29 November 2017
Speech - #2017033, 2017

Address to the Australian Chamber of Commerce and Industry’s 2017 Business Leaders Annual Dinner, Canberra

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It’s happening, right here and right now. Our economy is shifting gears, and we are entering a new chapter of growth.

The downturn from the mining investment boom that had restrained our economy for many years, has all but run its course. Reserve Bank Governor Philip Lowe confirmed this last week when he declared an “end to the transition”, before urging a new narrative be penned.

This view is supported by an increasing agglomeration of evidence.

A welcome bounce in non-mining business investment, record business conditions, an unprecedented boom in job creation - 296,000 new jobs created in the first 10 months of the year, a 40-year record, and the longest run in positive monthly trade balances, also in 40 years.

Certainly, some frustrations still persist, in particular the stubbornness of wage growth that is weighing on family and household incomes, and the dislocation and disruption in the retail sector which, combined, are having an adverse impact on consumer perceptions of the economy. But the underlying trend is positive.

The IMF last week recognised the “green shoots” that are beginning to emerge on wages as the labour market tightens and spare capacity stripped out of the system and that “conditions [were] in place for a pickup in economic growth to above-trend rates.”

“The improved picture” the IMF said, “reflects a strong global outlook, recent stronger employment growth, and a stronger contribution from infrastructure investment with positive spillovers to private investment and the rest of the economy.”

Our economy is strengthening and will continue to strengthen with the right policy settings in place. As I said in the Budget, so long as we continue to make the right choices to secure the better days ahead.
You know all that. But what do you really know of the alternative?

******

Ten years ago I entered parliament; Kevin Rudd became Prime Minister and more than a decade of successful Coalition economic management came to an end.

If I had knocked on your door in the electorate of Cook and told you that if Kevin Rudd and Labor were elected, they would turn a $20 billion surplus into a $27 billion deficit in just one year, before going on to accumulate $240 billion in combined deficits, and would increase our Commonwealth debt by 34 per cent every year.

If I had said that in one year this deficit would hit more than $50 billion or 4.2 per cent of our economy, arguably the biggest deficit since WWII and spending would keep increasing despite growth in revenues falling.

If I said any of this, I would have been accused of political scaremongering. I would have been told that Kevin Rudd labelled himself an economic conservative and had urged the reckless spending of the Howard Government to stop. So what was I going on about?

After all, they may have just seen Julia Gillard and Wayne Swan on the TV having meetings with business people, allaying fears that business wasn’t concerned about a Labor Government.

Then if I said that this spending would include a cash splash of over $50 billion in stimulus payments to welfare recipients and cheques to deceased people and pets; if I said it would be spent on the most expensive sun shades ever built in schools or on household insulation programmes that would set fire to people’s homes, even occasioning in death, or a cash handout for selling your clapped out Datsun 120Y. If I said 50,000 people would turn up on 800 boats, and that more 1200 would drown at sea. That 6000 children would go into detention, when there were currently none. And that this would cost you, the taxpayer, $11.6 billion.

If I said any of this you would’ve called the police. You would have said there’s a madman on my doorstep.

Well, as we all know, all of this happened and more.

Labor’s truth in Government is stranger than any fiction I can imagine, but the economic damage under Labor is always very real.

The lunacy, failure and economic mismanagement that was the hallmark of Labor’s last government will be replicated by a new one, especially one led by Bill Shorten.

You are welcome to your criticisms of our Government, and while you may be frustrated at times with our handling of politics, it is also this Government that has been cleaning up the mess, getting things done, and putting the right conditions in place for our economy to grow.

We have kept expenditure growth below two per cent, the lowest of any government in the past fifty years, and one of only two governments in the last fifty years, together with the Howard Government, who have kept their cost curve below their revenue curve and maintained our commitment to the 23.9 per cent tax-GDP cap, also known as our tax speed limit.

It is the Turnbull Government that cut growth in our working-age welfare to 2.1 per cent, compared to Labor’s runaway growth of 9.1 per cent.

In six years, Labor increased the number of welfare recipients by 250,000. Since we were elected, we have decreased the number of people on income support by 140,000 – down to 15 per cent of the working age population, the lowest proportion in at least 25 years.

It is the Turnbull Government that has maintained our trajectory back to a projected balance in 2020-21 and maintained our AAA credit rating.

It is the Turnbull Government that has reduced the rate of growth in Commonwealth debt by two thirds, to single digits for the first time in a decade.

It is the Turnbull Government that from next year will ensure that the Commonwealth is no longer borrowing money to pay for everyday expenditure on pensions, welfare, Medicare and schools funding.

It is the Turnbull Government that is building Western Sydney Airport and the Inland Rail as part of a $75 billion national economic infrastructure program, and Snowy 2.0. They are designed to drive growth and generate jobs.

It is the Turnbull Government who is implementing the largest recapitalisation of our defence forces since WWII, upgrading our strategic defence capability and investing in a new and dynamic advanced manufacturing Australian defence industry.

It is the Turnbull Government that has wrestled with the difficult challenges in our energy sector and has secured guaranteed gas supply for the next two years for industry, better retail deals for household and businesses on their electricity bills, the removal of legal loopholes which enabled network operators to jack up their prices, and a new National Energy Guarantee that carries with it lower prices of around $400 annually, compared to today, for the average household.

It is the Turnbull Government that is opening our banks up to greater competition to give small business in particular better and fairer access to capital, while strengthening the banks’ world class resilience that underpins our economy, and supporting our FinTech sector to be world class.

It is the Turnbull Government that has restored the rule of law to the building and construction industry, in bringing militant unions to heel and making them accountable through our registered organisations legislation and outlawing corrupting payments by businesses to unions.

And it is the Turnbull Government that has secured the passage of almost 180 bills since the last election, in a Parliament which was roundly written off as unworkable at the time.

One of the most important pieces of legislation passed was our small and medium sized business tax cuts, as part of our broader Enterprise Tax Plan that would reduce business tax to 25 per cent. This would not only support the increased investment needed to spur growth and create jobs, but ensure Australian businesses are not left stranded and uncompetitive in a world embracing lower taxation.
A lot is happening and there is a lot to lose if a Labor Government is given the opportunity to change all this, having long fought us on these positions.

In 2007 the Australian people gave Labor the benefit of the doubt, and paid a heavy price for it.

*****

Just like in 2007, Labor is not a benign option for our economy, and it is important that those who believe in growing our economy do not allow themselves the excuse that we can afford another Labor Government.

Tonight I want to talk about the key reasons why Labor and Bill Shorten’s dark vision would suffocate our economy just as we are entering a new growth phase.

A dark economic vision that values envy and populism over growth and jobs.

This vision foolishly thinks increasing the tax burden on Australian households will actually help the economy. It sacrifices jobs on the altar of ideology.

Since the Budget I have continued to set out the Turnbull Government’s economic narrative. It is a message that is unashamedly geared towards economic growth, because an economic policy platform that fails to have growth as its core pursuit or its end game, sets the nation up to fail.

So just in case some people think they can risk their business with Bill Shorten becoming Prime Minister, allow me to provide a gentle and respectful warning.

If Bill Shorten becomes the next Prime Minister, Australian households and businesses will be slapped with a crushing $164 billion tax bill, according to new Treasury modelling I have released this evening.

A $164 billion tax slug over ten years dumped straight on top of an economy that is getting back to its feet and moving towards better days ahead.

These extra taxes will smash through our tax speed limit of 23.9 per cent for taxes as a share of our economy, that Labor have already said they will abolish and not be bound by. At the last election this was estimated to rise under Labor to 25.7 per cent, and it is now closer to 26 per cent.

I asked Treasury to prepare these costings of their specific tax measures based on Labor’s own policy announcements. The costings are to the same standard that Treasury would apply if asked to do a costing under the Charter of Budget Honesty.

It calculates the true extent of Labor’s catalogue of taxes on housing, investment, wages, small businesses, family businesses, savings and wages.

Firstly, Labor’s Housing Tax – a $20 billion tax on mum and dad investors through Labor’s plan to abolish negative gearing for established homes.

And because they are related …

Labor’s Investment Tax – a $13 billion tax increase in capital gains tax for all assets by 50 per cent, by halving the CGT discount.

Labor is oblivious to the impact the abolition of negative gearing and halving the CGT discount would have on a housing market that is already showing signs of easing in the most important markets of Sydney and Melbourne, and is continuing to struggle in Perth.

Careful and targeted action was required to mitigate the risks of an overheating property market that was impinging on housing affordability, particularly for first home owners.

And that is what the Turnbull Government delivered.

Our regulatory measures to curb lending growth have worked to let out some of the steam in our hotter housing markets, without impacting markets that have struggled for the last few years.

As a result, the growth in investor lending has slowed, house price growth is moderating, and first home buyers are re-entering the market.

The IMF has given this targeted approach a resounding tick of approval.

Labor’s reckless plans would lead the Australian housing market to a hard landing, with the negative impacts flowing directly to the Australian economy.

We need more investment in our economy.

You don’t increase investment by taxing it more.

Labor’s Tax Return Tax – a $1.5 billion tax courtesy of Labor’s proposal to slap a $3000 cap on the amount individuals can deduct for managing their tax.

Bill Shorten likes to yell about stopping the wealthy from minimising their tax through clever accounting, but it’s just another con.

This change will slug every day Australians who have complicated tax arrangements and those going through the heartache of divorce or redundancy disputes who may require intensive tax advice.

It will also restrict the ability of those who feel they have been unfairly treated by the ATO, from heading to court to argue their case.

If you have a dispute with the tax office, you should get your day in court, and you should be able to access the advice you need to make your case.

Labor’s Higher Income Tax – a $22 billion tax on wages – courtesy of Labor’s plan to reimpose the deficit levy. Under Labor new taxes are never temporary.

This aspiration-sapping plan would take the top tax bracket to 49.5 per cent; one of the highest tax rates in the OECD.

This is Bill Shorten reaching into the pockets of Australians and clawing back half of the extra money they earn. One dollar for them, one dollar for him.

This could result in some of our best minds heading overseas where the tax rates are less burdensome.
Labor has also committed to impose a higher Medicare levy on the 3.4 million Australians earning over $87,000, but not one cent of this levy will go towards funding our National Disability Insurance Scheme. So what’s the point?

The Turnbull Government committed to increasing the Medicare Levy by 0.5 percentage points, to fill the $55.7 billion black hole left by Labor for this important scheme; rather than leaving it to the variabilities of tax revenue.

Labor remain in negligent denial about this funding gap and believe they left office in 2013 with the NDIS fully funded, perhaps they believe the four years of surpluses, Wayne Swan announced that night.

Another con.

But despite saying they don’t need it, they still want to increase the Medicare Levy, just because they can.

It’s simply a naked tax grab instituted for no other reason than to satiate Labor’s desperate need to raise tax and spend more money.

Labor’s Family Business Tax – a $22 billion tax on family businesses, with Labor planning to impose a 30 per cent tax rate on distributions from discretionary trusts.

Another envy bandwagon tax under the guise of clamping down on the wealthy that has consequences for many families who would be amused at the suggestion they are rolling in cash.

Particularly family businesses in regional areas, where the variables of the weather year-to-year can impact your cash flow and income, not just on farms.

These families use trusts legitimately to spread income between beneficiaries, to assist in flexibly managing their affairs.

These trusts also play a critical role in keeping assets in the family.

Nonetheless, Bill Shorten is coming after you.

Labor’s Savings Tax – $25 billion worth of new taxes on your superannuation savings; lowering the annual non-concessional contributions cap to $75,000; lowering the high income super contribution threshold to $200,000, reversing the introduction of catch-up concessional contributions, and reversing changes to tax deductibility for personal contributions.

This coterie of taxes has one net outcome – punishing Australians who are saving for their retirement.

Their decision to scrap the catch-up contributions targets mothers on maternity leave who will be prevented from contributing extra to their superannuation when they resume work.

It would also hurt those who have spent years out of the work force.

And who can forget the Tradie Tax – Labor’s changes to tax deductibility for the 800,000 who are self-employed, which is less about raising tax revenue and more about protecting Labor’s industry super donors.

And finally, Labor’s Growth Tax, imposing higher Taxes on Business earnings – a $59 billion tax on Australian businesses, courtesy of Labor’s plan to reverse the Turnbull Government’s Enterprise Tax Plan.

There is no question Bill Shorten will not proceed with our full Enterprise Tax Plan for businesses with a turnover of greater than $50 million. They continue to oppose its implementation in the Parliament as we speak. This will risk investment and put Australian businesses at a competitive disadvantage to their competitors overseas, and send jobs offshore.

But what they continue to deceive Australians about is reversing the tax cuts we have already legislated for the 3.2 million businesses with a turnover less than $50 million.

Every time Labor talk about a $65 billion tax cut to business, they commit themselves to hitting small businesses with a giant stick.

Not implementing the balance of the Enterprise Tax Plan for businesses with a turnover of over $50 million, hits those businesses with a $35 billion tax bill.

Labor’s policy at the last election, and included in their election costing, was to only allow tax cuts for companies with a turnover of up to $2 million. That policy remains unchanged by Labor.

Reversing the legislated tax cuts for firms with turnovers between $2m and $50m will impose a $25 billion tax bill on those businesses – impacting their growth and the jobs and wages that depend on that growth. 3.3 million Australians work in those businesses.

Labor are relying on this $25 billion to pay for commitments they have already made.

Labor have to fess up, tell Australian small and medium sized businesses that you are going to reverse their tax cuts, tell the Australian people that you can’t afford your promises or tell them that you’re going to increase the debt and deficit even beyond the higher levels you have already confessed to.

Bill Shorten and Chris Bowen should face Australian small business owners and tell them straight: That Labor is going to increase their taxes.

No more fudging, come clean.

There are almost 18,000 small businesses in Bennelong that are waiting for Bill Shorten’s answer before December 15, and if he fails to tell them, then he will confirm once again why Australians cannot and do not trust Bill Shorten, because he’s shifty as.

*****

But speaking of Bennelong, this is not the only risk that Labor presents to voters at this by-election.

Labor arrogantly hopes the people of NSW have forgotten what the NSW Labor party did to their State when they go to the polls on December 15 and ask them to vote for the former Labor Premier that the people of NSW voted out en masse just over six years ago, for Labor’s worst ever election defeat.

On that day they removed the scandal-plagued Keneally-led Labor Government from office; a government that had dragged the NSW economy to the bottom of the pack.

It is a matter of public record that those who sponsored, assisted and were promoted by Kristina Keneally as Premier and beforehand, are now in prison.

But while these are all important issues to consider at the ballot box, there are also the important questions of economic management.

The creation of jobs, the price of electricity, the liveability of cities and towns and the infrastructure that enhances them – this is where the Labor Keneally Government’s abject failure did the most damage to the people of NSW.

Economic growth in NSW lagged other States, the unemployment rate was above the national average and residential building approvals were less than half of where they are now.

Under the Coalition’s economic management in NSW, our State has reclaimed its mantle as the economic powerhouse of the nation.

Growth has increased, 372,000 jobs have been created, unemployment sits at 4.6 per cent, well under the national rate of 5.4 per cent. NSW under the Coalition is now in the midst of the longest construction boom in NSW history, evident by the cranes that dot Sydney’s skyline.

In 2016-17 over $5.6 billion of work was completed on roads in NSW, while the pipeline of work has ramped up to record levels; more than twice as large as the pipeline inherited from Labor.

And this week the PM and John Alexander announced a $100 million commitment to build a bus interchange in Bennelong to ease congestion.

The Keneally-led Labor Government also left the State’s finances in disarray with $4.4 billion worth of deficits and $14 billion of net debt forecast. Six years later, and the State has $7.9 billion in surpluses forecast and net debt has been erased.

The 2011 Financial Audit Report conducted by the Acting NSW Treasury Secretary, concluded that under Labor there was a “marked deterioration in the State’s financial position’’ which reflected “a lack of fiscal discipline” and “a failure in the application of the Budget process and a failure of financial leadership of the State.’’

This is what Kristina Keneally and Labor are offering the voters of Bennelong. Don’t let Labor do to Bennelong what they did last time to NSW and what they did last time to Australia. Australia cannot afford it.

Once bitten, should be twice shy.

This should be as true for business in Australia, as it is for the people of Bennelong.

The Turnbull Government is getting on with the job and getting the results.

The difference in approaches to economic management with Labor and our record could not be clearer.

Labor have forfeited the right to the benefit of the doubt, whether in Bennelong or nationally.

Labor will put all that business has worked so hard to achieve at risk. You can see the opportunities ahead. Labor’s anti-business policies will snuff them out.

The Turnbull Government is making the right choices to secure the better days ahead, based on principles of fairness, security and opportunity.

We seek your ongoing assistance in ensuring that we can continue to do this for our economy, to deliver the jobs, higher wages and services, supports that rely on a growing economy.

Thank you.