Speech to the Institute of Public Accountants, Great Hall, Parliament House Canberra
Our Budget is a crucial part of our Economic Action Strategy that aims to build a strong, prosperous economy for a safe and secure Australia.
It is a Budget that calls on every Australian to create opportunities, to nurture economic growth and to ensure that we have secured brighter prospects for our future.
It sets out a path back to surplus and slashes projections for debt, which means the money that we ask from each of you as taxpayers, won’t be wasted on interest payments that can help otherwise to be building our future.
The budget also presents all of the usual financial details Australians, ones that you would rightfully expect, but with an honesty and integrity that has been lacking in recent years.
There aren’t these herculean optimistic forecasts on which a budget is built, where fictitious revenue streams are not only identified but committed and locked in, creating a budget trajectory that gets itself out of control.
Those frank projections are consistent from the projections presented in the mid-year fiscal and economic outlook.
They represent an honest and genuine account of our circumstances and anticipated trends in our economy, not a bottom line that was opportunistic and desired for media purposes like the previous Government, but one that was credible, realistic, took real account of the transition going on within our economy, to build a credible and solid foundation from which to project forward what our expenditure and economic strategies need to be.
In this building some five years ago, when the second phase of the Labor stimulus package was being debated at 3am, there was an eloquent contribution, or so at least said the Sydney Morning Herald. To my surprise, it was actually from me.
The point I was making about time was that the Coalition was seeking to ensure that the nation wasn’t sleepwalking into a poorly designed, irresponsible and unsustainable package dreamt up by a panicked government.
I said at the time, the only certain outcome from the package that was being pushed through, rammed through the parliament, is waking up to the nightmare of decades of excessive debt and deficit.
Sadly, that is what has occurred and the budget last night was not only a wakeup call about the trajectory that our nation had been placed on, but a call to action to change to make a more sustainable, a more credible, more predictable and sound progress and pathway for our future.
We’ve had to come to terms with what we’ve inherited. There is that joke when a person is asked to get to a particular cathedral and the answer is ‘well I wouldn’t have started from here mate.’
But start from her we have and the country has inherited those burdens that we foreshadowed some years ago.
That economic mismanagement, that era of missed opportunity – we need to accept and deal with. We need to deal with the circumstances we find ourselves in.
As the Treasurer said last night “doing nothing is not an option. The days of borrowing and spending must come to an end. It is time, for all of us, to contribute and build.”
Now the job of repairing the budget is the responsibility of all and we aim to share that heavy lifting amongst all within the community and across the economy.
The Budget takes steps to ensure the Government is living within its means, and to rein in the age of entitlement.
As many of you would know our economy is facing considerable challenges over the medium and longer term.
The decline in our terms of trade is likely to be extended beyond the forecast period, while the rising proportion of our older citizens will lead to lower labour force participation, further constraining per capita income growth.
Confronting these challenges requires faster productivity growth.
Our Budget supports stronger and more sustainable economic growth in the medium term and does not place further pressure on the economy’s transition to a broader based growth in the near term.
We understand the importance of confidence and that’s why we are seeking to ensure that this transition is handled with care and clarity but with a purpose about what the longer term objective and what the needs of our nation are.
Government expenditure is being redirected to more productive uses, such as expanding infrastructure investment, and the Government is introducing new measures to encourage greater workforce participation.
By getting government finances under control and laying out a credible plan for fiscal repair, the Government is providing businesses and households with the certainty they need to invest in their future.
Our Budget will also help to keep interest rates lower over time by reducing the public sector’s call on resources, while rebuilding the Government’s flexibility to respond to adverse shocks in the context of a volatile global economy.
The Budget takes a significant step in transforming the role of government.
But don’t just take my word for it. We’ve seen an encouraging response to our Economic Action Strategy that was announced last night.
The Business Council of Australia said: “Working from a very difficult budgetary starting position, the Government deserves credit for taking important steps to confront the long-term challenges Australia faces for an ageing population.”
Infrastructure Partnerships Australia said: The Commonwealth budget strikes a solid balance between the short-term pain of budget reform and the long-term national interest, because it frees up the funding needed to invest in economic infrastructure to safeguard the economy.
The Australian Chamber of Commerce and Industry said: “The budget goes a long way to restoring all important business confidence that will drive investment and job creation, particularly for Australia’s two million small businesses that employ some seven million people.”
So, as we as a Government have said the Budget is part of the evolution toward providing enhanced opportunities for all Australians.
The Budget redirects taxpayers’ dollars from unaffordable consumption today to productive investment for our future. It will do this while supporting our citizens that the most vulnerable and beginning the task of ensuring that our Government lives within its means.
The Budget delivers structural reforms that will facilitate growth in living standards while not placing additional near term pressure on the economy.
