The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

26 February 2012

Treasurer's economic note

Over the past 18 months, the Gillard Labor Government has got on with the job of preparing our nation for change, like the shift in global economic weight from West to East, the ageing of the population, and the transition to a clean energy future. And on Friday, we received a timely reminder of how well placed our economy is to deal with these changes. In his testimony to a parliamentary committee, Reserve Bank Governor Stevens highlighted Australia's rock-solid fundamentals: we have growth around trend, low unemployment, contained inflation, a sturdy financial sector, strong government finances, a huge investment pipeline and a triple A credit rating from all three international ratings agencies.

But we know it is only by making the right decisions today that we can grasp the opportunities of tomorrow, just as the Hawke-Keating Government did when it transformed Australia into an open, modern economy. Preparing our nation for the future is why the Gillard Labor Government is investing more in apprenticeships and training, and taking steps to improve workforce participation. It's why we're reforming the tax system to provide a fairer return on the nation's resource wealth and tax breaks for businesses outside the mining boom fast lane. And it's why we're rolling out a superfast broadband network  to link our households, hospitals, schools and businesses. Policies that manage change and bend it to our advantage are the best way to build prosperity for all Australians

Spreading the benefits of the mining boom

Under the Prime Minister's leadership, we've introduced legislation to provide Australians with a fairer return on their mineral wealth, which they own 100 per cent. While demand for our resources is clearly a major benefit for our economy, it's also accompanied by a higher dollar that's making life tougher for manufacturers, tourism operators and other businesses that compete in international markets. With the Minerals Resource Rent Tax, we will use the strength of the mining boom to strengthen the entire economy.

Revenue from the MRRT will provide a tax break for Australia's 2.7 million small businesses from 1 July this year. It will also help fund critical investment in roads, bridges and other infrastructure, relieving capacity constraints particularly in our great mining regions. And importantly, we're saving some of the gains from the MRRT through superannuation, with a boost to the super guarantee for 8.4 million workers, and new concessions for 3.6 million low‑income workers. These changes are expected to increase Australia's pool of retirement savings by $500 billion by 2035. We all know Australia's resources boom won't last forever. The MRRT will help lock in the gains for generations to come.

Putting a price on pollution

We are putting a price on carbon to prepare our economy for the clean energy jobs and industries of the future. This essential reform is necessary for us to remain competitive as the world moves to cut pollution. Putting a price on carbon  will drive innovation in less polluting ways of producing goods and services, and tilt the balance towards investment in renewable energy and other low-emission technologies. The carbon price will only apply to around 500 of Australia's largest polluters.

Every cent raised will go to supporting households and jobs, and tackling climate change. On average, households will see cost increases of $9.90 per week, while the average assistance will be $10.10 per week. The assistance will be delivered through increases in pensions, allowances and family payments in May and June this year, and also through personal income tax cuts from 1 July for all taxpayers earning up to $80,000. The tripling in the tax-free threshold will deliver a tax cut of at least $300 next year for around 60 per cent of taxpayers and take around one million people out of the income tax system.

Investing in skills and infrastructure

The Gillard Labor Government delivered a $3 billion skills package in last year's Budget including 130,000 new training places. We've also introduced reforms that are having real benefits for students and families, including the national curriculum, modernising facilities in schools across the country, investing in teacher training, providing more power to principals, and providing more information to parents than ever before through the My School website . The Government has already almost doubled funding for schools to more than $65 billion over four years. And through the Gonski review, we have taken the next step towards a new funding model that delivers the best results for Australian schools and families.

In terms of infrastructure, we have secured the structural separation of Telstra, an essential reform to increase competition and allow the roll-out of the National Broadband Network. We've also doubled investments in roads, railways and ports, which is crucial to boosting productivity and future economic growth.

Better health outcomes

Last year the Gillard Labor Government reached an historic health agreement with the States to deliver an extra $19.8 billion for public hospitals through to 2019-20. The deal is delivering more beds, more services, and more local control to hospitals around the nation. The deal also provides for higher levels of accountability for hospitals and more transparency through strict reporting at the MyHospitals website .

Another critical health reform was the passage this month of legislation through the lower house to means test the private health insurance rebate . This measure will help ensure spending on health care is sustainable and targeted to where it is most needed. Around nine in ten Australians won't be affected at all by the changes. I think most Australians understand it is simply not fair for low and middle income Australians to continue to subsidise the health insurance of households with incomes of more than a quarter of a million dollars a year.

Delivering for all Australians

Whatever the political events of the past few weeks, Australians have every reason to be proud of our nation's long list of achievements. Many of the reforms achieved were long talked about, but Prime Minister Gillard had the courage, conviction and determination to overcome the obstacles and see them through to completion. Despite the challenges of minority government, a total of 229 bills have passed through the Parliament, ranging from the legislation for the Clean Energy Future package to the one-year Flood Levy to help rebuild communities devastated by last summer's natural disasters. Under Prime Minister Gillard's leadership we will continue with the job of building a stronger economy and a fairer society through things like better pay for Social and Community Sector workers, laying the foundations for the first ever National Disability Insurance Scheme, and investing in the education of our future generations.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia