A big thank you for the chance to spend time with you on Darkinjung country, in a really beautiful part of Australia which is also an indispensable part of our national economy.
You couldn’t ask for better local representatives or supporters than Gordon and Emma, and Pat up the road too, and they’re really valued, cherished and effective parts of our team as well.
We’ve been working closely with Gordon to be here today and with Joseph, Scott and the Business NSW crew who put this together – please show them and the staff of the Mingara Recreation Club our appreciation for hosting us at Tumbi.
We’re joined by a couple of Davids – Harris and Mehan – Liesel and Adam from the state parliament; plus Patricia and Alex from the University of Newcastle, and another David, John and John from Council.
I’m sure I speak for all the political representatives when I extend a big thank you to all the business leaders for the jobs and opportunities you create on the Central Coast and beyond.
Today’s the perfect opportunity to get out of the capital cities once again and reflect a bit on your contribution, and to focus particularly on housing and small business.
And it’s perfectly timed because the PM and I made some announcements yesterday I want to flesh out for you before we get to the panel conversation.
Last time I was here I joined Scott and many of you a bit outside Gosford at the Chamberlain Group – an important employer in this region and home to some big Australian success stories in manufacturing and business.
That was on the 27th of February last year, one year and one day before war broke out between the US, Israel and Iran and unleashed chaos on the global economy.
So it hasn’t been long since I joined you last, but we are in a very different situation today, and I welcome the opportunity to discuss some of that with you and how our Budget fits into that.
It’s been a big week already, a welcome reprieve on interest rates and welcome developments in the Middle East too.
The end of the war can’t come soon enough.
We can’t afford another false dawn.
We desperately need this ceasefire to stick.
But even after the signing of that deal, even after the proper opening of the Strait of Hormuz, we’ll still be paying a hefty price for these hostilities long after they end.
You can see that in the budget forecasts for our economy and in the global forecasts for higher inflation and lower growth too.
We’ve got a lot coming at us from around the world but we’ve got a lot going for us too, and that’s not often recognised.
Some quick international comparisons tell a compelling story:
We’ve had faster through the year growth than every major advanced economy except the United States, and lower debt to GDP than all of them.
We are the 11th lowest‑taxed economy out of 38 in the OECD, the 6th lowest spending to GDP, and the IMF expects ours to be one of the 3 strongest budgets in the G20.
We had faster growth in living standards in 2025 than the OECD average, courtesy of decent wages outcomes, stronger employment growth and tax cuts.
We’ve seen more new businesses registered per month on average than under any other government, and an insolvency rate almost half of what we saw in the Howard years.
But the big standout has been business investment, absolutely booming in the last couple of sets of national accounts.
You might not read much about these national strengths in the papers each day, but they do put us in a strong position to deal with 2 sets of considerable challenges.
The first is the intersection of inflation higher than we’d like, productivity growth lower than we’d like, and what that means for the speed limit on our economy, its capacity to grow quicker.
The second set of pressing issues is at the intersection of the tax system, the housing market, and what that means for our intergenerational obligations.
The Budget is about addressing both sets of challenges simultaneously.
It’s about getting through a difficult period made worse by the war, without neglecting longer‑term issues.
It’s about recognising the legitimate concerns people have about where they fit in a story of accelerating technological change, intensifying global pressures and economic dislocation – all playing out in our polls and politics.
The Budget is an economic strategy not a political strategy, but it’s shaped by these circumstances, and designed to respond.
That means there were 5 substantial packages to deliver real change: in fuel security, cost of living and housing, productivity, tax reform and budget repair.
I won’t have time to detail each of them, but I do want to make the point that if the Budget is about resilience and reform then it’s also about the regions, including this one.
You’re positioned between Australia’s most economically significant city and one if its fastest growing, high speed rail will one day mean you’re 30 minutes from both, but your opportunity goes well beyond geography.
You’re at 350,000 people already and growing; your 27,000 businesses contribute well over $20 billion a year to the national economy.
You’ve seen a 5.5 per cent increase in the number of businesses setting up here, between 2022 and 2025.
Around 1 in every 4 Central Coast businesses is in the construction sector.
Employment is up too – 172,000 people work on the Central Coast, an increase of 3.6 per cent since May 2022.
And in that time, workforce participation, has increased 0.8 percentage points to 61 per cent – a larger increase than almost every region in Sydney and the seventh largest in New South Wales.
Having 2 health professionals as your federal members has helped ensure more than $25 million for 6 fully‑funded bulk billing GP clinics across here and the 3 other nearest regions.
Having a government focused on housing has seen important investments in the small‑scale infrastructure essential to getting more projects off the ground here.
The extra $2 billion for housing supply in the Budget makes sure around $600 million goes to New South Wales and that at least a quarter of that is for regions like yours.
The 5 per cent deposits scheme means 4,300 more locals now own their own home in your communities and more than 34,000 residents are getting our boost to Rent Assistance.
We’ve still got a long way to go on housing because we’re playing catch up after a decade of neglect, but we’re also starting to make a positive difference.
When we came to office 4 years ago, housing commencements in New South Wales were falling by 28 per cent.
Today commencements are up 53 per cent over the past year and that’s driving a 26 per cent improvement nationally.
This challenge still begins with supply but doesn’t end there, and that’s what motivates the tax reforms in the Budget.
Once you acknowledge the simple truth that there’s a generational crisis in housing in this country, you’re presented with a binary choice of whether to address it or ignore it.
Addressing it invites all kinds of scare campaigns and comes then with a political cost.
Ignoring it consigns another generation to a broken status quo which locks even more young people out of the market, and leaves it to another government to fix.
