Thank you for the opportunity to talk today.
The Australia-Israel Chamber of Commerce is a strong and thoughtful advocate for business, and has a proud and distinguished record in bringing together business and government.
These dialogues foster strong ties between business and government, encourage collaboration and help bring about the positive outcomes we need to underpin our future prosperity.
And central to our future prosperity is understanding the roles that government and business have in nurturing economic growth.
Today, I want to discuss the economic imperative before us for both government and business and outline the approach this Government is taking to see Australia prosper.
And this requires looking through the mining boom we are experiencing and putting in place drivers of economic growth that will follow the boom.
It is about getting the building blocks right so that individuals and businesses can prosper.
Our Governments approach is grounded in the understanding that productivity growth is essential to economic performance.
And one example of how we are doing this is the National Broadband Network, an investment which will transform our economy in the decades to come.
The story of the Australian economy today is one of transition.
In one sense this is the norm.
As a medium sized, open economy, we have never been stationary.
Too small to dictate economic terms, but open enough to be dictated to by them, the Australian economy has long been shaped by international forces.
In 2012 this is no different.
These are the early years of the Asian Century which will reshape both the international economy and the Australian economy, with lasting and profound results.
With these tectonic shifts occurring, nations face a simple question do we prepare for change or resist it?
Leadership and good government at this time mean preparing for change.
And that is what this Government is doing.
Equipping our economy to make the most of our proximity to Asia underpins our approach and is the genesis of the Asian Century White Paper that will shortly be released.
Because the Asian Century will demand Australia re-calibrate its economy.
Often overlooked in discussions of the Asian Century is the span of time it will encompass.
We often let discussions be framed by the next five to ten years, the rise and fall of commodity prices.
But our challenge is not to formulate a policy, set and forget far from it.
Our relationship with Asia will go through infinite permutations over the century ahead of us.
The task of policy makers and of business leaders will be constant, and it will be ever changing.
It is this understanding that frames the Governments economic approach.
In the immediate term we are making the most of the mining boom, as Asias demand for the raw materials of modernisation continue.
But while managing the commodity boom is front of mind, we also need to position ourselves for future waves of growth.
Indeed the central challenge for government is getting the settings right by investing in our future prosperity.
This is why we need to look through our strengths in commodities and anticipate the economy beyond the boom.
Because it is only with this understanding that we can make the right choices today, to underpin our future.
So, against this backdrop, policy makers are confronted with questions over how to best prepare Australia.
How do we manage the transition?
And how do we best prepare for the next century of economic growth?
The answer to these questions lies in the economic imperative; in the need to have a modern, flexible and adaptive economy that can respond to and succeed in the Asian Century.
Because the only certainty before us, is change.
For Governments, our role is to prepare the economy and to prepare our people to navigate and succeed in times of change.
Our role is to create the circumstances for economic growth and job creation.
It is to invest in the infrastructure that will underpin a dynamic economy.
To invest in our people through training, schooling and research.
To have an open economy where the policy default is pro-trade policies that encourage foreign investment, and to aim to give our exporters the largest global market place.
While government has a clear role, business pulls these threads together into productive and commercial ventures.
Entrepreneurs respond to the market and take the risk of investing in new enterprises.
And businesses attract the best talent, innovate and utilise infrastructure and create jobs that spur economic activity.
But how productive the private sector is, and therefore how competitive our businesses are internationally, is in part a function of government investment.
It comes down to the number of students that graduate from university, and the quality of training provided in our TAFEs.
It comes down to the provision of critical productive infrastructure, and investments in the enablers of economic activity.
It requires all levels of government working to this goal.
It also involves policies that welcome foreign investment to our shores, and that open new markets for our exports.
But the historically bipartisan approach to open and free trade including foreign investment is breaking down as a false parochialism begins to dictate economic policy in some quarters.
I have long held the view that with an open economy, comes an open mind.
An openness to new ideas, new cultures, and to new people; this is what should shape our approach to the world, to foreign investment and trade.
In a country that has long benefited from foreign investment, from trade and immigration, closing our eyes to the world will weaken our economy, and weaken our prosperity.
This Government has made significant progress in building the enablers of our future economy.
We are guided by the principle that a countrys productivity is driven by the capacity and innovation of its workers.
Preparing our economy for the Asian Century will require a high knowledge, high skill workforce able to compete internationally.
That is why we have doubled our investment in schooling, and uncapped university places.
We are introducing a HECS-style loan program to remove barriers to learning a trade, at the same time as increasing the quality of courses.
We are establishing a quality framework for early childhood education to ensure all Australians get the best start in life.
And we annually fund $9 billion on research and science to push the boundaries of knowledge, and drive excellence in innovation and discovery.
The positive impacts of our investments in human capital are already yielding results; results that will become increasingly evident as the full effect of these reforms are realised.
