3 November 2022

Address to the Chamber of Commerce and Industry Western Australia and Australian Chamber of Commerce and Industry, Perth, Western Australia

Good morning, everybody and thank you for having me out west and for showing up in such incredible numbers for a conversation this morning about the Budget and the economy more broadly and the crucial role that WA will continue to play in both.

Can I say from the beginning though, Professor Collard, Len, thank you for sharing culture with us and for that really quite remarkable welcome to country. It was a wonderful opportunity to reflect and it reminded me when you were playing the didgeridoo that one of the things I've got in my office in Canberra ‑ Ngunnawal and Ngambri land in Canberra ‑ is a didgeridoo that was made for me by Rhan Hooper, and the AFL tragics in the room will recognise Rhan Hooper from his days playing for Hawthorn and for Brisbane, now he plays for the mighty Springwood Pumas in my electorate, and I like to have that there really as a reminder of the remarkable gift of Aboriginal and Torres Strait Islander people sharing culture with us and welcoming us on to your land so I really appreciate that, Len, thank you for your welcome.

And I appreciate as well the fact that Chris raised the sorry business around young Cassius, and the thieving of a young life full of such promise, I think impacts us all, and it's a reminder that we do have a long way to go in this country as Chris said, and we will go further on that journey if we walk together and when horrific things like this happen, it's a reminder that we've got much more to do. I wanted to thank Chris for bringing us together. I've known Chris for some time and all of his colleagues at the Chamber. I want to thank and acknowledge Andrew as well ‑ we've worked together closely for some time, as well. ACCI ‑ I really value the relationship that we have with the peak chambers but also with chambers all around Australia. I spend a lot of time, deliberately, with chambers of commerce all around Australia. I wanted to acknowledge as well, Rebecca, and CME for hosting us last night for dinner as well and really, all of you have been so welcoming. To Rio for sponsoring, BHP, Fortescue, SEC Newgate as well for playing a supportive role in this morning's breakfast, we appreciate that too.

In the course of this week, in the week after the first Budget of the Albanese Government was handed down, I've spent the last few days going from Brisbane to Sydney, to Hobart where I saw Mark Barnaba, to Melbourne and here to Perth, and I wanted to make sure that I was in WA in the week after the Budget ‑ not just to talk about the Budget ‑ but really as well, to say thank you to all of you. Thank you to all of you for the jobs and opportunities that you create here in the West but also right around Australia. Thank you for the really quite remarkable contribution that WA makes to our national economy and also to our national Budget, lots of boya Uncle Len, contributed to the Commonwealth Budget and I wanted to say thank you for that and also thank you to the people of WA for what was really quite a remarkable show of support for a new government at the last election ‑ something that we will never forget ‑ the faith that the people of WA showed in us in May of this year. What that's meant is, I get to work with the most incredible colleagues from WA and on the front bench, whether it's Madeleine King, Matt Keogh, Anne Aly who I can see here, Patrick Gorman, all of the back bench colleagues as well, it's a big team now. I was talking to Senator Fatima Payman before ‑ thank you for sending Fatima to work for you in the national Parliament as well and all of the colleagues. We've got this remarkable combination now of experience and new enthusiasm as well. You've sent a great team from WA to be part of the Parliamentary Labor Party and the new government as well and we appreciate that too and we appreciate the opportunity to work closely with Premier McGowan and his Cabinet here in the West.

We want to make sure that the new government repays the faith that the people of Western Australia have shown in us and that's how I encourage you to see the Budget that I handed down in Canberra nine days ago ‑ an opportunity to repay the faith that you showed in us, that this state showed in us ‑ in particular, in not trying to sweep under the carpet the pretty substantial economic challenges that we all face, but also at the same time recognising that we've got a lot going for us as well. We've got a lot going for us when it comes to the price that people are prepared to pay for our exports ‑ I don't need to tell you anything about that. We've got a lot going for us when it comes to historically low unemployment. But we've got some challenges too ‑ the global economy is a pretty tricky place right now, we've got labour and skill shortages which I'll come back to in a moment, parts of our economy have had wage stagnation for too long, we've got some energy policy challenges as well, aged care and some of the other issues too and so we've got our fair share of challenges. We've got some things going for us ‑ and I'm optimistic about the medium term future of our economy and our country ‑ but there's no use pretending that we don't have some tricky terrain to navigate together in the interim. And part of repaying the faith that you've shown in this new government and part of working so closely with all the employers of all sizes in the room here today and beyond, around Australia, is taking these challenges seriously. I wanted to talk about two in particular. No doubt there will be more in the discussions that we'll have shortly ‑ but the two things that I wanted to pull out as we introduce the discussion today, the first one is inflation, which is the primary challenge in our economy right now. And the second thing which is related to that, is I wanted to talk specifically about why I think this Budget is a good Budget for business and a good Budget for Western Australia because at its very core is a dedicated effort to deal with these skills and labour shortages which are holding the economy back, holding so many of you back and you have raised with me in different forums over a period of time now that this is one of your primary concerns. Certainly, when I've talked to Premier McGowan, as I do relatively frequently, this is one of the main things we talk about are labour and skills shortages.

