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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

12 May 2013

Treasurer's economic note

This week's note comes to you from the Commonwealth Treasury building in Canberra where I have been with our hard-working Treasury officials for the past week, finalising the 2013-14 Commonwealth Budget. There are some amazing autumn colours surrounding the Treasury building, but we have our heads down, adding the finishing touches to this really important Budget before it goes off to the printers.

More than any Budget over the past five and a half years this one is about choices, in particular the choices to make our economy stronger, our nation smarter and our society fairer. While the lead-up to Budget week is always a hectic time, it also provides pause for thought to reflect on some of the big decisions we have made in the past. I've had the privilege of putting together five Budgets before this one, each framed to take into account the Government's values, beliefs and priorities, and to deal with the challenges our nation has faced. In many ways each Budget - and the stimulus package we implemented at the height of the global financial crisis - have been milestones in our nation's economic journey. That journey has brought us to a place where the combination of our economic strengths is the envy of just about every advanced economy in the world. We've weathered some storms, and dealt with some setbacks, but we've charted a responsible course towards a stronger, smarter and fairer Australia. And that's exactly what you can expect from me again on Tuesday night.

DisabilityCare and school investment reforms front and centre of the Budget

It is because we got the big calls right to secure our future during the darkest of global economic times that we are in a position to take on some really big reforms in this Budget. By contrast, so many advanced economies are trawling through the rubble of recession, where reforming their economy and nation for the future is a long way from reality. We are currently embarking upon two reforms that rank among the most significant in this country's history, and I'm sure it won't surprise you to read that DisabilityCare and the National Plan for School Improvement are the big ticket items that will be front and centre of the Budget. These reforms have not been conceived for the short-term; rather, they are essential long-term initiatives critical to our core mission of building a stronger, smarter, and fairer Australia.

We're so well placed in Australia to now reap the opportunities unfolding on our doorstep in the Asian century, and for that, look no further than the National Plan for School Improvement - or the Gonski Reforms if you'd prefer. These education reforms represent an historic increase in education funding that will greatly improve the quality of teaching and learning to put Australian schools in the world's top five in maths, reading and science. It will give Australia the best possible chance to win the education race - which we know goes hand in hand with winning the economic race. So by funding these reforms for the long term in the Budget, we will secure not only a dramatic improvement in the quality of education for millions of Australians now and into the future, but we'll also increase productivity and strengthen our economy.

DisabilityCare Australia is another truly landmark reform, and the long-term funding decisions made in this Budget will ensure it becomes a permanent feature of Australia's social safety net, so that we leave behind Australians with a disability no more.

Other budget initiatives to make Australia fairer and stronger

Today Assistant Treasurer David Bradbury announced the Government's intention to sign an updated tax treaty with Switzerland  to boost investment and fill a crucial gap in our ability to access international tax information. Until now, we have hit a road block investigating people who are suspected to be hiding their money in Swiss bank accounts to avoid paying their fair share of tax. This treaty means we'll be able to share information with the Swiss authorities so we can track down those who are hiding money overseas. Since we signed a similar agreement with Singapore in late 2010, the ATO has been able to track down more than $100 million in revenue. This is part of a renewed global push to tackle international tax avoidance that I've consistently advocated in international forums such as the G20, because if highly profitable companies or individuals use tax havens to minimise the tax they pay, then it's regular Australians who ultimately pay.

My colleague the Health Minister Tanya Plibersek also made announcements this morning relating to support for research and detection of breast and prostate cancer. Some of the initiatives I'm most proud that we have made since coming to office have been in improving our country's detection and treatment of cancer. So it is great to be able to confirm that in the Budget there will be $55.7 million to expand free breast cancer screenings to women from 69-74 years of age. We know that age is the biggest factor in breast cancer risk, so targeting this age range will mean more cancers are being picked up and picked up early. I'm also very pleased to confirm that $18.5 million is in the Budget to fund three prostate cancer research centres. As a prostate cancer survivor myself - whose life was saved by innovative treatment - I'm personally very proud that this investment has been made to ensure that more lives can be saved.

Low interest rates and more Aussie jobs

I was also delighted to see two pieces of positive economic news during the week. On Tuesday the Reserve Bank cut the official cash rate to a new record low of 2.75 per cent . I'm really proud of the fact that a family with a typical $300,000 mortgage is now around $5,500 better off every year than they were when we came to office. The RBA has had the room to cut rates consistently over the last 18 months because inflation remains contained, and the Government's fiscal discipline has certainly contributed to this, along with competitive pressures from the sustained high dollar.

Then on Thursday we had the release of labour market data, which showed more than 50,000 jobs were created across the country in the month of April . I'm always pretty cautious about putting too much weight on monthly employment figures, but one thing that is absolutely worth celebrating is the fact that more than 960,000 Australian jobs have been created since we came to office in late 2007. That's a record I'm immensely proud of because this Labor Government has always put jobs at the top of our list of priorities - just as I will again this Tuesday night in the Budget.

We'll keep getting the big calls right for jobs and growth

As we enter budget week, it is very satisfying that our economy has outperformed the developed world over the past five years. But it's true too that this strength has also resulted in a sustained high dollar, bringing with it a set of new challenges, and contributing to an unpredictable and unprecedented whack to our revenue base. We've made a big decision to delay our return to surplus in response to this challenge, because we knew that to make vicious cuts in the near term would have tanked our economy and jeopardised the jobs we've always been so determined to support at every stage of our time in office. While the politics of this year's Budget may be rugged as a result of that decision, there is absolutely no doubt that we have made the right decision by picking jobs and growth over political expedience. Because that's what this job is all about at the end of the day, getting the big calls right on behalf of the Australian people.

Before signing off, I want to issue a deeply held message of gratitude to every single person working hard day and night at the Treasury Department, and right across the government, to put the Budget together. It is hard yakka, but without their tireless efforts our objective of building a stronger Australia simply would not be possible. My sincere thanks.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia