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Treasurer's Post-Budget Address and luncheon, 17 May 2011

Thank you to all those who joined us for the Post-Budget luncheon at the Melbourne Town Hall.

The Treasurer - who described Per Capita as one of the most important think tanks in the country - gave the third in a series of speeches on the 2011 Budget, and this one focused on opportunities provided by the mining boom.

Per Capita TV
Read the transcript below
of the Minister's speech,
or see the video
at Per Capita TV.

The Story Behind the Budget Part Three: Spreading Opportunity

Speech by Wayne Swan at the Per Capita Post-Budget Luncheon

It's always good to join the Per Capita circle. A lot of people have said Australia needs more think tanks you're almost unique in having set one up. Four years on from its founding, you and Per Capita are a long way down the path to a permanent presence on the Australian ideas landscape. It is great to be here in Melbourne to talk about the budget, in particular how we ensure that all sectors of our economy prosper from the mining investment boom. Melbourne and Victoria have a great tradition of taking the benefits of mining or agriculture and turning it into enduring benefits that have made this such a great city and great state.

This is the third in a series of five speeches I am delivering on the Budget as I move around the country. Yesterday, I was in Sydney talking about jobs, before that I was in Brisbane where I spoke about the need to get the fiscal settings right to capitalise on Australia's potential in the Asian century.

The way I see it, we have a unique opportunity to take a mining boom and turn it into an opportunity boom for the entire nation. And we will also reap the greatest benefits from the boom, if we draw on all our nation's resources in every corner of our patchwork economy. We want to ensure that the benefits of our prosperity are felt by all Australians. This sentiment is core to Australian values, the sense of a fair go, that everyone has access to opportunities if they work hard and contribute.

But while Mining Boom Mark II offers tremendous opportunities for our country, not everybody in every corner of the country is feeling the immediate benefits. It is true that the headline numbers for our economy are impressive. We have an unemployment rate with a '4' in front of it. We've seen the addition of some 700,000 people to our workforce since we've been in Government. In the past three years our economy has grown by more than 6 per cent, compared to flat to negative growth for many of our peers.

At a macro level these are impressive figures but they can and do mask some underlying currents. And those currents are often working in different directions, putting different people on very different paths. Regional unemployment rates present a simple yet striking snapshot of this. Think about these figures from the March quarter:

Far North Queensland has an unemployment rate of 11.1 per cent;
Mersey-Lyell in north-west Tasmania has an unemployment rate of 8.3 per cent; and
North Western Melbourne has an unemployment rate of 7.6 per cent.
This is a far cry from the below average rates experienced in other parts of our economy. Rates of joblessness are only one dimension of the very different conditions we see across our economy. And these patchwork conditions are something that we were acutely conscious of in preparing this year's Budget. It's why this Budget is very much consistent with Labor's historic values.

This is a Budget to drive growth, but also to share it. This is a Budget to deliver jobs, but also train people for more rewarding jobs. This is a Budget to get us back to surplus, while protecting the most vulnerable. With low unemployment, businesses crying out for skilled workers, and young Australians crying out for more opportunities, there has never been a better opportunity to ensure more Australians have an opportunity to share in our national prosperity.

Right now we're seeing an historic shift in global economic gravity from West to East. Robust growth in our region has taken our terms of trade to historical highs and is driving an unprecedented pipeline of mining investment. Mining investment plans for the coming financial year will, for the first time, outstrip investment for the rest of the economy as a whole. But for Australia, this is only the first manifestation of the changing weight in the global economy.

The implications stretch far beyond the mining boom that is gathering pace it also presents enormous opportunities to develop our diversified and knowledge-based economy. As incomes in Asia rise, and as more people join the global middle class, our region is going to be demanding a broader and more sophisticated range of goods and services.

But hearing this type of discussion seems to many Australians divorced from their everyday reality. While investment is surging, not every region is growing strongly. While incomes are growing, many families are struggling to balance the family budget. While unemployment is low and falling further, some families have never had a breadwinner. Some businesses are feeling as though they are stuck in the slow lane, even though they are in the middle of fast growing cities.

This is what the Prime Minister and I have come to describe as a patchwork economy. The GFC is still having a lingering impact. Consumers are still much more cautious than they have been in the period before the crisis spending less and saving a bit more. Credit conditions are still tight.

We've taken huge hits from the natural disasters that struck our region over the summer flood reconstruction has a long way to go and Japan's woes are being felt here too. The higher dollar a sign of our relative economic strength but a burden for many of our industries is making life tough for our manufacturing industries, for our education exporters and for tourism.

But our history shows that Australia's economy has been able to adapt and move as the global economy changes and take advantage of our natural resources. That's why at the heart of last week's budget was a plan to ensure more Australians share in our national success. It's why investment in skills and education has been at the centre of our policy response from day one. And it's why we are putting in place new measures to draw more Australians into the workforce. So that everyone has the chance to participate and to prosper.

Our starting point is maintaining strong public finances returning to surplus as our economy starts to really hum with all the investment pouring into the country. Returning the budget to surplus is fundamental to our economy it means that we won't be chasing the same resources as the private sector when the investment boom hits top gear. But just as important, for managing the boom, is getting the micro-economic settings right.

We need to invest in our nation's capacity and that means investing in jobs, training, and supporting as many people as possible into the workforce. This Budget is about taking the prosperity the boom provides and converting it into more and better jobs for more Australians. We have a unique opportunity to address some of the challenges of entrenched disadvantage and spread the benefits of this boom to every community and every postcode.

We have never been here before. We are in the middle of our 20th year of economic expansion, unemployment is low and our economy and businesses are crying out for more skilled workers. Never before have the needs of our businesses been so aligned with the needs of our workers.

Yet despite this we still have the fourth highest proportion of jobless families in the developed world. Around half of our very long-term unemployed have only achieved year 11 equivalent or lower. And about 10 per cent of Australians aged 15 to 24 are unemployed or not in the labour force and not studying that's about 320,000 young Australians not working or studying. That's just not acceptable for a country like ours.

That's why we are delivering a better training system and encouraging, rewarding and insisting on the participation of more workers. We're investing $3 billion over six years to reform our whole training system. So we get the training system that matches the needs of our future economy. And because jobs are the best mechanism we have for spreading opportunity, our participation measures will bring more people into the workforce. A bigger workforce means that our key industries won't have to compete so harshly with the mining sector for labour.

Many of our participation reforms have a broad focus, like cutting effective tax rates for single parents with school age kids, and wage subsidies for employers who hire a very long term unemployed person. This will help address our high rates of jobless families. We are providing the core foundation skills that the long term unemployed in particular need to get a job. $143 million will help them attain the basic literacy and numeracy skills, they need to participate more fully in the modern workforce. To encourage young people to stick with their studies if they don't have a job, we will extend Earn or Learn requirements to 21 year olds and create new pathways to full-time employment for early school leavers.

Our participation package is also focused on entrenched, place-based disadvantage. It is so perverse that postcodes side by side can have such different outcomes. That is why I think it is so important that this Budget has a focus on disadvantage based on area. In Victoria, for example, this will mean new services and new requirements for jobless families and teenage parents in Shepparton and around Broadmeadows. These programs will be complemented by innovative service trials and an extension of income management in Shepparton. All of these measures are aimed at helping people get their lives together, get ready for work, and get their kids ready for school.

We also want to ensure that all of our businesses can prosper. We know how hard many ordinary Australians have to fight for their businesses, particularly small businesses, how many long, back-breaking hours they put in.

Our small business tax reforms will make it easier for small business by enabling them to instantly writing off any asset valued at less than $5000. For a tradie, their main asset is so often their ute or truck or van. So in this Budget I announced we'd also be allowing small businesses to write-off up to the first $5,000 of the cost of a motor vehicle immediately in addition to other capital investments. This will mean increased cash flow allowing small business to reinvest in their businesses' growth and expansion.

So when 2012-13 comes around Australia's 2.7 million small businesses will have a simpler tax system providing strong incentives to invest and grow. If they are struggling, the tax system will be supporting them to keep going; and if they can see a chance to take advantage of the mining boom in some way, well the tax system won't be getting in the way. That's one way our tax reforms spread the gains across the nation. Our company tax cut will help spread the prosperity of the boom to all Australian businesses, making them more competitive internationally and making it easier for them to succeed.

We have also invested in a manufacturing package to help Australian manufacturers leverage more work for their business from the mining boom. With this new package, we'll work with the resources sector to identify opportunities for Australian manufacturers to play a key role in the projects we expect to see in coming years. We'll also work with our manufacturers, to make sure they have the skills and strategies needed to take advantage of those opportunities. This will ensure jobs from the mining boom stay in Australia.

Because many Australians are still doing it tough, this Budget also contains measures that will help with the cost of living. We'll support families with teenagers, with $771.9 million over five years, because we understand that raising your kids doesn't get cheaper as they get older. We're delivering up to an extra $300 of the Low Income Tax Offset during the year, rather than at the end of the year, so low- and middle-income earners receive more timely relief when the bills come in.

We're extending the Education Tax Refund to cover school uniform expenses, to help families with school-aged children at a cost of $460 million over four years. And we've given parents of children in childcare more choice about how and when they receive their child care payments letting them get an immediate reduction on the bills, if that helps.

While I'm talking about kids, I should say that we're committed to making every school a great school and we've embarked on an ambitious agenda to improve educational outcomes for our kids. We know that if you're committed to giving every kid a great start in life, you've got to be committed to investing in the excellence of our teachers because they're the most important resource we have in our schools.

We all know our economy and our nation is at its best when we draw on all its resources and all of our people, and we spread the benefits. This is a Budget that seeks to take a mining boom and convert it into an opportunity boom for our entire nation. And if we keep getting the policy settings right we can spread the benefits of the mining boom to all parts of our patchwork economy. Thanks very much for giving me the opportunity today to talk about how the Budget is helping to deliver on this.

Thank you.