Australian Chamber of Commerce and Industry Annual Dinner

Speech
28 Nov 2018
Prime Minister
E&OE

PRIME MINISTER:  It’s wonderful to be here with you and I’ve got a lot of colleagues who are here tonight and if I was to read them all out, we’d be here all night. So I want to give them a general shout-out, as well as to other parliamentary colleagues who are here and my Ministerial colleagues. It’s good to be back here again, I was here last year and when I was here as Treasurer I said to you; “You’ve got to vote for the economy. You’ve got to focus on the things that are going to do the right thing for the economy”. That doesn’t mean you’re partisan or anything like that, but you run businesses and what’s good for the economy is good for business. So it’s important to back the policies and it’s important to back those who are putting in place the policies that are good for the economy. Now why is that important? Many years ago people used to talk about strong economy management. The Coalition is very good at it.

Peter Costello was Australia’s finest ever Treasurer. Kelly O’Dwyer is here, she worked with Peter, we both worked with him when we worked in the treasury portfolios together. We often seek his counsel. Our finest ever Treasurer produced outstanding economic management. But it’s not something you just put on a wall, a strong economy and go: “Well gee, isn’t that lovely, we’ve done terribly well for ourselves, let’s pat ourselves on the back.” For me and for my team, a strong economy is not an end in its own right. It’s the essential thing that this nation requires in order to deliver the services the infrastructure, the thing that matter to Australians. That’s what it’s for. That’s it’s utility, it’s not some sort of academic exercise. It’s not some economists picnic, it is what is absolutely essential for those of us who serve in public life, go into public life for. To ensure that Australians can have the services and the infrastructure, the opportunities that they rely on.

And you create it; businesses represented here and well beyond this room, you create the economy that enables us to pay for affordable medicines. Spinraza is a drug that deals with spinal muscular atrophy. We listed that in this year’s Budget, saving kids lives. That’s what a strong economy does. We’re going to invest $30 billion more in hospitals over the next five years. That what a strong economy does. $37 billion more in schools around the country, a 65 per cent increase in per student funding. Backing in independent schools, non-state schools, state schools all of them, that’s what a strong economy does. It is helping Australians realise their opportunities.

Fiona Simpson is here tonight, $7 billion in support for our farmers and rural and regional communities in response to the drought. You can’t do that if you don’t have a strong economy. Its doesn’t happen and you don’t create a stronger economy by killing it with taxes. That’s what I said to you this time last year. You don’t do that, you cannot have a stronger economy, an even stronger economy, if you take a wet blanket of higher tax and throw it over the top. You’ll douse it, you’ll frustrate it, you’ll suffocate it, you’ll switch it down, you’ll turn it off. When you do that, they you cannot deliver on the essential services and the things that really, really matter to Australians.

Now, some will tell you: “Oh, we can pay for that with higher taxes.” It’s a false economy, it’s a false economy. You turn the taxes up, you turn the economy down, a zero sum game, it’s a trick, it’s a lie. Lower taxes, that’s what produces a stronger economy.

You know, I was up in Darwin recently and I spoke to the Chamber up in Darwin and I talked about our plan. I said; “Our plan for creating this stronger economy was about tax relief to encourage and reward hard-working Australians, whether they’re running their own businesses running their own farms, whether they’re hard=-working wage earners, we’ve legislated tax relief for all of them. $144 billion worth of personal income tax relief legislated through the Australian Parliament.

Now, if you tell Australians that you get to keep more of what you earn - because it’s their money by the way and it’s your money, running a small family business - you are able to keep more of that and invest it back into your business, more of what you earn is what you get to keep, then that can only be supporting what is going in and around the economy. If floats everybody’s boat, it lifts everybody up.  That’s why we believe in our heart of hearts as Liberals and Nationals that we need to ensure that we keep taxes down. Because we believe that Australians should keep more of what they earn.

They have worked hard for it, you’ve worked hard for it, why should you give more of it to me?

People say: “Oh, you need to pay higher taxes so we can pay for hospitals and we can pay for schools and we can pay for affordable medicines”, well I’ll tell you how we pay for that; we pay for that by the economy being stronger and stronger and stronger and stronger.

