Q&A session - Melbourne Institute 2018 Outlook Conference
11 October 2018
Question: You were very complimentary about Peter Costello before, I’m not sure whether you had a chance to listen to his comments earlier. I’ll quote them to you. “The day Malcolm Turnbull challenged Tony Abbott for the leadership of the Liberal Party, he had two things to say. He said we’d lost 30 Newspolls in a row, and the Government had no economic narrative. Now that’s fine, but I kept waiting for the economic narrative to come and I’m not sure that it did.”
PRIME MINISTER: Well, it was acknowledged today. There he goes, he’s nodding away.
QUESTIONS: It wasn’t particularly complimentary and I just wonder whether you share his views.
PRIME MINISTER: No look, I do and I don’t. What I mean by that is, you know what our Government, as I’ve set out today I think very plainly, what we’ve been seeking to achieve. And I think we’ve talked a lot over the last three years about what we’ve been doing. We have and there have been many achievements and I ran through those today. What I have been seeking to do, particularly over the last seven weeks in coming into this role, is explain to Australians why we are seeking to achieve that. I think that’s a very important part of the economic narrative. Today, people may have felt a little uncomfortable because in a conference like this, where I’ve spoken before, it has been a bit dry, the topics can be very economic. Well, you know what? An economic narrative is about what you believe as well. What I’m seeking to do is connect with Australians about what our Government passionately believes in and why we think taxes should be lower. Why we think some people should not be dragged down and demonised for the simple reality that they go out there and they create jobs and they foster prosperity in our society, which means we can have a fairer society. Now, if I’m reading into what Peter was saying, I think that’s what he was getting at and that’s what our Government had to get better at. It’s that we had to explain the “why” - what was in here, not just what was in here. Because that is what motivates Australians.
One of the reasons I think John Howard was a great Prime Minister and Peter was a great Treasurer is whether you agreed with them or didn't agree with them, you always had a pretty good idea about where they were going and what they believed. Paul made this point before; there are uncertainties in our world today economically, not the least being what is happening with international trade and what that can mean for our economy. So what Australians want to be confident about, is what are the things that are going to drive us in meeting those challenges in future? What are the principles that we are working off and what are the fundamental beliefs that will determine our decisions? What I’m saying today is that I am all about ensuring that those who are going to invest and create jobs and give it an absolute go, we know that that is our best way to ensure that despite all those challenges, we will succeed and be prosperous. And as a result, we’ll be able to guarantee the essential services Australians rely on and have an even fairer society. And that’s my argument.
QUESTION: Yes, I'm from the Melbourne Institute. G’day, Prime Minister. I’ve got a question about the funding of the Great Barrier Reef support program and I really appreciate the Government's recognition of the role of climate change and needing to really support areas that really depend upon sort of, things like the Great Barrier Reef. Can you tell me what kinds of programs are being run with the $500 million and what do you think are going to be a sort of marquee kind of programs that will come out of that support program?
PRIME MINISTER: Sure, look, it’s everything from research that is being done on the Crown-of-Thorns Starfish, through to water quality and its impact, working with the commercial fishing industry, I mean the Reef is arguably Australia's greatest environmental assets. There are a lot of others too, by the way, but it’s arguably one of Australia's greatest environmental assets and is also one of Australia’s economic assets as well. I mean it sustains the livelihoods of millions of Australians, particularly those who live in north Queensland and the plethora of research and scientific studies that take place all the way up north Queensland are very disparate and they’re extensive. Now we had the opportunity at the end of last year to make an additional investment in the future of the Reef and that’s what we chose to do. We were in an economic position to do that. If we’d sought to do it year after year after year as an ongoing programme, then I don’t think we would have been able, the investment could not have been as significant as it actually was. That’s why we chose the method that we did to deliver that investment in that form. We also strangely formed the view - which I know is not shared by everyone in Canberra - that there actually are people outside of Canberra who know a bit about the Reef as well, and people outside of the public service well.
We wanted to be able to ensure that the resource was being deployed across the whole range of different projects and was being done away from interference or the intervention of government and that those programs could be considered on their merits, against a whole range of different priorities that were set out in the agreement that was done with the organization. So look, the projects are vast, the task is huge, but what we’ve invested in is the future of our Reef. We were able to do that in one go and that will provide a legacy not just over one or two years, I would say, but over decades. Because of that major injection that we made, at that one opportunity when we had the means to do it.
QUESTION: Thank you, Prime Minister. This is a difficult question for a forum like this and a difficult question for you, but I think it’s really important to ask; if you look back over the last two decades or little bit longer, it’s clear that Australia's economic interests owe much more to the rapid growth of China than it has to the change in the United States and one of the worrying phenomena now is the Trump activities too, I think, reduce the rate of growth in China. In particular, we’re now seeing not only the direct attempt by the US to do this, but through the new trade agreements, to get allies to do things to slow down the growth of China. This is a very difficult problem for us, because you know we’ve already been integrated with the US for defence reasons. But on the other hand, our bread increasingly is coming from the China area. Could you comment in any way on where you think the current Trump strategies might go? And secondly, how can we protect ourselves in some way from being caught up in this conflict between these great nations?
PRIME MINISTER: I think it’s one of the areas where Australia, over many years, has been very effective. We have been very able, for a long time, to manage the sensitivities and delicacies of both relationships. They are different relationships, I think all Australians understand that. Our relationship with the United States like our relationship with the United Kingdom, or Canada for that matter, these countries are deeply centered in our values and alliances. But equally in our relationship with China, as you say, it’s been growing year on year and year. The integration between our economies is becoming stronger and stronger. Now it is true that the overwhelmingly largest pool of capital invested in this country is from the United States. From Asia and even particularly from China it’s not even close to that level of stock that is invested in Australia. But it is rapidly growing as you said and there has been a strong alignment in our economic trajectories over the last 10 years, to what we’ve seen with the growth not just in China, but I would say also within South East Asia. For many years now our economic success has looked far more to our own region than it has to places further afield. So it is our role to be careful, to understand both relationships intimately and to try and understand the objectives of both of our partners.
Now I have had some involvement with this as Treasurer through the G20. What I believe the United States wants is a better deal for the United States in the international trading environment. That’s what I think they want.
Now you could say that they’re taking a rather unconventional approach to how that can be achieved. But I would muse that the President would argue that taking a conventional approach hasn't worked out too well for them. His mandate, from his election, is to change that up and to seek to achieve that outcome of a better deal for his country, whether it’s on trade or the economy more generally and to protect their interests in the way that they best see fit. Now, we share a lot of values with them and interest on that score, but it is not our job to go around pushing the economic interests of the United States or the economic interests of China. It’s our job to push Australia’s national economic interests, and we have been successful at that. Whether it was the former Prime Minister's success in pursuing the TPP, starting with Prime Minister Key and Prime Minister Abe and securing a deal that no-one said could be made to stick. Now, we have interest from the United Kingdom in joining that arrangement which was actually a discussion that I had several years ago with the Chancellor once Brexit had just been voted on.
So we continue to be a champion of free trade and an advocate for it in Australia, in a way that seeks to bring countries together to see the benefit of that approach. What do I mean by that? Whether it’s on the TPP or when we’re arranging with the United States to ensure that aluminum and steel tariffs, that they didn't apply those tariffs to our country, our argument was simple; we don't have any tariffs on your products. That’s actually what you want. We should be the standard of what people want in a trading environment; an open, trading economy looking to put our best foot forward with no leg-ups, but a level playing field. I think Australia and our role in all of this, is to hold ourselves out as the standard bearer for free and open trade today.
We are a pro- trade country. We’re also a pro-investment country. We’re a pro-immigration country - three of the great pillars of Australia's economic prosperity over 200 years and more. So it’s to stand up for those values and stand up for those mechanisms in the global market place, whether it be the G20 or the WTO or anywhere else. We are not for closed shops, on trade or the shop floor and Australia has an important role to champion free trade, open trade. We must continue to do that without allies and our strategic economic partners, which the United States and China fall into respectively
QUESTION: Prime Minister three questions ago in your answer, you made reference to risks in the international situation to our prosperity and continued growth. You have just responded to Bob Gregory on the risks in the China-US relationship. Did you have in mind, wider risks? And could you say something about how you see international developments more generally affecting Australian growth, over the period ahead?
PRIME MINISTER: Well I think Bob hit this nail on the head, I mean it’s hard to go past that one. More significant, potential risks in regional stability, strategic stability, these are obvious risks. But you know, there are some things you can control and there are some things you can't. I’ve always found the best way to manage against risks that you can't, is to manage the risk that you can control. How do you do that? You make sure you have lower taxes for businesses, that you’ve got a competitive and productive economy that reward effort, that we’re doing everything we can to ensure that the inputs to our production processes - whether it be energy or anything else - are at a competitive rate for prices so our firms can compete. I mean, we have always made our way. 27 years of consecutive economic growth is not an accident and it doesn't just have to stop. It can continue and I believe it will continue. I think the Australian economy has shown an incredible resilience. It is not luck. There is some good fortune every now and then, but it is not luck. It is the result of good economic management.
You sit around the G20 table, go back over 100 years - and I feel for what is happening for people in Argentina. At that time, you go back in the early 1900s. We shared all the same opportunities, they were one of the most wealthy countries in the world. What’s the difference over 100 years? Good government. That’s not a commentary on the current government in Argentina, don't misunderstand me, that is not my point. My point is that you manage the things that you manage, in your own jurisdictions and you get them right. You can't control all these other things that happen out there and those risks are real, of course they are. But we can talk about it endlessly, our better use of time is to focus on the things we have to do to make our own economy and our own businesses more robust and more successful. That’s how you protect jobs, that’s how you protect income. That is why we have had 27 years of consecutive economic growth.
QUESTION: Thank you Prime Minister, congratulations if I may on promoting a war of ideas, I think a Royal Commission into aged care and an inquiry into nuclear power are just fantastic. But my question is about small business taxation. If I may, SMEs per capita are only a bit over half the United States and that must be of great concern. Taxation is a big issue and there’s 2.2 million small businesses in Australia and only one third of them are incorporated. Now you propose to charge 25 cents for the third that are incorporated and the other two thirds are paying 47 or recently 49. So you’re cutting the rate in half for the incorporated and if that’s not [inaudible]. It’s not helping us, I’m a retired timber importer but I know a number of professionals and a number of accountants and solicitors who were supporters of the Liberal Party but are now paying double the incorporated rate. They have professional reasons for not incorporating, so I am really puzzled about that and I’d appreciate an answer.
PRIME MINISTER: You may not know that the legislated changes introduce the tax offset, it’s now 8 percent for unincorporated entities of up to $5 million in turnover and under this plan, that will double to 16 per cent tax offset for unincorporated entities. So we are mirroring what we are doing for incorporated entities in the unincorporated space. We are delivering equivalent tax relief to those businesses as well. So, it isn't just on the incorporated side, it’s on the unincorporated side as well, so we are doing it for both.
QUESTION: Thank you Prime Minister for the opportunity to ask one more question. I am from RMIT University and I’m also part of the Women in Economics Network which has been newly formed. My question revolves around diversity. We know that policy-making will be more robust if you have a greater diversity of views and inputs and life experience. What is your Government doing to foster and encourage greater diversity within your own Parliament and how can you be more of a role model for the rest of society and businesses to also follow suit? Thank you.
PRIME MINISTER: Well I’ll tell you one thing. The people that sit on our benches, 95 per cent of them aren’t former union officials. I mean I wouldn’t call that diversity.
They’re people who run small businesses, they’re people who have worked in science and technology they’re people who have worked in the public service, people who have worked as teachers, people who come from a broad array of different backgrounds in our society and our community.
Now where we need to do better obviously is of course I want to see a greater level of female representation in our Parliamentary ranks and just this morning I was with Kate Ashmor here and she is our candidate for McNamara here in Melbourne. Last night we were with Jane Hume who has just come into the Parliament more recently in the Liberal Senate seat. We have two great new female candidates who are on the winnable positions of the Tasmanian Senate ticket. I was with Lucy Wicks yesterday up in Robertson on the Central Coast and she came in 2010 and is doing an outstanding job. I’m pleased that we now have six women in the federal Cabinet under our Government. The first Cabinet I served in five years ago under this government, there was one. So I am pleased that there are six today and I want to see that increase. I was working, I was in WA the other day and I was sitting down with Danielle Blaine who was the female President over there of the Party in Western Australia. She’s developing a great programme to mentor and get more women, particularly those of a professional background and to take them through the process of how you can succeed in going through what is a robust and difficult process in politics, to find your way. I has been a lot easier for blokes to find themselves, just by the process, in federal Parliament, than it has been for women. We believe in our Party, that always, that should be done – yes we’ve got targets – but that has to be backed up by programmes in the organizational wing to ensure that people can get in there and make that contribution. But I’m very pleased about the contribution that my female colleagues are making, none less so than Kelly O’Dwyer, who is really demonstrating. Her success as a Cabinet minister and a mother of two very young children in a very tight seat in the seat of Higgins here, I think demonstrates and says to all young women; “You can do it and you can have amazing influence on Australia public life.” I think Kelly holds that out better than almost anyone.
So they’re our objectives. That’s the direction we’ll keep moving in. But what you will see and I joked about it, I mean people in the Labor Party taunt me when I asked everyone in the Labor Party could you please lift your hands if you used to be a union official. And no one did. I don’t know what they were ashamed of, they all put their hands under the desk, but that is the truth. Labor claim diversity but they certainly have no diversity of economic experience. They have no diversity on that front, they basically bring the union shop view to the Parliament and as Bill said, he wants to run the country like a union. Over to you, thank you.