The decisions embodied in the budget last night improved the underlying cash balance by $36 billion over the five years to 2017-18, including $18.5 billion in 2017-18.
The size of government has been substantially reduced over the forward estimates, with the ratio of payments to GDP falling from 25.9 per cent in 2013 14 to 24.8 per cent in 2017 18, with further reductions projected out to 2024-25.
The budget repair strategy is designed to deliver budget surpluses building to at least 1 per cent of GDP by 2023 24. It’s not overnight, that transformation would have been too harsh and too much of a shock that there is a clear plan and conviction to achieve the 1 per cent GDP surplus by 2023-24, with the Government more than offsetting all new spending measures with decisions to reduce spending elsewhere in the budget.
We have been able to achieve this through a number of methods including a temporary budget repair levy, a reduction in the footprint of government, an infrastructure growth package and a range of other initiatives.
As I said earlier from 1 July 2014 until 30 June 2017, there will be a Temporary Budget Repair Levy of 2 per cent on individuals’ taxable income above $180,000.
This measure will raise an estimated $3.1 billion over the forward estimates period. Which means an individual with taxable income of $300,000 a year will pay an additional $2,400 in tax for each of the next three years.
The public sector will be streamlined to focus on the areas where Commonwealth Government involvement is necessary.
The Government has an ongoing process, including in Budget measures, the decision to abolish 70 bodies, boards, committees and councils, which will create greater efficiencies within the public sector and streamline accountabilities.
Rigorous scrutiny of government programmes has seen a reduction in red tape, with 50,000 pages of regulations abolished and more to come.
The Government will conduct reviews into future ownership options for Australian Hearing, the Defence Housing Authority, the Australian Securities and Investments Commission Registry function and the Royal Australian Mint.
In the area of health the taxpayer currently funds 263 million free services a year under Medicare.
The numbers show this is clearly unsustainable.
While many Australians already contribute to the cost of visiting their GP, from 1 July next year, the Government will be asking all Australians to contribute to their own health care costs.
Previously bulk-billed patients can expect to make a contribution of at least $7 to the cost of most visits to GP and out-of-hospital pathology and diagnostic imaging services.
I know Labor has had a lot to say about this issue. The Shadow Treasurer and the Shadow Assistant Treasurer are at logger heads over this issue.
In 2003 Andrew Leigh, the now Shadow Assistant Treasurer said and I quote: “There’s a better way of operating a health system, and the change should hardly hurt at all. As economists have shown, the ideal model involves a small co-payment – not enough to put a dent in your weekly budget, but enough to make you think twice before you call the doc. And the idea is hardly radical.”
The other measures around the infrastructure growth package will activate an extraordinary investment and improvement in our infrastructure.
You’ve seen incentives put before Commonwealth, State and Local Governments to look at their own assets to see what they can do to build over $125 billion of additional infrastructure.
The package includes an Asset Recycling Initiative that will provide financial incentives to State and Territory Governments to sell existing assets and reinvest the sale proceeds into additional productive economic infrastructure.
This initiative has the potential to catalyse close to $40 billion of additional investment and contribute to the creation of a strong pipeline of projects.
The company tax cut will be of advantage to many small businesses structured through an incorporated body.
The Small Business and Family Enterprise Ombudsman has been designed to deal with dispute resolution, advocacy within government, to ensure a more small businesses friendly approach by our regulators and a single entry point to get information about Government assistance.
The Government has also provided $2.8 million over four years to assist small businesses to access the Commonwealth procurement market. This is an important area of work that is often too difficult to navigate and overwhelming in terms of the conditions imposed upon those seeking some of the Government procurement action.
$1.4 million over four years has also been provided to the ACCC to support the extension to small businesses of unfair contract provisions currently available to consumers.
The Restart programme will provide an incentive, a payment, a subsidy of 10,000 to employers to hire eligible mature aged people.
There are a range of other measures that are designed to support enterprise and the longer term economic prospects of our country.
It is about the sustainability of our financial position and about real growth and future opportunities for our nation.
You’ve called for longer term thinking in Government for years and you’ve asked why our national leaders won’t take a longer term perspective? Why is it about tomorrow’s headlines, when our next generation’s future seems to be less prevalent in the discourse and discussions in this building and elsewhere.
Well we’ve done that, we’ve taken a longer term view and we are investing in our future and we ask you all to help make a contribution.
Last night was a significant moment – the nation decided it will change track.
We will work to secure our future and our prospects not only for the citizens today, but for our nation’s future.
We will all have to make a contribution and I’m grateful for the advice and counsel that many of you give me.
I hope we can count on you being part of the work ahead to make our nation all it can be.
Thank you for your time.