Shortly after being appointed to this position I described the task at hand in the following terms : The challenge of the last term was to avoid recession. The challenge of this term of government is to manage growth.
Michael Stutchbury from The Australian has put it perhaps more precisely, referencing the pressure the mining investment boom places on the rest of the economy to restructure around Australias new source of prosperity.
The growth challenge manifests in many ways, but fundamentally it manifests as change.
We are an economy in transition. A transition which has been a central focus of your discussions over the last two days. A transition driven not only by demand for our resources, the terms of trade at their highest sustained level in 140 years and the largest wave of investment in our history; but also by the shift in the global economy of which these facts are evidence.
The Treasurer spoke at some length yesterday about the consequences and opportunities that present as the middle class in Asia continues to expand. By virtue of our location, our resources and our knowledge-based industries, this expansion heralds enormous potential for our nation in the years ahead. But potential remains simply possibility unless it is grasped.
We also know that change is never only up-side, never easy and rarely uncontested. In the face of change, many responses are available to us as a nation; and to our political, business and opinion leaders.
They can rail against it.
They can garner opposition.
They can pretend that nothing need change.
But we know that such negativity is not only untrue, it is also risky. At best it distracts us, at worst it prevents the reforms which are needed.
The economic realities which are driving the change we are experiencing wont alter by virtue of political conflict or media spin.
In approaching the growth challenge, we should start from a few principles:
Recognising that our job is not to prevent change but to handle it;
Remembering that the nations prosperity has never been secured by refusal to reform; and
Having the courage to think and act long-term, to look not only beyond the daily media cycle, but the current political cycle.
Headlines and stunts may grab our attention but they will never secure our prosperity in the face of this change.
Consider some of the key policy issues central to meeting the growth challenge.
First, we need to run a sound fiscal strategy, to continue to strengthen public finances after the nation has come through the global financial crisis. To reduce the Government spending so as not to compound the inevitable price pressures from the mining boom.
Thats why the last budget reduced spending, outlined the fastest fiscal consolidation since at least the 1960s, and is delivering a reduction in government spending as a share of the economy to levels lower than the average that preceded the Global Financial Crisis. This is being done with a tax to GDP ratio lower than that which we inherited 21.8% compared with 23.5%.
Whilst we have rhetorical agreement on the need for fiscal consolidation, this is simply not matched by the Oppositions behaviour where we see a range of savings measures opposed, spending measures proposed, with no effort to address how they will be funded. In the absence of alternative savings measures this approach would simply undermine the return to surplus.
Secondly, we need to leverage the current heightened prices we are receiving for our mineral and energy resources for the long-term benefit of the nation. As the Treasury Secretary has described it we are exchanging a non-renewable capital asset for an income stream. If the return on that exchange is deficient, if we dont invest it wisely, we lose an opportunity to convert todays advantage into long-term national benefit.
On this matter, we again see political opposition. The Government proposes an MRRT, to enable investment in infrastructure, in expanding national savings and a reduction in the company tax rate. All opposed by the Coalition.
Finally, the issue of carbon pricing. Unsurprisingly, it is my view that no serious discussion of the growth challenge is complete without a recognition that decoupling emissions growth from economic growth is in our long-term national interest. We live in a carbon intensive economy, and an environment vulnerable to climate change. It is in our national interest to price carbon.
Today is July 1. But for Tony Abbott taking on Malcolm Turnbull, but for the Greens voting with Senator Fielding and the Coalition, today would have marked the commencement of the first year of a carbon price. And all the investment decisions taken since that day would have factored in the certainty of that price regime. Hopefully, that uncertainty that will soon be resolved.
And as is self-evident, the carbon price debate has degenerated into a series of stunts and the clamour of vested interests.
It is hard to recall a time when the distance between where our political debate currently is and where it ought to be has been greater.
It is fashionable in some quarters to blame minority government. Unsurprisingly this is an analysis often promulgated by those who have some measure of self-interest in demanding an election.
But does such an analysis bear out the facts?
Is it minority government which has prevented there being any bipartisanship on the issues to which Ive referred, or a whole host of others?
In fact, minority government has delivered over 100 Bills through the Parliament, including the structural separation of Telstra, the Budget bills and various key Budget savings measures including some initially opposed by Tony Abbott.
Those who blame minority government are missing the point. After all the cross-benches only even become relevant if the major parties remain opposed.
The point is that too many in our national polity appear to no longer countenance bipartisanship.
As history has shown us, long-term reform has often required it.
Reform is far easier to oppose than to propose, and far easier to destroy than to deliver. Instead, those advocating reform now need to be prepared to pay a short-term political price for doing what is right. As the Prime Minister has described reform purchased through the deliberate expenditure of political capital in the nations long-term interests.
Thank you.