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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

22 July 2012

Treasurer's economic note

It was great getting out and about during the week in communities from South Australia to Far North Queensland. One of the things I'm always impressed by is how so many Australians are preparing for the economic opportunities of tomorrow even as they deal with the challenges of today. I met with business operators facing cautious consumer spending who were looking to the opportunities and efficiencies that the Internet can provide. I met farmers getting back on their feet after natural disasters and tourist operators battling a high dollar who were looking to potential new markets in our region. I met with local leaders looking to the benefits new roads, improved port facilities and faster broadband can deliver their communities. It was a reminder just how important it is for policymakers at all levels to also have an eye firmly on the future.

New Approaches to New Challenges

Unfortunately, too often debates about economic policy seem to be stuck in a time warp, as renowned economist Jeffrey Sachs said last week. Writing in the Financial Times, Professor Sachs noted that simplistic arguments revolving around the level of government spending and taxation won't help address future challenges. The world is changing and different strategies are required: "The new approaches must be long-term, structural, sensitive to inequalities of skills and education, aligned with the need for more sustainable technologies and 'smarter' infrastructure (empowered by information technology) and congruent with long-term demographic trends."

Although Professor Sachs was writing about the situation in the United States, his argument applies equally to Australia. Yesterday's solutions won't make our economy sustainable beyond the mining boom or ensure the benefits are more fairly shared. They won't deliver an adequate retirement income for our ageing population. They won't provide faster broadband speeds to households and businesses across the nation. And they won't address the challenge of climate change or help build the clean-energy industries of the future. New policies are needed to meet new opportunities.

That's why the Gillard Government is investing more in education and training, and encouraging greater workforce participation to ensure our economy has the skilled workers it needs. That's why we're reforming the tax system to provide more reward for effort, better incentives to invest, and a fairer return on the nation's mineral wealth. That's why we've put a price on carbon pollution to ensure we take advantage of the clean-energy industries of tomorrow.  And that's why we're building a National Broadband Network to link our households, hospitals, universities and businesses to each other and to the rest of the world.

Connecting to the World

I was in Adelaide on Monday where I saw the progress that's being made in rolling out the NBN. Like in so many other communities I've visited across Australia, it was great to see the enthusiasm about the opportunities superfast, affordable broadband will deliver for education, for healthcare and for business. While the copper telephone network has served us well, it's clear it can't provide the services and speeds we'll need in the future. Superfast broadband is also absolutely vital to securing long-term productivity growth. In fact innovation from information and communications technology is estimated to be the single biggest driver of business productivity. A Deloitte Access Economics report last year found that the direct contribution of the Internet to the economy is about $50 billion and that figure will increase to $70 billion by 2016.

Countries around the world have already rolled out their own networks or are in the process of doing so – places like South Korea, Japan, Singapore, China, Germany, France, the Netherlands and Sweden. During the week, the latest OECD broadband figures reinforced how important the NBN will be for increasing Australia's international competitiveness. We rank only 21st out of 34 economies in terms of fixed-line broadband penetration. That, of course, will improve as the NBN rollout gathers pace. Work is expected to be underway or completed for more than 3.5 million Australian homes, businesses, schools and hospitals by 2015. Check out the searchable map on the NBN website for details of when the rollout is likely to start in your town.

Shifting to Clean Energy

Another area where it's critical we keep up with the rest of the world is in the shift to cleaner forms of energy. By next year, more than 850 million people will live in a region where big polluters have to pay for their pollution.  In fact 94 per cent of OECD members have or are implementing an emissions trading scheme at a national or regional level. For instance, there's already a carbon price of around A$24 a tonne in Ireland, around A$145 per tonne on heating fuels in Sweden, up to A$64 a tonne on petrol in Norway, about A$28 a tonne in Canada's province of British Columbia and the United Kingdom's price floor for the electricity sector starting at A$24 a tonne in 2013-14. And I'm just back from China, which is developing pilot emission trading schemes covering over 200 million people, with plans to take it nationwide after 2015. There's no doubt the rest of the world is acting.

As the highest polluter per person in the developed world, Australia would have been increasingly exposed if we hadn't acted. If businesses and industries had remained locked into old practices and deferred investments in cleaner, more efficient technology, our economy would have slipped further behind our international competitors. It's clear we didn't have to worry about going early; the focus is on keeping up – ensuring we position Australia as a beneficiary of the transition underway in our region and in the wider world.

I've always welcomed a robust debate, whether it be about particular policies - like the carbon price or the NBN - or our overall economic prospects. But the debate needs to proceed from a firm foundation of facts. That's one of the reasons why I started this Economic Note three years ago. From today, I also plan to start sharing interesting economic facts using the #EcoFact hash tag on Twitter to further kick along the debate. A vigorous contest of ideas remains the best way to ensure we keep getting the big policy calls and economic settings right for the benefit of all Australians.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia