Thank you, Brett, for that introduction.
Its always good to be here in the West - to experience firsthand one of the growth centres of our economy, and to discuss the business and economic outlook for the year ahead.
At the beginning of 2013, the outlook for Australian business remains positive.
This is particularly true here in Western Australia, where growth remains strong.
However, while the domestic outlook is favourable, global economic change will continue to present challenges for business and governments alike.
As always, with change also comes opportunity.
Indeed, there are few other countries that have the capacity to shape their own futures as we do as Australia does in 2013. And the opportunities are there for the taking.
For business, this demands innovation and adaptability to be able to respond to the global economy; to carve out opportunities for growth and market share. It requires utilising new technologies and harnessing the brightest minds.
For government, managing these circumstances requires getting the economic settings right and laying the foundations for long-term growth in this, the Asian century.
It also requires a substantive policy debate, knowing that it is only by making the right choices and working towards shared goals that we can ensure our future prosperity.
In the recent update to its World Economic Outlook, the IMF gives cause for cautious optimism as we head into this year.
We know that growth in the global economy is not assured, and, as the IMF report outlines, remains to a large extent contingent on governments in Europe and Washington.
The challenges before those governments remain significant.
The Europeans are looking to kick start a sustainable recovery. The US Government is faced with sluggish economic growth and the debt cap debate remains unresolved.
But while the performance of major advanced economies is expected to temper global growth forecasts, projections for our region are of a more positive tone, reminding us of Australias place in the global economic landscape.
This realignment of economic power is still unfolding. A shift accelerated by the modest growth prospects in western countries.
Indeed, the different outlooks of western and eastern economies and Australias position at the crossroads partly explains our recent economic experience.
We are an open economy that is shaped by global forces.And while our historic trade ties are with western countries, our future increasingly lies with the rise of Asia.
This shift in the economic landscape gradual, but powerful is reflected in the uneven experiences in the Australian economy.
Industries with significant exposures to Europe or the US are more likely to be operating in an environment of weak demand. While those industries that are already tapped into the markets of Asia are likely to continue to enjoy a stronger growth trajectory for many years to come.
The high dollar will continue to impact on many businesses placing pressure on our exporters, at the same time reducing the cost of imported household consumables.
It is these external influences that are transforming our domestic economy.
I know that WA businesses understand first hand these economic trends.
The rise of Asia and the continued strength in the mining sector has propelled the WA economy to increasing heights. With business hours in Perth better aligned with Beijing than Sydney, an understanding of Asia has long guided the commercial outlook of this city.
An outward looking and optimistic perspective, underpinned by resilience.
As you all know, WA has been the powerhouse of the Australian economy over the past decade, but it is worth briefly going over some of the statistics to appreciate the extent of the economic activity.
If you look back to 1990, WAs contribution to the national gross domestic product was 9.6per cent. In the year to June 2012, this had increased to 16.2per cent.
Consider that in the same time New South Wales share of national GDP has declined by over 5 percentage points and, in my home state of South Australia, the share of national output has declined 1.5 percentage points.
At a time of global economic realignment from western countries to the east, Australia is witnessing the reverse as economic strength shifts from the eastern seaboard to here in the West. This has seen significant movement of capital and labour as our economy readjusts to the new economic reality for Australia.
In the year to 30June2012, the net inflow to Western Australia from interstate migration was around 11,100 persons WAs highest on record.
And WA currently accounts for almost 30percent of total private business investment in Australia.
In aggregate, Western Australia benefits from inflows of capital and skilled migration, while other states are experiencing labour shortages and are struggling to attract investment.
Australians now speak of a two speed economy.
While the story is more complex than this, it is undeniable that in 2013 there are few common economic experiences in Australia.
This statement reflects both international and local experience. There are parts of the WA economy that are struggling; sectors that are experiencing the impact of the high dollar or undergoing structural change.
So while the WA outlook is positive in aggregate terms, the on-the-ground experiences are mixed.
Managing the national impacts of these global forces requires an economic plan that leverages our strengths and invests in the drivers of future growth.
The economic approach of this Government is framed by our values and vision for the economy for this generation, and those that follow.
It is derived from asking: What type of economy do we want in the future and why?
For me, it is an economy that is resilient and adaptable, an economy that is built on the capacities of our people and the innovation of our businesses. An economy that enables opportunity and underpins a fair society.
And this Labor Government has the economic plan to deliver this vision.
A plan that puts in place the long-term reforms necessary for continued growth.
A plan that invests in the drivers of growth and pursues nation building reform.
Today, I want to talk about two core elements of our economic plan.
First, the importance of an appropriate fiscal strategy and why such a strategy underpins the other elements of reform; and, second, how investments in education, skills and the knowledge economy will underpin an adaptable and resilient economy.
Getting the fiscal settings right enables governments to undertake the big reforms. The right reforms.
Underpinning Labor's plan for the economy is a fiscal strategy that is appropriate for economic conditions and sustainable over the longer term.
This strategy laid out in 2008 when we first came to Government involves:
- achieving budget surpluses, on average, over the medium term;
- keeping taxation as a share of GDP on average below the level we inherited; and
- improving the Government's net financial worth over the medium term.
Our medium-term fiscal strategy provides structure and stability to government finances. Structure is fundamental to the long-term position of the budget, ensuring that investments in the big reforms are sustainable.
And, if you look beyond the politicking on fiscal policy, youll see the facts demonstrate this: that our strong position benefits Australian business. The triple-A assessment from all three ratings agencies provides confidences to business, to investors and to the markets.
Today, more than ever, the medium and long-term perspective is important.
Against the backdrop of an ageing population, investing in programs that will improve productivity and participation have to be a priority. These investments need to be outwardly focused, engaged with our region, and enable us to make the most our geography.
We are located in the right place at the right time.
The rise of Asia underlines the imperative to make room for the drivers of growth.
And to capture these opportunities, we have to get the fiscal settings right.
As the Prime Minister said during her National Press Club address on Wednesday, new structural calls on the budget need to be associated with new structural savings.
This will ensure that important reforms are sustainable over time.
In 2013 with an election date announced for September we will continue to set out and implement our plan for the country.
We will continue to offset spending over the budget forward estimates and we will announce further structural savings to ensure our key reforms the National Disability Insurance Scheme and schools reform are sustainable over the medium-term.
We will lay out all of our policies between now and September, providing Australians with the costs and the savings that will be made to enable these to take place.
That is the responsible thing to do. That is the right thing to do.
It is irresponsible to make promises of more spending, lower taxes and higher surpluses, without detailing how youre going to pay for it.
And it is meaningless to announce policies without providing credible costings.
Costings are only credible if they have been prepared by Finance and Treasury, or the independent Parliamentary Budget Office and released publicly.
Costings are not credible when they have been prepared by a private firm acting in the interests of their client, rather than in the public interest.
We have a strong track record of making savings to reprioritise spending and maintain our budget position.
In the Mid-Year Review, we made $16.4 billion of savings, on top of over $130 billion in savings made over our last five budgets.
We also have a strong record when it comes to making structural saves that have contributed to the long-term health of the budget position.
Abolishing the Dependent Spouse Tax Offset and means-testing the Private Health Insurance Rebate are just two examples. Now, I know this has been, for some people, controversial, but without the changes to the Private Health Insurance Rebate, spending for this program was forecast to reach the equivalent of 75 percent of expenditure on the Medical Benefits Schedule an unsustainable position.
Indeed, if you look at the Mid-Year Review we released last year, it took stock of these and other changes and reported that, without these savings, net debt would be $250 billion worse in 2020-21.
Focusing on the investments that will drive economic growth and therefore revenues is key to a sustainable budget position.
That is why we have prioritised investment in economic infrastructure.
Here in WA, we are:
- investing $3.7 billion through the nation building program increasing per capita spending in this state from $154 to $261 per person;
- supporting productivity improvements in roads, rail and ports including through projects such as Gateway WA and Perth City Rail Link; and
- rolling out the National Broadband Network, the infrastructure of the modern Australian economy.
Through collaboration and teamwork, we experience endogenous growth in human capital, further increasing the nation's productive capacity.
While the economic imperative of investment in human capital is clear, this Government is also guided by our values of equity. We dont just want our children to compete in the future economy; we want them to prosper.
We are smart nation, but we will need to be even smarter.
We will need to enhance our adaptability and our resilience.
We will need to leverage our strengths to not only manage change, but to grasp opportunity.
As I outlined at the beginning of my remarks, Australia is at the crossroads of global economic forces.
Our capacity to benefit from these shifts will require an economy that can continue to adapt; an economy where businesses can act swiftly to take advantage of opportunities and be flexible to respond to market forces, both domestic and international.
This will require maximising new technologies and shifting an increasing share of business activity online.
The ubiquity of the NBN will grow connectivity for business to client relationships, and also enhance supply chain efficiency.
Business innovation will be key to our competitiveness.
Because we know our position in Asia, whilst it is an advantage, does not guarantee success. If anything, proximity places Australian businesses under greater international competitive pressure than ever before.
This is something Im sure you all here in WA are well aware of and which you are also prepared to tackle front on.
Last year the Prime Minister released the 'Australia in the Asian Century White Paper', which noted that: Our greatest responsibility is to invest in our people through skills and education; to drive Australias productivity performance and to ensure that all Australians can participate and contribute.
However, we are at risk of our competitiveness becoming constrained by lower educational performance in our schools.
All parents in Australia would have higher ambitions for their childs education, and theres no question that employers are looking for more and more skilled labour.
And yet across all our schools, over more than a decade, we have been slipping behind the education standards of the region and the world. We know that education creates opportunity.
That is why this Government has introduced reforms to the early childhood and the vocational and higher education sectors, and implemented policies to encourage mature workers stay connected with the labour market.
This has required significant investment, as will our response to the Gonski Review.
Over the coming months there will be those who ask: How can we spend so much on additional schools funding?
In response, Id pose the question: How can we not?
The economy that charts a prosperous course through the Asian Century is one that has the brainpower to continually adapt, to be flexible, able to change and able to compete with the much larger economies in our region.
To think that the status quo when it comes to schools is acceptable is to deprive the next generation of the opportunities they deserve and to ignore the economic imperative before this country.
In the end, plans for the nation are what an election year should be focussed on.
This should be a year where competing visions for the country are laid out. A year when the policies that underpin those plans are clearly articulated in specific terms and not couched in platitudes designed to please everybody.
This is a year when fiscal credibility should be judged on the costings of ones policies on the hard numbers.
Because I believe that avoiding a proper public debate on the basis of costed policies is in itself an act of economic irresponsibility.
To hide behind slogans, rather than to present to you honest and costed policies puts at risk our future prosperity.
And its disrespectful to the Australian people.
This is not the approach this Government will take.
We will present a clear plan to the Australian public, well ahead of the election on September 14.
A plan that extends our existing reform agenda for a strong and resilient economy and ensuring jobs and opportunity.
A plan underpinned by Labor and indeed Australian values of fairness and opportunity, and it is a plan that will be properly costed and presented to the public.
I thank The West Australian for the opportunity to participate in a substantive debate on policy, here in one of the growth centres of Australia.
ENDS
