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

27 October 2008

NO.041

Addtress to the
Brisbane North Chamber of Commerce

Brisbane

27 October 2008

It's great to be here today - both in Queensland, my home state, but also speaking close to home in my electorate of Lilley.

I had a few moments of reflection on the way to speak with you this afternoon. As a North Brissy local, I've travelled our local roads thousands of times. I was struck on this journey by just how much our local area has grown in the 12 years I've been the Member for Lilley, and in the 12 years since the Chamber of Commerce was established.

Probably like you, I also noticed how slowly we were travelling! Congestion in many critical arterials in Brisbane constantly reminds us of the need for Brisbane's infrastructure to keep pace with the enormous growth we've experienced in the northern suburbs. I'll return to this a bit later in my speech.

But in building economic growth here in the northern suburbs, in ensuring that that growth delivers benefits for local businesses, the Brisbane North Chamber of Commerce always plays a critical role. So I do want to acknowledge this afternoon Chamber of Commerce President, Simon Penrose, and also Jim Carden, Corporate Relations Manager for Brisbane Airport, who is today's sponsor.

I also want to acknowledge Yvette D'Ath, the Member for Petrie and a really valued colleague of mine. Yvette and I work closely together in Canberra - she's a terrific advocate for the Petrie community and particularly in bringing the concerns of local business to the attention of ministers.

Today I want to talk about a topic of deep personal interest to Yvette and I, and of critical concern to the Rudd Government. That is: nation building in Queensland, and right across the country.

I'm passionate about this topic because I understand that in the 21st Century, being globally competitive will depend on Australia's infrastructure being world class. Properly functioning infrastructure, in the places where it is needed, will help the businesses that you own, run and work in, be more productive, competitive, and ultimately, to grow. And being such a vital region, when businesses on the northside grow, you help to grow Australia despite extremely difficult global conditions.

The Global Context

It's worth touching on these global conditions.

From the very beginning of this crisis, the PM and I have been upfront with the Australian people. That means looking business leaders like yourselves in the eye and acknowledging that we are in tough economic times. You know it. I know it.

We all know the global financial crisis is affecting financial markets around the world, and we are starting to see the effects in the real economy. Across the world, more than 25 financial institutions have failed or been bailed out. The crisis has buffeted confidence around the world and is contributing to a slowdown in the global economy. Stock markets have fallen around the world, including here, by a third of their value since the beginning of the year. And there has been a shift away from market-linked investments, including property trusts, throughout the global system.

The International Monetary Fund now expects growth of less than 1 per cent in six of the world's largest developed economies next year. This will be the slowest growth in developed economies for over a quarter century.

There is no doubt: though Australia is better placed than most countries, we are certainly not immune from the impacts of the global crisis. We must expect that domestic growth will be affected - we will see that in the Mid Year Economic and Fiscal Outlook, to be released very soon. For 2009 we predicted a modest increase in unemployment in the Budget and we have been upfront about saying it will be increased in MYEFO. No doubt revenue will take a hit as well, with obvious consequences for the size of future surpluses.

But the fundamentals of our economy are strong in comparison to most other nations. We have well regulated financial institutions - of the world's strongest banks, four are right here in Australia. We are located in a region that is still growing, albeit at a slower rate. And we did the hard yards in the Budget to ensure a strong fiscal position to cope with what's ahead, and buffer the nation against the global fallout.

Decisive Action

These strong fundamentals have been bolstered by the decisive action taken over recent days and weeks.

Back in May, when we were preparing the Budget, we foresaw choppy waters ahead. We made those tough decisions to build a strong budget surplus - to help us cope with precarious economic times. Of course, those times are now upon us.

On 14 October, in the face of dangerous global conditions, the Prime Minister and I announced the Economic Security Strategy - a $10.4 billion fiscal stimulus package. $10.4 billion to strengthen the national economy, support sustainable growth, and protect Australians from the financial crisis fallout.

  • It's an economically responsible package, funded from the budget surplus.
  • It's a fair package that puts money in the hands of those who need it most: Australia's pensioners, carers and seniors, and families.
  • It's a package that will provide a temporary kick along to the housing market, through the First Home Owners Boost.
  • It's a package that will help business - directly, through the injection to the Productivity Places Program, and indirectly, through the growth we expect to see as this additional $10.4 billion flows through the economy.

