Tony Abbott outlines the economic growth strategy for a Coalition government
This is an edited version of Opposition Leader Tony Abbott’s “state of the nation” address to the Committee for Economic Development of Australia, delivered in Sydney, Friday 15 February:
Economic growth. That is what we need in this country, stronger economic growth. If we do have strong economic growth, profits are up, income is up, employment is up and government revenue is up. In fact, with strong economic growth the government can simultaneously increase spending, cut taxes and boost the surplus and if you say that’s a magic pudding, it is actually what happened for the last five or six years of the Howard Government.
If you just look at the raw headline numbers for economic growth, the last few years don’t look too bad. Despite the global financial crisis there was only one quarter of actual negative growth. But if you look behind the numbers the situation is not nearly so good.
GDP growth per head of population since 2007 has been only one third of the GDP growth per head in the Howard era, and this is why the Howard era now looks like a lost golden age of prosperity.
Over the last five years multifactor productivity in this country has actually declined. It’s actually declined by three per cent. We know that the private savings ratio is massively increased. It’s at the highest level in two decades because people don’t trust the Government to save, that’s why they are saving so much themselves. People don’t feel rich, that’s why they are saving so much themselves.
We know that real wealth per head has actually declined over the last five years because of stagnant property prices and because of falling share prices and that’s led to so much more restraint in spending which is why so many of our main street retailers and businesses feel under such pressure today.
The challenge for government, the challenge for the Coalition should we become the government after the election, is to do more and to do better to get economic growth up and the best way to get economic growth up is, of course, to get the fundamentals right.
It’s always the right time to get the economic fundamentals right and what you’ve got to do in terms of the economic fundamentals is understand the iron laws of economics and one of those iron laws is that government doesn’t create wealth, business creates wealth.
Sensible governments never go around attacking wealth creators, they never go around accusing people who have invested millions, created thousands of jobs, of being a danger to democracy as this government, I regret to say, has. Sensible governments understand some of the corollaries of the iron laws of economics such as that you don’t speed up the slow lane of our economy by slowing down the fast lane, such as that you do not boost our economic strength by targeting the strongest sectors of our economy and you can never, never, tax your way to prosperity.
Now, I believe that the Coalition I lead understands all of this in the marrow of its bones and that’s why I am confident that should there be a change of government later in the year, there will be an instantaneous adrenaline charge in our economy. There will be an instantaneous surge of confidence because an incoming government will understand that simple truth that business is the source of prosperity, business is the source of economic growth and it will want to work with business rather than against business in boosting the prosperity of every Australian.
The Coalition’s strategy to boost economic growth is really quite straight forward and it starts with getting taxes down. There’s been a lot of talk about the carbon tax. There’s a lot of talk from the Government that the carbon tax hasn’t really been noticed. Well, everyone notices a new tax and people are particularly conscious of a new tax which doesn’t serve any reasonable economic purpose. The problem with the carbon tax is that it’s damaged our economy without helping our environment and that’s why it will go as the first priority of an incoming Coalition government.
Then there’s the mining tax. Now, the mining tax was always a bad idea. This idea that miners don’t pay enough tax is just misleading at best and dead wrong at worst. Miners pay the company tax that everyone else pays. Mining staff pay the tax that every employee pays. But miners have always paid royalties, always have and no doubt always will. So the mining tax was effectively a third tax on a sector which can easily go somewhere else. This idea that the only place you can mine is Australia, again, just dead wrong. Mining capital can go to many other places and it has started to go to many other places since the mining tax was introduced.
Then, of course, there’s the way it was introduced and the outcome of its introduction. It has turned out to be a lose/lose tax, a tax which impacts on investment, impacts on employment but in the end raises hardly any revenue at all and we’ve had the really rather sad spectacle in Parliament this week of minister after minister in denial about this particular tax.
The trouble with government which is spending unsustainably is that it is always looking for more taxes. There’s the carbon tax, there’s the mining tax, and, in all candor, there are the coming additional taxes on superannuation. They thought they could get away with a carbon tax because that was only going to be paid by the so-called big polluters. They thought they could get away with a mining tax because that was only going to be paid by the wicked multinationals. But those taxes aren’t raising enough money. That’s why they’re now coming for the ordinary people of Australia with new taxes on superannuation. Well, under the Coalition the carbon tax is gone, the mining tax is gone, and there will be no further fiddles with superannuation because people’s savings don’t belong to the Government. People’s savings belong to the people and the Government has to respect that.
We’ll get taxes down and we’ll get government spending down.
We will do it in ways which we believe are responsible. Some of the ways we will do it will be controversial. For instance, we’ve announced that the so-called school kids bonus will go because this is a cash splash with borrowed money that has nothing necessarily to do with education. We won’t go ahead with the 6,000 person a year increase in the refugee intake because that would send the wrong signal to the people smugglers and in any event, at the moment the people smugglers are determining that intake. We will trim back the Commonwealth public sector, not because we fail to respect the work of public servants – as a minister for nine years I very much respect the work of public servants – but there’s 20,000 more in the Commonwealth public sector than there were five years ago and there hasn’t been a commensurate increase in service delivery or efficiency. So, just those changes will save about $10 billion over the forward estimates period.
If we don’t go ahead with the National Broadband Network in its current form, that’s about $50 billion less that the Commonwealth will need to borrow. So, we will get government spending sustainably down and most importantly, ladies and gentlemen, we will get productivity up.
It is important for all sorts of reasons, productivity not the least of them, that we restore the rule of law in all sectors of our society but particularly, in our workplace. There ought to be a level playing field for wrongdoing. Wrongdoing is wrongdoing, whether it happens in a company or in a union. So we will make sure that wrongdoers face the same penalty for the same sorts of crime, and we will establish a registered organisations commission to act as a watchdog and policeman for the union movement and for employer organisations in the same way as ASIC polices corporate organisations.
There will be a one-stop shop for environmental approvals and this will be part of our campaign, our pledge to reduce your red tape costs, business red tape costs by $1 billion a year, at least $1 billion a year over the life of a Coalition Government and we will get the public sector’s efficiency up by measures such as working with the States to ensure that public schools and public hospitals are run more by their communities and less by distant bureaucracies.
If we get government spending sustainably down, if we can lower the tax burden, if we increase productivity we can make our economy so much stronger. We can unleash the creativity of Australia’s business people. I know that we are capable of more than we are currently achieving. I know because I have seen with my own eyes very successful Australian businesses competing and succeeding in very difficult fields.
There is a factory in Burnie in northern Tasmania which produces 25 per cent of the world’s underground mining equipment. There is a workshop in West Gosford which, believe it or not, produces 10 per cent of the world’s aerosol springs – not a particularly glamorous product, ladies and gentlemen, but absolutely necessary to a modern economy and 10 per cent of the world’s billions of aerosol springs are produced at this little workshop in West Gosford. There’s the R.M. Williams factory in Adelaide which successfully produces high quality footwear and clothing, something which we are supposed not to be able to do anymore in this country. So, given that we can do a lot, even now, under unpropitious circumstances, how much more could we do and do well under better circumstances?
That’s the challenge that the Coalition faces. That’s the challenge that I believe we are more than capable of rising to, to put the economic policies in place that will once more give us a dynamic, five pillar economy with a strong service sector and a strong education sector, a resilient and sustainable manufacturing sector as well as the mining and agricultural sectors which have been so important to us over the last few years.