The economic and social costs of ignoring this problem substantially outweigh the political costs of acting on it.
The ATO released data this week which painted a very clear picture of the current tax system.
New Treasury analysis of that data shows just 0.2 per cent of tax filers earned around 60 per cent of all net capital gains income in 2023–24, while 99 per cent of tax filers earned only 13 per cent of all net capital gains.
People under 35 – despite making up around a third of all tax filers – received just 6 per cent of dividend income in the economy.
Those same under 35s received over 80 per cent of their assessable income in the form of salaries and wages – less than 2 per cent came from dividends and net capital gains.
If we care about intergenerational fairness and want more young Australians to get ahead, we have to acknowledge that the current system isn’t helping.
Our reforms make it easier for first‑home buyers, they incentivise new builds, they cut taxes for workers and they better align the tax treatment of labour and asset income.
We heard in the Senate inquiry this week just how important those objectives are.
Having taken the decision to act on negative gearing and the capital gains tax discount the imperative becomes not replacing one kind of distortion with another but applying the new discount broadly and fairly across asset classes.
This is important for productivity and growth for at least 3 important reasons.
Firstly because it means more investments made for economic reasons, not tax advantages, ensuring more efficient allocation of capital.
The current arbitrary discount has undercompensated some kinds of investments and overcompensated others.
Since the big policy mistake in 1999 it’s made investments in established housing way more attractive at the expense of other investments like shares, and helped ensure house prices are double wages growth ever since.
But it hasn’t just created these distortions between types of assets, it’s also disadvantaged the regions.
Treasury analysis shows on average over the past 20 years, the appropriate discount for inflation for housing in capital cities would have been around 30 to 40 per cent rather than 50.
But the appropriate discount for higher density units in regions like this one would have been more like 60 to 80 per cent.
In other words the existing arrangements may be substantially disincentivising investment in medium and higher density housing in regional areas like the Central Coast.
That’s the first reason why our changes are good for the economy.
The second is the boost to labour supply from cutting taxes a fourth and fifth time for 13.3 million workers, including almost 142,000 here on the Central Coast.
The third is the Budget’s $3.5 billion worth of tax cuts to support new and growing businesses at critical stages in their life.
This includes loss carry back to encourage risk and smooth out difficult periods, supporting 32,000 NSW companies;
Loss refundability for startups, benefiting 10,000 companies in this state;
A permanent instant asset write‑off, encouraging investment, slashing compliance costs and supporting 26,800 business here on the Central Coast;
Expanded incentives for venture capital and reforms to the R&D tax incentive;
All in addition to a broad and ambitious productivity package to make it easier and faster to build and to cut compliance costs across by more than $10 billion a year.
As is normal for big tax reform, we are rolling out these changes in tranches and in consultation with the business community.
Yesterday, we announced the next steps in that process.
The path we’ve outlined is all about providing more clarity and confidence to investors, more support for small businesses and more incentives for innovation.
We will lift the turnover threshold for the 50 per cent active asset CGT reduction from $2 million to $10 million.
It’s already the most commonly used of the 4 existing small business CGT discounts.
Our changes mean 98 per cent of all active businesses will get a concession or a carveout.
It means every one of the 2.7 million active small businesses in Australia will be eligible for significantly reduced capital gains tax when they sell.
This includes about 99 per cent of active businesses here on the Central Coast.
Nationally, 98 per cent of active businesses will be eligible to pay no more than 23.5 per cent CGT, and likely much less once you account for indexation and other concessions.
And we are keeping the other 3 existing CGT discounts and waivers in place.
We have seen a lot of misinformation about our proposed changes.
The fact is the overwhelming majority of businesses are eligible for very generous CGT concessions and we’ve just made them even more generous.
And it brings the $3.5 billion business tax‑relief package I just mentioned to more than $3.8 billion in total.
We acknowledged before and in the Budget papers the unique challenges faced by investors and businesses with a low or zero cost base, which is why we have now released a consultation paper on a new Innovative Business CGT Concession.
This would give founders, investors and employee share scheme participants the option of a flat 50 per cent CGT discount instead of the indexation adjustment.
This is all about recognising and rewarding the risk that founders and early investors take, and supports our overall goal of a more productive tax system.
We are seeking views to help shape the final design, and I encourage all of you to have you say before 10 July.
We’ve also announced a number of amendments to ensure our reforms have their intended effect and to give more clarity and certainty around some of the definitions and details.
This includes specific income support payments that will qualify for exemption from the minimum tax on capital gains, gift and donation deductibility from the minimum tax, and removing unnecessary ministerial powers that are not required to achieve the policy intent, as well as legislating the definition of new builds following consultation.
And to be even clearer, we will exempt income from all types of testamentary trusts from the minimum tax, with further consultation to occur on implementation.
We have been clear that there is no tax on inheritances or deceased estates but we are taking this step to put this beyond any doubt.
So much of this Budget will be beneficial for housing and for businesses here and across the country.
But at the same time, we know these changes are contentious and contested, and we respect that people will have a range of views on them.
I know that not everyone in this room will agree with everything we are doing.
That is the nature of any reform but especially big tax reform.
I said earlier that Gordon and Emma are terrific local representatives, and I can assure you that they have been representing the views of everyone this room every day since we handed down the Budget, and before that too.
I don’t shy away from contested views and we consult where we can.
I’m here today because I care deeply about your expertise and experience and I want it to help shape how we implement these changes.
That’s why I was so pleased to accept the invitation to speak with you this morning, and why I am looking forward to the panel discussion with you as well.
Thank you.