Australian Government coat of arms

Prime Minister of Australia

The Hon Malcolm Turnbull MP

Address to Back to Business Lunch for Business SA

10 March 2016

Adelaide

Prime Minister

E&OE

PRIME MINISTER:

Well thank you very much Nick and thank you Nigel McBride, the CEO of Business SA.

It’s always good to be in South Australia and indeed here in Adelaide, where I’ve been for the last few days. And it's good to be here with my Federal colleagues Christopher Pyne, Simon Birmingham, Matt Williams and David Fawcett, as well as the Deputy Premier Mr Rau and Liberal leader Steven Marshall and their parliamentary colleagues.

The Chamber’s new logo and the theme of your summit, I'm wearing your new logo, Back to Business, indicates determination and optimism and you are right to be enthusiastic.

My Government's focus is to ensure that our economy continues its successful transition from one driven by the mining construction boom to one that seizes the opportunities of these, the most exciting times in human history.

Never have we seen before such global economic growth in both scale and in pace. It has been super charged by technology and the opportunities have never been so great.

There has indeed never been a more exciting time to be an Australian.

But to succeed in seizing those opportunities, to continue that successful transition, we need to be more innovative, more competitive and productive.

We need to ensure that our defence dollar, not only strengthens our armed forces, but serves to build up and expand our local defence industries.

At every level from the big manufacturers to the technology start-ups, because those start-ups will one day become big companies and that is the path of entrepreneurship and enterprise which we must support.

We need to ensure that Australian children acquire the digital skills and literacy of the 21st century, that our great academic scientists and engineers better collaborate with industry and that investment and entrepreneurship is encouraged.

Every lever of our Government is pulling in that direction.

When it comes to the big economic decisions, we will get them right.

We announced yesterday that the ARTC will fast-track a major upgrade to the east west national rail network, 1,200km of 50 and 60-year-old rail lines will be replaced to take heavier loads between Adelaide and Tarcoola and at faster speeds.

This boosts productivity in South Australia and indeed in the whole national freight network.

It also provides a very large order for steel to the Arrium Steelworks in Whyalla and will help ensure its continued operation and viability.

Now this week, I also join the Industry and Innovation and Science Minister Christopher Pyne to announce that the National Centre for Defence Industry Capability will be based here in Adelaide.

This $230 million centre, which is due to open in the second half of this year, is a 10-year commitment from our Government for more jobs and economic growth across Australia and here of course in Adelaide where it will be headquartered.

The Defence White Paper is the first fully costed and externally verified Defence White Paper and its investment plan is all about tapping into and driving industry, innovation and technology.

It also picks up on one of the key themes from our National Innovation and Science Agenda, collaboration.

The centrepiece of our naval ship building plan will be a continuous build of surface naval vessels centred around the construction of the future frigates to be built here in Adelaide. Overall we will be creating 2,500 Australian ship building jobs.

The submarine force will be increased from 6 to 12 boats. The results of the competitive evaluation process relating to the submarines will be announced in the course of this year.

Significant work is going to be done, continuing to be done in Australia.

We've already announced 500 dedicated jobs in the new submarine project for combat system integration, design assurance and land-based testing.

We'll spend almost $600 million on upgraded facilities in the Edinburgh Defence Precinct and we'll upgrade the Woomera Range Complex and Cultana Training Area.

As Defence grows, communities will grow. Their economies will expand and jobs will be created, particularly in South Australia and across regional Australia.

Last week we saw real GDP, a measure of the growth of our economy, grow by 3 per cent in the December quarter from a year earlier.

Our annual growth is faster than any of the major economies in the G7 and well above the OECD average.

We are making a transition from a mining construction boom led economy to one with more diverse growth; to one with more export-oriented diverse growth.

In 2015, we saw more than 300,000 new jobs created, the strongest growth in a calendar year since 2006, the last full year of the Howard Government and of course well before the global financial crisis.

South Australia, too, despite the challenges, you recognise is heading in the right direction with the jobless rate down from 7.9 per cent in June 2015, to 6.8 per cent in January, still too high but the trend is the right way.

At this vital moment, I regret to say that our political opponents are standing in the way of progressing to the new economy and the jobs of the future. They are getting the big decisions wrong.

Take Labor's policy to limit a person's ability to offset investment losses against their wage or salary, personal income, professional income to new residential housing.

Under Labor, you effectively will not be able to negative gear a new investment in established residential housing or commercial property or indeed shares.

It's an extraordinary restriction on economic freedom and it's not just a policy aimed at improving housing affordability, as has been suggested.

