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Address to the Australian Chamber of Commerce and Industry Annual Business Leaders Dinner
Well thank you very much Terry, what an interesting night. I’m sure everybody is focused on the agenda tonight and not paying much attention to what’s been happening in the United States.
Let me say before I have some prepared remarks here which I’ll come to in a moment, but let me say firstly how pleased I am to be here tonight at the Australian Chamber of Commerce and Industry. So many of my Parliamentary colleagues and Cabinet Ministers and Ministers – we understand that what you do, your enterprise and your entrepreneurship is what creates the jobs, the opportunities, builds the great horizons for Australians. So we, Terry, you can rest assured I think you know that - I think you may have been in doubt about our ability to deliver all of our agenda given the Parliamentary environment but I don’t think any of you or your members have any doubt about our commitment.
Let me say a little bit about the result, the election result in the United States.
A little earlier tonight I spoke to the media and appeared on 7.30 Report and congratulated President-elect Trump on his win.
This has been a very extraordinary election campaign in the United States, he acknowledges that. By all and not by least among whom are the participants and we convey our very best wishes to Secretary Hilary Clinton for her very hard fought campaign.
And I know that the intensity of that campaign, not to speak of its length – I might say we complained about an eight week campaign here, this campaigns gone on for two years. There is a lot to admire about the United States but the length of their election campaign is not something we should seek to emulate. The five weeks seems a good period to me, the traditional period.
I know there has been some concern in Australia and indeed around the world by the confronting intensity of that campaign.
It’s instructive to note that President-elect Trump has tonight in his first remarks, praised Hilary Clinton, thanked her for her service to the American nation, reached out to all Americans, including those of course that have not voted for him or his Party. He also reached out to all nations and you can see that from his point of view, he’s seeking now to move from the campaign to administration.
I think it was Mario Cuomo who first said, “We campaign in poetry” – you may not regard this campaign as being essentially poetic – “We campaign in poetry but we govern in prose.”
And the market’s reaction was initially, clearly one of grave concern, but I think that was in large part because the result was so unexpected. I think it is – I don’t think there was any pollster or media pundit that predicted the result. So that – there was a complete uniformity in being wrong as it turned out. And that always shocks markets – markets don’t like surprises.
Now as far as our nation is concerned, we should be reassured by this - we have strong and enduring national interests in common with the United States. And they have continued and persisted through many different administrations, different personalities, different secretaries, different congresses. Our national interests bind us together, we have common values, common goals.
Both of our nations are committed to the maintenance of peace and stability in the world, especially in our region where the presence, the powerful presence of the United States has been such a force for stability for so many decades. Indeed our prospects and that of our region – the fact that billions of people have been lifted out of poverty, has been a consequence of that stability – some people describe it as the Pax Americana, others might argue whether that’s a little strong but nonetheless, without that strong presence of the United States for those 40 or more years we would not have seen the extraordinary growth in China and of course all the countries of the region.
Now that has been manifest in the worlds interests, manifest in our interests, manifest in Americas interest.
And as Paul Keating often used to say quoting Jack Lang: “In the great race of life, always back self-interest because you know it’s trying”.
I have no doubt that the United States under President Trump will pursue its enduring national interests and its enduring values, which we share. Just as his predecessors have done, despite differences of political view and perspective, from a domestic-American point of view, and just as his successors will do in the decades to come.
Now turning to this evening, I want to talk about the era of opportunity that we bear. I want to welcome you all to this amazing hall, the Gandel Hall here in this magnificent library which houses so many of our nation’s treasures.
Now, this year’s budget and its centrepiece, our National Economic Plan was avowedly focused on policies which will drive economic growth.
It’s exactly what we need.
Every element of our National Economic Plan is assessed according to how well it would help us transition our economy from a mining construction boom to a more diversified economy. And we are methodically implementing every element of that plan.
