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

15 July 2010

NO.023

Economic Reform for Working People

Address to the Whitlam Institute and
The University of Western Sydney

Sydney

15 July 2010

Thanks John [Phillips, Chancellor of the University of Western Sydney] for that introduction and can I also thank the Whitlam Institute and the University of Western Sydney for inviting me here today.

The central question of your symposium today is the most fundamental question a society can ask itself: how can we create a fairer society?

A stronger economy and that fairer society are the lights that guide me in political life. I've always considered our mission in the federal Parliament is to help build prosperity and to spread opportunity. So it's a privilege to be asked for my views on all this by an institution so dedicated to prosperity and fairness - and to Gough himself.

Gough deserves the unique place he holds in our nation's heart. For me, and many of my generation, we owe much of our education and our inspiration to his Government's reforming record.

Gough taught us that political life isn't just about governing and managing, vital as that is. It is also about building something, making the nation better than we found it. Taking our people forwards, not backwards. That's what drove the reforming Labor Governments of the past, and it's what drives Julia and I, today.

Right throughout our 120-year history my side of politics has understood that a society that is fair and just rests on a growing economy that sees tangible benefits flow to working people.

Julia's giving a speech right now at the National Press Club in Canberra, about what we call a patchwork economy, and what we need to do to ensure more Australians join together, and work together, to enjoy the benefits of national prosperity.

I don't want to get too partisan here today, but consider for a moment the contrast between her approach, and Mr Abbott's.

Consider the contrast between a PM who wants to build consensus around economic reform and move the country forward, versus someone who generally takes extreme views that divide the community.

Consider the contrast between moving forward with new investments in training and infrastructure, versus taking us backwards to the worst aspects of WorkChoices, and cuts to health and education.

And the contrast between someone who sees economic management in boom times as a way to deliver tangible benefits to people who work hard, versus a Liberal leader who thinks booms are to benefit the few.

These are the economic objectives at play in the election this year and they represent a very stark choice for the Australian people.

So with so much at stake for the Australian people and their economy, I want to tackle the question of how we make our society fairer through three battlegrounds for the election and beyond. One, how we responsibly manage the economy. Two, how we strengthen and secure the economy. And then three, how we ensure it delivers tangible benefits for working people.

Responsible Economic Management

The first battleground - responsible economic management - isn't as exciting as a discussion of the big, hard-fought economic reforms, but it's the bedrock upon which all the enduring economic reforms are built.

There's no better evidence of responsible economic management than the updated numbers I released yesterday in the Economic Statement. They show how successfully the Government has steered the nation through the turmoil of the global financial crisis.

The best evidence of this is the fact we're getting back to surplus in three years, three years early. That means we will be back in the black ahead of every single major advanced economy. Contrast our position to the G20 advanced economy goal - to halve deficits by 2013. We won't have halved our deficit by then - we'll have eliminated it and returned the budget to surplus.

Our unemployment rate - already lower than any of the major advanced economies - is expected to fall even further to 4¾ per cent in 2011‑12. This is a remarkable achievement when you consider countries in Europe and the US are still dealing with near double-digit unemployment rates. I think all Australians can be proud that we've created more than 350,000 jobs in the past year. This is a stunning result for Australia and shows what we can do as a community when we work together.

Strengthening and Securing the Economy

The second battleground - strengthening and securing the economy - is also one I'm very happy to talk about, because my side of politics has a proud tradition of economic reform.

I have to say, each of our reforms have been hard-fought. None have come easily. Most have come despite loud objections.

There are always groups interested in keeping the status quo. Change is hard, because it means going from something that people know well, to something they are less certain about. Confronted with change, there are always those who warn the world will end, the economy falter, our way of life would be threatened. They still do.

Reform is made easy when there is political bipartisanship to match this community consensus. In the absence of consensus and bipartisanship, reform becomes that much harder.

Only the naïve believe introducing significant national reform is easy. All it requires, some argue, is 51 per cent of the two-party-preferred vote and a bare parliamentary majority. That's how it works in theory. But not in reality.

Successful reform is hard. I know that from experience.

It takes belief in the need for change. We have that. It takes ideas to promote prosperity and opportunity. We have them too. And it takes patience, persistence, good management skills, and a willingness to listen so as to find the best way to take people with you.

Our political opponents always take the easy road, diving, and carping and moaning and opposing. But we need to be better than that.

We need to look to the long term. We have to ask of ourselves - distracted as we are by our day-to-day lives:

  • "How does this shape our future?"
  • "Will this make Australia a fairer place?"
  • "How will future generations benefit?"

Governments have a responsibility to look to the longer term. You and I might not see the implications of the decisions we make today, but our children will. So I'm glad to say that a willingness to look to the long term has been a hallmark of the most productive reforms of the part 30 years - and it still is.

Look at the floating of the dollar. The Hawke Government's decision to float the Australian dollar in December 1983 was arguably one of the most significant economic policy decisions in Australia's history.

It was a decision taken in the face of strong opposition. Opponents argued a freely floating dollar would expose the economy to fierce global economic shocks. It didn't. In fact, nearly three decades on, it has been an important mechanism that allowed our economy to deal with both positive and negative economic shocks.

Look at national savings. There has been no more significant boost to national savings in this country's history than the introduction of compulsory super.

At the time, there was an extraordinary amount of fear about what introducing compulsory superannuation would mean for Australian businesses. Some said it would kill the economy. But through consultation, negotiation and - where possible - consensus - the government introduced a scheme that did not send businesses to the wall.

Instead, through wage restraint and appropriate transitional arrangements that were implemented over several years, Australia grew a superannuation system that is unique in the world. Far from failing, the economy thrived. Now, Australians are able to retire with greater dignity and means than ever before. We have a $1.2 trillion industry that is well-supervised, has strong integrity and provides a vehicle for hard-working Australians to save for their own retirement.

And look at some of the reforms we're committed to delivering today - to further strengthen and secure our economy for the 21st century. They are just as ambitious in their scope.

Look at our mining tax reform. We saw the need for a fundamental reform of the way we use the wealth generated by our country's mining resources.

To us, it's firstly a question of ensuring Australians get a better return for their non-renewable resources, so we have something lasting to show for them. If we don't, how do we explain to our grandchildren that we spent a one-off windfall in a single generation, without thinking to leave anything lasting for them?

But our mining tax reform is also about building the strength and security of the economy. Making sure we're competitive. Making sure we tackle the impediments to economic growth. Fundamentally, it's about maximising the opportunities for average Australians.

From day one, we have said that all of the revenue from better resource taxation will be reinvested in the community through economic reform.

We expected to raise $12 billion from the RSPT, and we thought that was about a fair return for Australians. As you know, we had to cut our cloth to fit the arrangement we reached with the mining industry, which will instead raise $10.5 billion from the MRRT.

This means the resource companies have signed up to an agreement that will deliver $10.5 billion that we will invest in more super, better infrastructure and help for small business. This is a great deal for Australians, and will set us up for years to come.

Our reforms to strengthen and broaden the economy will have far reaching implications.

Take what we're doing to boost national savings. On the back of the mining tax, we're lifting compulsory super contributions from 9 to 12 per cent.

I'll talk in a minute about what that means for hard-working Australians, but it will also mean a massive boost to our national savings pool of $500 billion by 2035. This builds on the $1.2 trillion in today's super funds.

It means a strengthened financial services sector, with more funds under management. It means potential new sources of funding for the critical infrastructure projects our nation needs to keep growing.

Speaking of infrastructure, look at what we're doing. To address bottlenecks and capacity constraints that hold us back, we're giving Australians a leg-up in competing with the world through a world-class broadband network.

Our tax reforms will allow for greater infrastructure spending - a $6 billion Regional Infrastructure Fund that will allow us to remove constraints to growth.

As a Queenslander, I know all too well how the resource boom brings prosperity to places like Gladstone, where I'm headed tomorrow, but at the same time puts enormous strain on local infrastructure. I've seen how towns that used to work well begin to buckle under the strain of economic growth. Better infrastructure will improve the standard of living for people in mining communities, and help the resource sector grow.

Look at telecommunications reform and our National Broadband Network. This is the largest ever infrastructure project in the nation's history.

The NBN will give Australians and Australian businesses superfast, affordable internet. It's difficult to conceive of all the benefits that will bring: a massive expansion in people working from home; greater efficiency for our transport assets; and fewer wasted hours. It will be easier for Australian businesses to commercialise their products and easier for them to export those products overseas. The NBN will provide a massive boost to our productivity growth and will build a stronger and more internationally competitive economy.

Look at our initiatives to make life easier for business.

As you know, tourism operators, farmers and manufacturers don't cheer the higher dollar that comes with a resource boom. It makes their life harder.

We want to give everybody in our economy a go. That is why we're reforming business taxes through a reduction in the company tax rate and through special tax relief and simplification for small businesses. This will make it easier for Australian companies to do business. It will make Australia a more attractive place to invest and it will boost investment and jobs.