This is a policy that will affect a broad range of sectors of the economy, not just the housing market, without having any idea of what its overall impact will be.

And that's what happens when you develop tax policy on the run, it's how you make very big mistakes.

The path to new enterprise, the path of entrepreneurship, more often than not, involves somebody who starts off in life with just their human capital.

They get a job, they get some income for their personal efforts, they borrow some money, they take a risk, they capitalise a new business.

How many of us in our business careers have walked down that road?

Labor is going to make someone in that situation unable to deduct the interest on that personal loan against their wage and salary income.

So that would apply if you wanted to invest in a shop or a business, a cafe or a restaurant.

Labor is also proposing to increase the capital gains tax by 50 per cent and that’s across the board, not just on housing.

It’s not a housing affordability strategy, it’s an anti-investment strategy.

If you want people to do less of something you tax it. That’s why we tax tobacco heavily. If you want people to do more of something you lower the tax, that’s why we have capital gains tax exemptions for investing in early stage startup companies. That’s why we have tax breaks for research and development.

So when Labor seeks to increases the tax on capital gains by 50 per cent it is acting clearly and with eyes wide open to discourage investment. It is a policy calculated to discourage investment. It will substantially reduce the rewards for investment and so there will be consequently less investment.

Now right now my friends we believe in our Government that Australia needs more investment, not less.

We need to build on the optimism and the confidence we’re already seeing in the economy and everything we are doing is calculated to deliver more of that.

Regrettably, Labor’s plans will inevitably undermine property values, increase rents, discourage investments and obstruct entrepreneurship.

We’ve also reintroduced legislation, our second attempt to get the support of the Senate to re-establish the Australian Building and Construction Commission. That bill together with another twice rejected by the Senate would implement the substance of the recommendations of the Trade Union Royal Commission

Australia’s construction industry employs more than a million people and it is at the centre of our competitiveness.

It’s essential ensuring that construction is competitive is absolutely vital for our economic growth.

Yet here in South Australia alone, the Court has found repeated breaches of the industrial law by the CFMEU, the same pattern of lawlessness set out in the evidence before the Royal Commission.

And how does the Labor Party react?  Well, they stick their heads in the sand and say, ‘nothing to see here’.

Our two bills rejected by Labor and the Senate seek to achieve just this: the restoration of the rule of law to the construction sector and ensuring unions and employer associations have the same obligations of accountability and transparency as the companies of which many if not most of you are directors.

If those bills became law and we urged the Senate to pass them, the big winners would be the members of the unions, the workers, they would be the winners, just as greater transparency, greater accountability in the corporate sector delivers benefits for shareholders, the stakeholders in those institutions.

Now just as our natural resources have given us a big edge in the past and will continue to do so, our human resources will do the same in the future.

Our Government’s $1.1 billion National Innovation and Science Agenda led by our redoubtable South Australian Minister Christopher Pyne, will drive cultural change to encourage smart ideas.

We will support greater collaboration between industry and researchers, nurture talent and skills, encourage Australians to be more confident, take a risk and learn from mistakes and get Australian investors to back them at an early stage, at the highest risk stage.

Our tax incentives will support businesses that take risks and innovate.

Our legislation to help startups access early stage capital will be introduced into the Parliament next week.

We’re establishing two new co-investment funds so government can partner with the private sector to back in early stage ventures.

South Australian company Fluoro Medical’s revolutionary foldable splint is a great example of collaboration between industry and research.

State and federal funding means Fluoro Medical can work with manufacturers to produce their waterproof splints in large quantities and their workforce will grow from four to 25 in the next year. That’s the type of growth we want to see.

The Innovation Agenda will make sure Australians have the skills they need to prepare for the jobs of the future and particularly provide greater pathways for women in the critical areas of science, technology, engineering and maths.

We’re supporting more coding and computing in schools, to ensure our students have the problem-solving and critical reasoning skills for 21st century careers.

The Government, people and businesses in South Australia are already partnering with government successfully to create new opportunities for this state.

Adelaide-based Heliostat SA, a new division of the auto parts maker Precision Components, now employs former auto industry workers in a major renewable energy export opportunity with Japan.

They’ve been assisted through a $1 million investment from our Automotive Diversification Programme.

Seeley International, which was established in an Adelaide suburban garage in 1972 by Frank Seeley AM, is now fast tracking the development of a next-generation evaporative cooler.

It’s also increasing operations at its Lonsdale factory, with assistance under our Government’s Next Generation Manufacturing Investment Programme.

