Thanks Robert [Regan, Corrs Chambers Westgarth] for hosting us and for the very kind introduction. I hesitate to point this out but you omitted something very important: my membership of the Logan Chamber of Commerce. And now when I tell them at the June meeting that they got a mention at the ACCI post-Budget reception they’ll be very pleased.
To James [Pearson, ACCI] thank you for years of engagement, first out west and now at ACCI, spread out over a couple of different roles in both our cases. Nice to see you and to see the Sydney business community represented here. I appreciate you all making the time, and I look forward to some questions on a panel shortly.
In the highly-charged and hotly-contested days and weeks after a federal Budget is handed down, I’ve detected a sense of appreciation – if not downright relief – when we start a contribution like mine tonight with the things that we actually agree with the Government on.
For example, we’ve said we’ll vote for the 1 July tax changes if they put that in the parliament split off from the subsequent stages. We’ve said we support the extension of the instant asset write-off for small business, a policy we designed and introduced in the first place. We support tax cuts for genuinely small businesses. We’ve indicated our in-principle support for some, if not all, of the multinationals, superannuation and black economy measures though reserve the right to consult on the details and do more if that’s appropriate. We enthusiastically support the new listings on the Pharmaceutical Benefits Scheme.
More broadly, of course we all want to see the economy grow; we want you to create more and better jobs; we’d all prefer not to have to spend billions of taxpayer dollars servicing record levels of debt which doubled over the last five years despite positive global conditions.
We can agree on all that. But we diverge from there because, from our point of view, the current policy settings in last week’s Budget don’t actually serve those objectives.
As a country, we’re not paying down debt fast enough; not growing the right way; and not making the most of our opportunities.
When the world’s economies are surging forward, we are underperforming. Our growth is not what it should be, below trend and below expectations; our labour market weaker than the headlines suggest once you consider underemployment and insecurity and the impacts of stagnant wages growth on demand in the broader economy.
We haven’t noticeably shifted the dial on debt despite something like $40 billion of new receipts in the Budget, courtesy of the best global environment for a decade or so. We still have record net debt, twice what this Government inherited, and gross debt over half a trillion dollars for the next decade at least. We’ve gone from leader to laggard in Budget repair, compared with the other major developed economies.
We over-performed when the world was weak and now underperform when it is strong. And hollowing out investment in our people – our stores of human capital – as the Budget does, will make the situation worse, not better.
It’s one thing for the Turnbull Government to fail the fairness test Labor and the community has set for it. Quite another to fail its own tests by underperforming on the three things the Treasurer says matters most to him: growth; jobs and debt. The Budget won’t make Australia fairer, more productive, or much more resilient. On each front, disappointment.
We take our responsibilities as the alternative government very seriously, and to be viable we know need to do more than point out where our opponents have fallen short. We need to present a coherent and viable alternative approach to the Budget. That’s what we’ve done and what we are doing. We’ve shown we can be fairer than our opponents – and I think that’s well-established – our focus is on demonstrating we can be more responsible as well.
Part of that means supporting business in a way that gets value for money; in a considered, affordable and targeted way. That’s why we announced the Australian Investment Guarantee to give tax relief to companies investing onshore and why we’ve taken other smaller but no less important steps in areas like levelling the playing field for 23,000 independent mechanics or ensuring Australian businesses get a bigger share of the billions of dollars governments spend on procurement. It’s why we’ve made room in our alternative budget to invest in a more skilled workforce and more productive infrastructure.
We contrast that approach with the Government’s one-point plan for a company tax cut, which will see the lion’s share of $80 billion or more spray around overseas in the form of executive salaries, share buybacks and puffed-up dividends. The Treasury’s own modelling shows the benefits of this approach to be negligible at best and way down the track. There are no guarantees the proceeds of such a big outlay will be invested here.
There’s nowhere near enough bang for so many bucks foregone.
It’s unwise and it’s unaffordable, and it’s unfair as well and we can do better.
The argument over fairness has largely been fought and won, at least since soon after the 2014 Budget. Now I believe Labor is winning the argument over responsibility.
Not just because our opponents have doubled net debt; been the only Government to own half a trillion dollars in gross debt; and accumulated debt faster in good times than its predecessor did in a term that included the GFC. But because of the strength of our alternative.
Just yesterday, Chris Bowen’s post-Budget hit-out at the Press Club committed us to some quite strict budget goals to guide our decision making before and after the next election. They are: achieving budget balance in the same year as the government; delivering bigger cumulative budget surpluses over forward estimates as well as substantially bigger surpluses over the medium term; and dedicating the majority of savings raised from our revenue measures over the medium term towards budget repair and paying down debt.
Once in Government we’ll be guided by principles including: repairing the Budget in a fair way that doesn’t ask the most vulnerable Australians to carry the heaviest burden; more than offsetting new spending with savings and revenue improvements; and banking positive changes in receipts and payments from changes in the economy to the bottom line.
When we meet these goals, apply these principles and implement our substantial plans to reform tax concessions we intend to make a substantial contribution to putting the Budget on a more sustainable, structural footing.
We are very concerned that the latter stages – certainly the final stage – of the Government’s income tax proposals repeat the mistakes made in the second half of the Howard-Costello period in office, when big permanent tax cuts were committed during a temporary spike in revenue. We’ve seen this movie before, and it ended with big structural damage done to a Budget which is only just now recovering.
We can’t afford a sequel. Not with such thin and vulnerable surpluses forecast for the years ahead, with so much geo-political uncertainty, and so much debt.
So right across the Budget, including when it comes to those take cuts, we will shoot for fairness and responsibility. Investing where we can do the most good for inclusive growth and employment, and doing what we can to pay down the record debt we could inherit.
No Opposition has done more work on being more responsible or more ready. We are proud of the approach we’ve taken to the economy, and to the Budget, and I look forward to discussing it more with you tonight and in the weeks and months to come.