Today, I want to talk about what I like to call the 'Fair Go Economy' that we have here in Australia.
When I was working in border protection years ago, both in opposition and in government, Senator Jim Molan, former Major-General Jim Molan, had a defence military maxim he explained to me. He said, 'Scott, you've got to have a plan but understand that no plan ever survives contact with the enemy'. Now, he wasn't arguing against having a plan, rather to understand what a plan does. How it works to achieve what you're seeking to achieve. How it actually draws people together, sets out a clear objective, understands your strengths, your weaknesses, understands the objective, gets people focused on it, so when the contact comes, people know how to respond and you yourself know how to respond in leading a process to achieve that outcome.
In this year's Budget I announced a plan for a stronger economy and there are many components of that plan. I know that making tax rates more competitive for business has been the one that most people have talked about. But this is a very wide-ranging plan. Investing in our public research infrastructure, championing trade all around the world, investing in infrastructure, whether it's Tulla Rail or the Frankston to Baxter line or whatever it happens to be, our investments in infrastructure are a huge part of that plan. The medical industry, the defence industry, lower personal income tax and so on. These are all part of what is a broad-ranging plan, the overwhelming majority of which has been legislated, but there are some items still to go.
The other thing about plans when it comes to the military, or in the corporate world or even in sport - my beloved Sharks will be down here in Melbourne on Sunday – you don't know what I'm talking about, it's called rugby league. They're coming down on Sunday, they'll have a plan.
But I'll tell you what they'll also have, just as our military do, they have a code; they have a set of values about how they play the game and how they conduct themselves. The values that underpin your plan, what you believe in, that frames your plan, that chooses your objective, that frames how you deal with challenges, that's even more important than a plan.
So I've got a few questions for you today, three in fact. Do you believe in a fair go for those who have a go? Do you believe, that to do better in this country someone else has to do worse? Or to put it the other way, do you believe for you to do better no one else has to do worse? Do you believe the money the government spends is yours?
Now if you've answered yes to all of those three questions, or any part thereof, we're on the same page. We're on the same side when it comes to how we are seeking to drive economic policy in this country. You know Australia is a place, over centuries, with the exception of our first Australians, we've all come from somewhere else. It doesn't matter if it was ten generations ago, or you're the first generation that was here, we've all come from somewhere else at some point.
Australia has a set of values of people who had the opportunity to start again. That completely informs our outlook on the world and life here in our country. We're not the US; we weren't founded by pilgrims. That's an interesting story, that's their story though, it's not ours. We're not the UK, we're not Europe, we're not Asia. We're the place where people came and had the opportunity, in most cases coming to seek it, to start again. In the case of my family, it was compulsory when they turned up in Sydney in 1788. But they did get that opportunity. They might not have been looking for it, but they got it, and they went on to live a life that they could never have dreamed of had they remained back in the UK at that time, and all those who followed them since.
And you know, we're a country that refuses to be denied our prosperity. We are such a resilient bunch. The Global Financial Crisis, the mining investment booms, 30 per cent falls in the terms of trade, SARS, bird-flu, all of these things have happened in the last 27 years. And we've remained in continuous growth over that period of time.
Today, there are less people in both absolute and relative poverty than when we were first elected in 2013. And in fact the most recent HILDA Survey shows that those on the bottom 10 per cent of incomes in this country, compared to average wages, have lifted, and it is true that those in the top 10 have actually come back a bit. This 'Fair Go Economy' is continuing to produce a lot of fair results I would argue very strongly. But it's based on some clear principles.
As a country we were not going to be denied our prosperity and opportunity because we had the old world rules and the old culture rules of where we may have come from imposed on how we were going to operate here in Australia. Our country is about saying that's for the rest of the world. In this country your opportunity won't be defined by those old discriminatory rules or practices. In this country if you have a go, you'll get a go. And that is a fundamental principle that I think sits at the heart of how we operate as citizens, as a society, and indeed as an economy.
I think of it as a fair go contract that has underwritten our incredible achievements as a country. A fair go contract that actually starts with personal responsibility. That's what comes first. Others talk about it, about mutual obligation, but this fair go contract says you have a role in all of this, it won't just turn up. This principle of a fair go for those who have a go is ingrained in the economic plan that we've been setting out for this country now for several years and is getting results I would hasten to add.
Whether it's the record jobs growth that we experienced last year, and we continue to enjoy strong jobs growth; whether it's the closing of that distance, as I said, in terms of incomes, whether it's the strong investment led growth putting us at the top of the pack in advanced economies all around the world; whether it's the rebound in non-mining investment which is running at 10 per cent on the last National Accounts, five times the long run average, eight consecutive quarters - our plan is getting these results because we believe in these principal values.
A fair go for those who have a go means we believe in lower taxes. Everyone should keep more of what they earn. We fundamentally believe this. This is why, in this year's Budget I handed down a personal tax plan. I appreciate you would like it to be more and I appreciate that there are more things you would like to have done but I can guarantee every opportunity this government has had to genuinely reduce taxes, and particularly personal income taxes, we've taken with both hands. And we've fought for it.
You'll remember the personal tax plan, immediate relief for those on lower incomes. Immediate relief through a tax refund.
Lifting the thresholds within the tax system to protect against bracket creep over the next decade. Removing one entire tax threshold to ensure that 94 per cent of Australians will not face a marginal tax rate greater that 32.5 cents. Now when was the last time you saw that happen? That is a big change. We'd all like even bigger changes I'm sure, but we believe in people keeping more of what they earn. Because we think that's what a fair go means for those who are having a go.
Now we also believe, in accordance with this principal, that the best form of welfare is a job, and last year we had 95,000 young Australians, over the last fiscal year, get a job. That is the strongest growth in youth employment in a fiscal year in 30 years since 1989.
In my first Budget I outlined a plan called PaTH. That PaTH programme has to date put 27,000 young people, who are longer term unemployed, in a job. Now this is transformative stuff. If a young person gets into a job and off welfare between the ages of about 22 and 25, the chances of them returning to welfare reduce dramatically. You're not just saving on welfare now; you're saving on welfare over a lifetime. But more importantly than that, you're transforming an Australian's entire trajectory over the course of their life. So we think the best thing we can do for young people is to get them into jobs. And that's why we have programmes like PaTH.
It's not just for young people. In this year's Budget that fair go for those who have a go extended to older generations. We've applied exactly the same wage subsidies, but this time to get older Australians into jobs. Through the pension work bonus, we've made sure those who are advancing in age can actually earn more, without it impacting entitlements they might have under the pension and in particular for those who generate income from a business. Previously business income was not counted. You can now earn $7,500 from your business as an older person without impacting your pension or other entitlements.
So whether you're a young Australian, whether you're an older Australian, whether you're an Australian working right now of middle age - we believe that the best security we can provide you is the security of a job, and when you earn you'll keep more of what you earn.
In this year's Budget I talked about backing business to invest and create more jobs. Since we introduced the angel investing arrangements back in the 2016 Budget, 340 companies have benefited from that. $300 million in additional investment. It's a 20 per cent tax offset capped at $200,000 per investor and a 10 year capital gains tax exemption. Through the early stage venture capital investor limited partnership arrangements we've seen investment go from $620 million to $1 billion in just one year. Over 300,000 new businesses started up in 2016-17 and entry rates of businesses going in are up to 15 per cent and exit rates are down to 12 per cent.
We're backing businesses to create businesses. We're doing that through a raft of measures whether it's specifically tailored to start-up tax arrangements or it's in lowering the taxes for small to medium sized businesses which is already legislated for businesses up to $50 million; expanding the definition of a small business to $2 million to $10 million, giving them access to the instant asset write off, pool depreciation and easier GST; and we've got a three page GST form down to three questions.
These things are happening for small business right now. The anti-phoenixing measures that Kelly championed in this year's budget are all about supporting small businesses that have been burned by the unscrupulous, unethical and illegal practices of phoenixing operations which deny them what they earnt. We believe people should keep more of what they earn when it comes to the tax system, and when it comes to applying the rule of law.
We believe in an immigration system that brings people to Australia who want to make a contribution and not take one. It's our fair go contract that underpins our fair go economy. It's not about ensuring everybody gets the same. The same outcomes, a vanilla economy. It's one that breathes life into incentive and encourages people. It's not about equal outcomes, it's about equal opportunities.
In our fair go economy someone does not have to do worse for you to do better. The Liberal Party, National Party, Turnbull Government completely reject the politics of envy. This is a gnawing cancer in our polity, society and in the economy and we must call it out. I get irritated when I hear commentators talking about how clever it is. It's not clever, it's un-Australian. It violates a core principal that somehow someone has to be punished for someone else to do better. That's not what we believe as Liberals.
I pointed out just prior to this year's Budget, before we introduced our personal tax plan, that 14.3 per cent of taxpayers are in the highest tax bracket in Australia. They pay on average $84,600 each in tax. That's more than virtually most Australians earn in total. They pay 30.3 per cent of the tax bill.
Go to the next bracket: 19.3 per cent, paying on average $30,500 each and they account for 34.8 per cent. So you've got one quarter of the population paying around two thirds of the tax. And the Labor party thinks they should be paying more. And if Labor is elected, they would pay more. Labor have pledged to strip away $70 billion of personal tax relief from Australians. Tax relief that has been legislated by our parliament.
Envy politics is flat-earth economics. It focuses on what you carve up rather than how you grow it. That always ends with everyone getting less and not just less in their pocket. Without a stronger economy and focusing on a stronger economy, we can't increase funding for hospitals for example. The GST is a consumption tax. If consumption falls – guess what happens to the tax intake – it falls. That's less money for hospitals, for schools, for essential law and order which is obviously urgently needed here in Victoria. A stronger economy delivers those services. To focus, as Labor does, on the carve up rather than growing it, penalises those essential services – Medicare, hospitals, the pension, affordable medicines. All of these depend on the values I'm talking about here today, which are rejected by the Labor party.
But we reject the politics of envy and we embrace the economics of opportunity. It's what's driving their thinking on tax. If you're doing well, you're the problem. If you're supporting your family, running your business, you're the problem – according to Labor when I read their tax plan. Higher taxes on houses, higher taxes on investing, on capital gains tax, up 50 per cent on everything, abolishing negative gearing as we know it. Trusts and family businesses, they're in Labor's sights.
Higher income taxes, higher taxes on savings, higher taxes on retirees by the disgraceful removal of the refundable tax credits they receive for investing in Australian businesses. Higher business taxes making all businesses less competitive. Don't kid yourself. Our law brings small business tax rates down to 25 per cent – that's the law. Bill Shorten will reverse that legislation and put those taxes back up. Envy is the enemy of a stronger economy and that's why we reject the politics of envy. It weakens our economy and it weakens our ability to deliver the services that rely on it.
Finally, let me make this point: it's your money that Government spends. When you believe that, it changes how you go about spending it and how you go about raising it. When we provide personal tax relief we don't talk about it costing us. See the way I understand tax is you pay it to the Government. But the way Labor talks about it, they are entitling you to keep more of your own money and it's an expense on the Government's balance sheet. That's not what it is. It's your money, you earned it. And our view is that taxes should be lower.
If you're worried, as I suspect many in this room are, about limiting the role and reach of Government into your life, into your economy, into your society, into your community, then you must limit how much you're going to tax the economy. That's what we did in this year's Budget because we believe this. If you want to control what the government spends, control what the government taxes.
We are the first Government to say that we will have, as a fiscal policy, a cap on the share of tax in the economy at 23.9 per cent, which is based on the period post the implementation of the GST and commencement of the GFC. If you have an unconstrained view on taxes there is an unconstrained view on how big you are prepared to let government get. As Liberals we don't share that view.
That's why we think we should limit how much tax is collected out of the economy. We think taxes when they get too high slow the economy down. Under our policies it is 23.9 per cent. At the last election, Labor's policies were going to get them to 25.7 per cent, and that's before the things that I mentioned a few minutes ago. They'll clear 26 per cent in a canter. That's about $50 billion extra in taxes every year. What's that going to do to the economy?
That's why we think taxes should be lower, and that's why we think taxes should be constrained, and it's also why we believe that we must live within our means. In this year's Budget we said the Budget would be coming back into balance in 2019-20, one year in advance. $30 billion of net debt will be paid down over the next four years, around $230 billion over the next ten years on our plans. We are balancing the Budget, paying down debt, providing for the future by investing wisely, whether it's in infrastructure, our schools, our hospitals, and doing that in an affordable and a sustainable way on a tax base that does not tear away and strip away at the economy that is the lifeblood of providing these services.
The beliefs that I outline underpin our plan for a strong economy. They keep the fair go economy dream alive. That's my dream. A fair go economy, one that honours our sacrifice and heritage that has bequested to us what we have here today, and to honour the principles that got us there, to not turn our back on them. We don't want to go down the Corbyn path, to not go down that dark path that would muffle and suffocate our economy. We have a very different view as Liberals. We embrace the economics of opportunity and personal responsibility. We reject the politics of envy and we accept the responsibility of careful and disciplined financial and budget management. That's our plan, that's our belief, that's what is up for grabs over the next nine months, that's the choice Australians are going to have to make. We feel very firm in our convictions and beliefs that inform how we are changing and driving Australia forward for the better.
Thank you very much for your attention.