JOSH FRYDENBERG:
The fundamentals of the Australian economy are strong. We're in our twenty eighth consecutive year of economic growth, we have a AAA credit rating, one of only three nations to have a AAA credit rating from the three leading rating agencies, we have a Budget that's coming back to surplus for the first time in more than a decade, we're creating more than 1.4 million new jobs, and we have an employment growth that is three times what we inherited. But our average growth over that twenty eight years has been 3.1 per cent, and more than half of that has come from productivity growth. Now, our productivity growth has started to slow and is not where we would like it to be. Over the last five years, it's still been higher than Japan, New Zealand, the United Kingdom, France, Germany and other nations. But in order to get our productivity growth back to 1.5 per cent, (inaudible) five year average of 1.1 per cent, we need to continue on the path of reform. From the Government's perspective, it's about enabling the private sector to be more efficient and effective, and Government services to deliver more efficiently and effectively. Now deregulation, industrial relations reform, tax reform, infrastructure spending, skills, health, competition, they've all got a key role to play. My other message today was to business. Business has seen share buybacks and special dividends increase quite substantially. Over the last twelve months they've totalled $29 billion, compared to the average over the last four years which has been around $12 billion. My message to business is back yourself to grow, invest in research and development, invest in capital deepening, invest in the expansion of your business. The other point I made today is that the states are a key partner for the Commonwealth and for business and for employees in meeting our productivity challenge. Indeed, of the 28 policy recommendations put out by the Productivity Commission in their Moving the Dial Report, 22 of them were either the sole or joint responsibility of States. So I have written to the State Governments, and I am putting productivity as an agenda item on the next meeting of Treasurers which will be occurring in October. Productivity is a national task that requires a national conversation, and the work that we are doing at a Commonwealth level, that the business community can do, that the states can do, is all important in about allowing Australians to earn more and to keep more of what they earn.
JOURNALIST:
Productivity growth has slowed during the time you've been in Government, why is the Coalition only picking up on that now? And is there more that could have been done?
JOSH FRYDENBERG:
Actually, the Labor Party had six quarters of negative productivity growth through the year, and we've seen our multifactor productivity rates higher than when Labor was in Government. The reality is, globally there's been a slowdown in productivity growth. It's not a new challenge, nor is it one that requires today a different solution than yesterday. What we do require is to ensure that we continue on the right track of deregulation, of infrastructure spending, of a more efficient and effective health and education systems and of course increasing competition. So most recently, we passed through the Parliament the Consumer Data Right, which will enable more competition in the banking sector and which will be extended out to energy and telecommunications, and we're capturing digital disruption to the benefit of consumers. In the Budget, we extended the instant asset write off for companies with a turnover of up to $50 million out to $30,000, and we have brought forward the company tax cuts for businesses with a turnover under $50 million, brought them forward five years earlier than originally intended, we've also put in place a $2 billion Securitisation Fund.
Those reforms are actually increasing access to finance and decreasing the cost to invest for those businesses. The $100 billion infrastructure spending which I talked about today is a pipeline of nation building projects which will bust the congestion in our cities, get people to work and home sooner and safer, and unlock the potential of our regions. So a lot of things that we're doing, a lot of things that we have been doing and a lot of things we'll continue to do.
JOURNALIST:
Can you tell business how to operate though? Doesn't it go against free market ideals to urge them to re-invest, rather than letting them run their companies as they like?
JOSH FRYDENBERG:
Well, businesses obviously need to make their own decisions, but my key message is it's in the best interests of their shareholders, the company, and the Australian economy, were they to invest more in capital, were they to grow and invest more in research and development. Having a share buyback because you have excess capital through an asset sale or operating cash flow may be a short term solution but may not necessarily provide the long-term benefits to your company, and I cited the cases of CSL and Cochlear, two technology driven companies that have capitalised on the environment in which they're operating in to invest and to grow.
JOURNALIST:
And which infrastructure projects are among those being considered for being fast tracked?
JOSH FRYDENBERG:
We have, as I said, we have 160 infrastructure projects under construction today, 120 in the planning phase, and made the point that we are looking at what projects can be brought forward, but we always bear in mind the capacity constraints, as well as ensuring that we're coordinated with the states. We have a very, very significant pipeline. $100 billion over ten years of infrastructure spending, with the cost of congestion in our cities reaching $40 billion in the years ahead, governments at all levels need to tackle the congestion, and that's what we're doing with a number of our projects.
JOURNALIST:
Isn't it a bit hypocritical to make this call now on dividends, when you so vehemently defended franking credit refunds in the election? A policy that incentivises the payment of dividends?
JOSH FRYDENBERG:
They're completely different issues. What we're talking about now is share buybacks. What we're now saying is companies that are not necessarily investing in research and development, in new capital equipment or indeed growing their business asset purchases, they're not doing that because they're wanting to do a share buyback and purchase back more of their shares and lift their share price that way. My message today is the way to benefit to your company, to benefit your shareholders, to grow the economy, is to look for new opportunities, is to expand the horizons, is to take the good ideas that are out there, and the track record of these companies, to use the balance sheet and the opportunity with low interest rates to grow. And to grow means you create more jobs, and that will be good news for productivity and the economy.
JOURNALIST:
The expectation of businesses to invest, when you're not actually doing it, giving them any incentive to do so, wouldn't a better policy be to develop a serious, plausible, clear energy policy?
JOSH FRYDENBERG:
Well, energy is one of the topics we talked about today, and I pointed out in the speech, there's a lot of digital disruption in the energy sector, and through our Consumer Data Right and the extended intervention into energy, but we're also investing in new generation, we've invested in the stability of the system with the Snowy 2.0, a multibillion dollar initiative from the Commonwealth Government. We're committed to increasing the interconnectedness between Tasmania and the mainland, and capitalising on their pumped hydro capacity and their wind technology, and of course, we're following through on the ACCC's recommendations about new generation, as well as more transparency in the gas market and in the retail markets. There are a lot of things that we're doing in the energy space which are starting to see energy prices come down, which have started to see gas prices come down. There are no silver bullets in energy or indeed to the productivity challenge, there's no simple answers but we have a whole series of initiatives under way which are designed to get energy prices down, get productivity up, and to allow Australians to keep more of what they earn.