As a result of our National Innovation and Science Agenda, Australia’s great entrepreneurs are starting new businesses while many of those who’ve left our shores have come back. And companies are accessing capital under our tax incentives for early stage investors. The Treasurer estimates that our Enterprise Tax Plan, of which Terry spoke a moment ago, which will eventually reduce the tax rate to 25 per cent for all companies, will boost GDP by more than one per cent over the long term. Our personal income tax cuts
Our personal income tax cuts which apply from the 1st of July will increase the upper threshold of the 32.5 per cent bracket from $80,000 to $87,000. So more than half a million hardworking Australians will continue to pay the 32.5 per cent marginal tax rate instead of being pushed into the higher 37 per cent marginal rate over the next three years.
And our Omnibus Savings measures, together with the increase in the tobacco excise, are expected to improve the budget bottom line by $11 billion over the forward estimates.
Our changes to superannuation are expected to raise a net $3 billion in revenue over the forward estimates. They will make the superannuation system more flexible, fit for purpose, fairer and more sustainable.
And we continue to make record investments in infrastructure, education and health.
Now as Terry noted, another top priority is the passage of the legislation to re-establish the Australian Building and Construction Commission and to strengthen the governance of registered organisations - both trade unions and employer groups.
These vital economic reforms have already passed the House and we hope to secure the support of the crossbench in the Senate to see them passed. We still encourage Mr Shorten and the Labor Party to support them. Surely the political wing of the Labor movement has a vested interest in seeing the rule of law apply to the union movement.
My Government also recognises that Australia’s defence industry is a key driver of economic and national security. And we have done more to support it in months than Labor did in their entire six years in Government.
We have elevated the minister responsible for Defence Industry to Cabinet level - we are developing a sovereign defence capability and job creation plan to support it.
Since then, our achievements include the commencement of our naval shipbuilding plan, which will see the commissioning of 54 naval vessels, all to be built in Australia, the approval of the first commercial contract between the Government and DCNS in relation to the future submarine program, the selection of Lockheed Martin as the Capability systems integrator for the future submarine program, the announcement of the restructure of the Australian Submarine Corporation, ASC to turn it into a world-leading defence company, and Securing our position as the Asia Pacific regional hub for maintenance, repair, overhaul and upgrade of componentry for the Joint Strike Fighter.
My Government is also building on the success of our three North Asian free trade deals.
We have recently secured a comprehensive update to our free trade agreement with Singapore, which will drive unprecedented economic integration with our fifth largest trading partner and foreign investor.
The agreement includes new measures intended to improve mobility for business people like yourselves, give better access to government procurement, reduce red tape and make it easier for Singapore to invest in Australia.
It also involves – I see Warren Entsch here from North Queensland, far North Queensland in Warren’s case, but it also includes $2.25 billion of investment in defence infrastructure, Shoalwater Bay and Townsville as part of the enhanced collaboration with Singapore’s defence forces who train and exercise in Australia.
We are also engaged with Indonesia and are we’re optimistic that we can complete an enhanced trade agreement with Indonesia by the end of next year.
We are putting real energy in to broadening our commercial relationship with India.
And my Government continues to work on delivering an ambitious regional comprehensive economic partnership agreement with 16 countries in our region. A successful RCEP deal will further embed Australia with the dynamic economies that are our neighbours.
All of these policies are designed to help repair the budget, support enterprise, drive growth, generate better, higher paying jobs - building upon our strong recent economic performance.
Our economy grew by 3.3 per cent over the year to June.
This is faster than any of the G7 economies. Growth has been broad based, with activity in the non-mining sector expanding by 2.7 per cent over the year.
Exports are 9.6 per cent higher than a year ago, marking the strongest export growth since the Sydney Olympics.
Over the year to September 163,000 jobs were added. Consumer confidence has now been above its long run average for 28 weeks in a row.
Business confidence, according to the NAB Monthly Survey, is at plus 4 per cent, 4 points, and business conditions are at plus 6 points.
Among small to medium enterprises, business conditions and confidence are above their long-term averages.
And your own, that’s to say ACCI’s most recent Small Business Survey notes that small businesses’ employment expectations are at their strongest level since 2010.
Now these are the practical objective measures of economic reforms. These, if you like, demonstrate that the economic leadership my government is providing, the measures we are implementing, the policies we are promoting are having their effect of driving exactly what we promised – jobs and growth.
And we know that the small business sector is one of the great generators of jobs.
Our more than two million small businesses employ over 4.5 million Australians.
Over the year to June 2015, Australia’s small businesses employed an additional 170,000 workers - an increase of 3.7 per cent.
These small businesses are where many big ideas begin.
They are where Australian families risk everything - they set aside the security of a salaried job, and put their heart and soul into a small business, striving to make a better life for their children and grandchildren through tireless effort.
My Government seeks to make Australia the best place in the world for families to start and grow a small business, and to prosper.
We believe the Government’s role is not to tell you what is best, but to enable you to do your best.
That’s why the Enterprise Tax Plan - designed to encourage investment and entrepreneurship is so important.
From the 1st of July, we have reduced the company tax rate for small businesses to 27.5 per cent, with the rate progressively decreasing to 25 per cent over the next 10 years. We are seeking the support of the Senate for that Enterprise Tax Plan.
We’re also providing an eight per cent discount for unincorporated businesses—later to rise to 16 per cent—of the tax small business owners pay on their business income.
We are putting money back into the hands of small business operators so they can invest to grow their business and employ new staff.
And the logic is pretty straight forward.
We know that if you reduce business taxes you increase the return on investment. If you increase the return on investment you will get more investment. If you get more investment you will get more jobs.
It is as straightforward as that.
It used to be a bipartisan consensus on that and I am sorry there isn’t anymore.
It used to be very clear that that is you, supporting you, ensuring that you have the incentive to do more and an incentive to invest more is the way to drive jobs and growth in our economy.
Now tax cuts are one element of our plan; competition policy is another.
The Harper Competition Policy Review—which we commissioned in our last term of Government—offered 56 recommendations to revitalise and reshape competition across all levels of government.
The Government accepted most of the Review’s recommendations in our sphere. Of course, many of them applied to state governments as well. We are particularly committed to the reform of Section 46 of the Competition and Consumer Act, which will prevent businesses from misusing their market power to derail the competitive process.
At the December COAG meeting I’ll discuss with my state and territory colleagues how we can work together to develop a new reform agreement to improve competition and productivity across a range of Australian markets.
And in recognition of the fact that small businesses simply don’t have the time or specialised staff to get bogged down in unnecessary paperwork, we will continue to cut red tape.
Over the last three years we’ve repealed thousands of unnecessary legislative instruments, reducing annual compliance costs by over $4.8 billion.
And now, we’ll broaden our agenda to focus on reforms that directly enhance innovation, competitiveness and productivity.
We want to free up business to do what it does best—to think, to invest, to innovate—and I don’t just mean start-ups, I’m talking about established, indeed venerable businesses as well.
One of my favourite examples is the Adelaide Company, Philmac.
Philmac is an 85-year-old manufacturing company in Adelaide which makes plumbing fittings. Now if you said an 85 year-old manufacturing business in Adelaide, you’d think maybe they don’t have [Inaudible], I might be a bit concerned about that, you might be a bit concerned about that.
Let me tell you about Philmac – it has built itself a niche in the global plumbing market.
It's innovating, it’s growing. Its innovation has been the key to its growth. This is not, you know, a new website, a new application for smart phones – these are gate valves, joints, angles – these are the nuts and bolts of pipes, pipe systems, plumbing systems. It's the leader in its particular section of the market globally. It has achieved a global leadership in the market where you have metric and imperial pipe networks in the same area and you need to be able to make them work together. They have developed that – this 85-year-old business in Adelaide and they’ve done it because they have been smart and confident and innovative.
That is a long-established company, working in an area which most people would not regard as being especially high tech, but taking advantage of the call for innovation in the most liberal trade environment in our history.
Every business—large, small, old or new—has a part to play in building a robust culture of entrepreneurship.
Now the Minister for Small Business, Michael McCormack, who is here tonight, likes to remind us that his own electorate is leading the way, with Wagga Wagga and surrounds striving for 100 start-ups by 2020.
This is an idea driven by local entrepreneur, Simone Eyles.
Simone’s 365Cups coffee app is a favourite of Michael’s he tells me because it enables him to order a coffee ahead of his arrival into town when he is travelling around the electorate.
And, as he notes, when you’re covering an electorate the size of Switzerland, caffeine can be your best friend.
But Simone has not been content with running a highly successful business with $7million in revenue.
She has established Working Spaces HQ where anyone with an idea is welcome to come and network and collaborate with other creative people—because innovation should be just as commonplace in regional Australia as it is in our cities. It is just as important in Wagga Wagga as it is in Sydney. It is just as important as it is for an old business that has been around for decades or a century or more and during the election campaign you may recall my visit to a bedding manufacture which was well over 100 years old but through its innovation in mattress technology it is now exporting several container loads a week to China with its new high tech mattresses. What could be more basic than making mattresses? They started making them stuffed with straw. Now they are selling them to the world’s biggest market.
Now Simone in Wagga has unearthed start-ups ranging from health and fitness and photography, to agricultural and food technology.
We want all Australians right around the country to have the opportunity to do that. So that is why our National Innovation and Science Agenda is so broad ranging.
Budding businesses will find it easier to raise equity finance thanks to a 20 per cent non-refundable tax offset for investors. And there is also a 10-year exemption on capital gains tax if investments are held for at least a year.
In addition, there are new arrangements for venture capital limited partnerships, increased access to company losses, and we are introducing Australia’s first dedicated framework to make it easier to access crowd-sourced equity funding.
We are at a point in time when there is an abundance of ‘ground floor’ opportunities for new and growing businesses, and the Government is determined to support those who seek to take them up.
Our Export Trade Deals are designed to take advantage of the emergence of markets in our region, the depth and breadth of which we have never seen before.
And Australian businesses stand to reap further benefits if we can secure the ratification of the Trans Pacific Partnership in Washington, which endeavours to address the issue of the Asia Pacific becoming what has been described as the ‘global epicentre’ of bilateral agreements.
I have urged the American Congress to ratify and embrace the TPP, as both a statement of US strategic commitment to the Asia-Pacific and the best way to promote stability and security, which is the foundation of our ongoing regional prosperity.
It will be interesting to see over the next few months whether the Congress can achieve that during what is called the ‘lame duck’ period between the election which has just occurred and when the new Congress takes its seats in the new year.
In the meantime I would encourage you to focus on the opportunities that arise from the Free Trade Agreements we already have signed with China, Japan, Korea and of course Singapore. Already, small and medium, large businesses, some of you in this room tonight are cashing in on those opportunities.
The opportunities the Free Trade Agreements, particularly with China have created for Australian exporters, particularly in regional Australia are remarkable.
Tasmanian, where I was just on the weekend has been a very significant beneficiary of that – particularly of the ChAFTA deal. You know there are the arguments made or the descriptions made in China that is Tasmania can be the delicatessen of China, well I guess not even Tasmania is big enough to be the delicatessen of China but nonetheless the opportunities are enormous. Very important for us to make this case, for all of us, not just prime ministers – for all of us to make the case for free trade, believe me we have a massive vested interest in jobs, from open markets and free trade.
It has been controversial in many countries, of course, and we’ve seen those arguments and, of course for protectionism but the truth is that one of the reasons we have been able to successfully, so far, to transition from a mining construction boom to a more diverse economy and maintain strong economic growth is because of the export opportunities that come from those free trade agreements.
And of course it is not just the Tasmanian lobsters, Queensland beef, South Australian wine - up 38 per cent over the last couple of years, in terms of its exports into Asia - that are benefiting from this.
There are educators, financial advisers, architects, even lawyers who are taking their skills north.
So I want to applaud Australia’s businesses for seizing those opportunities.
It is your belief in your ideas and skill that is the foundation of the success and growth that powers our economy.
Confidence, passion, innovation and ingenuity - that is what drives you forward, and those qualities are the foundation of future jobs growth and prosperity in the years ahead.
So thank you—and all businesses you represent, large and small—for your commitment to Australia. Your commitment, your willingness to partner with our Government in securing the prosperous future that we must deliver for our children and grandchildren in the years ahead.
Thank you very much.