Our Government has a strong commitment to free trade with negotiations underway on eight free trade agreements with countries including Japan and the Republic of Korea.
Our exports to these two countries alone exceed $75 billion in value, with imports exceeding $25 billion.
And in the Asian Century these trade ties will foster and underpin a deeper relationship between Australia and our region.
Indeed, central to the Asian Century White Paper process has been looking to strengthen our links with our region.
Fundamental to this process is education and understanding.
The implicit suspicion that comes from some in the Parliament on questions of foreign investment from our own region underlines the importance of strengthening our ties.
Similar to investing in human capital, our Government has also made significant investments in the physical infrastructure required for continued growth.
Under Minister Albanese our spending on roads rail and ports totals $47 billion since 2007.
This includes funding for the Pacific Highway, the Victorian Regional Rail project, and the Noarlunga to Seaford Rail Extension in my home state of South Australia.
Here in Sydney this includes the Parramatta to Epping Rail Line and the Northern Sydney Freight Corridor.
The Government will be calling for private sector firms to build and operate an intermodal terminal at Moorebank, contributing $10 billion in economic benefits and taking more than 3,000 trucks off Sydney roads each day.
These investments will have tangible productivity benefits in our cities and regions, reducing the cost of transportation and boosting the movement of freight.
But today Id like to specifically go into some detail about this Governments key infrastructure project the NBN and the contribution it will make to building a 21^st Century economy.
Minister Conroy my co-shareholder will be releasing the Corporate Plan this afternoon.
Rather than steal his thunder on the details, I wanted to talk today about why our Government believes the NBN is needed.
Because I do not think the importance of this reform can be overstated.
Over the decades to come, our economic growth will either be constrained by broadband speeds or it will be enabled by it.
Understanding this point is fundamental to our future prosperity.
As a Government, we have made the decision that ubiquitous high speed broadband is essential infrastructure for economic growth.
The benefits of this investment will be profound.
It will cut across all sectors and reshape our economy in a number of ways.
We often refer to the specific to provide examples of the ways in which the NBN will reform our economy, and change our society.
We talk about online schooling, and better health care and e-record keeping; quicker downloads, and faster web use.
But these examples are typically informed by our past experiences.
They are existing transactions delivered differently.
We should not discount these as they are tangible and real improvements in the way we conduct business, but what is exciting about the NBN and the opportunity provided through universal broadband is the services and businesses that are yet to be created.
To understand the transformative effect of the NBN we need to look at its capacity to affect the whole economy.
I see four key drivers of productivity encompassed by the NBN.
The first is the capacity of the NBN to remove transaction costs across the economy, paving the way for automation and standardisation.
We are in the early years of e-commerce, and will increasingly see a move from the physical to the online.
The mindset of online banking and shopping will filter through all aspects of our lives, and expand to services such as legal, engineering and accounting.
The transaction costs between business and clients will be continually lowered, increasing profit margins and driving increased efficiencies.
But the greatest changes to business models will be internal efficiencies, reducing the transaction costs of their own operations.
Improving inter-business and supply chain metrics will see increases in real time logistics and more efficient inventory use.
Stores, hospitals and warehouses will stock goods as required, removing the opportunity cost of idle inventories.
This will allow businesses to better manage their operations, to be more flexible in reacting to market changes and seeking advantage in quickly responding.
The move from physical to cloud data storage will also change the way information is managed and used, reducing the capital costs of IT software and infrastructure.
The benefits of these reforms will be end-to-end and applicable across all sectors.
They will free up resources, increasing opportunities for new investment and growth.
The second key area where the NBN will drive economic growth is in increasing the number of connections across Australia.
As a large country, commercial connections and relationships have been defined by our physical locations.
The NBN will open up the country to business, leading to the evolution of a truly national seamless economy.
With the increased connectivity comes bigger market places, and will see a more efficient allocation of resources.
This will be most beneficial to the SME sector.
Large national companies or multinationals will typically have a physical presence in all major centres allowing them to seek out new business and expand their market share.
But SMEs are typically constrained by their geography, unable to penetrate new markets.
The NBN will transform this dynamic, providing the means for SMEs to expand their market presence and sell goods and services across the country.
Another sector where this will likely have the greatest impact is in the services sector.
The transition of the services sector online will reduce the need for face-to-face meetings; reducing costs and improve productivity.
The next generation will not accept such service provision over the telephone, or low quality video conferencing.
Key to business moving online will be retaining the human element of interactions.
Handing over your accounts to an accountant, or landing a business deal still requires the trust and interpersonal connections that occur across a meeting table.
For the benefits of online connections to be realised, we need to be able to provide human connectivity.
Connectivity therefore requires bandwidth.
It requires high quality and real time vision and sound.
Having all premises connected by the NBN will see connectivity like weve never seen before.
The third key change that will be driven by the NBN is innovation.
The NBN will provide a ubiquitous open-source platform that will encourage innovation in ways we are not able to imagine.
Now such statements occasionally get derision from detractors of the NBN; they claim that being unable to foresee all benefits is in some way a flaw in the design or business model.
Nothing could be further from the truth.
Establishing an open platform, with universal access provides the most fertile environment to foster innovation.
To use an analogy as an example, iPhones, and for that matter all smart phones, have dominated the mobile phone market for a number of years now.
And with several million iPhones across Australia, the iPhone provides a platform for innovation at the same time as access to consumers.
Take a look at the number of apps that now fill our iPhones, which demonstrates the power of providing a platform and access.
People can check their heart rate, share information, track stock prices and financial market movements.
This same principle underpins our approach to broadband and the NBN.
With high speed and universal access, the opportunities for innovation are unlimited, with the market responding in ways we cannot predict.
Additionally, the NBN will enhance other investments in human and physical capital.
A 2011 report prepared by Deloitte for Google indicates that the internet already makes a direct contribution of over $50 billion to our GDP.
And this is anticipated to grow to roughly $70 billion by 2016, and grow strongly over the coming decades as the opportunities of investments like the NBN are realised.
The final change I want to discuss is the impact of the NBN on labour mobility.
Since the industrial revolution workers have moved to industrial and commercial centres they have moved their families for employment.
Labour mobility in Australia by international standards is strong.
This demonstrates a willingness of Australians to seek out the best employment opportunities and not be limited to their geographical area.
This is a strength, something optimised by the fly-in-fly-out workers in mining towns.
Because labour mobility is in many ways a function of economic conditions.
While Australias aggregate employment and economic data is strong, we know that there are areas that are not experiencing the same growth as others.
As an economy in transition we are seeing localised impacts both positive and negative.
And while the current period is demonstrating particular change, we know that change will be a constant of our economy over the coming decades.
The human cost of such transitions is often the hardest.
Capital, finance and inventories can be readily shifted to seek increased returns.
But labour is more sticky; it can respond slowly to economic change.
The NBN will have profound impacts on labour mobility.
Building on our strong disposition to seek out employment, the NBN will allow firms to take jobs to workers, wherever they are in Australia.
This will allow firms to be able to attract the best talent.
It will allow for skilled workers to be able to retain their social and community networks and seek work in a different city or regional centre.
Before closing I wanted to briefly touch on the NBNs financials.
As I mentioned, Senator Conroy will be releasing the next NBN Co corporate Plan this afternoon.
This Corporate Plan once more confirms that the NBN can be built and deliver a solid return for taxpayers.
The Corporate Plan looks at NBN Co's costs and revenues and determines that, based on the financials alone, NBN makes a profit.
And of course this doesnt even begin to capture the value that NBN will bring to businesses and families right across the country through improved services and increased opportunities.
We should also remember that the private sector would want a larger profit to undertake a large project.
But thats exactly why the Government has stepped in.
We think its that important that the entire population has access to broadband and so weve undertaken the task while ensuring taxpayers get a return.
The release today of the Corporate Plan follows earlier plans and studies, including by independent financial experts (like Lazard, McKinseys and Greenhill Caliburn), that support the case for the NBN.
There are volumes of such studies that have been released publicly.
In fact, Id be surprised if you could find a more scrutinised project in Australia.
Weve released numerous studies weve commissioned, and NBN Cos Corporate Plans.
Weve established a Parliamentary Committee devoted to overseeing the NBN and weve extended the FoI laws to NBN Co.
And these are just some of the steps weve taken.
So to challenge the Government for lack of transparency around NBN is pretty staggering.
You would also have seen commentary about the budget treatment of the NBN.
But the simple fact is that we account for the NBN in the same way that we account for other GBEs.
And this is the same way theyve been accounted for over many many years.
This is exactly what youd expect, as our treatment follows normal government budget accounting rules.
The Opposition again are looking to divert attention from their lack of policy on broadband, and to undermine the productivity benefits that will flow from the NBN.
In responding to the economic imperative before us, governments need to do all we can to provide the right conditions for growth.
We need to provide the right settings for business to innovate, invest, take risks and grow.
The transformation that will come from the Asian Century demands such a response.
Without a flexible, dynamic and outwardly focused economy, our future prospects will dim.
It is against this need that the Government is investing in the human and physical capital needed for growth.
And central to these investments and in many ways enhancing other government investments is the NBN.
I started this speech discussing the role of government and the role of business in responding to the economic imperative of the Asian Century.
For government it is important that we approach the future with an open mind; that we understand our role in enabling growth, and stay true to the philosophy of an open economy, in name and practice.
Our Government is doing its part; we are playing our role in providing the environment for success.
And I am also of no doubt that the innovation and entrepreneurship of Australian business with the right settings will flourish and make the Asian Century, the Australian century too.
Thank you