PM addresses the Business Council of Australia

Keynote Address to the Business Council of Australia 2017 Annual Dinner

Transcript
20 Nov 2017
Sydney
Prime Minister
Tax cuts; small business;
E&OE
Economy and Finance, Business and Employment

PRIME MINISTER:

Well thank you very much Grant, that’s a very very warm welcome.

And I want to say how pleased I am to be here tonight at the BCA, with so many of my parliamentary colleagues, the key economic ministers, we don’t have Mathias Cormann, but we have Scott Morrison, we have Kelly O’Dwyer and of course we have - so important for vocational education - Simon Birmingham.

Also we have, as you know, we’re very lucky to have with us, Bill English, great Prime Minister of New Zealand. Well I shouldn’t comment on internal politics of other countries.

(Laughter)

Everybody else comments on ours, but I want to say Bill, you and John Key delivered outstanding economic growth and prosperity in New Zealand.

You set your country up as a role model for others, including us and it’s great to see you and Mary here tonight.

And I want to also welcome Stephen Harper, the former Prime Minister of Canada. Again, a great economic reformer and one from whom we have learnt so much.

Jennifer Westacott, the Chief Executive of the BCA. Jennifer, thank you so much for the leadership you provide, the sound advice you give governments. Of course you’ve spent your whole life giving sound advice to governments, prior to becoming head of the BCA.

But also, you touched – Grant touched on the postal survey. Let me just say Jennifer, the courage you showed was admired by all of us.

(Applause)

This has been a social issue that has been divisive and controversial for many years. But we are resolving it – we have resolved it through a respectful process in which every Australian had their say. Everybody’s view was respected. Everyone had their say – 80 per cent of Australians chose to have their say and there was as we know, an overwhelming majority for change. The parliament is now getting on with the job of delivering that.

But I have to say many people have said to me, you know, ‘why are you so, why do you manage to get so much stuff through the Senate?’ And they ask Scott and I that, and Kelly and Birmo and of course our – you know Birmo’s part of the Senate team and they ask Mathias and George that.

And do you know what the answer is? The answer is respect. Respect, every single member of the Senate and the House was elected by the Australian people and whatever party they’re in, whether you agree with them or not, they’ve got a seat in parliament. You respect them, you talk to them, you listen to them and it’s amazing what you can actually get done.

Grant, thank you for your warm introduction, and also I want to acknowledge – there’s so many distinguished public servants here tonight – but of course Martin Parkinson the Secretary of the Department of the Prime Minister and Cabinet.

Now I acknowledge that we meet on the land of the Gadigal people of the Eora nation, and I pay my respect – our respects - to their elders past and present.

Now when I was in Vietnam earlier this month for APEC I enjoyed a banh mi with the Australian Vietnamese chef Luke Nguyen.

I’m sure you’ve seen him on television, he’s got a television show – cooking show in Vietnam. I asked him at a press conference with all these Australian television journalists there, I said ‘Luke what’s your audience? What are your numbers?’ And he said ‘25 million’.

(Laughter)

Seeing all those stars of Australian stage and screen, faces sad as they realised he was reaching a huge audience.

Now the banh mi, as you know, is a French baguette filled with fantastic yummy Vietnamese food. It’s one of the most popular Vietnamese breakfasts - but what might surprise you is that 75 per cent of the wheat used to make it comes from Australia.

Australian wheat to Vietnam is just one chapter in our successful free trade story and countless more are being written off the back of our big free trade deals with China, Japan and South Korea.

Our most recent deal with Peru, signed just a couple of weeks ago in Da Nang, will eliminate 99 per cent of the tariffs facing Australian businesses who export into that country.

And we remain committed to the TPP, the Trans Pacific Partnership, which would be the most ambitious trade agreement concluded since 1994, and Stephen Harper and Bill English were there at the foundation, giving our businesses access to markets worth approximately 10 trillion dollars.

Now Justin Trudeau’s last minute and surprising decision not to go ahead with the TPP-11 in Da Nang was very disappointing. But it has not deterred others and Prime Minister Shinzo Abe of Japan and I are determined to press ahead with others on what would be a game changing agreement.

Free trade opens doors for Australian businesses to millions of consumers, especially those in our rapidly growing region.

It means more jobs and more prosperity in Australia.

Today, 2.2 million Australians are employed in a trade-related activity. As a result of trade liberalisation over the last 30 years, real GDP is 5.4 per cent higher, real wages are 7.4 per cent higher, prices are 3.4 per cent lower and average family income is $8,500 a year higher.

And that’s why Liberal Governments back free trade, and always will back free trade.

(Applause)

Democracy and open markets have been two of the most powerful forces in human history.  Political and economic freedom have fostered growth and prosperity around the world, including at home here in Australia.

We will not make Australia stronger by winding those freedoms back. We must instead reinforce and build upon them; the economic freedom to get ahead and carve out your own future, underpinned by the democratic values that define us: a fair go, mutual respect and generosity. 

Believe me, protectionism is not a ladder to get you out of the low growth trap. It is a big shovel to dig it deeper and deeper and deeper. Free trade means jobs, it’s delivering jobs now and it will secure our prosperity in the years to come.

Now, our democracy is robust; built on foundations strong enough to withstand the occasional tremor.

The High Court’s interpretation of Section 44 was disappointingly literal.

(Laughter)

And certainly not what the Government had argued for. We contended that the Court should hold that foreign citizenship by descent should not disqualify an Australian citizen born in Australia unless they had, at least, been aware of it. How, we argued, could you have a conflicting allegiance to a country of which you weren’t even aware you were a citizen?

Well I can see you’re all convinced, but regrettably the seven judges of the High Court were not.

And the Constitution is for the Court to interpret and nobody else. And so we accept their decision and we will now resolve it with a fully transparent and accountable process. In the future only thoroughbreds will have more of their genealogy published than federal politicians.

(Laughter)

The disclosures and declarations, which will constitute a sort of parliamentary stud book, and any further references to the High Court should all be dealt with before Christmas.

Now I know it sells more newspapers to write headlines about chaos and threats to democracy. And of course increasingly the hyperbolic outrage and sensation of the twittersphere has infected much of the mainstream media – that’s true. There’s even a bit of fake news around.

The reality however is more mundane, but also more reassuring.

The challenges to Australia's Parliament have proved its strength, not its frailties.

It has proved that in times of uncertainty, the nation needs calm and measured leadership; steady hands at the helm - even if it does result in people asking me as recently as tonight, why am I so calm?

To those I simply answer in the words of our very wise colleague Rowan Ramsey, the Member for Grey: “If you think tossing and turning all night will solve your problems, go right ahead. As for me I prefer a good night’s sleep.”

(Laughter)

Very good advice in any line of work, but particularly ours – Scott wouldn’t you say?

So calm composure, deliberation - that’s how we overcome our challenges, just as we have done ever since the election last year.

The year has been one of delivery, focusing on what matters to Australians: Can I get a job? Can my kids get a job? Can I start a business? Will my business get ahead? Will the lights stay on and can I afford the bill to keep them on?

Now my Government is answering those questions with a thoroughly Liberal agenda:  policies that encourage enterprise, creating more opportunities for people to get ahead.

And we have delivered on the agenda I set out at the National Press Club at the start of the year - more jobs, personal and corporate tax cuts, budget savings, childcare, housing affordability.

I know that you’re probably weary of ‘jobs and growth’ as an election slogan. No they all loved it. But you know what? It’s now an outcome. It is an outcome.

And we have delivered solutions to intractable problems that have confounded previous governments, including school funding.

Simon Birmingham’s reform to Commonwealth school funding is a historic moment in the history of the federal government. For the first time in our history, Birmo, you were able to deliver on behalf of our government for the first time, federal school funding which is national, consistent and needs-based.

Never before done, every former education minister I know, and I know quite a few have said “oh well that’s what we aspired to but we couldn’t get there”. Well, we have done that, we have done that with a slim majority in the House and nowhere near, you know, a minority in the Senate.

That is what happens when you work with people with respect. And I want to say thank you to David Gonski for the leadership you delivered. We are fulfilling on your vision for the first time.

(Applause)

Now our energy reform, again bringing together climate and reliability and emissions reduction obligations, reliability again for the first time in a market based instrument.

Now we’ve also made decisions that have directly affected the operations of many in this room, drawing plenty of comment.

But we have always acted in the national interest. And in many cases, we have been prompted to act by a clear failure of markets or previous governments.

The major bank levy brought us no joy but it was necessary to help repair the federal finances.

We inherited a budget with unfunded spending promises on hospitals, schools and the NDIS. And with so many of our proposed savings held hostage in the Senate, we have limited options to restore budget discipline.

