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

23 May 2013

A Fairer Society

Post-Budget Address to ACOSS

Sydney

***Check against delivery***

Thanks, Cass [Goldie] for that introduction. It's great to be here.

I can't think of anywhere more fitting than ACOSS to continue the conversation we've started together about fairness in our society. I thought I'd do something slightly different today and come at the concept of fairness through the prism of economics, not just equity. I've always believed that good social policy is good economics. And I think that's even more important to remember now than ever. I say that because our economy is in the midst of two big transitions. We've got a resources sector shifting gears – as the investment phase winds down and the production and export phase ramps up. And then we've got a broader rotation in our economy from mining to non-mining growth drivers, with new record low interest rates starting to encourage more activity in sectors like housing construction and retail. We start this transition from a position of strength, but we also know it won't be seamless and there'll be challenges along the way. It's likely that some of this will play out in the labour market as the resources sector shifts to a less labour-intensive phase, and as the high dollar continues to challenge many business models. In fact the Australian dollar hasn't been around parity for this long since Hawke and Keating floated it. It's taking a toll on many businesses. Obviously we've seen an announcement from Ford today, and of course it's a very difficult time for a lot of workers and their families.

I want to reiterate that the Government is committed to ensuring that the affected workers and the regional communities of Geelong and Broadmeadows are assisted and supported during this transition. We want to make sure that these workers have every opportunity to gain new employment – and that there is new investment to create new jobs in Geelong and Melbourne's northern suburbs. The Gillard Government will contribute $30 million to structural adjustment programs that support the economic development and diversification of these regions. We'll also support businesses and workers in the automotive supply chain with an additional $10 million for the Automotive New Markets Program to help auto component makers win business in new markets. We will work with Ford, manufacturing unions, local communities and business organisations to achieve these goals. These programs will build on existing support for individual employees and will help the wider regional economies that will be affected. What this announcement from Ford highlights is that different industries and different communities are impacted in very different ways by the big transition in our economy. While we shouldn't lose sight of our underlying economic resilience, the impact people feel from the economic change we're going through will depend a lot on where people live and what they do for work.

Of course, there are some on the extreme right who say we should just leave these communities to the mercy of the market. That they are just collateral damage in the process of economic adjustment. But this Labor Government will never allow such an ideology to dictate policy. Because a 50-year-old who's worked their whole life in manufacturing can't just pack up and move to the Pilbara to drive a truck. Not when their roots are so deep in the local community, when their kids are in school and their family and friends live all around them. We believe to our core that there is a role for government in helping industries and communities transition. That's precisely what our Plan for Australian Jobs is all about, which we delivered in response to the Prime Minister's Manufacturing Taskforce. In the short term, we are assisting the transition with reforms to strengthen anti-dumping rules and boost Australian industry participation and local procurement for major projects. In the long term, we are creating the right policy environment for innovation to help create the new industries and jobs of the future. We must ensure that we take all Australians with us as our economy goes through this transition. We must ensure that no one is left behind. We must do everything we can to support jobs in our economy. This is where economics and social policy start to intersect. But it's also where the economics and politics sometimes collide. In the Budget I handed down last week, we put the economics over the politics and said we'd come back to surplus a bit later to make sure we continued to support jobs and growth amid this economic transition. Of course, the politics of this had all the commentators in a bit of a frenzy. But I don't think anyone seriously questioned the economics. I think just about every reputable market economist would agree that a more gradual fiscal consolidation was the most responsible course we could have taken in the circumstances.

The global economy had taken a sledgehammer to our revenues and the stubbornly high dollar was making our economic adjustment harder. We knew that cutting harder and deeper to chase revenues down would hurt the economy and put people out of work. Obviously, that was not something we'd ever be prepared to do. No matter the political cost. But this is also where good economic policy is good social policy. Labor has always believed that the most fundamental thing which makes a society fairer is the opportunity of a job with decent pay and conditions. That's why we abolished WorkChoices when we came to government. That's why when the GFC hit, our economic response was devised with the singular intent of preventing everyday Australians losing their job, from losing their homes, their prosperity and everything that goes along with those things: happiness, peace of mind, marriages – and, tragically, sometimes even lives. We did the economics by the Keynesian textbook. There were political risks, but we acted based on Labor's egalitarian values because it was the right thing to do. And it paid off, with one of the lowest rates of unemployment and one of the fastest rates of economic growth in the developed world.

More Australians are in work today than ever before, and our economy has created over 950,000 jobs since we came to office. Of course, our opponents pay lip service to job creation and job security. But that doesn't hold much water when they've just tried to abolish penalty rates for workers and when they voted against economic stimulus during the GFC. The basic point is that jobs have been at the heart of everything we've done since we came to office, so it shouldn't have surprised too many people when we put jobs first again in the Budget. And as our economy continues its transition, in the face of the sustained higher Australian dollar, it will become even more important to support jobs, particularly in those parts of the community that are most affected. Our Labor values have always endured, but our policy must respond to the economic circumstances. The most important thing we can do is keep growing our economy and creating new jobs and opportunities for hardworking Australians.

But there's also a lot more we need to do to support those in our community who are under pressure or need a helping hand. As you know, I've had a lot to say about the fair go. You might have heard a few of the things I've said recently – like my article in The Monthly or my speech on the lyrics of Bruce Springsteen – both about the importance of egalitarianism and democracy. What I've been saying is that good economic management doesn't just grow the economy, it ensures that growth is enjoyed by the maximum number of people. To make that point I drew out in some detail the bitter American experience which shows that growth linked to widening inequality is slower growth that produces deep social dislocation. I copped a lot of criticism over those contributions to the public debate, but I don't resile from them for one second.

The lesson of America, expressed so well by great artists like Bruce Springsteen, but plainly observable in that country's economic and social statistics, is that the extremes of inequality must be fought against. A united country and a genuine democracy require a basic degree of shared prosperity and an equal political voice for everyone. Ideas like these have actually defined my entire public life. When I entered Parliament 20 years ago, I talked about the things I'd learned from my parents about fairness. My parents weren't intellectuals. They didn't go to university. But they understood what a good community was and what it could do. My father, who like his father, was a war veteran, ended up serving local veterans professionally by being the manager of his local RSL. My mother was a great helper and contributor to our local schools and community organisations. They taught me to believe in an Australia where every person had the right to a fair go no matter which postcode they were born in. I reflected in my maiden speech on the challenges that had arisen to those values, at a time when Australia was mired in recession with unemployment over 10 per cent, almost twice its current level.

But in 2008 we got the big economic calls right, which meant our economy not only avoided recession but is now over 13 per cent bigger than before the GFC, with low unemployment and low interest rates. But the challenges of our economic transition have also made it so much more important that we always keep an eye on fairness. There'd be quite a few people in communities around Australia who'd be feeling that what's happening in our economy isn't fair at all, especially if they've been working in an industry being hammered by the high dollar. Governments must always be focused on helping those who want to work find the opportunity to do so and providing a strong social safety net for those who need it most in our community. That's what we did again in this Budget. Because even while our economy is in transition, and even though our revenues have been savaged, we can't afford to starve our future. The investments we've made go right to the core of a fairer society. We took the unprecedented step of explicitly identifying savings to fully fund our priority investments over the next decade and beyond. In 1975, Labor created universal healthcare for all Australians at a time when illness was one of the biggest causes of financial ruin for families. I'm deeply proud that we are now creating DisabilityCare Australia – in the footsteps of Medicare. We're creating a system that supports choice and control for people with severe and permanent disability and their inspirational carers.

Just yesterday, I went along to a morning tea hosted by Yooralla in Melbourne – a fantastic organisation that supports people with disability. I met a great young bloke named Greg who is in a wheelchair but clearly wasn't going to let that stop him making the most of himself. It was a really good feeling to know that DisabilityCare will mean the difference between someone like Greg getting a new wheelchair when they need it instead of having to wait three years using their old one. Of course, DisabilityCare is also good economic policy – it will help boost productivity by supporting Australians with disability so they can contribute to their fullest in the workforce and in the broader economy. And there's our historic investment in schools. Most of us have people to thank for where we are today: that's often our parents, but it's also often that great teacher you had in primary school. That teacher who really connected, who really loved her job. We all understand the transforming power of education. We have to improve our educational performance by improving performance in every school. A smarter nation has to be a fairer nation. The gap between the highest-performing and the lowest-performing kids in Australia is higher now than it is in other developed countries. Gonski found learning outcomes for the poorest 25 per cent of Australian children are three school years behind those in the wealthiest quarter.

