Future Directions for the Australian Economy
Opening Remarks at the 2020 Summit
Parliament House, Canberra
19 April 2008
At the outset let me thank:
- David Morgan for giving us his time and his experience in co-chairing this session;
- Adam Lewis and his McKinsey colleagues for agreeing to facilitate the discussion;
- The officials across government who have worked hard to make this all happen; and
- Most importantly, the one hundred participants here and all the many Australians who have made considered submissions in the last few weeks.
This weekend we've got a hunting licence for new ideas. Let's try and hit some targets.
- An opportunity to look years ahead, assess the challenges and opportunities, and give Australia every chance of success in the global economy of the future;
- An opportunity to sketch out together the economy we want for 2020, and how we go about the hard yards of getting there in the long term; and
- For me, it's also a chance to leave the ERC to one side; to listen; and benefit from all the considerable economic policy horsepower and wisdom assembled in this room.
There will be a lot we disagree on this weekend.
But I believe, in our hearts, we can agree on one thing:
That the job of economic policy makers is not just about creating wealth, it's also about spreading opportunity.
And it's about recognising that in economics the future belongs to the most open, adaptive and inclusive nations.
I urge you to consider not just the interests of the industries and organisations you represent this weekend, but remember those less well-off than yourselves in the Australian community.
Let me stress that while there are a number or important questions I would personally like to see addressed, there are no 'official' views and no predetermined conclusions.
I want this spirit of openness to be the guiding principle of our discussions.
And I'd like to kick off today by outlining the big economic headwinds and tailwinds, and forces that will shape the years up to 2020 - forces like:
- The ageing of our population, which will see the proportion of our population of working age decline over coming decades;
- Climate change, which means we'll need to reduce our carbon emissions, and change the way we do business, but which also provide an innovative nation like ours with big opportunities in green industries.
- And the rise of China and India on the global stage and with it, a once in a generation commodities boom that has seen our terms of trade rise to a 50-year high.
It's not well-known yet, but the recently settled contract prices for coal and iron ore suggest there is more to come.
Our terms of trade are likely to increase more in the coming year than they have in any year since the boom began.
So what are the implications for persistently high terms of trade for the structure of our economy - and what does this mean for policy?
I think it means that by 2020 the main question asked of this generation of economic policy makers could be this:
What did we do with the proceeds of the boom? Did we waste them or invest them wisely in future prosperity and opportunity for our nation?
And we'll be judged on our actions to combat climate change and provide for the ageing of the population as well.
Dealing with the three big challenges I identified is going to take some pretty big thinking and some ambitious reform - but we're up for it.
It's going to take things like:
- A more nimble, more adaptive and more flexible economy, so we can take advantage of a rapidly changing global environment;
- Genuine geographic mobility of workers, so they can be where their skills are most needed and rewarded;
- Harnessing the digital economy more effectively;
- Policies to retain the skills and talents of older workers in the economy;
- Better national markets which cross state borders;
- An absence of infrastructure bottlenecks which shackle the economy today;
- Particular attention to the needs of the burgeoning sunbelt communities on our coasts;
- Encouraging the best and the brightest from the private sector to contribute to the country, by participating in genuine public service; and
- The creation of new jobs and industries that thrive in a carbon-constrained economy.
These are the types of big issues and big ambitions and big thinking I hope we can nut out this weekend together, and you'll have literally hundreds more ideas.
Because if we're to prosper in 2020 it will take all these things and more.
For me, I think the best contribution to a strong economy in 2020 would be a more efficient, fairer and more rewarding tax and welfare system:
- A system that doesn't give to Australians, or take from them, one cent more or one cent less than they deserve;
- That strikes the right balance between those that need a hand and those who don't;
- That makes our business tax regime more internationally competitive;
- That gives everyone, from lunchrooms to boardrooms, the incentive to work hard, upgrade their skills and save for their retirement;
- That makes high effective marginal tax rates a thing of the past and eliminates some of the wasteful, inefficient churn in the current system;
- That recognises it's the hard work of middle Australia and the innovation and leadership of business that builds prosperity, not just the decisions of governments.
That's my view, but let me repeat - this weekend is all about you and your ideas for Australia.
So enough from me - thanks again for being here, and over to you.