Putting together the Economic Security Strategy was a big decision. But these are extraordinary times - demanding decisive action. The recent 100 point reduction in the cash rate underscored this point. And now monetary and fiscal policies are working in tandem to help Australia confront uncertain economic conditions.

But we have not just acted through budgetary measures. We are attacking this problem from all sides.

The Rudd Government has also taken decisive steps to support and strengthen Australia's financial system:

  • We guaranteed wholesale term funding of our banking institutions;
  • We acted to support competition in mortgage lending by investing an initial $8 billion in prime AAA-rated domestic residential mortgage-backed securities;
  • We strengthened protections for deposit holders, providing a guarantee for deposits in Australian banks, building societies and credit unions;
  • We strengthened protections for deposit holders, providing a guarantee for deposits in Australian banks, building societies and credit unions; and
  • On Friday I announced important implementation details for our deposit guarantee and wholesale funding guarantee.

The measures further refine and strengthen the guarantees the Government is providing Australians in these uncertain times. They are the product of tireless consultation and careful monitoring of our financial markets. The product of countless conversations I've had over recent weeks, days and hours. They show we will always do whatever it takes to make our system even more stable and secure.

I also instructed the Secretary to the Treasury and the Chairman of ASIC to engage immediately with those financial institutions not covered by the guarantee to assess the impact of the global financial crisis on them, and any actions that may be required in future to help them weather the storm. That work continues today. It will be done as quickly as possible, consistent with consulting properly, getting the detail right and also protecting the taxpayer.

I can't and won't promise instant solutions in a time of unprecedented uncertainty, but I can promise that we will work as hard as possible, consistently and decisively to resolve as many issues as possible.

Of course, there are broader forces at work over which we have little control: for example, of the pooled retail mortgage funds that have frozen redemptions, half of them did so before the deposit guarantee was announced. That's a very important piece of perspective.

The global financial crisis will continue to have impacts in Australia. As I have said all along, we are not immune.

It's also important investors don't rush to judgment in uncertain times. As always, I encourage people to get proper financial advice before making big financial decisions about their investments.

It is our job, as political leaders to discuss these issues in a sober and responsible manner. I agree completely with what John Stewart of the NAB said over the weekend, that those who have sought to politicise what is happening on our financial markets have been unhelpful given the enormous turbulence we face.

The decisions announced on 12 October, then in recent days, are partly responsible for the stabilisation of the banking system in recent weeks, and for the banks' ability to pass on the remainder of the RBA's official rate cut. And with a powerful fiscal stimulus, the right monetary policy settings, the right guarantees, and a well regulated and stable financial system - we're more likely to weather this storm, with confidence.

Building Productive Capacity

On top of all this, we are also bringing forward our nation building investments in the future, to boost productivity and deliver a new generation of prosperity.

I've spoken today of the global financial conditions threatening our immediate stability and prosperity. But the crisis also brings a more insidious danger.

Managing the response to global conditions is absorbing a huge amount of energy, time, and attention. But when we emerge from the crisis, the serious, long-term challenges to Australia's competitiveness, productivity and prosperity will still be with us. As a nation, our biggest mistake would be to allow global conditions to distract us from the long-term task of building Australia.

Good governments must have the capacity to manage the conditions of today, while investing in the skills and tools required to confront the challenges of tomorrow. That means we can't afford to stop investing in building national economic capacity.

In the task of growing our national economic capacity, investment in Queensland is critical. Queensland is a key driver of national growth and prosperity. We're a state that works cleverly with our rich natural resources.

We have a recent tradition of strong leadership from state government - a tradition which Anna Bligh has continued throughout her premiership.

But what I hear from Queensland businesses is that capacity constraints are holding you back from achieving your full potential. You could grow more, but transport costs are too high. There are bottlenecks in freight networks - congestion on major arterials, ships lined up waiting for access to ports, like at Dalrymple Bay. The telecommunications services you need aren't available, or they're unaffordable. It's hard to find employees with the skills they need. After so many years of growth, a long resources boom, this simply isn't good enough.

That's why the Rudd Government is taking action to grow our national economic capacity by making real investments in hard infrastructure. But like the response to the global financial crisis, building Australia's economic capacity is a problem that must be tackled from all sides.

We're not going to get the most out of investments in rail and roads when our tax system is dated, and our education system is designed for the economic needs of a different age. We're not going to get the most out of hard infrastructure investments when you are spending time and energy dealing with red tape and senseless duplication across state regulations.