With Indigenous students two years behind their non-Indigenous peers. These kids are less likely to finish Year 12, and it will hold them back the rest of their lives. They'll find it harder and harder to get ahead, so they simply fall behind. This is unacceptable in a country with all of our economic success. Again, this is where good social policy is also good economic policy. PwC found that simply accepting our current declining trend in education performance would see our economy end up $1.5 trillion smaller than it should be over the life of a child born today. On the other hand, if we increase Year 12 completion rates to 90 per cent, we'll increase workforce productivity by 0.6 per cent and lift our GDP growth by 0.65 per cent a year. I'm also really pleased that in a difficult Budget we were able to find room to increase the amount someone can earn before Newstart and other allowances are reduced – for the first time in a decade. We're lifting the income free area from $62 to $100 a fortnight, and we're also indexing the income free area to inflation for the first time. Of course, I know many of you would have liked to have seen more, and frankly, so would I and everyone on my side of politics. But in a difficult Budget like this, more would have been unaffordable. And that goes to the core of another long-term challenge we face.

I'm one of the biggest believers there is in the social safety net. But you can't have a strong social safety net into the future unless it's sustainable, particularly as our population gets older. That's why we've been taking responsible decisions to better target our family payments system to ensure that help goes to those who need it most in our community. But we've been doing everything we can to take care of all Australians. And that's the enduring difference between Labor and our opponents. We know that a decent social safety net is not only the pathway to a stronger community, but also a stronger economy. Our opponents will never admit that a more inclusive society – which harnesses the potential of all its people – is a more productive society through higher participation in the workforce and the broader economy. It becomes clearer by the day that this Tea Party influence is increasingly taking hold of the right of Australian politics. It's an echo of the Thatcherite refrain that ‘there is no such thing as society, only individuals'.

Never has the contrast in Australian politics been in sharper focus. Just think about our alternative approaches to policy. Labor is rolling out the income support bonus of $210 for singles and $350 for couples combined – which Mr Abbott has now said he'll scrap. We're introducing the Low Income Superannuation Contribution to boost the retirement savings of 3.6 million of Australia's lowest paid workers by up to $500 a year, including 2.1 million women. Mr Abbott will scrap it. We've introduced the Schoolkids Bonus. Mr Abbott will scrap it. We're increasing the Superannuation Guarantee rate from 9 to 12 per cent, but Mr Abbott has now given a sneak peek of his plans to scrap it. Australians are entitled to assume he won't proceed with the increase from 9 to 12 per cent because last year he said: "… we strongly oppose the superannuation increase. We have always as a Coalition been against compulsory superannuation increases …"

That would rip $127,000 out of the retirement savings of a 30-year-old worker on average full-time wages by the time they retire. It would also reduce our national superannuation savings pool by more than $500 billion by 2037 and put further pressure on the long-term sustainability of the budget. And then there's the prospect being raised by Liberals right around the country of an increase in the GST, which would hit those on lower and middle incomes hardest.

We are having a big contest of ideas in this country in the lead up to the election in September. That's what has been so starkly presented in this Budget. Social mobility is the bedrock of an optimistic society. It's our responsibility to use our economic resilience to put in place the big reforms that will create opportunity for all Australians. Through the years it has always fallen to Labor governments to introduce the big reforms for our nation's future. And that's what we're doing in this Budget. It's also been the hard work of organisations like ACOSS which has helped us keep our value system strong. We have to keep up this sort of intellectual work. Social and economic ideas matter. Just as social and economic policy does. So let's keep thinking and evolving our ideas and policy to ensure we have a stronger, smarter and fairer Australia for tomorrow.

Thank you.