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

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

10 February 2013

Treasurer's economic note

I spent a lot of time over the summer thinking about the great opportunities we have in 2013 to put in place some key reforms that will make Australia an even better country. We know there's a lot to do this year, so it was great to get our teeth into it back in Canberra this week.

This year we will deliver on two vital planks in our plan for Australia's future: the National Disability Insurance Scheme and the Gonski reforms to lift Australia's school performance. These are reforms that will ensure each Australian can realise their individual potential and get the opportunities they deserve, and will also boost the whole country's productivity and its ability to make the most of the Asian Century.

In three months time I will be handing down this Government's sixth Budget which will ensure these significant reforms are funded in such a way that they are sustainable well into the future. As the PM said in her Press Club speech the week before last, we will be focussed on finding the right structural savings, always underpinned by fairness.

Domestic economy

On Tuesday, the Reserve Bank decided to leave the cash rate steady, after cutting rates a number of times over the last 15 months. Of course, the Government's responsible budget strategy has already given the Reserve Bank room to deliver the equivalent of seven interest rate cuts in just over a year in response to ongoing global volatility. This means that a family with a $300,000 mortgage is now paying around $5,000 a year less in repayments than they did when we came to office. For families with a larger mortgage, average savings on interest repayments are even greater. That's very real relief for countless families across Australia, who also will have the option of paying off their mortgage a lot faster than they could before Labor came to office. While transitions in our economy aren't always seamless, lower interest rates will continue to provide support to sectors like housing, where we are already seeing early signs of improvement. The impact of rate cuts will gradually work their way through the economy, providing support to millions of families and small businesses across Australia.

The Reserve Bank also released its quarterly Statement of Monetary Policy  on Friday, which highlighted that the downside risks to the global outlook had lessened in recent months. This reflects recent actions by policymakers in both the US and Europe, in addition to encouraging signs of stabilisation in China and our broader region. Despite this, there are still deep-seated challenges plaguing many advanced economies which are struggling to kick-start growth and make inroads into stubbornly high unemployment rates. As the Statement highlighted, Europe remains a potential source of instability and the US still needs to resolve its rolling fiscal challenges in a way that supports growth.

The Statement also confirmed that Australia's economic fundamentals remain resilient, despite a slight downgrade to the RBA's growth forecasts. There's no doubt that severe global headwinds, particularly towards the end of last year, contributed to patchy conditions in some sectors and weighed on confidence. This has added to pressures from a high dollar and cautious consumer behaviour. Despite this, the RBA is still expecting solid growth and contained inflation over the forecast period, which builds on Australia's record of resilience of the past five years. The fact that our economy is 13 per cent bigger than it was before the Government came to office puts Australia in a different league to most advanced economies. While some businesses remain cautious in their approach to hiring, it was also heartening to see unemployment remain low at 5.4 per cent in January, with nearly 850,000 jobs created since the Government came to office.

On Friday the Australian Taxation Office provided the Government with combined Minerals Resource Rent Tax revenue figures for the first two quarters of the 2012-13 financial year, showing that the revenue totalled $126 million to date. As I said late last year, it is clear that revenues from resource rent taxes have taken a massive hit due to the impact of continued global instability, commodity price volatility and a high dollar. The Government has always supported increased transparency in our tax system and we believe any revenue from the MRRT should be published, which is why I made this information public just hours after it was received. It can never be forgotten that these are minerals that are owned by all Australians, so the benefits should be shared in by everyone.


The resilience of Australia's economy is always a topic of conversation when I meet with G20 Finance Ministers, which I'll be doing again later this week in Moscow. These meetings provide an important opportunity to take the temperature of the global economy with my international counterparts. It is encouraging to see that so far in 2013 we've seen some cause for cautious optimism for growth in some of the world's largest economies.

One of the things I will pursue at the G20, and which my colleague, Assistant Treasurer David Bradbury, recently announced, is this Government's commitment to improving the transparency of corporate taxpayers and increasing cooperation between nations to close tax loopholes. While the vast bulk of businesses and individuals pay their fair share of tax, there are some that undertake their business activity in one country but then shift their profits to another so that they effectively pay no tax. This is an issue of concern right across the G20 and requires international cooperation to address.

The PM and I were pleased to announce last week Richard Goyder AO, Managing Director and Chief Executive Officer of Wesfarmers Limited, has accepted our invitation to head the B20, a key business group that will lead business engagement during Australia's presidency of the G20 in 2014. Mr Goyder is a successful business leader, heading a thriving Australian business which is the country's largest employer. He will head the B20 group of around 20 leading business people, giving Australian business a very prominent voice in shaping the global agenda as we head toward Australia's G20 host in 2014.


Unfortunately again, this summer saw too many Australians having to grapple with the devastation of floods and bushfires and that heartache continues today as people set about rebuilding their lives. My home state of Queensland was once again battered by the forces of nature just two years after the widespread devastation of Cyclone Yasi. As a Government, we must stand by everyone who has been touched by these disasters as they rebuild their lives in the coming months. To that end, the Federal Government is committed to working with local and state governments to rebuild affected areas, and we have made payments available for those severely affected. On Friday we announced that we had signed a new National Partnership Agreement with the Queensland Government specifically aimed at rebuilding of the state, ensuring that all levels of government can work most effectively together to get Queensland back on its feet as quickly as possible. We also confirmed on Friday that we will not be implementing a levy to fulfil our Commonwealth contribution to the rebuild.

The Year of the Snake

One of Australia's vibrant communities, the Chinese community, is sitting down to banquets across the country to celebrate Chinese New Year today. The Chinese community has a long history in Australia and has enriched this country immeasurably. The Government's Asian Century White Paper recognised this enormous contribution, that will give Australia a greater ability to compete globally in this, the Asian century. I wish you all a very happy new year – the year of the snake.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia