Thanks, Richard, for the introduction, and to the Australia Institute for the invitation to speak tonight on the traditional lands of the Ngunnawal and Ngambri people, whose elders I acknowledge in the customary way. And thanks to all of you for joining us here.
It’s an honour to give this oration in Bernie Fraser’s name. Even more so with Bernie in the audience.
You know his CV but it bears repeating because it’s remarkable: grew up in regional New South Wales, like Governor Bullock; joined the Public Service at 20; the only Australian to have led both the Treasury and the Reserve Bank; played a key role in shaping the economic architecture we rely on now, like central bank independence, inflation targeting, compulsory super.
Some of you were in this room a year ago when he spoke about national security and the broader global scene and called for more courage and ambition, including on tax reform. In that respect he shares something of the temperament of the Australia Institute itself – not shy about telling the government where you think we haven’t gone far enough, or fast enough.
He was equal parts blunt and expansive from this lectern, on this stage, and tonight I aim to hew as closely as I can to the example he set.
I’ll come to tax reform and the housing market shortly but first let me set the scene.
When Bernie spoke here a year ago, inflation was lower than it is now. Interest rates had been cut 3 times that year. Unemployment was very low. Private demand was gathering pace; public demand was starting to retreat. We were in the early stages of an investment boom and house prices were surging.
The Coalition was already in all sorts of trouble, hurtling towards another split, another ballot. Barnaby Joyce was still in the party that made him Deputy PM. One Nation was polling third, between 10 and 15 per cent.
Twelve months later you can see how much has changed – in the global economy, in our own economy, and in our politics – all wrapped up and related.
A major prolonged war in the Middle East, pushing up inflation and interest rates here and around the world and weighing on growth, playing out in housing markets and in bond yields and borrowing costs, exacerbating some of our own longstanding challenges.
We know all of this hurts working people the most and they are our focus always.
We also know budgets aren’t the primary driver of prices in our economy. In fact we’ve seen inflation come back at the same time as public demand growth has halved and private demand growth tripled compared to the year before.
But we can play a helpful role in budgets and budget updates and that’s why there’ll be another new savings package by year’s end. We are working on that now and that’s why I won’t pre‑empt it too much here.
And all of this is happening against the backdrop of accelerating, displacing and transformational change laid out in the Intergenerational Report I released here last month, across technology, industry, energy, demography and geopolitics.
The combination of near‑term pressure and transformational change has shifted the ground under people. Made them feel more disconnected from opportunity, even disregarded, mourning a loss of control as change accelerates around them.
All of this is then fed and fuelled, monetised, politicised and catastrophised by algorithmic rage bait.
In our system One Nation has been the most obvious beneficiary of all this. But the political ramifications are playing out across the board and around the world.
Think about the political churn we’ve seen in other countries, this way –
The Japanese counterpart I met with last week in Tokyo was their third Finance Minister I’ve dealt with in my time as Treasurer. The UK Chancellor I meet with this week will be their sixth, in those same 4 and a half years.
South Korea and France have had 4 each. When I look around the G20 hall on Thursday in Bangkok only a quarter of us will have been there since mid‑2022.
In the past year we’ve seen the far‑right AfD in Germany dominate elections in 2 states. In France, Marine le Pen’s National Rally performed strongly in local elections and posted their strongest result in the French Senate – and in recent polling she was leading the pack for the presidential election next year.
Here in Australia, support for One Nation has doubled in the past year.
I have never been complacent about them or about this at any stage. We have never taken the outcome of the next election for granted, and never will.
We approach the hard work of governing in hard times with humility not complacency, and tonight I want to talk with you about what that means right across our economic policy but especially when it comes to reform.
The far‑right strategy is to divide people and it’s working. Their goal is to talk down our economy so that that their endless negativity becomes a self‑fulfilling prophecy.
Their core message is often clear and sometimes very appealing: let’s just go back to a more nostalgic version of the world we remember.
We have all the facts to push back on this, but facts don’t beat feelings. Feelings are as real as facts.
The past will always feel safe and familiar and desirable because by definition we understand it better than we understand the future. That’s normal. That’s human.
When a significant swathe of our fellow Australians find that message of returning to an idealised version of the good old days appealing – we shouldn’t turn on them.
Our role as progressives is not to scold those who see appeal in that message. It’s not to mock them or ‘cancel’ them or talk down to them.
In fact, the true mission of serious progressives is as old as liberal democracy itself, and it comes in 2 halves.
One half is to persuade people that despite the visceral appeal of returning to the past – that this is not actually possible. And that trying via the actual policies of the far right will harm them. That the far right in government will weaken not strengthen the nation we love.
The mission is to show that there is no going back to an imagined past. Yes partly because it never really happened the way you remember, but also because we need to respond to the world as it is and not as it was.
The other half of our mission is this: to persuade working people that the path we advocate, the path we haven’t walked before is actually the safer, more secure and more prosperous path for them and their loved ones.
And you do that by starting not from a place of smug moral superiority – but from a place of genuine respect and understanding that I’ve carried with me around my local community in Queensland and not just for the 13 years I’ve represented it, but over a lifetime living there.
Three in 10 Australians now say they’d vote One Nation. That party has a foothold in the House of Representatives and in state parliaments, and they’re getting very positive treatment in traditional media.
Nobody expects polls to change much any time soon – it would be more surprising if they did. Same goes for consumer confidence.
We don’t dismiss the very real pressures that people are under or the way that plays out in our politics. Those pressures are real and not for one second do we downplay them. We understand that a desire for the past is rooted in a dissatisfaction with the status quo.
If anything, taking these pressures seriously, not dismissing them, not disregarding them, is the first of 3 essential elements of our response.
Part of that means pointing out where parties like One Nation, indeed any coalition or combination of them and the Liberals and Nationals, would make people worse off not better off. Which means they’re benefitting politically from economic uncertainty and cost‑of‑living pressures at the same time as they’d make things worse.
What they offer is just culture war camouflage for cutting wages and attacking workers.
Their superannuation policy would make people much poorer in retirement; their wages policy would eat away at take home pay and living standards; their unfunded commitments would blow a hole in the budget; their migration policy would smash the economy.
They would make a tangible difference to the lives of Australians but not a positive one. They would make people worse off, at the worst time.
They would be a disaster in government – inexperienced, incompetent and incapable of managing the economy or our international reputation. They couldn’t govern without Liberal numbers and that would make them a genuine coalition of chaos.
Again, we don’t take the dangers they pose to our economy or society, or indeed our majority, lightly.
Genuinely acknowledging the pressures people are under is a crucial first step, pointing out the risks posed by our opponents is very important, but neither is enough on its own to respond to the right‑wing threat. And that’s why the second essential element is delivery.
Cheaper medicines that have saved people $3 billion already. A 5 percentage point jump in bulk billing in less than a year. Urgent Care Clinics.
Decent pay in the care economy and real increases for workers on the minimum wage and awards.
Over half‑a‑million cheaper home batteries now installed and over 150 renewables projects approved.
Expanding paid parental leave. Paying super on it. Boosting low income super.
Cutting taxes 5 times in 3 ways, beginning with a re‑write of stage 3 and building on that again and again.
Delivering in tangible and enduring ways, that’s the second element I wanted to touch on tonight.
The third is reform.
Reform which is contested and contentious.
Reform which brings with it the usual scare campaigns from the usual places.
Reform to better align the aspirations of working people with the opportunities of a first‑rate, growing economy so that we can lift living standards for more people over time.
Our economic plan consists of a fuel security strategy, cost‑of‑living help, a productivity package, a tax reform package and budget repair – and all of it’s important.
But one of the biggest changes since Bernie’s speech a year ago has been the way we’ve dialled up the ambition on tax reform in particular.
Especially when it comes to the defining intergenerational issue in our economy – housing – and what that then means for better aligning the tax paid on income from assets with the tax paid by workers.
We are rebalancing the housing market in favour of first‑home buyers, so they don’t have to compete with investors backed by generous government tax breaks.
And tomorrow, I’ll be introducing the third major piece of tax reform legislation since the Budget, on trusts.
Our broad package of tax reforms to cut taxes for workers and make the housing market fairer for young people is more important and more urgent now than the day we announced it, given the pressures on wage and salary earners in the proportionately smaller workforce and in the ageing society laid bare in the IGR.
So this now is the irony of the intersection of Australia’s politics and economics: an incumbent government spending a great deal of political capital delivering real change to the status quo while 3 opposition parties defend it at best or diminish it at worst.
In other words, a government acting on people’s real frustrations versus opposition parties who just want to prey on them.
We know that change is hard whether it’s the change imposed on us or the change we choose for ourselves, but the status quo is harder for the people we represent.
So we are reforming the status quo, more than the far right and its billionaire backers would like us to, and perhaps more slowly than many of you would like us to.
We may come at this mission from different points of view, at times with different answers and timeframes, but you take our challenges seriously and that matters now, more than ever.
Stability and the status quo are not the same thing, nor is longevity and legacy. But they are very closely related because you can only properly change this country from stable political foundations.
Perhaps a key mistake made by parties of the left is that in their defence of democracy and institutions they’ve also inadvertently become the party of the status quo. We are not making that mistake, we are reforming the status quo in tax and housing and in other ways, in the interests of working people.
Hoping the far right goes away or implodes again is not actually a strategy. But acknowledging and acting on the pressures people are under, delivering better and more tangible outcomes for them and reforming the status quo in their interests is, and that’s our approach.
I started by looking back over the past year and now I want to start to wrap up by looking at the year ahead.
Making forecasts and predictions is difficult enough in times of stability but even harder now in times of great volatility. But with that caveat, if you look at a combination of forecasts from the Reserve Bank and the Treasury, which they’ll update before long in the usual way, there is some cause for some cautious confidence.
They don’t expect things to get a lot better in the next 12 weeks but they do expect things to get a bit better over the next 12 months.
Their expectation by the end of next year is for inflation back in the target band, with 20 of 31 economists surveyed by Bloomberg expecting interest rates to ease by around that time as well.
They expect unemployment under 5 per cent and the return of real incomes growth, and high levels of investment.
And we expect the tax reforms will be bedded down and legislated by then too.
But so much of the next year will be hostage to decisions taken in Washington, on Wall Street, in Tehran.
The war in the Middle East has been an absolute disaster for the cost of living, and its end can’t come soon enough.
These difficult times test our people and they test their governments.
But they’re also a test of whether a country’s character falls to the level of its critics, whether we turn on each other, or reach for the most comforting culture war, or whether we are capable of doing the harder thing, to change and adapt and reform and prosper together through uncertainty.
I’m confident but not complacent that Australians will choose the second course.
Not because the pressures aren’t real or the political risks aren’t substantial or persistent, but because we are better placed and better prepared and we have a better plan than other countries to withstand the worst of this – global, economic and political.
Bernie Fraser has done more and better than most on these essential and pressing issues, for a long period of time, and he’s a good example for us to follow.
I thank him, I thank the institute, and I thank you for this welcome opportunity to speak here tonight.
