PRIME MINISTER: Well thanks Grant. No pressure then, eh? I hope you make a great presentation Josh after your next Budget. Expectations are high mate, but at least you’ll get to be the first Treasurer in some time to announce a surplus Budget. That’ll be a very important day for Australia, a very important day for Australia.
Thank you very much Grant, thank you very much members of the Business Council, all of those who have come together here tonight. I think Grant summed it up pretty well actually. It’s about the economy, it’s about growth. You know, in 2007 and Stephen Harper will know - let me about Stephen Harper for a second. Stephen Harper is part of a pantheon of great centre-right leaders in global politics. Margaret Thatcher, Ronald Reagan, John Howard, Shinzo Abe, John Key, Stephen Harper. It’s a pretty good list and he sits comfortably in that list of great leaders who have informed, I think, the prosperity of the world for a very long period of time.
I was at APEC on the weekend and we were reflecting on the fact that since the early 1990’s a billion people have come out of poverty, in the world. They didn’t get there by higher taxes, by the way. They didn’t get there by increased Government regulation. They didn’t get there by bigger sized Government, they didn’t get there by any of those things. They got there because businesses invested and employed people, trade was liberalised and people were lifted out of poverty like at no point in human history.
The world has never been more prosperous than it is today.
The world has never been more connected than it is today.
The world has never had more opportunities than it has today and all of that is true for Australia as well. So in following on in the footsteps in the pantheon of great centre-right leaders, of which Stephen joins us here tonight, our Government sits in exactly the same space.
When I first ran for Parliament in 2007, our economy was performing strongly. John Howard and Peter Costello had lead a highly successful government. We talked about the strength of the economy and how much had been achieved, as I have just been doing, globally. And we forgot to mention something; that is the economy is not an end in its own right. A strong economy is not something like a strong Budget, that you put in the trophy case and you look at it admirably and pat yourself on the back and go; “Isn’t that marvellous. We’ve got such a strong economy. Look at all those wonderful charts, all those lines heading in the right direction.” None of that means anything.
A strong economy is important because it pays for hospitals. It pays for schools. It pays for affordable medicines. It pays for a strong defence force. It protects Australia’s sovereignty, it pays for stronger borders, it pays for childcare. It pays for the disability support pension. It pays for the aged pension. It pays for the National Disability Insurance Scheme.
A strong economy delivers higher living standards for Australians all around this country. That’s why we believe in policies that drive a stronger economy.
As much as I enjoyed my time with Governor Lowe every month, sitting and poring over the charts - he knows as we would talk endlessly about the strength of the economy at that level - he and I both knew something that was more important than the charts we were looking at; that is what a stronger economy was enabling us as a nation to do. You’ve only got to look around the world where you see countries that have had the same opportunities as us, the same natural resource endowments, same patterns of people. Poor governments and poor policies have left them destitute. It’s a terrible shame, it’s shocking, it’s heartbreaking.
When Australia eclipsed that record of 27 years of economic growth, I remember giving the presentation to the National Accounts and I didn’t mention it at all. Made no reference to it. One of the journalists said to me; “You made no mention of the fact that this has been the longest running period of growth in Australia’s and indeed global recorded economic history.” I said; “No, because not all Australians have felt it yet.” And until they feel it and until they benefit from it, I won’t rest and our Government won’t rest.
The stronger economy has to reach every Australian and it’s not going to get there by going slow on growth. It’s not going to get there by doing things that will hold growth back, that will hold businesses back, that’ll hold investment back, that’ll hold the passion and entrepreneurialism of Australians back.
You don’t get a fairer society by making it a poorer society.
You don’t make some people do better by pulling others down.
As Grant said; more for all. That’s the objective, that’s why we believe in a stronger economy. It’s not an economic argument, it’s an argument about people. The economy supports our society and our people. That’s why we believe in a stronger economy.