The levy was such an option. But we have been determined that our actions will not jeopardise the stability and integrity of our financial system.

Now our intervention in the gas market was designed to address an alarming problem that was created by the failure of previous governments.

Literally no regard was given, none, zero, despite multiple warnings, no regard was given – I hesitate to make this occasional partisan observation, it’s simply historical fact – by a Labor Government in Queensland and in Canberra that allowed gas exports from the east coast of Australia without paying any attention to the clear risk, warned risk that this would result in tighter supply and higher prices.

Well as we all know, we found ourselves in the extraordinary situation – we’re a nation about to become the largest exporter of LNG – that has a gas shortage on the east coast of Australia.

Many of you particular with manufacturing businesses, businesses that use gas as a feed stock, or need gas for thermal heat, many of you were facing price rises that were astronomical – so action had to be taken.

I defy anyone to argue that ideological purity is more important than addressing soaring energy costs that were crippling businesses and threatening thousands of jobs. In our estimation, about 65,000 jobs were in imminent threat because of what was happening in the gas market.

Now our intervention has worked. With the cooperation of the gas companies – to which we acknowledge – we’ve secured supplies for the domestic market, resulting in a meaningful fall in wholesale prices, coming back down to where they should be to the LNG net back price, which is what they should be if the market is operating properly.

And I know there are still calls to pull the trigger, pull the trigger, they say, and impose restrictions on exports. Our preferred approach, as always, has been to work cooperatively to get the outcome Australians need. That’s what we’ve done and you can see how constructively we’ve worked with the energy sector to do that.

Look at the National Energy Guarantee, which will put the onus on the energy retailers to ensure the reliability of our electricity market – keeping the lights on - at the same time as meeting our emissions reduction obligations, in accordance with our Paris commitments. And of course doing so in a way that brings wholesale prices down.

Now unlike other proposed mechanisms, it gives them the freedom to find the most efficient path to do so based on engineering and economics. Engineering and economics are the guides to our energy policy, our opponents have tried ideology and idiocy and it doesn’t work. It does not work. We need to focus on this in a hard headed, clear-eyed way.

I have been heartened by the overwhelmingly positive response to the Guarantee, including from energy retailers. As one ASX top 10 chief executive said to me recently: ‘Thank you for bringing forward an approach that lays the basis for a genuine, long-term solution to meet Australia’s energy and emissions goals.’

Now we particularly welcome the BCA’s enthusiastic embrace of the National Energy Guarantee – in fact you may remember we had a meeting some time ago and we went through some of the intricacies of the energy market, Grant is one of my many tutors I’ve had on energy matters over the years and I thank you for that. And your efforts to encourage the states to put aside politics to deliver reliable and cheaper power.

Now 87 per cent of all jobs are in the private sector.  So we recognise the enormous contribution businesses – big and small – make to the economy, particularly the remarkable jobs growth Australia has enjoyed. 

Moving from unemployment into work - as well as increases in the number of hours worked - are two of the most important drivers of income growth.

356,000 jobs have been created in the past year - that’s nearly 1,000 new jobs every day. 

84 per cent of those jobs were full time, and the unemployment rate has fallen to its lowest level since January 2013.

Business conditions are now at an all-time high.  And we know that when businesses have the conditions to grow and prosper, they respond by hiring new workers and paying higher wages.

Liberals stand for an open and competitive economy. We stand for level playing fields – not subsidies, misguided industry plans or picking winners.

That’s why we will continue to prosecute the case for company tax cuts, on top of those we’ve already delivered for small and medium businesses, and these are businesses up to $50 million turnover, probably not many of them on the board of the BCA I would say, Grant.

But you know something, those hundreds of thousands of businesses employ half of the private sector workforce, and they are all getting a tax cut and believe me as I go around, and my colleagues here and others go around the country talking to those small and medium businesses, you know what’s happening? They’re getting more money after tax, they’re investing it back into their businesses, and they are employing more Australians.

That is what is driving the jobs growth – it’s investment, it’s business, it’s enterprise.

And that’s why we will continue to pursue trade deals that open doors and level the playing field for Australian companies competing on the world stage

It’s why we are investing in the skills of our people by ensuring world-class schools, training and higher education.

We have to equip Australians so they can capture the benefits of these technological changes, while ensuring we have the support in place for those who find those changes difficult to deal with, or even impossible to deal with.

