PRIME MINISTER: Well, good morning everyone, and thank you for the introduction Michael. I can tell you quite openly that I am living with COVID, like Australia is, and I’m sorry I can’t be there in person with you this morning, as a result of the isolation, but I’m looking forward to coming out of isolation tomorrow.
Can I also begin today by congratulating the AFR on on 70 years. Joining you at this Summit this morning, as Michael has just said, is another milestone in the AFR’s illustrious career in Australia.
I also want to begin by acknowledging the Gadigal people of the Eora Nation, and pay my respects to their elders past, present and emerging.
And recognising any veterans, as I always do, and servicemen and women, and thank them for their service. And particularly today on International Women’s Day, can I particularly thank all of those women who are serving in our Defence Forces all around the country, and particularly right now as Australia faces these further terrible floods and natural disasters, especially up there in northern NSW. I’ll have a bit more to say about the economic participation of women, which is at record levels in Australia at this moment.
We gather at an important moment in world history and at an uncertain time for our global economy.
The overlay of an uneven global recovery from the pandemic, unprovoked military aggression in Europe, in Ukraine, an energy and commodity price shock, and continued geostrategic risks in our own region, this all creates a highly complex and risky external environment. It’s no place for amateurs.
It brings to the fore how we think about the nexus between security and economic policy and national resilience – a topic that has been building in importance over recent years. And I can extend back to my time as Treasurer when I highlighted national resilience, particularly national economic resilience, as so essential for a country to be successful.
Because the countries that can best manage this delicate balance, of economic and national security, these are the ones that will succeed in the decade ahead. The ones that can get this balance right, get this calibration right – they are the countries that will succeed. And in that context, Australia is at the leading edge.
This morning I want to make a few remarks about today’s heightened global economic uncertainty, before addressing Australia’s economic position and the steps that our Government is taking to support business-led growth. Let me underline that, you’ll hear me say it a bit – business-led growth – and national economic resilience.
As we entered the final quarter of 2021, the prospects for strengthening global economic growth into this year, in 2022, were very positive.
The global rollout of vaccines and falling infections of the Delta strain were supporting growing confidence, as Michael said, that a durable global recovery from the pandemic would take hold this year.
Australia was especially well-placed. And the National Accounts have confirmed that.
According to the December quarter National Accounts, GDP was up 3.4 per cent above our pre-COVID level. And Australia’s employment in December was also well above pre-COVID levels.
Australia’s economic and job generation performance has outpaced every single G7 economy during the two years of the global pandemic. And particularly on job creation, even more strongly so.
Now this is a stubborn fact for those who try to advance a different narrative about the Government’s economic performance during this pandemic.
As 2021 drew to a close, Omicron, though, generated a new wave of health and economic challenges for the whole world, not just Australia, and it hit us hard too.
Globally, case numbers spiked to unprecedented levels, though deaths remained moderate compared to previous waves, thankfully.
Omicron was not just a new variant, it was like dealing with a completely different virus. All the rules changed, overturning so many of the virus management norms we’d become accustomed to and accepted, and even relied upon right across the country at a federal and state level as we were managing COVID. It changed everything.
Furloughing rules designed for Delta caused significant disruption to our labour force, and supply chains in particular. Testing protocols collapsed supply chains for Rapid Antigen Tests that had previously had only been assigned an ancillary purpose by official medical advice, only weeks before.
There were plenty who were wise after the event, there always are, but we all worked together solidly over the summer, and as outbreaks largely peaked and stabilised by late January, and high vaccination and rising booster rates meant we weathered the health impacts comparatively well, this meant Australia was able to move forward. Hospitalisation rates in Australia over Omicron peaked at less than half the OECD average.
Now these outcomes enabled children to go back to school as planned, albeit with a few little changes, for people to go back to work, and for the national reopening plan that we set in train back in June/July of last year, to start moving forward once again. And we’re living that now.
Despite the challenges over summer, our economic resilience held. Our unemployment rate held steady at a 13-year low of 4.2 per cent, 4.2 per cent, in December and January.
But we did face acute pressures in some key areas.
Fortunately, while Omicron is continuing to circulate in the community, the worst of the workforce and broader economic impacts from the latest strain would seem to be behind us, and we welcome that.
And this has given state governments the confidence to end many of the health restrictions that had been in place, including state border closures, and I’m so pleased that the country is whole again with the opening of the Western Australian state border.
Likewise, it has given the Commonwealth Government the confidence to re-open our international borders.
But there always remains the risk, of course, of a new strain of the virus reaching our shores, and therefore the uncertainties of COVID, well, regrettably, they will continue to remain with us. But we can’t let them overwhelm us or intimidate us.
And to that end, this Friday I will join the premiers and chief ministers, as we’ve done on more than 60 occasions over the course of this pandemic in the last two years, to review Australia’s winter preparedness plan that we set in train some weeks ago.
There are also other risks that the Australian economy is facing.
The catastrophic flooding in Queensland and New South Wales, following on floods in South Australia, are an unfortunate reminder that natural disasters are increasing in their frequency and intensity, with devastating impacts on communities.
The initial phase of economic support is being provided to support communities to clean-up and remove damage and debris. We’re particularly seeing that up in in Queensland, which has really now moved into the recovery phase.
More than $1 billion has been directed to NSW and Queensland in 50-50, joint-funded support for small business, primary producers and local governments. Now this is on top of the individuals and families payments. Emergency payments are now more than $200 million, which have already gone out the door in just a week.
The destruction and devastation in the Northern Rivers is well beyond anything previously experienced. I mean, it’s two metres higher, the flood level that was experienced there, than the highest ever recorded flood in that part of Australia. It is just mind-boggling, the scale of this flood in in and around Lismore. And I’ve been speaking, in constant contact with the Premier about this. He’s up there right now and has been for several days, and he’s been giving me regular reports, as have my Ministers that have been through. And I’m, I’ll be there this week, as soon as I can come out of isolation, to see this first hand, and talk to the community, not just about the short-term clean-up and the challenges that we face in the immediate response, which have been significant because of the scale of this flood, but also the long-term reconstruction efforts that are going to be needed.
Just like we did for the North Queensland floods some years ago, not just in Townsville but particularly out in Western Queensland, where we almost lost our entire cattle herd, our livestock industry in North Queensland. They were devastated. There was an inland sea. And so we got about the task of rebuilding. And in the same way that we stood with the people of North Queensland at that time, our Government, the Australian Government, will stand with those communities in the Northern Rivers to support them as they clean-up and rebuild, now and in the months and years ahead.
Right now, the Government is is finalising its first wave of over and above measures, particularly for the Northern Rivers area. The New South Wales Government is doing the same. And we’re looking to integrate those plans as much as possible to ensure that we can rebuild Northern New South Wales, particularly in the most acutely affected area in and around Lismore. And I will have more to say to that in coming days. And the Expenditure Review Committee of of Cabinet is meeting again this afternoon, the National Security Committee met yesterday again. We’ve been meeting very frequently during this particular crisis of floods. This is not just a flood event, I should say, in North New South Wales. This is a catastrophe on a very national scale.
Looking abroad, the global economy faces new headwinds.
Rising prices of energy and broader wage cost pressures in the US have brought forward expectations for when the Federal Reserve will start to unwind the unprecedented level of monetary stimulus that it has in place.
Higher US interest rates and less global liquidity could weigh on capital flows to middle and low-income countries, with implications for their growth.
Those developing countries that have accumulated significant debt during the crisis face particular risks.
And of course, recently we’ve seen Russia’s threats towards Ukraine escalate into a brutal, unprovoked and unconscionable attack – ripping up the norms and rules which have kept Europe and the world largely at peace since the end of World War II.
Now I dealt with Australia’s response to these events at some length in my remarks to the Lowy Institute yesterday. And I I won’t rehearse them again here.
Europe will of course suffer the biggest economic impacts from Russia’s aggression.
The uncertainty caused by the conflict – and how bad it might get, and is likely to get – is already having negative confidence effects that are weighing on both financial markets and Europe’s real economy.
More directly, Europe is particularly dependent on Russian energy – and in the short-term will struggle to diversify away. Russia, after all, supplies 40 per cent of Europe’s energy.
Now one of the key issues that I’ve discussed with European leaders, particularly Chancellor Scholz and the Prime Minister of Poland Mateusz Morawiecki, both of these leaders have been highlighting these issues, and the role that Australia can play to assist them, particularly in Germany we are doubling down on our energy partnership, particularly in relation to hydrogen. These issues have highlighted the role that Australia can and should be playing in the energy futures of Europe.
Gas prices in Europe have more than doubled over the last few months and higher energy costs will depress economic activity.
But the economic implications are wider than just Europe.
Global oil prices have traded over $US130, the highest since 2008. And this reflects expectations of supply interruptions for many months to come.
Food and grain prices are also rising, which will pose challenges to lower income economies, including many in our own region.
At least in relative terms, Australia remains very well-placed to manage this shock.
Merchandise trade with Russia and Ukraine is 0.2 per cent of our total two-way trade with the rest of the world, limiting the direct impact.
Commodity price rises will be the most obvious transmission channel to Australia.
Petrol prices in Australia have risen, like they are elsewhere. At the bowser it’s now around 185 cents, a bit higher in my part of Sydney down in the Sutherland Shire, a litre, and on average in metro areas.
But in contrast to most other advanced economies, much of what Russia and Ukraine export, we do also.
And still, we are not immune from the negative impacts of Russia’s invasion of Ukraine on global growth as well.
And there are some supply chains for important imports that run through Russia and Ukraine that may be disrupted, and have our close attention.
For example, Urea Ammonium Nitrate supplies to our agricultural sector – we are closely monitoring supply and working with industry to ensure we have alternatives, if needed.
These are just the first order impacts of Russia’s actions. The longer term geo-strategic and economic implications, though, are much more profound.
Russia’s actions undermine global stability and the global order that has delivered so much to our world.
This is a moment of truth for all countries who say they value global rules and norms based on respect for international law and the sovereignty of all nations.
In the post-Cold war era, the world prospered enormously from rapid globalisation and the heightened inter-dependence that came with it via trade and financial linkages.
Living standards in Australia and around the world rose enormously as a result, with billions of people lifted out of poverty.
Opening up to international trade and competition, liberalising capital markets and policies that promote a market-based, private sector driven economy, business-led growth, are proven factors critical to economic success.
However, recent events have highlighted some important truths.
Firstly, global economics is downstream from global politics.
A relatively open and free trade and financial order is not a naturally occurring phenomenon. It never has been.
The nature of the great power at the centre of our global systems matters decisively – together with their animating ideas and ideals.
And secondly, as Martin Wolf observed the other day, the tectonic plates of geopolitics have shifted such that Western liberal democracies now need to manage strategic security an overriding imperative for their economic policy.
Now this is what my Government always has done. This is not news to us. We have always been very clear-eyed about the link between national security and economic security.
We face these incredibly unique times. We have moved into a new era.
The world has become a more uncertain, less stable and more dangerous place. The economic agendas are just not re-heats from the 1990s. We need to address the challenge that exists in this day, in this age.
And it’s important to stress that strong national security and genuine economic security, they go hand-in-hand. They are two sides of the same coin. And this drives our outlook.
Our security as a nation underpins our prosperity and peace of mind – our national resilience and our national sovereignty.
This means businesses have confidence to invest for the long-term. Families can plan for their future with confidence. Communities can flourish.
Conversely, without a strong economy we cannot achieve the sort of security, sovereignty and freedoms Australians have aspired to.
A strong economy allows us to make the necessary investments to protect our nation in the face of rapidly changing security threats, and to maintain sovereignty over decision making, including in times of crisis.
A strong economy means a stronger future. If you can’t manage a strong economy, then you can’t manage Australia’s national security. And the Government has demonstrated its credentials on both of these fronts consistently over our entire time in Government.
Now Australia’s record of resilience and our strong economic fundamentals provide the foundations of successful sovereignty in this new, more dangerous era.
But let me remind you of one simple fact.
Prior to the pandemic, Australia had sustained a world record in, by some accounts, of over 28 years of uninterrupted economic growth.
Now this was unmatched by other advanced economies, both in terms of duration and the rate of growth.
And that’s why, frankly, I’ve never really been in the, and caught up in the hoopla, of the ‘Build Back Better’ camp, that opportunistically sees the post-COVID recovery as some opportunity to replace our market-based, business-led growth economic system, with a Government-centred reimagination of global capitalism.
Our model of economic management and business-led economic growth has been world class.
Capitalism didn’t break. There was a pandemic. The world got hit by a global pandemic.
And that is why we have championed in every international forum, especially the G20, for business-led growth strategies.
Now I said at this event last year, you cannot run the economy on taxpayers money forever. It’s not sustainable. There has been a time and a place for this intervention, and our Government has done it more successfully than any others in drawing our economy through this pandemic, with JobKeeper, the cash flow boost, and the many other measures – the COVID Disaster Payments in the second phase, in 2021 – which has ensured that our economy has come through intact and has been well set up to come back on the other side, as we have seen on numerous occasions.
And we are now normalising our fiscal settings and have handed the reins of our economy back to the private sector, back to for business-led growth, to drive us forward.
Now my concern is that the alternative to our Government, a Labor Government, with the Greens, if elected, would seek to snatch the reins back, following the lead of their political fellow travellers in countries overseas, liberal democracies.
And through the pandemic, Australia continues to stand out internationally on all key health and economic metrics.
Let’s look at Canada, for example, to bear this example out. We have both had roughly the same number of confirmed COVID cases and the same level of vaccination coverage of our population. We have both done well on those issues. Yet Canada has suffered 37,027 COVID deaths compared to Australia’s 5,453, on the latest information we have.
Equally, Canada’s employment growth of 0.5 per cent and December quarter GDP growth of 0.1 per cent from pre-pandemic levels compares to the Australian case of 2.2 per cent growth in employment and 3.4 per cent economic growth for that December quarter.
This is why I can say that more than 40,000 Australian lives have been saved during the pandemic, compared with the average death rate of all OECD advanced economies – 40,000 more Australians would be dead today were it not for Australia’s response to the global pandemic.
We have one of the lowest death rates in the OECD – a performance nine times better than the OECD average.
We have one of the highest vaccination rates in the world. Almost 95 per cent of Australians aged 16 and over are fully vaccinated.
No country, of course, has got everything right – I’ve been very candid about that – when it comes to COVID. Nor could they claim to.
But I think most of you will have noticed, in the audience, and would regard Bill Gates as a fairly objective and well-informed observer on these matters.
And a couple of weeks ago, at the annual Munich Security Conference, he cited Australia’s COVID-19 response as the gold standard.
In the context of future planning, Bill noted that: “If every country does what Australia did, then you wouldn’t be calling [the next outbreak] a pandemic.”
“They [Australia, he was referring to] orchestrated diagnostics, they executed quarantine policies, and they have a death rate in a different league than other rich countries.”
And while other countries “had the capability to do that”, as Bill pointed out, Australia, we actually did it.
And we have outperformed the major advanced economies during the pandemic.
As I said, our economy is now 3.4 per cent larger than when the pandemic struck, and around 260,000 more Australians are in work compared with where we were before COVID.
And the jobs recovery is widespread.
There are more Australians in working age jobs today – that’s at 76.3 per cent – than at any other time in Australia’s recorded economic history. I know that our economic plans are working because Australians are working, and at record levels.
And particularly on International Women’s Day, I’m pleased to note that the female employment to population ratio is at record highs, and the female unemployment rate is at record lows.
In November 2020, we saw the gender pay gap fall to the lowest level on record, on record, and, in another first, women now hold a record more than 50 per cent of Australian Government board positions. And that adds to the fact there are more women in my Cabinet than any other Cabinet in Australia’s federation history.
More than one million women have come into work under our Government. That’s a million voices reinforcing the strength of the economic management that has been delivering for women in this country over the course of our Government.
There is much more to strive for though, and much more to achieve, and that’s on all of us – from the Government to every individual. And, today, my Government and I are committed to doing just that.
The youth unemployment rate has fallen to the lowest rate since October of 2008.
As I said before, I believe we can now achieve an unemployment rate this year with a three in front of it – something we haven’t seen in 50 years, and that’s supported by Reserve Bank forecasts.
This would be the lowest unemployment rate recorded in Australia since monthly labour force records began in 1978 – I consider this a once in a lifetime opportunity. And you can’t take it for granted. It’s not some natural course of events that will unfold. It is the product of the economic management that we have been faithfully stewarding in this country.
That’s reflected in the fact that our AAA credit rating remains intact – one of only nine countries to achieve this. Last time I referred to that in this Forum, there were 10 countries. There are now nine. We’ve been able to maintain that through one of the single largest, the single largest economic intervention by a Government in an economy in Australia’s history.
The events unfolding in Europe, though, are a reminder of the close relationship between energy security, economic security and national security.
And through our natural endowments, Australia is in the fortunate position of being one of the world’s major energy exporters. We’re not going to shy away from that. We’re not going to cut our own lunch on that.
We have the endowments, the know-how and the technology investment plans to ensure Australia remains an energy superpower based on affordable, reliable energy under a wide range of scenarios.
Notwithstanding higher costs for energy and food driven by international events, Australia has weathered interruptions in global supply chains better than most. That’s particularly been the case in gas, where our supply mechanism has ensured we’ve been able to keep the pressure down on gas prices.
We cannot be complacent though, however, and I will return to that shortly.
The key driver of Australia’s growth going forward will be the private sector. It will be households and businesses.
And the Budget later this month will build on the policies that the Government has already put in place under our economic plan to support future growth and resilience that is working.
Let’s remind ourselves of that plan again. One, five core elements:
- Keep taxes low and cut red tape.
- Invest in the skills and infrastructure that Australia needs to grow.
- Deliver reliable and affordable energy to support our economy to grow while reducing emissions.
- Establish Australia as a top ten data and digital economy by 2030, and
- Ensure we can always make things here in Australia – by securing our sovereign manufacturing capability, to unlock a new generation of high-wage, high-skill, high-tech jobs.
Now I’ve spoken about the elements of this plan at previous Summits.
Our Personal Income Tax Plan is putting money back in the pockets of more than 11 million taxpayers. We are flattening the tax scales and we have delivered small and medium-term sized businesses with the lowest tax rate in over 50 years.
Our Deregulation Agenda is making it easier for Australians to grow and run their businesses. All told, our regulatory reforms, when fully implemented, are expected to generate benefits in excess of $21 billion over 10 years. But there were opponents to these changes, particularly when it comes to the EPPC Act. There were opponents that do not want to see investment able to flow more easily in this country due to less cumbersome regulation.
We continue to deliver on our $110 billion pipeline of investment in transport infrastructure. That’s creating tens of thousands of jobs right across Australia. And that included the bring-forward of transport projects during the pandemic.
With labour increasingly scarce in our economy, we are working to ensure all Australians have the capacity to get a decent, well-paid job.
We’ve invested $13 billion in skills development during the pandemic – I spoke a lot about this this time last year at this Summit – through apprentice incentives, JobTrainer and other measures. Now what this has seen is Australia has more trade apprentices in training than at any other time since economic records were kept since 1963. Trade apprenticeships, 220,000 of them – the highest we have seen since records have been kept.
We have preserved our trade training base in this country through the pandemic because of the steps we took. The very first step we took was to ensure we kept those apprentices in jobs. And as I’ve moved around this country, I have met countless numbers of apprentices in their second year, in their first year, or completing their fourth year, none of whom would have been able to stay in those jobs were it not for the support that we gave. It is one of our Government’s, I think, most significant achievements during this pandemic, that we kept our trade base, our trade skills base, intact through the pandemic, and now with record numbers of trade apprentices in training.
Electricity prices in the national market are the lowest they have been in eight years. We’ve had an eight per cent fall in electricity prices in the last two years. And we will continue to take action on climate change. We have committed to net zero by 2050, and have a clear plan to achieve it through technology, not taxes. We will not sacrifice our nation’s energy security, trading off affordability and reliability in our domestic energy markets. We’ve got the balance right when it comes to managing emissions reduction and growing our economy and supporting our traditional industries. Our opponents do not have the same balanced policy that we have at this election, and put that at risk.
We are investing more than $20 billion in clean energy technologies, unlocking more than $80 billion of private sector investment to achieve lower emissions, while retaining our energy independence.
More than $2 billion has already been invested in our data and digital economy strategy, from boosting our cyber workforce to investing in our data security and infrastructure. This has led Google alone to invest $1 billion in Australia to establish one of only five Google research hubs right here in Sydney, helping to create the data and digital ecosystem that will help us to achieve our broader goals.
And we are securing our sovereign manufacturing capability through our Modern Manufacturing and Supply Chain Resilience strategies.
We’ve got $1.5 billion in the Modern Manufacturing Strategy, very much at the heart of our plan for economic security and national resilience.
It has a dual focus – to build sovereign manufacturing capability in key areas, and support supply chain resilience that is under pressure and is under threat.
Today I want to stress that our starting point as a strategy is one that supports the growth of the entire manufacturing sector – through a more competitive business environment, with lower taxes and energy costs, support for research and development, a stronger skills and higher education system, and in seeking new trade opportunities.
While Australia cannot and should not produce everything domestically, we have enormous potential in today’s economy to grow our manufacturing sector and play to our strengths.
Our focus is on building scale in six areas of advanced, high-value manufacturing. This is a program we worked up with Andrew Liveris, and the COVID Coordination Mechanism that we put in place:
- Space
- Medical Products
- Food and Beverage
- Recycling and Clean Energy
- Defence, and
- Resources Technology and Critical Minerals Processing.
These are the sectors we’re focusing on. These are the priorities that we want to build on, while creating pathways to new capabilities and new markets.
Instead of spreading taxpayer dollars thinly across the economy, we are focusing our investments and grant programs on areas of genuine competitive strength and strategic priority to build scale and have a real impact.
Under the Modern Manufacturing Strategy, we have so far committed over $437 million in funding to boost manufacturing capability and supply chain resilience, leveraging $980 million in private sector investment.
Our supply chain resilience, on that issue, COVID has demonstrated the importance of domestic manufacturing to national health, security and resilience. It has brought into sharp focus the need to be constantly alert to supply chain vulnerabilities.
It should be emphasised that, for the most part, Australian businesses have successfully managed supply chain risk these past couple of years, and our economic performance demonstrates that – specifically COVID, and trade coercion from China, and now the terrible crisis in Ukraine.
A strong private sector continues to be our first line of defence. Businesses know their businesses best, they don’t need to be told by governments what to do, and they are primarily responsible for supplying the vast majority of goods that Australia wants and needs. However, there have been examples where Government action has been necessary to find a solution.
And a good example was the looming shortage last Christmas of AdBlue. While the country was focused and we were focused, of course, on Omicron, we were also focused on this looming shortage – an essential additive for modern diesel vehicles that not many of us knew about before late last year.
China’s decision to suspend urea exports, from which we make AdBlue, had the potential to shut down our trucking network, with significant implications for our domestic supply chains and our economy.
We took immediate action to intervene, reaching an agreement with Incitec Pivot to convert Gibson Island in Brisbane from the manufacture of agriculture grade urea to produce AdBlue and higher grade refined urea.
This was a $29.4 million investment to secure a ten-fold increase in domestically produced refined urea and AdBlue. Within two weeks we had supply restored and an emergency distribution system operating along east coast transport networks.
And I particularly want to commend my colleague Angus Taylor, the Minister, for his critical role in working this issue and finding a solution.
What we are talking about here is not some abstract, binary debate about Government intervention versus the market.
Rather, it highlights the vital enabling role Government can play, and should play in these circumstances, in maintaining economic security and identifying industry solutions to specific problems. We’re not overreaching our mandate. We’re not engaging in the big back, ‘Building Back Better’ rhetoric. We’re just doing what needs to be done in a very targeted and sensible way.
The Government’s $107 million Supply Chain Resilience Initiative is providing targeted grants to establish or scale domestic manufacturing capabilities and identifying other options to address supply chain vulnerabilities.
In addition, the Government has established the institutional capability for early warning and analysis of current and future supply chain vulnerabilities through the Office of Supply Chain Resilience, that I established.
This involves, firstly, effective ‘foresighting’ and analysis of supply chain vulnerabilities, and secondly, whole-of-government coordination of both domestic and international response options. And thirdly, we are doing detailed consultation with industry on supply chain vulnerabilities.
Now we’ve identified seven initial categories for attention, which were considered important to our national interest. And they are as follows:
- Semiconductors
- Agricultural chemicals
- Water treatment chemicals
- Telecommunications equipment
- Plastics
- Pharmaceuticals, and
- Personal protective equipment, PPE.
Now we’ve already made significant progress. We’ve secured an agreement with Moderna to establish mRNA manufacturing in Australia in Victoria, with the Victorian Government – the first facility outside of Europe and North America to be able to do this. This sovereign on-shore capability will increase preparedness for possible future pandemics.
In round one of our Supply Chain Resilience Initiative, we have already invested more than $33 million in 27 projects in agricultural chemicals and medicines. This includes backing Australia’s only local manufacturing site for critical intravenous medical fluids, Baxter Healthcare.
We have invested in local manufacturing of medical technologies since the start of the pandemic, including for mask manufacturing at Med-Con and ventilators by ResMed.
Supply chain resilience is an increasingly prominent issue across international forums, and Australia is driving outcomes, including in the G20, APEC, the G7+, and especially the Quad, where there is a keen interest in what Australia is doing and the leadership we’re providing here.
In the Quad, we are mapping the supply chain of critical technologies and materials, including semiconductors. In addition, Australia is leading the development of the Quad Clean Energy Supply Chain 10-year plan.
And at a bilateral level, Australia is collaborating with the United Kingdom on a joint project to improve public sector approaches to managing supply chain risk. Australia is seen as a leader, if not the leader, in this area of managing critical supply chain issues.
In this new era, we can’t just be thinking about ‘just in time’ supply. We need to be thinking about a ‘just in case’ model, which supports greater diversification and larger inventories of key goods.
Trusted partners, of course, critical. That is the world we are living in now – and we all know that supply chain disruptions are lower when we plan and we prepare for them.
We also know that supply chain problems are best solved together. We need trusted supply chains, not just efficient ones.
But building and strengthening markets is a long game, and I would encourage businesses to continue to work with the Government to ensure early identification and timely responses to supply chain challenges, and to deal with trusted partners.
Finally, you’ll be pleased to know, in conclusion, and I appreciate your patience, ladies and gentlemen, if I had to identify the essential qualities that have stood Australia in good stead through the most tumultuous events in our lifetime, it has been our ability to adapt, to be resilient and be pragmatic in the face of radical uncertainty.
We have all stared into the abyss together, and here we are all today.
Whether that be a global pandemic, a global recession, the natural disasters which continue to buffet us, economic coercion in our region, or now concerted efforts to overturn the international order through military and violent aggression.
I wish I could say this era of radical uncertainty is coming to an end.
But it’s not, as events of recent weeks attest.
What I can say with confidence is that our Government is the best-placed to continue to navigate Australia’s way through these incredibly difficult and uncertain times.
We have demonstrated this time and again, as we have brought the Australian economy through some of the most difficult challenges in generations. The record is there.
Now is not the time to turn back. It is a time to stick with the economic plan and leadership that has been working for Australia and getting Australians into work.
Our Government has an unwavering focus on building a stronger economy, because we know this is the only way we can keep Australians safe and guarantee the essentials that Australians rely on.
A strong economy means a stronger future.
That is what the Liberals and Nationals are able to offer Australians as they make their choice at the election to be held this year.
Thank you very much for your patience and attention.
PHIL COOREY, POLITICAL EDITOR, AFR: Prime Minister, just, I feel like these are bookends here. A couple of years ago we were at this speech and you were essentially talking about having to throw your conservative economic philosophy out the window to manage with COVID. And now today you’re talking about it’s now time to return to a normalisation of the Budget and budget settings. And you were quite emphatic about the Build Back Better, which others have called The Great Reset. But having said that, can we seriously go back to everything as it was? And I was interested, you know, in what you’re talking about supply chains and taking a greater role in ensuring the supply of critical goods. Andrew Liveris at the start of this crisis a couple of years ago, told the AFR that we, Australia, we drunk the free trade juice and decided that offshoring was the way to go. He said that era is now gone. Do we have to be a little bit more circumspect about our total embrace of, you know, the free market internationally? And do we have to be prepared perhaps to pay a bit more for some products in return for knowing they’re there when we need them?
PRIME MINISTER: Well, Phil, I think there is a recalibration that’s occurring and that’s that’s sensible. Frankly the whole nature of conservatism is that, you know, you learn from the things that occur and you, and you make the transitions that are necessary. But the principles that underpin how you manage a Budget, how you grow our economy, I think remain. And those principles are that you need to be obviously mindful of the impact on your Budget of long-term impacts on structural spending. You need to exercise that fiscal responsibility, and where we have had to lean forward in an unprecedented way in recent years that was necessary. The alternative was to allow our economy to completely collapse and decay and not be able to respond on the other side.
And I think one of the key reasons we were able to retain our AAA credit rating, despite the incredible level of spending that had to be undertaken to pull the economy through, is that the ratings agencies could see that these were sensible investments – that they were time-limited investments, they were based on clear principles. Principles that I articulated in this very forum two years ago, and they could see the plan – they could see the plan to get in and they could see the plan to get out. And that’s what we’ve done.
And then every step along the way, I must say, that every time, you know, it’s one thing to say you will commit to this level of spending, which we did. That’s actually the easy part. The hard part is actually turning that off. And every time we wanted to turn it off, of course, the Labor Party and the Greens would say, oh no, you can’t do that. And we know that they would have spent an extra $80 billion more than the Government would of in not being, having the discipline to turn things off when they needed to be turned off. But we stuck to our course. And I think that’s been an important reason why we’ve been able to maintain the credibility of our fiscal responsibilities, which has been recognised, I think, in maintaining the ratings that we have.
But you’re right to say, well, now we need to look at a world that is very different, and we need to look at a world where, you know, as I said, the economy is [inaudible] from global security. And we need to understand that supply chains are as much about trust as they are about efficiency. And this is a point Narendra Modi makes constantly and I often refer to it. And that’s why the Quad, I think, has become a very important engine for understanding these critical supply chain issues. It doesn’t mean we need to make everything in Australia. I’ve set out in our Modern Manufacturing Strategy – that Andrew had a very, Andrew Liveris had a very keen hand in – that there are some areas where we really need to lean into to achieve scale, and the Modern Manufacturing Strategy is about that. It’s about ensuring that in some areas we can really get to scale and that can provide a real income generating opportunity for our country, and support the broader architecture of our economy. But there are other areas where we need to be having supply chains with trusted partners, and we need to build up the strength and durability of those links with those countries.
So I would say it is a more targeted form when it comes to open markets and and trade. I mean, we still have more than 75 per cent of our our trade covered by export agreements. And that’s a good thing. And we’re deep in discussions with the Indian Government right now about those, and that’s all positive and that’s all good. But like any business will manage its risk and diversify, Australia needs to be equally careful about that, both in how we manage our supply chains.
And when it comes to the Budget, you know, you’ve got to get it back to more normal settings. That doesn’t mean you need to go through periods of massive cuts and things of that nature. That’s not, that’s not on our agenda. And that’s just not the plan. This is done in a managed transition, in the same way we got the Budget back to balance, which took us, you know, six years to do that. We did that by growing the economy, reducing the rate of growth in expenditure down to less than two per cent over the forwards, which was the lowest level that we’ve seen expenditure growth at in this country fiscally in 50 years. And then, of course, it had to be increased because of the pandemic.
So, you know, you normalise this over time. You don’t do it in one foul swoop. You don’t need to go down that austerity path that others sometimes talk about. That is not our Government’s fiscal plan. We do not think that would be the best way to manage the Budget. We still have very strong priorities in areas like aged care, mental health and, of course, supporting the National Disability Insurance Scheme. But you can’t do that without a strong economy. That’s what pays for it.
PHIL COOREY, POLITICAL EDITOR, AFR: Ok, PM. On the other element of your speech. You’re keen for a business-led recovery, which gets us back to the pre-pandemic economic settings. There’s no shortage of recruits in this room, I would suspect, who are willing. And I point out the BCA’s pre-Budget submission had a few ideas. One of your, one of the criticisms of the Government has been a lack of reform, and I understand you, obviously you’ve been busy with, you know, managing the pandemic and stuff. But if you do win the election, do you, do you have any aims, do you have any aims or goals to sort of undertake any form of reform, be it tax, or to at least have a look at it through a review? You know, other than just managing the economy, will there be scope beyond the pandemic for a reform agenda from your Government?
PRIME MINISTER: Well, Phil, I don’t accept the premise of the question, and I never have. I know there are some who attend the Summit and may even sponsor it who think that economic reform in this country is about putting up the GST and putting up and putting on a carbon tax. Let me be very clear again – I have no interest in putting up the GST or putting on a carbon tax. I don’t think that’s certainty. I just think it’s higher taxes. We’ve cut taxes. Small business taxes are at 25 per cent. We are abolishing, and have legislated to do so, an entire tier of the personal income tax system. Ninety-four per cent of Australians will pay no more in their marginal rate of tax than 30 cents in the dollar. That hasn’t happened in generations, in generations.
The reforms, in particular, that we put in place to spur us through the pandemic on the instant asset write-off, which has been a policy of this Government for many years, and we’ve supercharged it during the course of the pandemic to bring in investment. And one of the most exciting things I’ve seen through the pandemic is I’ve walked into businesses and the first thing they want to show me after the apprentices they’ve kept on is the the new kit that they’ve been able to install in their manufacturing plants because of the instant asset write-off. I mean, look what Visy’s doing out there in Western Sydney, their recycling plants.
I mean, we have been on the tools when it comes to reducing taxes in this country for many, many years, and our reforms are in place. And so not only on that front, but whether it’s been the lower tax agenda, the regulatory reform agenda. I’ve set out the five points. I mean, the investment in infrastructure. I mean, we are building, we are more than almost, more than a quarter of the way through building the Western Sydney Airport. I mean, people talked about that for, since the 60s. Our Government’s actually doing it. I mean, you go out there, it’s, I encourage you to go out to the viewing platform. What is happening with the building of Western Sydney Airport is transformational. Now, plenty of others talked about it. I mean, my, the Leader of the Opposition actually went into Parliament on the basis of building it. But was Infrastructure Minister for six years and didn’t lay a brick on it. We are actually doing it. And so on infrastructure, on skills – we have the highest level of skills trade training in the country in economic recorded history. Our work on net zero by 2050, with the $20 billion of support to go into the plan to actually achieve that, and transform our energy economy over that generation and make sure Australia is, continues to be an energy powerhouse exporter into the region for decades and generations to come. The data and digital economy reforms, which I went into some considerable detail at the Forum last year. I mean, that is transforming our economy and will put us in that top 10, and we’re well on the way to do that. And we’ve just spent quite a bit of time talking about how we’re completely turned on its head how we support manufacturing in this country. Now that might not be increasing the GST or putting on a carbon tax, but I can tell you, for this economy, for the threats faced, for the threats that we face, and the merger between economic security policy and national security policy, that’s the reform agenda for this generation. We don’t need to get all retro.
PHIL COOREY, POLITICAL EDITOR, AFR: Given we’re squeezed for time PM, but I do need to ask you this. I’d just like your thoughts, and again, it’s of interest to people in the room, on immigration. We had a cap of overseas, of 160,000 net overseas migration I think went negative during the pandemic. Some people in this room are calling for a catch up. And then to settle to a, to a level higher than the 160. What are your thoughts on that? Do we need to play catch up on immigration, or do we just let it restore, or do we need a higher cap? And what are the political considerations you take into account when you, when you’re asked these sorts of questions?
PRIME MINISTER: Well, I think there’s some practical considerations first, Phil. And as a former Immigration Minister, I know this area very well. You just don’t turn the tap on and all of a sudden, 160,000 people turn up next week. This takes time. It will take time, just like it will in the tourism market, just like it will in the student market for these in-flows of people to build up again. And that will take some time. So I don’t see us threatening the caps that have been in place, certainly not in the year that comes, and we’ll monitor that very closely.
I mean, take the international travel industry, for example. I mean, the travel industry has been decimated over the last two years. And while those who are free, independent travellers, you know, just book online and do all that, and that’s a much bigger part of the travel market than it used to be, there is still a huge part, I mean, with the cruise industry, the organised tours, all of this – all goes through quite organised travel industry machines, and they have been completely decimated. And so we will see this come back over time, but I don’t think we should think it’s going to be immediate. And the same is true in building up those channels of people coming as migrants to Australia. Now, we want to encourage that and we want to support that, and we believe that is essential for Australia’s economic recovery. But I think the more pressing need is actually just getting those wheels turning again and getting people coming again. And I think once that is fully operational and we can see that working, then the issues that you’re raising will come into focus. But right now, they’re not presenting any impediment.
PHIL COOREY, POLITICAL EDITOR, AFR: Ok, Prime Minister. We’re out of time. So thank you very much for your speech and good luck on getting out of the, getting out of Kirribilli and back into the world. Thanks.
PRIME MINISTER: Thanks Phil. Good to talk to you.