That's why we're implementing reforms to the building blocks of Australia's economy: the education system, our federal system, and the tax system. These reforms will help Australia grow and prosper not just today, but in the decades to come. Long-term investments, with long-term payoffs in improved national productivity.

  • We're building the workforce we need for a productive future by investing in the Productivity Places Program and creating a 21st Century education system through the Rudd Government's Education Revolution.
  • We're building the national regulatory platform we need for a prosperous future: through COAG, we're implementing commonsense, market-driven reforms to create a seamless federal system.
  • We're building the tax system we need for a competitive future. We will create a clearer, simpler system which encourages workforce participation and provides reward for effort.

Nation Building

These reforms - in skills, modernising federalism and reforming our tax system - will provide the platform on which Australian business can grow.

The final piece of the jigsaw is building national capacity through solid investment in hard infrastructure. This is where one of the most critical gaps exists. And this is where - if I can get political for a moment - the Howard Government really dropped the ball. They did some good things economically, but when it came to infrastructure, they simply failed to do what was required. They failed to create new infrastructure where it was needed. And they failed to upgrade existing infrastructure as it aged.

So we have a massive infrastructure task ahead of us. It's a challenge we're willing and eager to confront. Building national prosperity is about rolling up our sleeves and getting on with what's necessary - and that's the style of our Government.

This is what led us to create Infrastructure Australia and the Building Australia Fund, the two institutions at the core of the Rudd Government's nation building agenda.

Infrastructure Australia is an independent, statutory council headed by Sir Rod Eddington. The institution represents a fundamental shift in infrastructure policy. Infrastructure Australia will audit Australia's infrastructure, and develop national priorities, on robust business cases and economic analysis.

Infrastructure Australia will take the politics out of nation building and ensure that investments are directed to the projects that will make the most difference to our nation's economic future. In developing and implementing the national blueprint, Infrastructure Australia will work closely with the Building Australia Fund.

In our very first Budget, we backed up our commitment to nation building with real dollars by making a multi-billion investment in the Building Australia Fund - a down payment on the modernisation of our country's infrastructure. And there will be more to come.

Early Moves

Infrastructure Australia and the Building Australia Fund are two components of our commitment to rebuild Australia. But that's not all we're doing.

Some national infrastructure priorities were so obvious and urgent that we've gotten on with the job straight away. These gaps were particularly evident in Queensland.

So we've hit the ground running by investing $22 billion in road and rail infrastructure through the Land Transport Investment Program - Auslink II. Of those funds, the Government has announced $4.4 billion for Queensland.

The Bligh Government - which has been pushing for Commonwealth support to address Queensland's infrastructure gaps for years - will be a critical partner in our efforts. This year, the Bligh Government is undertaking the largest infrastructure program of any state - more than $17 billion is committed.

I'd highlight Airport Link as an indication of the depth of the Bligh Government's commitment. This will be the most complex road and tunnel engineering feat in Queensland's history - the largest PPP in Australia's history. It will provide that vital link we need between the airport and the city. It will be a project of which Brisbane can be proud - with real impacts on urban congestion, particularly for northside families.

Other projects to address urban congestion will be tackled in partnership between the Rudd and Bligh Governments - including the $2.2 billion upgrade of the Bruce Highway, over $1.1 billion for the Ipswich Motorway from Dinmore to Goodna, and a further $455 million for the Pacific Motorway.

We're doing a lot more - more than I have time to outline today. There's the Housing Affordability Fund, the Health and Hospitals Fund, the Education Investment Fund. There's our work with the private sector on streamlining and improving the regulation of public private partnerships. I'm happy to address these topics more in question time if you like.

Conclusion

But what I hope I've made clear in the examples I've selected is that the Commonwealth Government is back in the business of nation building. We're committed - in good times and in bad - to addressing the capacity constraints that affect the ability of your businesses to grow. For your businesses, this means more efficient transactions, stronger competitiveness, skilled employees, and better productivity.

I know that when the Government supports your drive and energy and ideas, we provide you with the base of support for what you do best - invent, create, produce, work hard, and make your businesses grow. We do appreciate your effort and enterprise. Because if we are to strengthen our economy in the face of the current global challenges, then we need to work with the business community very closely in the period ahead.

Make no mistake: every single one of us here has a stake in getting this right.

Thank you, and I look forward to your questions.