The first one, inflation ‑ obviously, this is the biggest threat to our economy right now. That's why Mark and his colleagues on the Reserve Bank Board have engaged in some pretty substantial tightening of monetary policy over the last seven months, ever since before the election and that is because if we don't get on top of this inflation challenge, then so many of the other things that we want to achieve together in our economy will be that much more difficult to achieve. And so what we decided when we sat down five months ago and started to put together the skeleton of the Budget that I handed down last week, we sat down and we recognised the challenges in the global economy and some of those other challenges that I've run through ‑ some of them long standing and some of them intensifying ‑ what we realised at that point was that our responsibility was to take this inflation challenge seriously, because failing to do that, would compromise all of our other economic goals. And so once you draw that conclusion that inflation is public enemy number one, then all of the other decisions begin to flow from that so it defined our approach to Budget repair. It's quite unusual, for example, for a federal government to bank 99 per cent of the upward revisions in revenue from the surge in commodity prices but that's what we did because of the inflation challenge. It's quite unusual to have real spending growth flat over four years but that's what we were able to do. It's been unusual in recent Budgets to find $22 billion worth of savings in a Budget but we did that because we're serious about making sure that the Budget is not adding to inflationary pressures, as well. So it guided our approach to Budget repair but it also guided our approach to cost‑of‑living relief and we know that people are doing it incredibly tough out there and the worst thing that we could do would be to make life harder for people by having a Budget which was expansionary, and which added to these inflationary pressures.

And so the cost‑of‑living relief that we provide in this Budget is still substantial, about seven and a half billion dollars, but timed in a way and designed in a way not to add to that inflationary pressure by having an economic dividend. Whether it's early childhood education fees, whether it's paid parental leave, whether it's housing affordability, whether it's cheaper medicine, whether it’s our policy on wages ‑ all these things are designed to try and provide some cost‑of‑living relief without blowing out inflation, which already too big a part of the challenge that we are dealing with. So it guided our approach to cost of living. It also guided our approach to the way that we're directly investing in the drivers of economic growth in our country. And I think when the primary focus is about budget restraint, and it's about dealing with this near term inflation challenge, it can be too easily forgotten. But also in this Budget, at the same time as we showed some restraint in spending, we're also still making key investments in a stronger, more resilient, more modern economy. And you think about our investments in skills, our investments in energy, infrastructure, the NBN, a number of key investments, including here in the West. And when you draw all of that together, one of the big things that emerges from it, and this is the second category of things that I wanted to highlight to you, because I think it does show a) that we're listening to the business community, but also because we recognise at the same time as we're dealing with this inflation, it's partly a demand problem, and partly a supply problem. And a big part of the supply part of this issue is around labour and skills shortages, particularly in places like WA. Then you can pull out pretty easily from the Budget, at least five different ways that we’ve listened to you and tried to shift the needle when it comes to labour supply for your businesses. And if you think about it this way, we've got a big policy for fee‑free TAFE, which will help train the workers that you desperately need. We’ve got an extra university places. We have also increased the permanent migration cap, something that Andrew and I and others around the room have spoken about on earlier occasions, certainly one of the key conclusions of the Jobs and Skills Summit. We recognise that we can bring more people in at the same time as we train more Australians and that we don't see one as a substitute for the other. So migration is an important part of what we're doing.

Our early childhood education reforms are crucial here. Our modelling says that when we implement this plan for cheaper child care, it will be the equivalent of something like 37,000 extra workers in our economy because more and more parents, particularly newer parents, particularly mums, can work more and earn more if they choose to, once we make it easier for them to do so. And our Housing Accord, we're working closely with Premier McGowan, Treasurer McGowan in our Treasurers group, to see if we can come together with the building industry, with the superannuation sector, with local government, state government and Commonwealth to build more affordable homes, because we recognise particularly here, vacancies are incredibly low, rent is incredibly high. And it's harder and harder to live near where the jobs and opportunities are being created. So that's a labour supply issue as well. So those are at least five ways that we are trying to shift the needle when it comes to the skills and labour shortage that you're all confronting. But to finish on this set of observations ‑ we do not pretend now, we have never pretended that a new government five months into office, dealing with intensifying pressures from the global economy felt increasingly around the kitchen table, or some of the longer standing issues around skills formation and some of the other issues I've talked about today ‑ we don't pretend that a new government five comes in, can click its fingers and all of a sudden, all of the challenges that we are all dealing with collectively, all of a sudden disappear. And we’ve tried to be up‑front about that, I think part of the adults being in charge is not trying to talk down to people or pretend that we have every solution already implemented and the Budget has fixed every challenge in our economy, of course it hasn’t. We do see this as iterative, where there will be three or maybe four Budgets in the life of this parliamentary term. But what we're trying to do in this first Budget, and why we deliberately did it so early in our term, is because we wanted to lay the foundations for a more responsible Budget, a more resilient economy. We wanted to get the ball rolling on some of these skills and labour shortage issues. We wanted to budget for our commitments and keep faith there. And we also want to establish a new baseline when it comes to the budget and this national conversation that Chris was talking about a moment ago when it comes to the budget.

And so we hope that you see it really as the foundation for what happens now. Not the end of something but the beginning of something. And really central to that will be making sure that we continue to involve you in that conversation. So much of what we did in Tuesday’s Budget last week, was a consequence of engaging with you in a respectful and meaningful way, to see where we can find some common ground and move forward together on some of the issues that I’ve identified. There won’t be unanimity on everything that the Government intends to do but if we start from a basis of respectful and meaningful engagement that I've been so fortunate to have from so many of you for a really long time now, than we give ourselves every opportunity to navigate the tricky terrain over the next six, 12,18 months, and to build that better future after that that Australians need and deserve. Thanks very much.