See, we are delivering all of those things at record levels and not in increasing your taxes. In fact we are cutting your taxes, because that is what we believe as Liberals and as Nationals. We believe in having a stronger economy, not being an end in its own right, but we believe in what it can produce.

How we can make the economy stronger, that focus on a stronger economy is getting the Budget back into balance. I announced this week, yesterday, that we will deliver a Budget on the 2nd of April. Josh Frydenberg will be the most successful Treasurer since Peter Costello.

[Applause]

I suspect he won’t be recognised by Euromoney, to his great disappointment.

[Laughter]

Apparently delivering surpluses is not what Euromoney recognise as being the essential ingredients for being the world’s greatest treasurer. But I’ll tell you what; he will be the next Treasurer to deliver a surplus in this country and the last one was Peter Costello. Now, I will tell him I gave him a bit of help. And I’m sure he will make mention of it or else –

[Laughter]

But the Budget is coming back into balance and that has been hard work, really hard work. Hard decisions, getting expenditure under control. The lowest growth in public expenditure growth in more than 50 years - that’s fair dinkum more than 50 years - we have constrained expenditure growth, we have constrained growth in taxation we have put a cap, a speed limit on taxes. You know, if you’re serious about controlling expenditure in this country you’ve got to be serious about controlling taxes.

I have sat round and chaired ERC for many years now. The best way to control how much people spend is making sure you only take in what you need and that’s what we’re doing as a Government. We’re keeping taxes under control, we’re keeping expenditure under control and it is bringing the Budget back into balance. Next year we are hitting surplus again and that’s a great achievement. It means that the Western Australia Chamber of Commerce and Industry – who I would argue have had the most successful lobbying efforts over the last few years, I don’t know whether you give out a prize within the Chamber for these sorts of things –

[Laughter]

I tell you they made their case and they convinced me. The reason they convinced me is that it was important and it’s been enabled by a strong economy and getting our Budget back into balance, that we can finally fix the unfairness that existed with how the GST was distributed across our states and territories. Western Australia was held back for too long and we’ve been able to fix that without holding or taking any from any other state or territory in the Commonwealth. Why? Because we have managed the economy well, we have managed the Budget well.

So we are guaranteeing that funding for schools and hospitals and essential services. We have record investments in infrastructure. I’ve got to say one of the proudest days I have had as a Member of Parliament, as a Minister, as Prime Minister, was to turn the first sod of Western Sydney Airport. I have been involved in that issue for decades and it’s now happening, because of a government that decides it is important to build things, that build our economy. People have talked about it -

[Applause]

Give yourselves a clap, you’re all part of it. People talked about this for decades, but as a Government over the last five years we set about doing it and ensuring that the top sod has been turned on Western Sydney Airport. That is now reality which is transforming Western Sydney, Craig Kelly will know this, out in Liverpool Western Sydney University has built their vertical campus in the middle of Liverpool. It’s the biggest training centre for nurses anywhere in New South Wales. The reason they decided to put it in Liverpool, which is a city which is transforming before your very eyes - it reminds me of Parramatta 25 years ago - they decided to put it there, because of the Western Sydney Airport. Because of what was happening in Western Sydney, because of the investment in infrastructure that our Government had put in place. That led them to make that investment and then others made investments and then others make investments. You know how it works, that’s how an economy grows and that’s why we’ve made those investments in infrastructure, the Inland Rail, the list goes on, the North South Corridor, the M1 up in Queensland, the new water pipe line up in Townsville. All of these infrastructure investments are designed to do one thing; Grow our economy. We want to have an industrial relations system - which I know Kelly O’Dwyer belives passionately in - which does not set employers against employees. I joked the other day - but it is not a joke it is a serious deal – that Labor’s industrial relations policy is a throwback to the 1970s. It was written by people with flares and long hair.

