The Budget I handed down in May was built upon a foundation of fairness, security and opportunity. It was about making the right choices to secure the better days that are ahead.
It is a Budget that seeks to encourage and support all Australians; from all walks of life, of all generations and experiences, by doing everything we can to foster economic growth.
It doesn’t ‘kowtow’ to the big end of town, the unions or overseas interests. It puts Australia’s interests first. It respects the principle of a fair go, while rejecting demands for a free ride.
Our Budget speaks to realising the economic hopes that Australians have for themselves, their families, their businesses and communities, despite the challenges.
While we recognise the economic frustrations that many Australians have experienced in a challenging and changing world, we believe it is our task to replace this frustration with a sense of opportunity.
By contrast, our political opponents in the Labor Party see these frustrations only as something to cynically exploit for political gain.
Our Budget does not target one group of Australians over another, nor does it seek to champion some Australians at the expense of others.
It puts the interests of all Australians first by keeping the strongest credit credentials available.
Our Budget also does not give up on growth, by focusing only on how our economic pie is carved up. In making this their focus, Labor has put up the white flag on growth. By contrast, the Turnbull Government is implementing a strong national economic plan to drive growth.
Our Budget embraces the economics of opportunity for all Australians rather than the politics of division and envy between Australians that is embraced by Labor.
That is because the Turnbull Government is governing for all Australians - or as John Howard used to say, for all of us.
To ensure that living standards within every household improve as the economy marches forward. That every Australian has the opportunity to share in the benefits of our national growth story.
The Turnbull Government does not measure fairness through the narrow lens of envy.
That is a brand of politics that divides and ultimately disappoints the very people it promises to support.
Such an approach seeks to chase votes rather than earn them.
Bill Shorten only thinks you are doing better if someone else is doing worse. It’s a con. This politics, this populist agenda, is always based on someone losing, so long as it’s not Bill Shorten.
It’s a small vision for a big and successful nation like Australia and a dark vision for our economy, which the Turnbull Government rejects.
Populist politicians like Bill Shorten will always stand at the microphone and make bold assumptions about the ever-increasing gap between haves and have nots.
When you consider many Australians have not enjoyed the same level of growth in their personal financial circumstances as others, it is easy to fall into the trap and nod in agreement.
But when you hold it up to scrutiny, it is just another Shorten con, that sells Australia short.
Firstly, this cheap rhetoric about an unfair Australia diminishes the achievements of generations of Australians who have not only built a prosperous country, but a very fair one.
Australia has a proud record of looking after those who haven’t fared as well as others, and certainly better than most countries.
Australia rightly runs a progressive tax system with a generous social safety net. Our welfare system, despite its acknowledged faults which the Turnbull Government is acting to address, is one of the most targeted in the world.
The Turnbull Government has tightened means testing of benefits, including in the most recent Budget, while at the same time strengthening the integrity of our welfare system, by cracking down on the rorts to ensure it provides help to those who need it most.
We also believe that the best form of welfare is a job. The fact that more than 240,000 jobs have been created in the last financial year, the strongest year of job growth since before the GFC, means Australians are doing better.
Secondly, we must not buy the flat earth argument that you’re doing worse because someone else is doing better.
Sure, fairness is about paying your fair share, but it’s not about taking from those who have earned to simply even up the score.
I have supported and introduced tax changes that were designed to increase fairness and sustainability in our tax and welfare system and to ensure that we each paid our fair share.
Some of these measures have been unpopular, including with Coalition supporters.
In the Budget we necessarily legislated for the major banks to pay more to recognise the advantaged position they occupy in our financial system, not because their profits are large or they are unpopular. We are actually working to reduce taxes for profitable businesses so they can afford to invest more and pay higher wages.
We are seeking to legislate to increase the Medicare Levy so we can all ensure that the NDIS is fully funded and that we all continue to share in the cost of delivering it.
In previous budgets I have acted to remove generous superannuation tax concessions granted in more prosperous times that could no longer be afforded. This was not about increasing taxes, but making our retirement income system more affordable, not redistributing earnings.
Fairness should not be judged by how much you appear to punish people who do well. That cannot be the test in a modern and competitive economy.
Jamming the handbrake on those who once aspired and embraced their opportunities, and who have had good fortune and kicked some goals in life, is not a plan to make Australia a more prosperous country or fairer.
We cannot allow our tax and welfare system to be built on the principle that someone has to do worse for you to do better.
That is not what I believe Australians call fairness. We’re bigger than that.
Thirdly, we need to remind ourselves of some facts, as Roger Wilkins, the deputy director of the Melbourne Institute did last week when he rebuffed the notions of a growing inequality here in Australia.
Roger is not a politician, he has no dog in the political fight, he’s a respected academic. Amongst his many credentials he is responsible for the highly respected survey of Household, Income and Labour Dynamics in Australia (HILDA).
He said: “If anything, inequality has been declining.’’
This is particularly the case when we take into account our progressive tax and transfer payment system and when we are looking at our experience post the GFC.
Between 2011 and 2014, the Gini coefficient for household disposable income based on the HILDA data decreased from 0.311 to 0.299.
Analysis of the more recent census data for the 2016 Census shows the Gini coefficient based on gross household income has declined from 0.382 to 0.366 since 2011.
Between 2006 and 2014, the largest falls in household wealth occurred in the richer households, with the measure for the top 1 per cent of income earners falling 9.3 per cent, whilst the lowest 10 per cent had an increase of 25.7 per cent.
In addition, the HILDA survey has shown relatively little change in household income inequality between the endpoint of 2001 and 2014.
Also, the proportion of Australians earning half the median wage has fallen to 10 per cent from around 13 per cent in 2010, according to the ABS.
Where income has been constrained in families, our welfare safety net has proved immensely valuable.
According to the ABS, the poorest 20 per cent of households, on average, receive cash transfers and social services benefits worth more than eight times what they pay in taxes.
In addition, a 2010 study showed that the poorest 20 per cent of households received twelve times as much in cash benefits as the richest 20 per cent - the highest ratio in the OECD and 50 per cent more than the next most targeted country, New Zealand.
According to the OECD in analysis released in 2015, while income inequality has risen in most OECD countries over the past three decades, in Australia it had increased by substantially less than many comparable OECD countries.
More recently though, as I have also noted, the OECD acknowledged that inequality in Australia has actually fallen since the Global Financial Crisis on some key inequality measures and the ratio of income of the top 10 per cent compared to the bottom 10 per cent in Australia is below the OECD average.
Also in 2015, the Productivity Commission found that forty per cent of families paid no net tax, after taking into account their transfer payments like the Family Tax Benefit.
By contrast, the top 10 per cent of income earners in this country pay almost 50 per cent of the personal income tax received by the government. The top one per cent of income earners pay a staggering 17 per cent of all tax received.
I’d say that was paying a pretty fair share. To then say that their tax rates should be increased even further is nothing more than a lazy, cynical envy tax.
It is blatant ideology masquerading as fairness, and we embrace or even indulge it at our peril.
Above all, real fairness requires you to get things done.
You must be judged by what you do, not by what you think or say.
That is why in this year’s Budget we committed ourselves to doing four things.
Grow the economy to support more and better paid jobs.
Guarantee the essential services that Australians rely on, like Medicare, the PBS, schools funding and disability services
Put downward pressure on rising costs of living, such as electricity and housing costs.
And ensure the Government lives within its means by responsibly returning the Budget to balance and ensuring today’s services are not being paid for by tomorrow's taxpayers.
Our Budget is passing the Senate. Seventeen pieces of budget legislation have now passed the Parliament. These form part of the 126 pieces of legislation that have passed the Parliament since we were re-elected just over twelve months ago.
The Turnbull Government is getting things done.
When Australians are feeling the pinch, they become acutely aware of the essential government services they rely on.
Our Medicare system is world renowned. Our Pharmaceutical Benefits Scheme slashes the cost of life saving and improving medicines. Our generous child care rebates ease the burden for families to give parents the flexibility to return to the workforce. Our support for early childhood education and public education is where every Australian’s journey of opportunity begins - it is the bedrock for fairness and equality.
These are things we can take for granted when the good times roll, when our jobs are stable, wages are rising and the outlook is rosy.
But the moment the family budget is squeezed and wages growth slows to a crawl - as many households have experienced in recent times - Australians want to know that the services they rely on will be there for them.
When the cost of living starts to bite, suddenly a $40 rebate from a doctor’s appointment is crucial to your week.
The discount you receive on your medication over the counter at your local chemist is important and goes to a ‘must have’ as the raft of other bills pile up under the magnets on your fridge.
Despite the fact our national economy keeps moving forward to a steady beat, we understand that not all Australians have been able to take as much comfort from this as others.
Many families are hurting and struggling under the weight of financial stress and some have broken apart.
Some Australians can’t remember the last time they received a decent pay rise, despite putting in the hours and the hard work to provide for their households.
And with no pay rises, the rising cost of living has started to gnaw away at household budgets, particularly when that quarterly electricity bill arrives in the post.
For these reasons we have acted to give you the guarantees that you can rely on from the Turnbull Government.
We have legislated to protect Medicare and guarantee its vital service is available both now and into the future. As strong as ever.
We have established the Medicare Guarantee Fund to pay for all expenses on the Medicare Benefits Schedule and the Pharmaceutical Benefits Scheme from July 1 this year, and already $33.8 billion has been credited to the fund for the sole purpose of meeting the cost of essential health care.
Medicare is being protected and strengthened by the Turnbull Government, not eroded, let alone sold.
We have legislated record funding for our hospitals and schools.
Our $23.5 billion package to fund needs-based schooling for every student in every state, in every school, gives parents the confidence that when they drop their kids off at the school gate, their child is getting the funding based on what they need - not being left out by special deals other schools receive.
This is the fairness that has been sought by parents for decades and has now been funded, delivered and legislated by the Turnbull Government.
From 2017-18 to 2020-21, the government will invest $37.3 billion in childcare, including before and after school care, to ease cost of living pressures for around one million Australian families, and give parents a fair pathway back to work.
These measures help Australians where they are at now, giving them the confidence that when times are tight, the government has their backs on the important things in life - health, education and the care of their children.
Too often, partisan battles occur over critical measures that materially benefit the lives of Australians, particularly our most vulnerable citizens.
When we return, I am hopeful that our Parliament will reject this approach and support our Budget initiative to once and for all fully fund the National Disability Insurance Scheme.
Governments must care for our most vulnerable Australians.
Australians look after their mates, whatever their own means.
The burden on the shoulders of those who have family members with a disability is already too great. Nobody can properly prepare for the hardship, nobody can prepare for the cost.
What we are seeking is to lighten their load and provide a quality of care that they deserve as a fellow Australian.
As my brother in law, who suffers from MS, told me - ‘it’s not flash being disabled, but the only good thing about it is being disabled in Australia’.
The NDIS can continue to make this a reality for disabled Australians and their families and carers. It’s not perfect and we still have a lot of work to do, but we must put the partisan squabble about funding to rest.
We have provided the solution in the Budget by filling the $55.7 billion funding shortfall with a 0.5 percentage point increase to the Medicare Levy.
We chose the Medicare Levy - asking all Australians to contribute according to their means - because this is the responsibility of all of us.
Those who earn more will pay more, but all of us above the thresholds that have already been set to protect the vulnerable, have a role to play.
This is the fair approach.
Fairness is sharing the load, each paying according to our means, ensuring we meet this cost as a nation.
To quote the architect of the NDIS, Julia Gillard when she announced plans to use the Medicare Levy to pay for the first half of the NDIS: “Everyone takes out and everyone puts in.”
The invitation I presented in the Budget to fund the NDIS was not for Labor to play politics and turn this into another episode of class warfare. It was to step up.
The Labor Party under Bill Shorten that is now refusing to support the Budget measures to fully fund the NDIS is falling short of the fairness standard and commitment to disabled Australians set by the Labor Party under Julia Gillard who initiated the NDIS.
When Bill Shorten rails against funding the NDIS, pitting Australians against Australians and claiming this is a wealthy person’s problem to fix, he’s fishing for votes, not helping people.
He is crassly playing politics with disability.
Where is the fairness in choosing politics over people’s lives?
The same can be said of Labor’s plans to oppose our initiative to give young Australians a helping hand to save for their first home.
In the First Home Super Savers Scheme we have a generous system where Australians can turbo-charge their house deposit by saving money inside their superannuation account within existing caps - attracting the tax concessions and a deemed earnings rate.
This has the potential to boost a young person’s house deposit by 30 per cent over three years giving them a considerable leg-up in their seemingly insurmountable battle to get the keys to their first home.
Labor won’t support them. But we will.
Labor is going to block what is effectively a tax cut for Australians saving to buy their first home. They are saying no, and in doing so, they are prepared to leave young Australians to fend for themselves in a ravenous housing market; an arduous proposition in the property markets of our capital cities.
They have nothing to offer them.
Where is the fairness in denying young Australians the opportunity to boost their house deposit?
Arguably our most important task in the coming year is delivering a fair outcome on energy policy that puts downward pressure on electricity prices.
Australians are sick and tired of watching political parties fight over the right energy solution. Politics as usual means business as usual which means power bills continuing to surge to outrageous levels.
We must reach an agreement, based on engineering and economics, not ideology and politics.
As the States played a large role in creating this problem, the only way forward is a national solution. The last thing we need is for States to continue to go it alone and try and be heroes.
We know very well where that type of an experiment ends. Especially here for the people of South Australia.
In the Budget I delivered in May, I described the Prime Minister’s plan to deliver more reliable, more affordable, and more sustainable energy in five ways.
Firstly, we need to keep more of our gas at home to meet our electricity needs.
The availability, or perhaps more correctly, the unavailability of gas in the domestic market has had a direct bearing on the cost of your power bill.
Back in 2015, gas was setting the price of electricity around 10 per cent of the time.
Now it is setting the price as much as 25 per cent of the time, as coal plants retired.
The impacts have been magnified by the rise in the cost of gas, with recalcitrant states who are needlessly locking up their gas supplies, exacerbating the problem. The solution is under their heels.
In Victoria, there is 40 years’ worth of gas supply sitting under its soil in the Gippsland Basin, but they, like the Northern Territory government which has an onshore gas resource that would last for 180 years, are refusing to unlock it and pour vital supply into the gas market.
Thankfully, wisdom prevails in the Finkel Report, penned by the Government’s chief scientist Alan Finkel, which recommends the States do away with their moratoriums on gas extraction, accept the evidence, and proceed on a case-by-case basis.
Secondly, we are making sure the big energy retailers are not profiteering from your electricity prices and we have tasked the ACCC to ‘look under the hood’ to determine whether retailers are being fair in the way they price their energy. Hearings started this week.
I won’t stand by and let energy retailers and rogue State Governments take advantage of Australians families, by seeking to pull the wool over their eyes and play the system.
In Queensland, around 65 per cent of the energy supply is state-owned and those companies have routinely exploited their market power to push electricity prices higher.
These colluding companies are owned and operated by the Labor Palaszczuk Government.
The result? Queensland has some of the highest electricity prices in the country.
Thirdly, we are working to improve energy regulation, providing extra funding to increase gas market efficiency and transparency.
The COAG Energy Council, led by my colleague the Minister for the Environment and Energy Josh Frydenberg, will stop energy businesses from appealing how much they can re-coup from customers.
Network businesses will no longer be able to appeal certain decisions of the Australian Energy Regulator through the so-called Limited Merits Review process.
In doing this, we are abolishing the opportunity of big energy companies and State Governments gold-plating their infrastructure and passing on the costs to you, the consumer.
Fourth, we are investing in new generation and storage capacity, whether that be our significant investment in Snowy 2.0 or our plans to investigate new gas pipelines and energy infrastructure here in South Australia.
We are talking real solutions.
There is nothing wrong with Tesla’s czar Elon Musk coming out to South Australia and trumpeting its revolutionary energy storage solutions for the State; committing to build the world’s largest battery right here.
While we welcome any initiatives to boost power and lower electricity prices, we shouldn’t get too carried away.
This battery has 129 megawatt hours of storage. This wouldn’t get 30,000 South Australian households through watching one episode of Australia’s Ninja Warrior.
The Prime Minister’s plan to invest in Snowy 2.0 has 350,000 megawatt hours of storage.
So, we would need another 2,712 more “world’s biggest batteries” before we get on the same page.
When a gale is blowing in from the Great Australian Bight, South Australia can generate around 13,000 megawatt hours from its wind turbines in a single day. The new battery could only store one per cent of that power.
We are not into showbiz energy policy, we are into real, tangible energy policy that actually makes a difference, not just grabs a headline.
Fifth, we are investing in new low emissions technology.
That does not mean it is out with the old and in with the new.
We remain resource and technology agnostic. While there is an estimated $7 billion currently committed to building renewable energy projects, coal must and will remain a prominent contributor in our energy mix.
It is not a question of either coal or low-emission technologies. It is both, for the longest period possible.
Coal is not going anywhere soon. It remains an integral component of our base load power; at present, an incomparable component given its reliability and cost. Under Dr Finkel’s own clean energy target analysis, coal would still supply 50 per cent of the National Electricity Market up to 2030 at least.
The last coal-fired power station to be built in Eastern Australia was in 2007, in Kogan Creek in Queensland.
By all means let’s welcome investment in a new lower emissions coal-fired power station or HELE plant as they are known and are building in places like Japan. But let's also be real about it.
These new HELE plants would produce energy at an estimated two and a half times the cost of our existing coal fired power stations. They would also take up to around seven years to set up. While welcome, where the economics and engineering stack up, we shouldn’t kid ourselves a new HELE plant would bring down electricity prices anytime soon.
When it comes to coal, the best thing we can do is simply ensure the power stations we currently have, Liddell, Bayswater etc, stay open, remain economic and work longer into the future. We need to sweat these existing coal fired assets for longer.
Not only does this provide critical base load for our economy in the decades to come, but it also buys important time as other energy technologies are developed and can be evolved to match the stability of more traditional power sources.
Under the Finkel recommendations, large thermal generators like the Hazelwood power plant that shut its doors in Victoria’s Latrobe Valley in March, would be forced to give a minimum notice period of three years before closing.
This is about avoiding price shocks and maintaining reliability, by giving the system enough time to plan for new generation.
And as outlined in the Finkel Report - which now has the support of the States - you must have a comprehensive pricing approach for renewables which reflects the fact that you also want stability.
Not just when the sun is shining and the wind is blowing.
In addition to guaranteeing the essential services that Australians rely on, we have also acted in the Budget to put downward pressure on rising living costs. Not just because it is the right thing to do, but it is the fair thing to do, ensuring that Australians can get a fair go.
Conclusion
In a speech to the Melbourne Institute last week, I painted an encouraging picture of where the Australian economy is at present and where it is heading, and I am not alone. This view is shared by the Reserve Bank, the IMF and many others.
There are better days ahead.
There is a clear momentum building within our economy, as businesses become more confident and begin to release the handbrake on their investment.
The sustained growth in new jobs is a perfect example of this underlying strength.
Last month, 62,000 Australians went out to find a full-time job and got one, taking the number of jobs created in the 2016-17 financial year to 240,000.
With increased investment and sustained profitability will come increased wages.
These are encouraging signs, but we cannot take it for granted.
The Turnbull Government will continue to make the right choices to secure the better days ahead, as we did again in this year’s Budget to grow our economy and ensure that all Australians get a fair go.
Thank you.