16 May 2014

Post-Budget Address to Higgins 200 Club



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This is the Treasurer's post-Budget speech to the Higgins 200 Club in Melbourne. The main topic of discussion were the Government's key priorities from the 2014-15 Budget.

Thanks very much Kelly. I feel as though I was just walking into the middle of the MCG, it's a long way. And to you Peter, we all stand on the shoulders of giants and indeed you are, and what you've done for the country I could only hope to in some part, replicate. And to all of my colleagues, particularly Mathias Cormann who's been an outstanding Finance Minister – really has been, and Bruce Billson, Steve Ciobo, all my colleagues who have been both collegial and understanding, and to all of you ladies and gentlemen.

You know I'm often asked what's the hardest thing to do in politics. And I always respond it's not hard but it's so important to be true to yourself and true to your values. And all the public servants involved in developing this Budget kept saying to us, that it was easier to get decisions out of the Expenditure Review Committee than certainly the Expenditure Review Committees, of the last six years. When we made decisions, they held and it was easy to make decisions because we applied a core set of values to everything we were doing. Number one, we have to live within our means.

What we inherited was a mess and if you believe the Leader of the Opposition last night, he's standing over the twisted metal of a train crash and he's saying, "There's no problem here, move on. No problem here, move on." And his solution is no solution. It is just a political response not a policy response so I don't think Australians will take him terribly seriously. I'm not going to waste my time responding to him.

But I want you to know why we are doing what we must do and it starts with the basic principle that we, as a nation, have to control our destiny and the only way we can shape the future is with our actions now. We are not going to pass the buck to another generation. We must move now to shape our destiny. We inherited an economy with below-trend growth; we inherited an economy with rising unemployment, with falling terms of trade. We inherited an economy where inevitably, interest rates are going to head towards more normal levels, where there has to be fiscal consolidation, and we inherited an economy that sooner or later is going to face enormous competition out of Asia and one day maybe even Europe. And we inherited an economy that is seeing the re-emergence of the United States, thank goodness. And out of that, we recognise that whilst we can't move immediately on significant reductions in expenditure, we've got to be smart about the way we address the Budget in the short-term and we've got to be brave about the way we address the problems in the long-term.

So we started by looking at ways that we can re-allocate spending over the next few years into things that are going to drive the economy. What we do know is that the huge construction phase associated with the mining and resources industry over the last decade is coming to an end and that industry is going into the production phase and we should celebrate that. However, all of those engineers and all of those transport and logistics providers involved in building those massive mines and gas plants and so on, they are now looking for other opportunities and mining. And resources represent 10 per cent of the economy, just 2 per cent of employment and what we've got to do is fire up the other 90 per cent of the economy. To do that we need to get on with the job of building things, building the productive infrastructure and building it fast.

I dip my lid to the Victorian Government, our colleagues and friends and Michael O'Brien. When I said to him, "We want to get on with the East West link," he said, "Let's do it," and we started at the last election putting in $1.5 billion to get work under way; before the end of this year – 6,000 jobs here in Melbourne. And I said to him before his Budget and before my Budget, "We've got to get on with stage two," and he said, "Let's do it," so we found another $1.5 billion to get on with building the entire project to create the jobs, to build the productive infrastructure that is going to make us more efficient and productive into the future and we are replicating that right around Australia.

To pay for it we've had to make and hard decisions, including reintroducing a fuel indexation, the increase in the excise on fuel which represents for the average family 40 cents a week. Forty cents a week increase in the cost of fuel to start getting the roads, getting the infrastructure that is going to build our economy and build the jobs. And the infrastructure package we've put in place, we're spending $50 billion over the next six years that's going to lead to $125 billion of new infrastructure in six years. That's the equivalent of eight snowy mountain schemes in six years and we're doing it because we must. We need to find up the rest of the economy, and why? Because we recognise, and our values are, that if you build the infrastructure to give people the opportunity to get to the starting line when the starter's gun goes off, everyone should have the opportunity to be their very best, to do their very best, and so we will build the essential infrastructure but then it's up to you, it's up you, and Australians are fantastic at it.

We are innovative, we are enterprising, and we are ambitious; we are also caring. And it's those values that we have applied to the Budget. Unshackle the Australian people. The bigger the Government, the smaller the people, the smaller the Government, the bigger the people. And that's what we've done. So it hasn't been just about improving the numbers but, by God, we had to do it, and we're reducing debt over the medium term by nearly $300 billion, and there are structural decisions we made in the Budget including the closure of the Military Super Scheme and the start-up of a new military super scheme that is going to reduce the unfunded liabilities for our children of $125 billion in 2050. That's how far out our decision making went in this Budget. Looking at the unfunded liabilities we were leaving to our children and grandchildren in 2050, fix it now, do not pass the buck to some future generation, that is what we said to ourselves and that's what we have done.

Now there will always be a critic as Teddy Roosevelt said. It's not the critic that ever builds anything. But I will tell you what, when they said there is no structural reform in this budget, it's laughable. In health, we recognise that if we truly want to have a sustainable health system, we need to build it now. And yes we are asking Australian's to contribute when they see a doctor we have built safety nets in for the most vulnerable including giving almost $500 million to doctors who can use their discretion along the way to ensure that someone who really can't pay, doesn't have to. And we have built in mechanisms for concession card hard holders and children, no more than 10 visits have to be paid for a year, but if we contribute $7 now, to go to see the doctor for our own health, and think about how you spend $7 in the course of an ordinary day if you contribute $7 now for your health or your children's health, what does it mean? Every dollar we raise in savings in the health budget over the next six years is going into the biggest medical research endowment fund in the world. And no city in Australia and few cities in the world understand the importance of medical research like Melbourne, which is unquestionably the medical research hub of Australia and a place where so many individuals have been so generous towards the development of medical research centres here. We will build a $20 billion fund in that perpetuity and forever, will double the amount of funding for medical research. So the Ian Frazers and the Fiona Stanleys, and the Gus Nosalls and the Howard Floreys all those years ago, can be repechaged into the future and multiplied and maybe we can find a cure for cancer or Alzheimer's, maybe we can. And by God it might be an Australian that does it. So we are investing in our people and through cure and discovery, we will be able to make our health system sustainable but it is going to take a contribution because you can never build without resources.

The starting point is to ask Australians to contribute now to build that. And in higher education, we are asking Australians to contribute and build as well. How can we not have a university in the top 20 in the world? In every other field of endeavour, we are in the top 20. If not, on occasions leading the world but we haven't got a university in the top 20 and we have very few in the top 100 and we are seeing the emergence of massive competition out of Asia. Well-funded universities that are like magnets attracting the very best academics in the world to teach their children how to be the very best in the world, well we've got to compete. And no student will pay any different dollars when they go to university, but when they start earning an income, they will start to repay the loan when they earn $50 000 and we are extending that concessional loan scheme to people who do diplomas, who do sub-bachelor degrees and why? Because they should have a quality of opportunity as well. Just because they don't got Melbourne University or Monash, they are no lesser people. But by God, they are having a go, and improving their lot in getting ahead and you know what, we are doing the same, for the first time, for apprentices; trying to keep them in apprenticeships and giving them those $20 000 loans staggered along the way, how important is that. So there is a quality of opportunity and out of the reforms $1 in every $5 saved by the universities is going to go to scholarships for low-income people from around the country. But out of that, maybe, just maybe we will have one of the best universities in the world. We have to lift, we have to lift. So in health we are lifting and in higher education we are lifting and we are also lifting in our changes in social policy, in welfare.

You know we should celebrate the fact that we are ageing as a nation, we are living longer and that is a good thing. Roughly one in every three children born today will live till 100. I have three children eight years and under and I celebrate that life but I want them to have a quality of life, I want them to be their best and have the very best opportunities and our welfare system must be a safety net and not a cargo net. We need to ensure the most vulnerable in the community have a decent quality of life but also, they have opportunity. It starts at the youngest of ages and yes, for people under the age of 30, we are not asking you to earn or learn, we need you to earn or learn. And there is appropriate safety nets built into the system for someone who is truly down and out under 30, but we are changing the system so you don't have a culture of entitlement start the day you leave school. We will do everything we can through job programs and other things to get you into a job but we are not going to give you straight up welfare as soon as you leave school.

For those between 30 and 50 it is a call to arms. We cannot afford to keep paying someone who can go to work, whose children are going to school, to stay at home because the money you receive is coming from another taxpayer, someone who is working. And if you do have the capacity to work, we need you to work because the proportion of our population that is of working age is falling as our ageing population is rising, so we need people to come to work.

If you have the choice to stay at home – fantastic, but please do not ask taxpayers to contribute to your choice to stay at home if you have the capacity to work and that is why we have our Paid Parental Leave Scheme; we need to keep particularly mums, engaged with the workforce. We can't afford to train and lose; we need to bring you back. For the over 50s we are asking the business community to change its attitude towards over 50s and we are going to do that with a $10 000 incentive to pick up those people who are on Newstart for six months after the age of 50 or, who are on Disability Support pension for six months. Pick them up and give them a go. We will give you $10 000 staggered over two years to help get people off welfare so that we are all doing the heavy lifting in reshaping the economy rather than just waiting for someone else to do it. Because life doesn't end apparently when you turn 50, I am told – I hope not, I haven't got long to go.

If we do these things ladies and gentlemen, we are going to build a stronger economy, we will reshape our destiny, we will reshape our destiny to build the things that deliver the economy we deserve. At the end of the day there is no easy solution. Repairing a Budget is hard, repairing a Budget when you are left with some of the key economic indicators heading in the wrong direction, that's hard as well, but we are up for the challenge.

We are not promising a surplus in a set year in order to win political favour and by God we are not announcing what we have announced in this Budget for political advantage, I can promise you that but we are doing what is right for the nation. We are doing what is right for the Australian people. We are doing what is right from the perspective of fairness but also from the perspective of hope. If we cannot get on with the job of fixing the nation's Budget and fixing the nation's economy, and doing it now, then what we are going to have to sacrifice in just a few years' time is going to be so much greater. I am not going to pass the buck to a future generation. Tony Abbott is not going to pass the buck to another Prime Minister. We are not going to pass the buck to another government, that is not our way – we will not do it. But we need you to help, we need you to understand and to convince, we need you to contribute because if we contribute now, our country will get stronger, our economy will become more robust. We will create jobs, you will create jobs; you employ people. The Government hardly employs people, you employ people and we need you to contribute as much as anyone else, to help build the sort of Australia that we really do want to shape for the future.

Thank you very much.