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Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

16 June 2013

Treasurer's economic note

Winter has well and truly arrived in Canberra, so while I'm not necessarily looking forward to returning to the chill of our nation's capital, I am really excited about what we have on the parliamentary agenda in this final sitting fortnight before the Parliament rises ahead of the election. This has been a very effective Parliament in legislating some huge reforms that put our country on a solid footing for generations to come, like the creation of DisabilityCare Australia, putting a market price on carbon and passing three Budgets. This has been no mean feat given the cards that were dealt by the last election with a minority government for the first time since the war. But despite the challenges that come from not having a majority government, it won't surprise you to read that what I'm most proud of are the enormous steps we've taken to build on our fundamental economic strength, and the big calls we've continued to get right. It's been hard yakka, but it's been worth it.

Despite our economic success, we can't rest on our laurels when it comes to reform. The work of reform is never done. That's exactly why this Government has been so determined to lock down our education funding reform agenda, because the key to a stronger economy into the future is a smarter nation. In public life, if you don't understand or don't accept this basic premise, then you are in the wrong line of work. So in this final parliamentary stanza you can expect the Government to be relentlessly focussed on the strengths of the Australian economy today, and how our education reforms will set our economy up for the future. In fact, I'm quite happy to be upfront about the fact that the Government's parliamentary focus this sitting fortnight will be all about the economy and education. We'll also be getting on with the job of legislating the big reforms with parliamentary votes on our historic investment in schools, as well as our important amendments to the 457 visa framework and the Fair Work Act.

Sending our kids to the top of the class

Our National Plan for School Improvement, born from the Gonski schools review, is smack bang in the middle of the Gillard Government's agenda for creating a smarter Australia. The Plan works from the starting point that every single Australian kid, no matter what circumstances they are born into, deserves the resources and support to receive a first-class education. The Gonski review found, quite plainly, that this isn't the case at the moment with our existing and broken funding model. We also know that we are being overtaken by some of our competitors, especially when compared to our Asian neighbours. So the onus is on the Government to do something about it. And we are.

The Asian Century White Paper handed down late last year contained within it the ambitious goal of lifting our school students' performance into the world's top five by 2025. But the fact is, that isn't going to happen if the status quo prevails. Now, it is very disappointing that some have decided to campaign against the reforms. But that won't for a moment dent the Government's determination to get this job done. These reforms will foster a generation of scholastic excellence that will set Australian kids up better than they have ever been before to take on the world, and meet future challenges head on with skills, ideas and boundless imagination. They will be equipped to take the jobs at the top of the value chain, and ready to contribute to an Australian economy that is diverse, prosperous, and integrated in global markets.

Despite the predictable, tired and partisan negativity in some select quarters, I'm buoyed by the wide coalition of people around Australia who recognise just how important these reforms are. This includes the Government of South Australia, who have now joined both New South Wales and the ACT in signing up to the Plan. South Australia's decision secures $1.1 billion more for their schools over six years. The Prime Minister also continued her personal efforts with the States this week in Western Australia, meeting with Premier Colin Barnett and providing new figures on how much Western Australian schools will benefit from our offer, following an update to the data underpinning the school funding model. It's a fair and generous offer – with the Commonwealth contributing two-thirds of the funding needed to bring schools up to the new funding standard – which illustrates how committed we are to giving school students in every single State the best possible start in life. In the same way that we won't accept children born into less well-off circumstances should receive a second-rate education, we also don't believe that your state of birth should impede your ability to reap the benefits of this innovative reform plan. So for our part, we'll continue working with State and Territory Governments to secure their agreement by 30 June so that there's funding certainty for the start of the 2014 school year. One thing is certain: the pages of history will reflect very poorly on anyone putting partisan political interests ahead of the interests of their school kids.

An economic debate based on facts

As we look ahead to the future with confidence that the Australian economy will be stronger than ever as a result of our education reforms, it's appropriate to pause and reflect on how Australia's place in the world has improved in the five years since the GFC ravaged the global economy. There is no doubt that we have great cause for optimism in Australia, with a glass that's by any credible measure considerably more than half full. As Treasurer, I see it as my job to make assessments based on the hard facts of our economic performance. Sadly, there are some in our public conversation who take a different view, and make it their life's work to talk the Australian economy down no matter how out of step their prophecies are with these facts.

Let's just step through some of these Australian economic realities. Our country continues to grow solidly, 14 per cent larger since the Government came to office, outperforming every major advanced economy and the vast majority of the developed world along the way. Our employment record is also something that almost every developed economy would trade for in a heartbeat, as we saw underlined yet again in this week's labour force data which showed around 960,000 jobs created in Australia since late 2007. This compares to the millions of jobs shed around the rest of the world since the GFC, with the euro area recently registering an unemployment rate of 12.2 per cent – a disappointing new record high. Alongside solid growth and a low unemployment rate of 5.5 per cent, we also have contained inflation, which has given the RBA room to cut interest rates to new record lows. And of course, we have responsible borrowings and low net debt, which is expected to peak at just one-eighth of the average of major advanced economies as a percentage of GDP.

The sum of these parts is an Australian economy with a combination of strengths that is without question the envy of our peers around the world. This is recognised time and again internationally, whether it is from leading authorities such as the IMF or the OECD, or by the global credit rating agencies who have all awarded Australia the prestigious AAA rating for the first time in our nation's history.

Now, I'm all for a robust and constructive debate about the economy, the challenging transitions ahead and the steps we should take as a nation to secure our future prosperity. But when the objective facts get thrown out the window the economic debate really suffers. Frankly, it is irresponsible as well. So this week I penned a piece in response to the cohort of commentators who ignore these important facts. Those of us in the public sphere have a responsibility to not mislead the public, especially given how it impacts confidence, and to reinforce why it's vital the facts shine through, showing up hyperbole and hypocrisy wherever they rear their ugly heads.

The choice for the future

We're coming up to a pretty stark and very important choice for how we want to see our nation progress into the future. It is a choice as much about our nation's character as it is our economic direction. In many ways, that choice can be boiled down to a simple threshold question: do we believe that investing in our kids is the best way to secure our future prosperity? I'm proud to be the Treasurer of a Government that does believe that to be strong, you must be smart. It is the Australian way. And with the plan we have for the future, we will continue to stand head and shoulders above the pack.

Wayne Swan
Deputy Prime Minister and Treasurer of Australia