Staging points of progress
Address to the National Press Club, Canberra
Thanks Maurice and the Board for the invitation back to the Press Club, and to Laura for the introduction.
I acknowledge the Ngunnawal and Ngambri people. And I thank the sponsors, and all of you for being here again today.
Like many of you, I’ve become accustomed to the rituals of Budget week, having now been involved in 17 of them.
The long, chilly walk to the Tuesday morning doorstop, the lockup, the Wednesday media blitz –
Right down to Shane Wright’s choice of socks.
And of course, the welcome, even cherished responsibility of speaking with you today, to put the Budget in its proper context and to share the proper credit.
It’s been really pleasing to see many of you notice that we try to do the lead up to Budget a bit differently–
By which I mean involve more ministers, consistent with the inclusive and generous way our Prime Minister leads his team.
The many Cabinet colleagues having addressed this Club in the last month I think is just one piece of evidence of that.
I started knocking around here when Peter Costello was Treasurer, and I’ve always found it a bit strange that Budgets get individualised as much as they do.
It’s true there’s only one of us at the despatch box, but there are two names on it, 23 cabinet ministers who decide it, the work of thousands behind it, and the aspirations of millions wrapped up in it.
So, a key reason I look forward to this part of a big week, is because it provides an opportunity to sincerely thank everyone who put it together.
The Finance Minister of course, such an extraordinary friend and colleague, strong and selfless, and so valued and indispensable in our team – I’ve never worked with a better person.
The PM, for providing the leadership –
Our colleagues on the Expenditure Review Committee for providing the scrutiny –
Ministers and caucus members for providing the ideas – all of them well‑motivated, some of them affordable!
Steven Kennedy and the Treasury team –
Jenny Wilkinson’s Finance Department –
The Cabinet Secretariat and the broader public service under Glyn Davis – for providing the professionalism and expertise.
My community for providing the inspiration.
My wife Laura, my kids who sat through the speech last night, it means a lot that you’re here – for providing the love and support.
And I hope you don’t mind me singling out someone else who has become like family to us, a big sister to me and aunty to my kids, a friend and conspirator with Laura and John and Mum – but more than that.
Barb Pini has been working for senior Labor people in this building and the one down the hill since the late 1980s, when she showed up for her first job with Deputy PM Lionel Bowen.
In the three and a half decades since then she’s worked for eight frontbenchers in ten stints –
Two Deputy Prime Ministers, three Treasurers, two Shadow Treasurers, two shadow Finance Ministers, and a Labor leader.
Barb’s been the heart and soul of the three offices I’ve worked with her in – Kim Beazley’s, Wayne Swan’s and now mine.
She is the personification of what Graham Freudenberg meant when he described the Labor Party as ‘collective memory in action’.
Unsung, but unequalled in work ethic and commitment to her family, this community, and the need to do right by each other.
The first reason I mention her today is that the 2023 Budget is her last one.
Some of you know she’s said this before – but this time I fear Barb means it.
It says something about her humility that guessing I’d mention her today, she preferred to watch this from the office with our kids –
But she’ll hear us in the ministerial wing if you could please join me in thanking her, with a loud round of applause.
Now, I start with Barb to pay tribute to her but also to put into some historical context the Budget we handed down last night.
You see, Barb began here towards the end of the Cold War, a couple of years before one recession and she’ll be leaving a couple of years after the subsequent one – almost thirty years apart.
At the start of that period Australia was positioning itself to find its way and its place in what would be an era of convergence.
It seemed conceivable then that the big divisions in ideology and economics might end in a settlement of sorts.
In the corridors of this building, the great Labor project of that time – opening Australia to the world – was underway.
So was a three‑decade expansion that became the envy of the world – enduring through a Global Financial Crisis.
In that time, not in one stand‑out moment, but steadily, the liberal democratic world began to fragment.
Economies became stale and stagnant.
Opportunities shrank and suspicion grew – that the system was working against ordinary people and that the future belonged to somebody else’s kids.
Uncertainty, insecurity, and vulnerability came to define the times.
Multiple crises in a decade and a half – financial, biological, economic, geopolitical – only accelerated worrying trends.
Nationalistic ideologues found fertile new ground and autocrats mounted new challenges –
Now expressed most shockingly tens of thousands of kilometres away in the bombing of hospitals and apartment blocks in Dnipro and Mariupol –
And in the drastic set of disruptions that it’s caused in the global economy, especially in energy markets.
All coming at us from around the world but felt around kitchen tables here at home.
In the sweep of all this, we come to office, and we hand down two Budgets in seven months –
The first, to bed down our commitments and align our fiscal and economic strategies for the start of a new government –
This second one, with a much harder task –
To serve our urgent priorities and our generational responsibilities at the same time.
To act as a hinge point between the end of a wasted decade and the beginning of a defining one, full of opportunities –
To shore‑up our path through some hazardous terrain –
To set‑us up for broader long‑term success in our society and our economy –
And to make sure that the benefits and opportunities of this moment are shared across our continent and our communities.
This meant working to three sets of influences simultaneously.
First, in the near term, a domestic economy characterised by persistent inflation –
Slowing, due to global pressures and rate rises –
But benefiting from low unemployment, stronger wages growth, and high prices for our exports.
Second, a bottom line benefiting substantially this year and next, boosted by the restraint we’ve shown in two Budgets –
But with structural spending pressures that remain.
And third, recognition that the next generation of economic growth will be powered by different forces than the last –
By our ability to manage and maximise the big geopolitical, fiscal, and demographic influences and make the most of the big shifts set out in Budget Statement 4 –
Namely growth in the care economy, fast technological change, and the industrial opportunities of net zero.
So, the job of the Budget and the balance I think we struck well, was to see us through, but also to look beyond.
By now you know how we are going about that.
You know we are expecting a small surplus this year, and smaller deficits after that, avoiding hundreds of billions in debt.
You’ve seen the $14.6 billion cost‑of‑living package we’re delivering that prioritises support for those most in need, without neglecting middle Australia –
The big announcement of last night: tripling the bulk‑billing incentive.
The initiatives we’re pursuing to broaden women’s economic participation –
And, the predictable political responses from our opponents.
The people who made the mess and spent years trying to cover it up – now complaining the clean‑up is taking too long.
The same characters who now claim they’ve supported all along the energy bill relief that they voted against in the Parliament.
As always, there are some who think we’re doing too much, others that we aren’t doing enough – that’s perennial.
PRRT is a good example of this and so is social security.
But our job is to make the right decisions for the right reasons –
I think we have done that and are doing that.
I want to take a few minutes today to focus on three mutually reinforcing parts of the Budget which are particularly important.
The first, our efforts to improve the Budget.
Second, what we’ve done to address inflation.
And third, our plans for growth.
First, our efforts to improve the Budget.
Here, we sought to build on the example we set in our last Budget, in slightly different circumstances.
In October, we returned 99 per cent of upward revisions to revenue over two years –
Well above the historical norm, but necessary to make sure we weren’t adding to inflation and to begin the journey towards Budget repair.
We wouldn’t be forecasting a surplus now without that effort – wouldn’t be anywhere near it without that discipline.
Seven months later, inflation is still with us, and big structural pressures on the Budget remain –
Meaning that our emphasis on restraint continues.
But what you saw last night, was a similar, but not identical approach, and that’s for three key reasons.
One, our economy is slowing – so, putting our foot too hard on the brake would’ve done more harm than good.
Two, we discovered a new range of expiring measures and mismanaged mess to clean up –
And three, we needed to do what we responsibly could to meet our other priorities – delivering support in tough times and investing in our future growth prospects.
That all resulted in a carefully calibrated strategy, of returning 82 per cent of revenue improvements in this Budget –
87 per cent over the last two.
A very significant commitment to getting our Budget back on track –
Which becomes especially clear when you look back on recent history.
The $208 billion of revenue upgrades that we’ve returned during our time in government has led to the biggest turnaround in the Budget in dollar terms on record –
And it’s enabled us to forecast a surplus ahead of most other advanced economies.
If we’d followed the example of our predecessors, who returned around 40 per cent of revenue upgrades to the bottom line –
We’d be forecasting deficits of around $40 billion, rather than a surplus of $4.2 billion.
Instead, because of our commitment to responsibility and restraint –
We’ll have less debt and less interest costs –
All while funding the services and programs that our predecessors were going to let expire –
Delivering help to people in need –
And investing in the drivers of our future prosperity.
But that doesn’t mean our work is done.
You all saw yesterday that the welcome improvement to our short‑term position, won’t make our structural spending pressures go away.
The NDIS and interest costs remain the most prominent of the big five you’re all aware of, which includes health, defence, and aged care –
But they’re also the most prominent areas of improvement.
Our commitment to banking revenue upgrades means we’ll have $300 billion less debt saving us around $83 billion of interest costs by the end of the medium term –
While the commitments of the Prime Minister and the states on the NDIS will secure its future and reduce payments growth.
This, combined with some modest but meaningful tax changes to improve our revenue base –
Has contributed significantly to a marked decline in the structural deficit by the end of the medium term.
The restraint that characterises our fiscal strategy was also key to dealing with the inflationary challenge.
Our Budget is contractionary when inflation is at its highest –
The result of our efforts to improve the fiscal position by around $125 billion over two years since coming to government.
This represents a turnaround of around 3.6 percentage points of GDP in 2022‑23 – a 1.8 percentage point turnaround in the next.
All this means that our fiscal position is clearly not working against the RBA.
But this Budget’s focus on inflation went beyond our fiscal strategy –
And right to the heart of the carefully calibrated cost‑of‑living relief we chose to deliver.
There’s been a lot of focus in the last twelve hours or so, on whether this package adds to inflation, so let me make a few things clear.
One, of the total spending we announced for next year, more than one‑quarter of the net‑impact relates to keeping existing government programs going and extending pandemic support –
Two, in total, the targeted relief that we’re delivering in 2023‑24 costs around 0.1 per cent of GDP –
And three, it’s been designed to provide effective, meaningful relief to households throughout the year – not in one big hit.
For all these reasons, the Treasury advice to us was that none of what we’re doing here will have a counterproductive impact.
What’s more, our targeted interventions in those areas where price pressures are most acute will directly take the pressure off inflation –
By some ¾ of a percentage point next year.
That means inflation will be lower in 2023‑24 than what we forecast in October –
Still higher than we’d like and more persistent than ideal –
But down from where it would’ve been – making a meaningful difference to families around the country.
So, inflation was central to our thinking – in how we went about providing relief to households –
In the execution of our fiscal strategy –
And in how we thought about growth.
Our goal here has always been to engage on the supply side, by investing in people, in productivity, in participation –
And in the biggest opportunity of this defining decade –the energy transformation.
You saw last night, that the additional $4 billion we dedicated to the energy transformation brought this government’s investment in the industrial and economic opportunities of cleaner and cheaper energy to $40 billion –
Making it a key focus of our growth strategy.
And today, I want to explain why.
At the start of my remarks, I referred to the era of economic progress that our Labor predecessors saw us through –
A series of big set pieces designed to unlock the shackles on our economy and make the most of the transformative era of openness taking hold around the world.
Today, the task of this generation, is to find the right policy levers to make the most of another transformation –
This time in energy.
When I think where Australia fits into this global story, one fact really springs to mind –
We have an abundance of the resources that will power the world’s efforts to combat climate change and the potential to produce renewable energy at a lower cost than anywhere in the world.
This means that cheap, renewable power, can act as a fundamental comparative advantage on which we can build new ones –
Especially when other countries in our region don’t have access to the same kind of plentiful, renewable power that we do.
That’s why we’re so focused on the industrial opportunities of net zero.
The journey that we’re on here, is not just about reducing the energy costs of existing businesses; it’s creating space for the creation of new ones –
But if we’re to succeed here, we need to do more than just transform our grid.
Countries around the world are making moves and strategic investments in the new industries of the net zero economy –
That includes the United States, through its Inflation Reduction Act, but extends to Canada, Europe and more.
We could’ve seen this as a threat –
Or just let the opportunities of this defining decade fall to others.
But instead, we see it as our big challenge and our big chance –
To partner with friends and allies to take our central place in the new, developing supply chains of the net zero economy –
In hydrogen, battery components, green metals and more.
That’s why you’ve seen – in this Budget and the last –
A long‑term signal to key markets, and clear practical actions to encourage productivity‑enhancing investment in the industries we can thrive in –
A safeguard mechanism that provides certainty for business –
New targeted investments in our hydrogen future last night –
A National Reconstruction fund that will partner with private industry to move up and along new, renewable value‑chains –
And targeted incentives for households and small business, to reduce their energy usage and save on bills.
As a Labor government, we want the opportunities associated with these new and growing industries to be available to as many Australians in as many parts of the country as possible.
You saw that last night, in our announcements of more than $1.4 billion to support regional decarbonisation –
A new Net Zero Authority –
And an historic skills agreement.
It’s also a big part of why we’re putting in place a new framework to address disadvantage –
Focussing on people and place, on local knowledge, and the power of communities to gather people in, to lift them up, and expand opportunity.
In many ways, what aligns, what unites our approach to disadvantage, to growth – a lot of what’s in this Budget –
Is an effort to co‑operate across state boundaries and with communities, wherever and whenever we can.
Working together, so that what otherwise would pass as moments in time, become staging points of progress.
I’m confident that that’s how this Budget will be seen – just like the one prior and the one to come.
Points at which to reflect on what’s in the Budget papers themselves and all that’s happened around them.
Because in this Budget you can trace the through‑lines of our first year in government.
The Jobs and Skills Summit, and our delivery of 300,000 fee‑free TAFE places from next year.
Upgrading our emissions reduction targets and legislating the Safeguard Mechanism earlier this year – a framework for the energy transformation initiatives we’ve spoken about today.
Making economic equality for women a priority – driving cheaper early childhood education, enhancing parental leave, and now delivering better support for single mums.
Commissioning the Defence Strategic Review, delivering the AUKUS agreement and rehabilitating Australia’s diplomatic relationships –
Investments in our national security and our regional stability, funded in this Budget.
In health, supporting the hospital system through this new phase of the pandemic, funding to keep our kids safe from the dangers of vaping, and securing Medicare’s future.
And in our commitment to getting wages moving again – the passage of Secure Jobs and Better Pay, and funding a decent pay rise for aged care workers.
But this hasn’t been a hurricane of initiatives without purpose or coherence –
Or a series of policies designed solely with a good press release in mind.
This Prime Minister sets higher standards for his government –
Ambitious, yes –
But also willing to make the tough decisions and the hard choices in a methodical, considered and sequenced way –
So that when we take a moment to pause and take stock –
It’s clear that what might otherwise seem like a flurry of activity, is actually an adult government working calmly and collaboratively through its agenda.
So, when President Biden, Prime Minister Modi and Prime Minister Kishida arrive this month, they’ll no doubt recognise some of the hard choices we’ve had to make.
But I hope they’ll also recognise a country finding opportunity in the challenges that we face –
And gaining confidence through the choices that we take.
A country that is on a journey towards a more inclusive, resilient, dynamic economy –
Increasingly powered by renewable energy – and true to the character of its people.
Smart, practical, resilient –
With an inherent sense of fairness and optimism.
This is the same spirit, the same decency and positivity that the referendum for a Voice is built on.
Almost directly above us, you can find Tom Roberts’ famous painting of the opening of the First Parliament – 122 years ago yesterday.
10 steps away are the Yirkkala Bark petitions, presented to the Parliament in 1963, almost the midpoint of the journey between the Australia of Federation and today.
A confident call for recognition and respect by the Yolngu people, that Yunupingu helped to draft –
Something that wouldn’t have even seemed vaguely possible to those in Tom Roberts’ sights.
And yet, in the same Parliament, around sixty years later, that document was tabled, and it was recognised.
In many ways, the space between these two points in our history is vast –
And yet here, you can walk between them easily.
That’s the gift we seek to bestow onto the next generation of Australians who walk through this place –
To do the work, to do what seems difficult now –
So that they too can walk with ease between new reminders of the staging points of progress that we’re creating.
The referendum that will take place later this year is one of those markers.
A chance for us to rise to the moment – and I’m confident that we will.
That’s what I was getting at last night.
In this commonwealth of common purpose, we have always been ready to tackle the big challenges and seize the big chances –
That’s what the Voice is about, it’s what the Budget is about, and it’s what this government is about.
Having the confidence and the courage to shape the future on our terms, and in our interests.
Recognising, listening, moving forward together in a spirit of unity and respect.
Sharing the belief that out of all the uncertainty and adversity of the last few years that Australians have handled with such resilience and strength –
A better future awaits.
And I’m proud of this Budget that will help build it.
Thanks very much.