I mean, with the cruise industry, the organised tours, all of this - all goes through quite organised travel industry machines, and they have been completely decimated. And so we will see this come back over time, but I don't think we should think it's going to be immediate. And the same is true in building up those channels of people coming as migrants to Australia. Now, we want to encourage that and we want to support that, and we believe that is essential for Australia's economic recovery. But I think the more pressing need is actually just getting those wheels turning again and getting people coming again. And I think once that is fully operational and we can see that working, then the issues that you’re raising will come into focus. But right now, they're not presenting any impediment.
Phil Coorey, Political Editor, AFR: Ok, Prime Minister. We’re out of time. So thank you very much for your speech and good luck on getting out of the, getting out of Kirribilli and back into the world. Thanks.
Prime Minister: Thanks Phil. Good to talk to you.