Thanks Cassandra. I think I'm mic’d up here. Firstly to you, thank you for asking me along and I don't think it's a traditional thing for Treasurers to come along to ACOSS conferences but I really did want to come. I wanted to come really to begin by expressing my gratitude to all of you for what you do on a daily basis. I know what you do can be not only physically challenging but emotionally challenging and I really do appreciate what you do. I really, really do appreciate what you do.
I want to emphasise that you know you asked the question before about who's happy with the Budget. I suspect it wouldn't be much different anywhere in Australia if you asked that question but we're not, this Budget is not about being popular and nor is it about making people happy. It is about doing what we believe must be done to lift the quality of life that people are going to have into the future and one of the most confronting graphs that the Secretary of the Treasury presented to me in our first meeting was - and he's presented it, I don't know if he presented it again yesterday but he has, Martin Parkinson has presented it on a number of occasions – basically, he shows a graph that if we don't improve our productivity growth in Australia, for the first time, we are going to oversee a deterioration in the quality of life over the next 10, 20, 30 years; a deterioration in the quality of life.
Now, if that occurs, then the most vulnerable in the community are the ones that are going to be the most affected. There's no doubt about that and that has been the most alarming single piece of information and when I presented it to Cabinet and I presented it to the State Treasurers – and it was Martin Parkinson's graph that illustrated there's going to be a deterioration in the quality of life we have unless we take remedial action now – there was just this stunned silence because we've had a mining boom, we've had some pretty good fortune over the years, there's been a lot of effort, a lot of structural reform as well, but we are now in a different world and we're facing a different world, so the Budget is the first step.
It is, and it comes down to, the sort of values that you are trying to put into the over-arching Federal framework. Now, it is a fact the Budget was never going to get back to surplus because expenditure was locked in at a growth trajectory that was unsustainable and you know, I think there is a consensus based on the information out there that of course it was never getting back to surplus, which just means that sooner or later it's going to be worse. Why? Because Australia imports money from the rest of the world, we’ve done so since 1788, we've imported money from the rest of the world because we're a big nation. Each year, this year it's about $40 billion we import from the rest of the world to fund ourselves and during the Global Financial Crisis it was a rude shock because our banks couldn’t get offshore funding so they relied on the Government's credit rating and the Government had a strong credit rating, therefore we were able to fund ourselves in international markets. But if we can’t, there’s a difference between us and Japan, and European countries and others that have much bigger debt but they're able to fund themselves because they've got a huge pool of national savings; we don't. So, therefore we're very exposed to the rest of the world and therefore, and that's going to continue for long time, probably a very long time that we don't fund ourselves as a nation. I hope it doesn't, but it will continue. Therefore, it's so important that we do run surpluses in Australia which reduces the call on borrowings and that allows the private sector to borrow the money that then helps to build the infrastructure that creates the jobs.
Unquestionably, there has been an expansion of the welfare system over the years and I gave a speech on the End of the Age of Entitlement two years ago and it was simply about making the point, the politicians have been as guilty as everyone else, in extending what is deemed to be welfare, higher and higher up the pay scale, and what it means is you can do it and you can afford it while you've got money coming in but then when the money doesn't come in, how do you pare it back? And what we really want to see is a strong safety net in Australia, an entirely sustainable safety net in Australia and the balancing act is trying to reduce the spread of welfare but at the same time ensure that the welfare safety net is strong. And also, importantly, to make sure that there is appropriate support for those that are helping to provide services to those most vulnerable in the community outside of the Government and that's a lot of what you do.
It's not the last word, it's the first word and I'm here because we want to keep having constructive dialogue and more engaged dialogue with ACOSS and others during the course of our term in Government.