Just as we want to liberate businesses, we also want to enable Australians to make the best choices for themselves and their families.

And one of the clearest ways of doing that is to reward effort by giving households and businesses more control over their hard-earned money.

We’re doing this in several ways.

We’re providing the conditions for economic growth that boosts business, creates jobs and lifts household incomes.

We’re addressing the costs of living wherever we can, including the National Energy Guarantee which brings down power prices and restores reliability and stability to the system.

A housing affordability package – a big feature of the budget -  designed to increase the supply of housing and help first homeowners save for a deposit.

Childcare reforms, another one of Birmo’s great achievements to support low and middle-income families with the costs of childcare.

And of course private health insurance reforms that take pressure off premiums for families.

Another way of putting more money into people’s pockets is by increasing their disposable income through lower taxes.

Now, some in this room will recall my earliest public foray into the personal income tax debate in 2005. I was a newish MP, but not without self-confidence, and it’s fair to say, however, my helpful suggestions were not universally welcomed.

Re-reading Taxation Reform in Australia: Some Alternatives and Indicative Costings – a catchy title - there are some proposals that today we would consider unpalatable or unachievable given our fiscal constraints.

However, I think it’s aged better than its author, I have to say.

The concerns that underpin the report remain - the tax system remains complex and compliance is a burden, our marginal tax rates are high, bracket creep is a constant challenge that needs to be addressed.

Now, as you know, we’ve already lifted the second highest income tax threshold from $80,000 to $87,000, keeping about half a million Australians from moving into a higher tax bracket.

And we did not make, as so many urged us, the temporary deficit levy, permanent - sparing Australians from facing a permanent incentive-sapping top marginal tax rate of 49.5 per cent.

Left in place, that would have meant that towards the end of the next decade, one million more Australians - including high school principals and police inspectors  - would see nearly half of every pay rise go to the Australian Taxation Office.

Just because we’re in challenging fiscal times doesn’t mean we should raise the white flag on making the tax system work better.

As recent Treasury analysis shows, we risk being left behind – Grant touched on this - by the rest of the world in terms of the competitiveness of our business tax regime.

The United States is by far the single largest source of the stock of foreign investment in Australia.

Now, the United States House of Representatives has voted for a bill which cuts their corporate tax rate from 35 per cent to 20 per cent.  The Senate has similar plans - how they marry their two bills together remains to be seen, but lower US corporate tax rates seem very, very likely.

The United Kingdom has already lowered its rate to 19 per cent, France and Belgium have announced tax cuts that will make their corporate rate more competitive than Australia’s.

If we don’t reduce our corporate rate to 25 per cent as planned – in our Enterprise Tax Plan - over the coming decade, the only advanced nations that will exceed Australia’s tax rate are Japan and Malta. 

Now there is much more to do. You know our plans on corporate tax. And in the personal income tax space, I am actively working with the Treasurer and all my Cabinet colleagues to ease the burden on middle-income Australians, while also meeting our commitment to return the budget to surplus.

My commitment to all Australians is this - whether you’re starting out in your first job, whether you are a worker providing for your family, or a business hiring staff, our goal is always to leave more money in your pocket, not in ours.

Higher taxes penalise people who are trying to get ahead. But when you reward hard work and enterprise, you encourage hard work and enterprise.

It’s pretty simple – more investment, more jobs. That’s the key.

Now we believe as Liberals that it is government’s job to enable you to do your best - that people should be free to chart their own course, to make their own choices, to strive to realise their dreams.

We do not believe as our opponents do, that government knows best.

We believe our job is to enable you to do your best.

Now these times in which we live are of change unprecedented in its scale and pace. Rapid change brings disruption and uncertainty. Risks abound, but so do opportunities.

These are exciting times. These are times of great opportunity.

We cannot change the tenor of the times, but we can ensure we are, as a nation, match fit to take advantage of them and we do that by equipping our people and our businesses with the skills to compete and to win.

That requires a strong economy, creating new jobs to take the place of those replaced by technology and automation, it requires innovation – that is the key to productivity growth - and above all it requires enterprise and investment because that is the key to jobs.

And that is why my government is backing you and every other Australian business, from the mum and dad startup to the biggest employers - your enterprises and that of the thousands of businesses not represented here tonight - they are creating the jobs and the opportunities that will secure our prosperity in the 21st century and we are backing you!

Thank you very much.

[ENDS]

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