[Laughter]

This is a policy that will divide workers and their employers. You know, when I walk into businesses, particularly small and medium sized businesses I see people working together. That’s what I see. I see people who want to work together. I see people that have arrangements that enable them to all benefit from the success of the organisation, of the enterprise. That’s a healthy workplace and that’s what we want to see. We want to see Australian work places working together, employers, employees, managers all of them understanding that the way you get ahead, is not to pull some down and lift others up, but everybody gets ahead. That’s our vision for workplace relations in this country.

The result of our plan is pretty straight forward; we’ve got growth running at over 3 per cent. It’s got a 3 in front of it. We have got unemployment down to 5 per cent. 50,000 less people are unemployed today than in the last election. Over 100,000 Australians, young Australians, have got a job last financial year the strongest grown in youth employment in Australia’s economic history. How many weddings have you been to, how many bar mitzvahs, how many christenings, how many 21sts have you been to as business employers, as owners, of your staff? How many weddings and how proud were you when you looked at those young people that you gave a job to? How good is that? I mean you’re in it to make a living, but you’re passionate about what you’re doing and how you change lives, when it comes to how you run your business. That’s what small and family businesses are all about and that’s why we back small and family businesses. That’s why we see small and medium sized family businesses as being the engine of our economy.

Michaelia Cash is here tonight and she is responsible for that portfolio and she is doing a stunning job and together with Josh Frydenberg and Kelly we have been working on some packages and some plans to further support small and family businesses in Australia.

You already know that we’ve reduced taxes, as we were doing before, to 25 per cent and we have brought that forward. You already know that we have extended the instant asset write off. You already know that we have lifted the small business definition from $2 million to $10 million, so you get access to pool depreciation and GST on a cash basis and things like that. You already know about that, that stuff we’ve already done that has encouraged small businesses all around the country.

On that alone, the biggest support for small and family businesses from any government in generations, true to the Menzies foundations of our party as Liberals, supporting those small and family businesses. But in recent months I’ve decided as Prime Minister that we need to go even further. That we need to give even more support for small and medium family sized businesses across Australia.

The first one deals with cash, getting paid. Cash flow always starts with getting paid. If the invoices you issue are not being paid, that hurts your business, that makes it harder for your business. Businesses, small businesses should never be treated as a bank by governments or large businesses. We should all pay on time.

[Applause]

I am pleased to say that our Government has been working to do just that. 97 per cent of Australian Government bills under $1 million are being paid within 30 days and we are taking this down to 20 days by the 1st of July 2019. I’m also taking payment times to COAG in just under a month, to encourage all states to catch NSW where they’ve gone to 20 days for those payments, where we are also going. I want State Government and Commonwealth Government to pay small businesses on time and recently when I spoke at the BCA dinner, I talked about their supply code. Qantas is here tonight, Trent is here, they are part of that. They’ve got 13,000 small businesses that are part of Qantas’ supply chain. They have signed up. That’s at 30 days, I’m hoping not just Qantas, but the whole lot will go down to 20 days as well. What we have said is that anyone who wants to work with the Commonwealth Government, you’ve got to agree to those terms as well. You’ve got to pay businesses on time, because the quicker the money moves around, the better the economy does, it’s just common sense. So we are working to deliver that.

We are also requiring that more businesses with a 100 million turnover, that’s 3,000 business to publish information on how they pay their small businesses. I want to see the score board. You need to see the score board if you are a small or family business. Who are the big businesses that pay on time? Now we already know that there are large businesses that are already dropping - as a result of what I announced only a week ago - their payment terms from 90 days in regional areas of Australia particularly Queensland, down to 30 days. That’s a big shift, that is a big shift and it is called leadership. It’s called leadership when you say as a Government you’re going to do it and you expect others to do it as well. We are already seeing others follow and we appreciate that. But there is more than that. You need to get access to capital, you need to get access to finance if you are a small and family business. So we are setting up the Australian Securitisation Fund, $2 billion to invest in deepening the capital base, the finance base for new lenders in the marketplace to be able to source their finance at a lower cost so they can lend it on to you, at a lower cost.

We need more competition in our banking and financial system, we want more of these new lenders, who get small business, who don’t say to you; “Give me your house and a mortgage over your kids and all the rest of it, and we’ll give you some money if we feel good about it.”