And Philmac one of my favourites as examples, an 85-year-old manufacturing company making plumbing fittings. Doesn’t sound very high tech does it? Doesn’t sound like the cutting edge of technology but this is why innovation is for everybody. Philmac has built itself a niche in the global plumbing market.

It's innovating, it’s expanding exports. It's the leader in its particular section of that market globally and it's growing its workforce from over 300 by another 10% and it's getting help under our manufacturing transition program.

But it's a great example of what Nigel was talking about earlier, the importance of innovation. Don't be victims of this big global economy, recognise it for the opportunities.

These are the most exciting times to be alive. They're the most exciting times to be a South Australian.

It is exciting to see these massive markets open up, in large part because of the free trade agreements that our Government and our great Trade Minister, Andrew Robb, has negotiated.

But you have to have the confidence and preparedness to do things differently and any industry can do it. As traditional as making plumbing parts, as old as agriculture or the latest tech startup with the latest technology for the most sophisticated defence capability.

Right across the board, confidence, passion, innovation, ingenuity, that's what drives you ahead, that’s where the jobs are in the 21st century.

Now currently, about 20 per cent of this state’s merchandise exports are destined for China.

China will progressively remove tariffs of up to 20 per cent on all dairy products. Korea and Japan have agreed to large duty-free quotas for products like cheese.

The FTAs mean reduced transaction costs for South Australian meat producers and processors.

South Australian wine producers are also big winners.

We were talking with some of your leading winemakers a few nights ago, 71 per cent growth in exports to China year-on-year. That's the type of growth we need to those big growing middle class markets in Asia.

Tariffs on all South Australian seafood is being phased out.

These are the South Australian products that the Asian middle class is crying out for. Their consumers want world-leading education and financial services, fine wines and fresh food, overseas holidays, art and fashion.

We will connect producers with their markets, increasing South Australia's productive capacity and that's why we've committed $2.9 billion to South Australia over 5 years for land transport. Some $1.7 billion of that will help complete the North-South Corridor creating 1,330 jobs.

The $1 billion National Stronger Regions Fund has funded projects like the $9 million upgrade to the Kangaroo Island Airport. The island can then take full advantage of the rise of domestic travel to South Australia, which was up 7.7 per cent in the year to September 2015 and 13 per cent in regional South Australia.

And that's all good news for your tourism industry, which employs 57,000 people directly and indirectly across the State. Connecting businesses as well as students and communities, households isn't only about new roads and bridges, it's also at the centre of the National Broadband Network.

We inherited, as you know, in 2013 a failed project and one which in South Australia and indeed Western Australia, had ground to a complete and utter halt. This however is one of those rare cases where a bad project, because of improved management and leadership, gets better and not worse.

By the end of this financial year the NBN will be available to nearly one in four households and by June 2018 will be available to three in four. By the end of 2018, more than 800,000 South Australian homes and businesses will be able to connect to the NBN, or have the NBN under construction.

So we need to have and we do, a policy environment that makes it easier for business and entrepreneurs to take risks and be the new sources of growth and jobs that we need.

We support Australians to seize those new opportunities with vigour and with energy and we will see the wonders that they will create with them.

We are backing Australians. We are in favour of enterprise, investment, infrastructure entrepreneurship. Innovation, every lever of our Government is pulling in that direction. That is what we're seeking to achieve.

Regrettably as I said and I say it plainly, factually and without rancour, our opponent's policies are absolutely calculated to set us on a different course.

Our Government, the Australian Government will work with the businesses, the people and indeed the Government of South Australia to ensure that your economy continues to be more innovative, your businesses more imaginative, more competitive and more productive.

My friends, this is a great time for us all. Yes there are challenges but believe me, the pace and scale of economic growth around the world is utterly without precedent.

Forty years ago, China was not part of the global economy, or an impoverished autarky, closed unto itself.

Now it is by most measures either the largest or the second largest national economy. The transformation has been extraordinary and it is not just in China.

The transformation in East Asia, in our very region, has now reached the point where half of the world's middle class are living in our hemisphere.

This is a remarkable change. The opportunities have never been greater.

Christopher Pyne and I talk about the successor to the mining boom as being the Ideas Boom and so it is.

Let me say to you, most booms come and go. The Ideas Boom will last forever if we recognise that it is bounded or limited only by our imagination and our enterprise.

As long as we are prepared to dream and as long as we are prepared to work to make those dreams into reality and I believe we will, my friends, our future, our Ideas Boom will be stronger year after year.

This is the greatest time to be alive. This is the greatest time to be an Australian.

Thank you very much.

Ends