There are two ways people think you can pay for Medicare, but only one of them works. You can pay for Medicare either by running a stronger economy - which is what we’re doing, that’s why we can guarantee Medicare, I can look every mum, every dad, every child, every pensioner, in the eye and tell them that you can trust me on Medicare and you can trust Josh, you can trust Mathias, because we know how to run a stronger economy.
Now our opponents think you can do this by putting taxes up. It doesn’t work. It’s a big wet blanket on the economy. It retards growth, it holds the economy back. The revenues don’t go in the same direction and you can’t make that promise. It’s a false promise.
So I tell you this tonight because I want you to understand why I want a stronger economy. I can tell you what we’ve been doing - and I will in a second - as to what we’re doing to create a stronger economy. But I want Australians to know, between now and the next election; why do we want a stronger economy and why should they want a stronger economy? Because you know, after a generation of Australians have known nothing but economic growth, perhaps it’s time to remind them.
I remember when I left university. I walked into a decade of difficulty. I walked into a recession. It didn’t matter whether you had a university education or a trade or whatever it was. A million people out of work.
I never want to see that happen in this country ever again.
Sometimes I hear the policy wonks go on and they say; “Oh, you know what this country needs is a good recession. That’ll teach them.” What a dangerous idea is that? How can you love your fellow Australians if you want to lump a recession on them, for goodness sake. Never on my watch, I don’t want to see my kids live through a recession. I did, my grandparents, worse. I want prosperity for this country and my family and my kids and my community, from one end of the country to another. And I know you do to.
So it’s so important at this next election, all of us in this room who understand the value and the importance of a strong economy to our nation’s future, that we carry that message. We have to value it. The Economist article made the point. Maybe it’s time - as the world has marvelled at what we’ve achieved - that we take a refresher course as to why a stronger economy is important. We should, and over the next while, between now and the next election, that’s what you’ll be hearing from us. Why a stronger economy guarantees the essential services, the essentials of life, a job, a house, a pay-cheque, investments for the future, medical care, schools, pensions. They’re the essentials Australians rely on and that’s why we will continue to fight for policies and implement policies that are designed to do that.
So what have they been, you say? From the day we were elected, we got about it; lower taxes. We’re a Government that has delivered lower taxes. Lower taxes for small and medium-sized businesses, lower taxes for households and families. Under our legislated personal income tax plan, Australians will not pay - 94 per cent of them - will not pay a marginal tax rate higher than 32.5 cents in the dollar. Law, legislated, done. That means, for most working Australians over the next decade, they will not experience bracket creep. The more they earn, the better they’ll do, the more they get to keep. More is not taken away from them as they do better. You don’t have to pull them down the better they do. You let them get on with it and keep more of what they earn.
We’ve put a speed limit on taxes, 23.9 per cent. That’s important. You know if you want to control expenditure in this country - I’ve learnt something very important - don’t give people any money, particularly the ministers who are here tonight. They like to spend money and Josh and I and Mathias know all about that.
If you say to your Government; “You’ve got a blank cheque on how much tax is going to come in”, guess what they’ll do? They’ll spend it.
If you control how much you’re prepared to tax the economy, then you can keep expenditure under control as well.
Our Government has the lowest rate of growth in public expenditure of any government in this country in the last 50 years and more. We’ve got a cap on how much we’re prepared to allow the economy to bear, on tax. Because we know that if you tax this thing too much, it will slow growth and we’ve put that discipline in ourselves.
Now you know, we undertook every effort to see broader-based reform of how much tax businesses paid in this country and we fought the fight for over two years. We took it to the last election, we got a mandate for it and we were able to achieve it, 25 per cent for businesses up to $25 million. Now we’re happy to achieve that. We’re happy to achieve that. But what you do know is our disposition will always be to ensure that people get to keep more of what they earn. Because that is what provides the incentive in an economy. That is what provides the drive in an economy. That’s what creates and fulfils the aspiration that has driven our economy for hundreds of years.
So lower taxes, investing in critical infrastructure. I was at the Bradfield Oration the other night. You think back to the big projects, the Harbour Bridge and things like that. Well today’s big projects are there. Western Sydney Airport, Tullamarine Rail, the Inland Rail, the North-South connector, Snowy 2.0. We’re a Government that is investing and driving big infrastructure projects. Just announced, in the large water infrastructure fund, the $200 million pipeline up in Townsville. Major infrastructure projects which are connecting communities, connecting markets to farms, to factories, connecting workers to their places of employment, increasing the efficiencies of our urban areas, increasing the productivity. An infrastructure plan; roads, railways, airports, ports, energy infrastructure, the works. All of that is designed to create an investment climate in this country which drives more investment.
We’re expanding our markets, as Birmo knows, the Minister for Trade. From day one, we started doing that. I’ll never forget the first Cabinet meeting, we sat down and Robby came and he set out the trade agreements we were going after. And there was the usual discussion, trade is not always that popular, from a political point of view. There are still some who hold that view, there are still some who will resist trade, as our opponents have every step of the way. But we’ve fought for it and we’ve achieved it and you know today, as Australian households are $8,500 better off every year, every year, because of the trade liberalisation that has occurred over the last generation, in real terms.
Trade has delivered increased prosperity and an increase in the living standards of Australians. That’s why we went after the China Free Trade Agreement. That’s why we went after the Japan Free Trade Agreement. That’s why we went after the Korean Free Trade Agreement. That’s why we went after the TPP-11. That’s why we’ve just concluded discussions on the Hong Kong Free Trade Agreement.
If you stand still long enough, our Trade Minister will seek to do a deal with you on the spot, because we believe in trade.
Yeah, down on Table 6, you’re in a lot of trouble. We believe in trade, we’ve always traded in this country. We’ve always looked beyond our shores for our prosperity and we’ve always realised it. Our Government believes in that. Trade has been a cornerstone of our economic success.
We’ve got a broad-based industry strategy which doesn’t dis, doesn’t dis out traditional industries. I like mining, I think mining is good. I think mining has produced enormous prosperity for this country. And one of the most disturbing things I heard recently, was when I was in Western Australia and I was sitting down with the mining industry and they told me that young people don’t want to become mining engineers anymore because they don’t think it’s a future for them, because apparently mining is a negative industry for Australia. I don’t believe that. I think mining is a good industry for Australia. I will say it here in Sydney, I’ll say it in Townsville, I’ll say it up in Gladstone, I’ll say it up in Western Australia, I’ll say it all over the country. You’ll hear the same message from me about the economy, wherever I am in the country. I won’t tailor my message to the audience as many of you probably know, particular after that post-Budget speech. I won’t, because I believe it’s good for the country.
Agriculture is good for the country and we’re going to continue to ensure we do the right things through trade and our environmental policies which ensure we develop agriculture in this country. But we’re also looking forward and supporting the development of new industries that has enabled our economy to transition.
Our Defence industry spend has been one of the key instruments by which we have been able to enable our economy to transition. As we’ve seen the motor vehicle industry recede we’ve seen a defence industry supply chain built up around this country and it doesn’t matter where you go. You have Penguin Composites down there in northern Tasmania, making the bonnets of armoured vehicles. They used to make kayaks. Or if you’re out with the switch-makers out in Queanbeyan or you’re up in north Queensland around the docks or over in Western Australia over in Henderson. Our Defence industry investments have provided a platform for the transformation of our industries and kept people in jobs.
Equally in this year’s Budget, I outlined our support for the medical industry, whether it’s in clinical trials or new medical instrument technology, these are important areas of development. Our services industries and human services, in aged care, aged care training, our education sectors, our tourism and hospitality sectors, all of these going forward - where are jobs? They’re largely in those human services sectors. But I can tell you that in manufacturing they’re doing well too. 86,000 jobs, 86,000 in the past year have been created in the manufacturing sector. That is, the number of jobs in manufacturing is the highest level since 2010 and in 17/18, growth value add in the manufacturing sector grew by 3 per cent, the fastest increase in a decade. So don’t let anybody tell you that manufacturing is dead in this country, it’s not, it’s just changing. It’s running and it’s driving prosperity for this country. So in all of these sectors and the financial sector, in fintech as we continue to become a world-leader in what is occurring in that sector. We’ve got a great story to tell.
A cooperative workplace is what we want. How on earth do you run a strong economy when you’re setting your employees against employers and you want to run an adversarial system? I mean what sort of an idea is that? How do you pretend to lead a country that you want to divide, in it’s very workplace? The Labor Party’s policies will take our industrial relations system to a throwback to the 1970s.
I mean industrial advocates will have to get around in flares and long hair to match the policy time zone -
Of where Labor wants to take industrial relations in this country. You’d all remember it back then; the fruit rotting on the wharves. The mining suppliers that couldn’t be relied on with our major markets, our mining industry was held back and the resources sector. You all remember the strikes, teachers going out. That’s not the vision for Australia our Party wants for the economy. We believe in cooperative workplaces. You know, when I go around particularly small and medium-sized businesses, I see the cooperation and collaboration and the model for the way our modern workplace should be like. People understand that the success of the enterprise is their own success as well, that’s how we see the future of industrial relations in this country, not a future of conflict. Not a future of division, not a future of entrenched divisions. We need to fight to ensure that doesn’t become the reality.
And a balanced Budget as always, the Budget will be back in balance next year, after more than five years of very hard slog to get it back there. Now, that is not just something to put on the shelf, that is something that will enable us to continue to invest in the services, in the future growth of our economy and the standard of living for Australians all around the country. That’s our plan. We’ve been delivering on our plan, we’ve been rolling it out for five years and we’ve been getting results. Growth with a three in front of it, that’s what I want to see. Unemployment at five per cent, that’s what we have delivered. The strongest growth in youth employment of over 100,000 in 2017/18, the strongest growth in youth employment in Australia’s recorded economic history. How good is that?
You know, if you’ve got a young person in a job by the time they’re 24 – I know this from being the Social Services Minister, Paul Fletcher is here, he knows about this – if you do that, then that’s what I call in rugby league a 12 point turnaround. You stop the opposition story – that is the opposition of unemployment and putting someone on welfare – and you score at the other end, which is putting someone in a job. Because if they’re in a job by that time, they do not get conditioned to living a life on welfare. You want to know why our Budget is turning around? Yes, there’s been improvement Grant you’re absolutely right, in corporate revenues and increased profitability. It’s welcome, we welcome it, it’s fantastic. But it’s also because people have been going from welfare recipients, to taxpayers.
That’s how you turn a Budget around.
That’s how you turn an economy around.
That’s what has been happening in our economy.
So, we’ve seen employment growth. We’ve seen record employment growth. We’ve seen our manufacturing sector doing well as I’ve mentioned. We’ve seen our export sector continue to drive forward. Services exports up 8.8 per cent and we’ll continue to see that happen so long as we keep the focus on growth.
One area I wanted to touch on before I leave you tonight is, you know, the economy is a positive ecosystem, businesses large and small are connected together. Peter Strong is here tonight from the Council of Small Business organisation, as is Michaelia Cash. They both understand that if big business does well, small business does well, if small business does well, big business does well. This is an important connection, we’re all part of the same supply chain. It’s important that works really, really well. That’s why we’ve done the thing that I’ve said.
Increased investment in small business through the Instant asset write off. The small business turnover threshold raised from $2 million to $10 million. Reducing the reporting burden of small and medium-sized business by doubling the ASIC financial reporting threshold. The establishment and getting access to capital through two initiatives, working with our financial institutions to create the Australian Business Growth Fund modelled on the UK experience and a $2 billion investment we’re putting into the securitization market for small business loans, which will enable greater competition in our banking and finical system and get more money that will drive the growth of small and medium-sized businesses into the future. Employee share schemes, which are freeing up and giving more opportunity for employees in small and medium-sized businesses to understand how they can benefit by the growth of the enterprise they’re part of. Angel investing tax incentives which is enable start ups to get off the ground and of course, the capital limited partnerships for early stage venture arrangements which are equally drawing capital into that sector, some $270 million of increased investment coming in. All of that is great. It’s part of our commitment to small and family businesses.
But you know another thing that really makes small businesses light up, is when they get paid. When they get they paid and when they get paid on time. You know, if you don’t pay them on time, it slows the whole show down. You know, in the economy the money has got to move. If you slow it movement down, everything slows down, everybody pays for that. In our economy particularly with the digital economy, as they know at MYOB, these things can move a lot faster than they used to. And they need to, it’s an important productivity driver to ensure that small business is not used as a bank, you know what I mean? If you’re not paying on time, you’re borrowing money from them. If you’re not paying on time to each other, you’re borrowing money from someone else. If we all – government, large business, small business – if we’re all paying on time and we all pay more quickly and we put in place the systems and the procedures to do that, the entire economy does better.
Technology is speeding it up, payment times are improving. Bills though are still paid 11 days late according to the latest data from Dunn & Bradstreet. While we’re seeing signs of improvement - late payment times are reducing 25 per cent in 17/18, that’s welcome – there are still late payments. This might seem a rather micro part of our economy, but I’ve got to tell you it’s incredibly important. Cash flow for businesses is incredibly important and speeding up the payment times is an important, practical way of how we can improve the performance and productivity of our economy.
Trade between small and medium and large businesses totals about $550 billion a year. Healthy cash flow is critical to these businesses. This issue is being consistently raised with us of course, by small and medium businesses, particularly with Michaelia as she’s travelled around the country. For many months people are working already and completed payment terms are being pushed out to 60, 90 and 120 days in some cases. Even loans are being offered to cover extended payment terms. So; “I’ll loan you some money, while I don’t pay you.”
Now, that is not a positive policy in progressive, forward-moving economy.
Michaelia has taken up this important issue and has tasked the Small Business and Family Enterprise Ombudsman Kate Carnell to once again look at it through the 2017 inquiry into payment times and practices. There has been over 1000 responses to that in just the past few days, to give you an idea of how hot this issue is.
This time last year, in the Government’s response into the Ombudsman’s inquiry, we made it clear that we would be carefully monitoring our progress and we’ve been improving. But I want to pay tribute to the BCA for their Australian Supply Payment Code. That has been an important step in changing the payment culture of businesses particularly large businesses in Australia. However it is true – and I was taking note of all of logos up there Grant – there are 139 members of the BCA who have signed up to the voluntary code. Congratulations and well done to you. It currently has 80 signatories though, of those 139 members and so there many more that need to sign up. So, we acknowledge the work you do and we encourage those who haven’t signed on, to sign on.
In our case, we pay our bills on time and are committed to reducing those times further. Our Pay On Time survey showed that Commonwealth agencies paid 97 per cent of their invoices under $1 million within 30 days. The results also show that we’re on track towards our commitment to pay our invoices within 20 days, by 1 July 2019. Over 70 per cent of all invoices under $1 million were paid in 20 days, over 10 percentage points on the year before. And although Commonwealth agencies are performing well, there is room for improvement - until we’re at 100 per cent, I won’t be happy, Mathias won’t be happy, we won’t be happy - because we want businesses to get paid so they can get on with running their businesses. We’re making good progress, working now with our New Zealand counterparts and stakeholders on e-invoicing. We see this as a clear advantage and once implemented, we aim to reduce our payment times for small businesses using this method, just down to five days, just five days.
All levels of Government should set the standard. Now, while all states have clear commitments to pay invoices within 30 days, we think they should do better too. The one state leading the way - which Mike Baird will be pleased to know - is New South Wales. In August they announced they were cutting their payment times for small business down to 20 days by the end of this year. And that was just the start of further commitments to take these payment times down to five days by the end of 2019. Well done to the NSW State Government and we’re challenging all states and territories, this is where I like to see competitive federalism actually help to ensure that that becomes the standard. That’s why I’ll be putting payment terms for state governments and territory governments and the Commonwealth Government on the COAG agenda when we meet in Adelaide in just under a month’s time. I’ll be challenging all the states and territories to match up to the lead that New South Wales has been showing and that we’re also showing in reducing our payment terms to 20.
We’re committed to levelling the playing field and with more transparency for small business and we’ll also, I announce tonight, be developing an annual reporting framework requiring large businesses over $100 million in turnover to publish their payment information. I want people to know who to do business with and people should do business with people who pay on time. They should know who they are and they should be able to make those judgements and I’d like to see that as a positive incentive for businesses to pay more readily. It will cover 3,000 of the largest businesses in Australia, including foreign companies and government entities. Small business will have more transparency, allowing them to do business with better payers. Large businesses will get the benefit of their suppliers and their customers knowing that they play fair and they pay on time.
We are committed to using every available lever to support businesses by pursuing these processes across the supply chain and so we’ll also deliver a new government procurement connected policy, which will require those large businesses seeking to tender to have satisfactory payment times in line with the Government’s pay on time policy of 20 days. So if you want to do government work, you’ve got to pay your suppliers and you’ve got to pay your contractors on time within 20 days. They’re the standards we’ll be requiring of those who want to work with the Government.
We will do more to help small business compete for government contracts also, in addition to the Government’s existing 10 per cent procurement commitment to SME’s. The Government will set a new 35 per cent target for SME participation in contracts up to $20 million. A stronger small and medium sized business sector is good for the members of the BCA in this room. It means you’ve got dynamic, innovative, agile, responsive members of your supply chain.
I always remember talking to Alan Joyce and he talks about thousands upon thousands upon thousands of small and medium sized businesses that makes QANTAS the best airline in the world. It’s not just the people that work for QANTAS - and I love them because I have more QANTAS employees in my electorate than any other electorate in the country, love QANTAS, love QANTAS.
But QANTAS is made great not just by the people who work directly for them, but for all those people and all those business who drive their supply chain for a great airline. All the large businesses are the same. You are great because of the people you work with, the people who work for you. You know that and I think it will be a major boon for our economy if we just set those standards and meet them. Work with all those businesses, give them the headroom, give them the space they need. Give them that cash-flow advantage. Give them that sense of confidence, that shot in the arm to see the money go into the account when they go and check it, and they check it pretty often as you know. I think that will make our economy stronger.
It may seem like a small thing to maybe those who are listening tonight in some way, shape or form. But it’s going to make a big difference and the reason I have decided to raise that with you tonight is because it takes these things to make a stronger economy. It takes a Government that actually understands that access to finance, that reducing regulation, that reducing taxes, that increasing payment arrangements to be supporting cash flow of businesses across the supply chain. We get it, that that’s what makes a stronger economy. And why do we want to do that? Because if I’ve got a stronger economy, if we’ve all got a stronger economy, then we all have the essential services that make us the greatest country on earth. That’s what the next election is going to be about. I’m not going to give you the other side of the partisan speech which will talk about our opponents. There will be plenty of time for me to do that.
I simply ask you one thing tonight; stand up for a stronger economy. Stand up for a stronger economy. What we’re doing is to make our economy stronger. A stronger economy is good for your bottom line, it’s good for the dividends, it’s good for the profits, it’s good for employees, it’s good for communities. There’s a choice at this next election; a stronger economy, or higher taxes. I know which one I’m backing, and I look forward to your support.
Thank you very much.