Source: Australian Parliamentary Secretary to the Minister for Industry
Mark, thanks for your leadership and the kind introduction.
Andrew, congratulations on clocking up 4 years in the role now and thanks for the invitation to join you and your members.
Let’s acknowledge together the elders, customs and culture of the Ngunnawal and Ngambri people on their traditional lands.
I also want to shout‑out some of my Ministerial colleagues joining us tonight – Murray, Anne, Patrick and Andrew.
As well as the Shadow Treasurer and other members and senators from across the parliament.
To all the ACCI members here – thank you all for the jobs and opportunities you create around the country.
Thank you for the important role local chambers play in every community represented here in the parliament.
And thanks for the chance to speak to you over dinner about 3 things that occupy almost all of my time as Treasurer.
Building on momentum in the private sector.
Making progress on the directions we set at the reform roundtable.
Against a backdrop of serious and persistent global volatility.
There are a number of ways to understand this volatility but just consider, for a moment, commodity prices.
Each week Treasurers get a simple page summarising movements in 8 different commodities.
So, by my count that brief has landed on my desk 179 times now.
Usually, treasurers look for the iron ore price at the top of the page first.
About 96 bucks this week, not bad.
Then it’s gas prices, about halfway down.
Other times it’s oil, particularly when conflict in the Middle East flares or tensions in the Strait of Hormuz escalate.
But there’s one commodity that until this week was missing from that weekly briefing that I’ve been watching most closely lately – and that’s gold.
Gold is up almost 50 per cent in the past year.
More than $12 billion has been funnelled into gold‑backed funds in one week of this month alone.
A year ago, an ounce of gold was about US$2,800.
It took 169 days for it to climb to US$3,300, and 167 days to climb a further US$500.
The most recent US$500 price jump took just 20 days – and that progress has almost unwound with the big fall in gold over the past fortnight.
We watch this with interest because, historically, spikes in the price of gold have been a symptom of a big event or more substantial global economic shock.
In the late 2000s it was the GFC and its aftermath driving the price of gold bullion up by 50 per cent.
Three decades before that, the ‘Nixon shock’ kicked off the biggest gold bull run in history – a 19‑fold price increase in just a decade.
It all started when Nixon ended the gold standard in 1971.
It was fuelled by 2 oil crises in the Middle East and sustained by a global battle with inflation.
Familiar signs of uncertainty and volatility are visible again across the global economy today.
Conflicts abroad.
governments everywhere managing the aftershocks of an international spike in inflation.
Global shifts in trade.
The gold price is one way to monitor global volatility but not the only way – we see it in each of the major risk indexes and in markets around the world.
This uncertainty was the major focus of my international discussions with counterparts and some of the world’s largest investors earlier this month.
Over 7 days, across 3 cities and 2 continents.
What came through clearly in almost every conversation was that risks to the global economic outlook are accumulating –from every angle, all at once.
Geopolitical tensions.
Strains and stresses in financial markets.
And the complex transitions underway in our economies, across energy, technology and demography.
Behind the scenes, leaders around the world are watching nervously.
Investors are cautious.
Capital is jumpy.
And uncertainty is more persistent.
This volatility has been normalised but not neutralised.
So far, global growth has outperformed the low expectations laid out in forecasts from the IMF and others earlier in the year.
But it’s not yet clear whether the world economy will continue to muddle through or if there will be a sharp correction.
The atmosphere in some markets is febrile – whether it’s the wild swings in gold, equity valuations, or on debt markets.
Regardless of what plays out, Australia faces these challenges from a position of relative strength.
We’ve got a lot coming at us from around the world, but a lot going for us in our own economy too.
Security and stability for investors, and geography.
Emerging advantages thanks to abundant wind, solar and critical minerals.
Expertise in AI and data centres.
The skills and experience of our workers.
When you look around the world, our macroeconomic and fiscal fundamentals hold us in good stead too.
We know there’s so much more to do, but so far we’ve seen:
The biggest nominal improvement in the budget in a parliamentary term.
Back‑to‑back surpluses in our first 2 years and a smaller deficit in our third year, avoiding $188 billion in debt.
Just this week, global rating agency Fitch reaffirmed our triple‑A credit rating – meaning Australia is still one of only 9 countries to be rated triple‑A by all 3 major rating agencies.
The lowest average unemployment rate of any government in 50 years and more than 1.1 million new jobs since May 2022.
Inflation did tick up today, but underlying inflation is still at the top of the RBA’s target band.
Today’s result was higher than we’d like but around half what we inherited, and the progress we’ve made on inflation has given the bank the confidence to cut rates 3 times this year.
And annual real wages have grown 7 consecutive quarters, now at their strongest rate in 5 years.
One of the most pleasing aspects of all this is that the private sector has now regained its rightful role as the main driver of growth in our economy.
This is the private sector recovery we planned for, prepared for, and hoped for – and now we need to sustain the momentum.
We are ahead of schedule.
In fact, if Treasury was publishing its mid‑year forecasts today it would be downgrading the outlook for public demand and upgrading private demand.
Progress is not limited to one part of the private side of the economy either.
We see it in household consumption because of the growth in real incomes.
We see it across housing and construction because of progress on the costs of building materials and cuts to interest rates.
And we see it in business investment.
Public demand put a floor under growth in 2024 and there are good reasons to be grateful for that.
Out of 38 OECD economies, Australia is one of only half a dozen not to have experienced any negative quarters of growth in the last 3 years.
But for 9 months in a row now, private activity has driven our economic growth.
Public demand has made no contribution to growth at all in the last 2 quarters.
This is a clear sign that consumption and capital are returning to the private economy in welcome ways.
We shouldn’t get ahead of ourselves because we know these quarterly numbers bounce around.
But the trends are now clear and encouraging.
For the first time since mid‑2023, discretionary household spending is doing more for annual consumption growth than essentials.
This is thanks to real wages growth, getting inflation down, our tax cuts and rate cuts.
It’s the same story in housing.
When we came to office, dwelling investment was falling at an annual rate of more than 5 per cent.
Today, it’s growing at 4.8 per cent.
That turnaround is across the board – 3 stubborn barriers to construction are all easing.
New builds are picking up.
Renovation activity is growing by around 5 per cent through the year.
And in the labour market, construction job vacancies have halved from their peak, so worker shortages are a little less acute.
Cost growth is coming down too.
Annual new dwelling construction cost growth has slowed from almost 20 per cent when we were elected to now 1 per cent.
And the rate cuts already in the system are helping with financing costs.
There’s still much further to go to fire up business investment but welcome trends have emerged in the most recent data.
Business investment has grown at 3.9 per cent a year on average since we came to office, compared to falling 1.3 per cent on average under our predecessors.
Investment as a share of the economy has lifted from 11.1 per cent to 12.3 per cent, but we need it to rise further and faster.
In the data, we also see an important shift in the nature of business investment.
Non‑mining investment, particularly in renewable energy and technology, is now doing more of the heavy lifting.
In fact, it’s grown over twice as fast as mining investment since the 2022 election, averaging 9.4 per cent of GDP over the past 3 years.
That is the highest three‑year average share of GDP since 2012.
Spending on intellectual property like software, data, and AI is now almost as large as spending on mining.
Capital expenditure in energy construction is up nearly 40 per cent since we came to office, driven by the roll‑out of large‑scale renewable energy projects and supported by our Future Made in Australia agenda.
More new businesses are being created each month on average than under any previous government, and the insolvency rate is now around half of what we saw during the Howard years.
This is a solid foundation from which to meet all this global uncertainty.
We know there is more to do to keep business investment going – it’s getting better but still not strong enough.
We know there’s much more to do to build more homes, and to boost living standards for workers.
And we know the best way to sustain that progress –
The most effective way to turn this cyclical recovery into something more structural –
Is by lifting productivity.
And that means attracting more investment.
These were the most important objectives at our Economic Reform Roundtable in August.
I want to thank Andrew again for the key role he played there.
I’m working very hard to do justice to the genuine spirit of collaboration and cooperation we saw there.
There’s been a flurry of reform activity in the 2 months since I brought everyone together in the cabinet room.
A massive amount of work is underway, some of it public, and much of it quietly behind the scenes.
Let me give you a stocktake of what’s been done, what’s underway, and 2 new elements I’m announcing tonight.
Already we’ve:
Announced we’ll slash another 500 nuisance tariffs, taking the total to 1,000. This streamlines $23 billion worth of trade and will save businesses $157 million every year.
We’ve introduced Katy Gallagher’s regulatory reform bill in the parliament, which will improve the operations of 13 government agencies, help cut compliance costs and unwind red tape.
The Investor Front Door pilot is now up and running, to steer major projects through approvals and attract the investment that will power our next wave of growth.
Murray will be introducing important changes to the EPBC Act to parliament tomorrow, sooner than we had originally promised.
Our major regulators have provided 400 ideas to wind back regulation where it’s unnecessary or duplicative.
We’ve asked the Council of Financial Regulators to help shape them into a package of reforms to make financial regulation more efficient, and more supportive of investment.
We’re progressing a Single National Market with state and territory treasurers, including work on road user charging and a more ambitious approach to National Competition Policy.
Clare O’Neil is pausing and streamlining the construction code, and working with Murray to clear a backlog of 26,000 homes that are waiting for environmental assessment.
Already more than 8,000 homes have been approved since August.
Tim Ayres and Andrew Charlton are finalising the AI plan and Katy is working on a public sector AI strategy, to be released by the end of the year as well.
Jason Clare and Andrew Giles are leading work on tertiary harmonisation, to make it easier for students to move between VET and university.
And as part of our usual budget processes, we will continue to engage on ideas for tax reform and budget sustainability.
Tonight, I can also announce another 2 important steps we’re taking from the Roundtable.
Firstly, Treasury is starting a new round of consultation on the superannuation performance test.
We’ve made it clear we’re open to considering responsible changes that maintain very high standards and the super funds’ responsibilities to members.
Which is why we’ll ask industry and experts for their ideas.
Treasury will stand up an industry working group to help find consensus.
The goal is to refine and strengthen the performance test to make sure it isn’t creating unnecessary obstacles to investment, particularly in key areas like housing and energy.
It’s about better aligning and unlocking investment that also boosts productivity, while maintaining a robust test and a primary focus on member returns.
I always wanted to tell you about new and substantial progress on our $900 million National Productivity Fund.
We have just signed off on the first set of state and territory reforms that will be paid out as part of that fund, with more to come.
This money only gets paid out when states deliver.
The Northern Territory government will now stop unnecessary objections to commercial developments – which could pave the way for more competition in its supermarket sector.
The ACT will now identify regulatory barriers to using pre‑fabricated materials, to help fast track housing construction.
And South Australia has now nominated a suite of zoning reforms which will help businesses redevelop land without needing to get a new permit, and speed up the delivery of mixed‑use zones, including 3,600 new homes.
This is not even an exhaustive list, but it gives you a really good sense of the reform we are leveraging and incentivising.
It also makes clear that we don’t see productivity as the responsibility of one level of government, or indeed one minister or one department.
Since the day after the election, we have deliberately made productivity a central objective of our second term agenda.
In every portfolio, our economic reforms are all about helping workers and businesses earn more, keep more, invest more, employ more and build more – to lift living standards overall.
There’s been so much progress already on the directions set by the Roundtable and we’ll bring even more of it together in our fifth Budget in May.
Here I want to be clear that this year’s MYEFO will not be a mini‑budget with lots of new initiatives.
The mid‑year update will be precisely that – an opportunity to update forecasts and the fiscal position.
The main game will be May.
I’ve focused on the private sector recovery tonight because this provides the foundation and momentum we need –
And because we know we won’t turn this recent progress into a permanent lift in living standards without more productivity and more investment.
I’ll have more to say about our investment agenda on Friday in Sydney.
And I’ve emphasised progress since the Roundtable, partly to correct a misperception fed by our opponents and critics –
But mostly because the Roundtable and the work we’ve done since then demonstrates the effort we are putting in to including you at every stage.
Because even with these welcome signs of momentum in the private economy, even with all our advantages, and even with all the progress we’ve made out of the Roundtable –
We know there’s much more work to do.
And we know that work’s best done in the considered, consultative, collaborative and methodical way that defines our government, from the Prime Minister down.
I’ve made and we’ve made a deliberate effort to put Australian businesses at the very centre of our policy development.
Not just because we know our future growth depends on your strength, resilience and ingenuity.
But because we know your involvement at every stage –
Your insights and ideas –
Give us the best chance of seizing the opportunities in front of us at a really important time for our economy, in the world.
That’s why this opportunity tonight is so welcome – thank you.