No. We want to see all these other businesses who are getting out there and establishing new payment models, new systems, new fintech companies who are going to go out there and they need to access lower cost finance to deliver that to you.

And we’re backing that in with $2 billion investment in the securitization market to ensure that is freed up.

We’re also working to establish with the banks the Australian Business Growth Fund modelled on the UK experience. Now that fund, together with the small business finance arrangements actually work together, as we’ve seen happen in other places.

Getting access to the capital, which can then be backed up by the access to the finance. Then, you’re realizing the ambitions the you have for your business.

But it’s not just about that. It’s about tax complexity and red tape.

Now, it may be a dry topic but if you’re running a small and family business, it’s a critical topic. As well as putting more incentive in the tax system, we’re working to ensure that it is fair, not only when it comes to the design, but to the implementation of the tax system.

As a former Treasurer I know the good work the ATO do. Now, I know there will be at least 200 stories in this place that won’t be that flattering to the ATO, but I suspect there will be some that are. Their job is to ensure the integrity of our taxation system, so we can deliver the essential services that all Australians rely on.

Taxes should be lower, but everyone should pay them. That’s also a rule I think it’s good to follow and the ATO seek to ensure that occurs.

But I understand the concerns, as does Michaelia, of small business when it comes to dealing with the ATO. There is no denying the complexity involved and we are focused on reducing that complexity. We know you’re focused on running your business, not studying the Tax Act or sifting through rules and determinations. The ATO recognises this too and they have taken steps – you’ve got to give them this - to improve the way they work with over 3 million small businesses.  

They’ve opened up more lines of communication with their after-hours call back service, gone out into the business community with their roadshows and they’ve looked at their debt collection and penalty relief processes. Small business interactions with the ATO should be smooth and the vast majority are. Ideally once you’ve lodged your return, paid your tax bill, or received the refund that you are entitled to, that should be it.  But for those who experience an audit or a dispute we understand the impact this has on you and your business. It can be stressful, intimidating and confronting and you will rack up some expenses when you deal with this. Under our Government, you’ll be able to deduct those expenses. Under the Labor plan, you won’t, it’ll be capped so if you’ve got a big fight with the Tax Office, your legal expenses will not be deducted over a certain amount. But those who experience an audit, we understand how it can impact you and while there are many good things the ATO does to make the process easier, we need to do that. The dedicated complaints hotline for small business, independent reviews of audits before they are finalised, advocates to support vulnerable and unrepresented taxpayers through the objections process and independent ,trained mediators to resolve cases.

But there is more that we have to do. That’s why I’m announcing tonight that we will be establishing ten new tax clinics, in conjunction with major and regional universities, to provide free assistance to small businesses and individuals with disputes with the ATO. These tax clinics will ensure small businesses in need have access to specialist advice from tax practitioners and students in the field on a pro bono basis.

The Government will also be reviewing the avenues through which small businesses are compensated if the ATO’s handling of the case causes an economic or personal loss. The review will be run out of the Department of Finance and they will report back in the new year.

A small number of cases go through the ATO’s disputes process all the way to the Administrative Appeals Tribunal. Tonight, I’m announcing a range of measures to make this path towards resolution easier.  Our Government will establish a small business concierge service within the Small Business Ombudsman’s office, to provide support and know-how about the AAT process before application. We’re creating a dedicated Small Business Taxation Division within the AAT, so small business will have a case manager supporting them throughout the entire process, a standard application fee of just $500 and decisions fast-tracked to within 28 days of a hearing.

This is just another step the Government is taking to ensure a level playing field for small business. It’s proof that we’re on your side, when it comes to what we want for you small businesses.

[Applause]

We want small businesses to succeed. Of course that’s in addition to the many other measures that we’ve announced, that include raising the thresholds for asset financial reporting, through from 25 to 50 on consolidated revenue, $12.5 to $25 million of assets and 50-100 employees. That means 2200 companies won’t be required to complete those annual asset financial reporting arrangements, saving $80 million in red tape costs over the year, which we think is a good thing.

Now finally, it’s also about the people who work for you and the skills that they need. Those skills are also key to the economic futures of Australians in a modern economy. We know the strength and dynamism of our economy has increased demand for new skills and a higher level of skills over someone’s entire working life. Providing a skilled workforce, especially for small businesses, depends on the vocational education and training sector, it comes not just from our universities. We believe in this form of education. We believe it equips Australians and it’s not just about training school-leavers to attain employment. It’s about ensuring people can update their skills throughout their entire working life. So in the VET sector, to be able to respond and adapt to future demands for higher skills, changing industry composition and structural change especially in regional and rural Australia and people working longer and in varied roles over the course of their working lives.

We need to strengthen our VET system, not simply as an economic imperative but to ensure Australians are equipped for the workforce of the future.

So tonight, I’m announcing that the Government has commissioned an important review of our vocational education sector in Australia, which will be conducted very promptly and quickly to make sure we’re training the right people for the right jobs in the years ahead. Now the person I have asked, with Michaelia Cash, to do this job has pretty good experience in doing it from across the ditch.  Steven Joyce the former New Zealand Minister for Tertiary Education, Skills and Employment and was also the former Minister for Finance in New Zealand. He will bring a fresh perspective on what is needed here and what we can do here, based on his extensive and successful work and reforms that he put in place in New Zealand.

He is the architect of those reforms to their apprenticeship and industry training system and was one of the most senior and most successful ministers in the Key Government in New Zealand. We’ve asked Steven to consult widely and I’m sure ACCI will be very involved in that process and that is the task that he has. The Review will have a particular focus on ensuring Australian businesses have the skills they need to support their business growth.

The Review will build on the work Minister Cash is already leading, including  the reforms to the Skilling Australians Fund. That fund, some $1.5 billion, supports state and territory governments to increase apprenticeships and every single cent of that fund, every single cent will be spent on vocational education and training in this country. Even where some states and territory governments – as is the case in Victoria and Queensland - where they haven’t signed up to that. That’s disappointing, that’s unfortunate and I would still hope they will look carefully at this arrangement with the Skilling Australians Fund and sign on to ensure they are getting the access to those funds to deliver the programmes that are important in their states and territories. But every single cent will be spent, of that Skilling Australians Fund, in vocational education and training in Australia.

But there’s one thing further I’m announcing tonight which will be supporting apprentices in Australia; I’m pleased to announce that we will be expanding eligibility of the Support for Adult Australian Apprenticeships Initiative, so that it will include apprentices aged between 21 and 24. Previously this initiative was only available for those 25 and older, but given that adult apprentices, for wage purposes, are now defined as being over 21 years of age this has left those between 21 and 24 at a disadvantage. This will mean about 12,500 adult apprentices over the next three budget years will be supported by a one-off $4,000 payment. We are doing this because getting young Australians to learn skills for meaningful employment is not just something that helps the economy; it’s something that can change people’s lives and ensure they’re on a path to a better life.

You know, under our Government we have reached the point where we have the lowest level of welfare dependence of the working age population, in more than 25 years.

[Applause]

That’s what turns a budget deficit into a budget surplus. It’s the old 12 point turnaround; you stop them scoring at the other end, your end, and you score down the other. You get someone who was receiving the welfare payment and you turn them into a taxpayer with a job. That’s what our Government has been doing and these initiatives I’ve been announcing tonight are all about that.

So I’ll conclude where I started; all of this is about building a stronger economy. Why? Because that’s the only way you can look Australians in the eye and say: “I’m going to fund your hospital, I’m going to fund your medicine, I’m going to fund your school, I’m going to fund the Disability Insurance Scheme.”

We’re going to make Australia stronger and you do that with a stronger economy. You can’t do it with higher taxes. You do it by encouraging the people who are in this room, the people who run businesses all around the country in our cities, in our suburbs, in our rural and regional areas all around the country. That’s how you create a stronger Australia and that’s what our Government is delivering, by focusing on delivering the stronger economy.

Thank you very much.

[Applause]