We're reforming the health system, with an historic new way of funding our hospitals and health needs into the future.

We're delivering an education revolution:

  • Giving our kids and their parents greater access to information about schools;
  • A national curriculum and improved resources to help them learn;
  • More computers;
  • Improving the quality of the education our children receive, so that they have every opportunity to excel;
  • New buildings for schools, many of which have been using the same classrooms to teach kids for decades.

These are the fundamental reforms that are going to matter to our children in years to come.

So I'm proud of Labor's reforms to strengthen and secure the economy - both those of the past and those we are delivering today.

Ensuring the Benefits Flow to Working People

But as strong as our reforming record is, our policies would be nothing if they didn't deliver meaningful, enduring gains for working people.

The best economic reforms increase opportunity and fairness. They are tangible, they make sense to people and add value to their lives. They aren't just reform for reform's sake.

This is the third economic battleground for the election this year - delivering tangible benefits for average Australians. That's what our mining tax reform is all about - boosting savings, building infrastructure, and encouraging employment.

Can you believe Tony Abbott wants to put all this at risk? How can you be anti-super? How can you want working people to have a less secure retirement?

Boosting super delivers a tangible gain with real meaning. The super guarantee doesn't just mean people retiring with more money in the bank. It means people retiring with more choices. It's another life-long achievement for people who have worked so hard to put food on the table, to educate the kids, to pay off the home. I'm proud that the super guarantee has delivered such a boon for the national economy, but it's also an achievement that hard working people can really see.

As I said, we're lifting compulsory super to 12 per cent - delivering a huge boost to hard working Australians in their retirement; about $108,000 to today's average 30 year old. It will mean many more Australians retiring on their own terms, with the dignity of a retirement well earned by a life of hard work.

We're also fixing the concessions built into super. Currently, the vast bulk of the concessions go to the wealthiest Australians. But about 3.5 million lower income Australians get no super concessions, or worse, are taxed harder on their compulsory super than they are on their other income. That fails any test of fairness.

So we'll offer lower income earners a tax rebate of up to $500, which will go into their super fund. This means a lower income earner will get more reward for the work they do, in the form of more superannuation deposits.

We're also simplifying the personal tax system. We work so that we can enjoy the good things in life - like time with our family. So it's important we do all we can to minimise how much time is spent doing your tax.

That is why we are introducing an optional standard tax deduction, worth $500 in 2012-13 and $1,000 in 2013-14. This will make tax time simpler for 6.4 million Australians, who will be financially better off by picking the deduction instead of calculating their expenses. More importantly, by simply picking the standard deduction they will have more time to spend on the things that really matter to them.

We will also reduce tax and paperwork for 2.4 million small businesses, by letting them write off immediately any new business asset worth $5,000 or less.

Now, when it comes to reforms with tangible benefits for working people it's hard to go past what we've done to make our workplaces fairer. Wages and working conditions go to the core of families' ability to tackle the everyday costs of living.

Our reforms recognise that the fruits of a successful economy won't reach everybody without:

  • Ensuring there are minimum standards on working conditions;
  • Ensuring the jobs of hard-working Australians are protected; and
  • Ensuring hard work is fairly rewarded.

That's why we are all about fair and balanced workplace laws that give job security and reward effort.

Combined with the personal tax cuts we've introduced - for the third year in a row - and the increased child care rebates we've provided since coming to government, these measures create more incentive and reward for effort.

Why it Matters

That's what Labor is all about.

I'm asked today how we create a fairer society. We do it by reforming the economy in a way that delivers meaningful benefits for working people, making their lives easier, giving them greater choices and quality of life.

We start from a position of strength. Compared with other advanced economies, Australians have shown themselves to be resourceful, nimble people. Instead of sifting through the rubble of communities hit by high unemployment, we have pulled together to work through the crisis. And we're better off for it - fewer people out of work, fewer businesses going to the wall - a whole generation of Australians who haven't had to face the pain of a prolonged recession.

Now we're called to be as successful in reforming our economy as we were in protecting it from the ravages of global recession.

My aim is for the Gillard Government's reforms to be just as important for future generations as the reforms of our Labor predecessors. And in the coming weeks and months, I'm looking forward to showing how we can work to build prosperity and spread opportunity:

  • By responsibly managing the economy;
  • By strengthening and securing the economy;
  • By delivering meaningful, enduring reforms that make a difference to the lives of working people;
  • And by moving our economy forward under the leadership of Julia Gillard.

And with that I look forward to your questions.