PRIME MINISTER **CHECK AGAINST DELIVERY**

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1 PRIME MINISTER **CHECK AGAINST DELIVERY** 28 April 2014 THE HON. TONY ABBOTT MP ADDRESS TO THE SYDNEY INSTITUTE, SYDNEY E&OE. It was about the middle of last year when Gerard Henderson first asked me if I d address this 25 th anniversary dinner. My response was along the lines that you might not want me if the election goes the wrong way. It s to Gerard s and the Sydney Institute s credit that he was prepared to take a punt on an Opposition Leader who was no sure thing but Gerard has always been prepared to have a go. It s made him one of our very foremost public intellectuals and, with Anne Henderson, he s made this Institute a force for good in the life of our country. This is the 10 th time in 12 years that I ve addressed the Sydney Institute. This will be my most economically focused address because, without a strong economy, it s impossible to have strong and sustainable communities. Economic growth is the means to a stronger society and happier people. That s why my election pledge, endlessly repeated, was to build a strong and prosperous economy not as an end in itself but for a safe and secure Australia. Right now, Canberra is fixated on the budget as we should be because budgets matter. We re striving to achieve a stronger budget because that s the way to a stronger economy, to a stronger society and to make your life better and your job more secure. On election night, I said that Australia was open for business and every day since we ve been working to implement our Economic Action Strategy. We promised to abolish the carbon tax and the mining tax and we won t rest until they re gone. 1

2 We promised to stop the boats and to end the $11 billion border protection cost blow out; and for the past four months none have come, not a single one, compared to over 100 carrying over 6000 people in the same period last year. We said that we d conclude free trade negotiations with Japan and Korea, and we have, and we ve accelerated talks with China. We promised a one-stop shop for big project environmental projects; that s well underway and we ve given the green light to new projects worth over $400 billion that s right $400 billion. We promised to cut red tape costs by a billion dollars a year and we ve made a strong start taking 50,000 pages off the statute book and the budget will do more. We promised to crack down on union officials who rip off their members and that s happening. We promised an airport for Western Sydney and that s happening too. We said that we wouldn t chase failing business waving blank cheques at them because the end of the age of entitlement should start with the end of business welfare. Above all, in promising to deliver a strong and prosperous economy for a safe and secure Australia, we promised to get the budget back under control because you can t fix the economy unless you fix the budget. There s far more that s right about our country than wrong; and there s far more grounds for optimism about our future than worry. But we have to get the economic fundamentals right. Prosperity is not a gift; we have to work our way to prosperity through being smarter and more diligent than our competitors. Like households and like businesses, governments have to live within their means. Every dollar that government spends is a dollar taken from the people in taxes or in borrowings. Everything that government does has to be paid for either in today s taxes or tomorrow s taxes with interest. And continuing a cycle of debt and deficits might briefly save a government from a bad headline, but it won t help you, the people, to plan a stronger and better future. A government that understands its limits is a government that allows people to grasp their full potential. Every time a government spends people s money for them, it limits their own freedom; hence the famous dictum that government should do what the people cannot do for themselves, and no more. As many of you would remember, the previous Liberal government in Canberra inherited $96 billion in net Commonwealth debt and a $10 billion budget black hole. It took the good work of John Howard and Peter Costello to produce surpluses averaging almost 1 per cent of GDP with almost $50 billion in the bank. This government s budget inheritance has been even worse. Labor debt and deficit stretching out as far as the eye can see: $123 billion in cumulative deficits over the next four years and debt projected to reach at 2

3 least $667 billion that s $25,000 for every Australian man, woman and child with $10 billion a year in interest repayments alone. At this level, countries no longer control debt; debt starts to control them. There were roof batts that caught fire, school halls that cost twice the going rate, super clinics with no doctors, and the NBN that cost more and more to deliver less and less. The Rudd-Gillard government made vast open-ended commitments on schools and hospitals to take effect beyond the forward estimates period. They didn t just booby-trap the budget; they created a ponzi scheme of unsustainable spending because they thought that new taxes, more spending and bigger bureaucracies were the answer to every problem. This budget will not change everything with one stroke. It won t offer a spurious guarantee of a surplus by a particular date. This budget will by no means be the only installment in the long-term restructuring needed to restore our economic health. But this budget will bring us close to surplus and on track to a strong surplus within a decade. This was the commitment we made, pre-election, and this budget keeps faith with our election commitments. Prior to the election, we committed to abolish the School Kids Bonus that had nothing to do with education and the Income Support Bonus because these payments were a cash splash with borrowed money. There are other one-off payments that should never have been introduced and are unaffordable at this time. Prior to the election, we said we d maintain school funding over the then forward estimates but explicitly refused to commit to Labor s changes beyond that. The best way to improve schools is to give local communities more say because parents and principals will be better than bureaucrats at getting the best possible value from taxpayer dollars. Prior to the election, we said that we wouldn t cut overall health funding but that we d find ways of making health spending more efficient. Part of that will be more price signals in the system with a strong safety net because free services to patients are certainly not free to taxpayers. Prior to the election, we said that we wouldn t cut the age pension. I want to assure vulnerable people that the age pension won t be less tomorrow than it is today and that people turning 65 tomorrow are certainly not going to have to wait five years to retire. I m confident that pensioners will be better off because they ll lose the carbon tax but keep the carbon tax compensation. Still, with four out of five seniors on the pension, the number of workers per retiree dropping from five to three by 2050, and more than 1000 people becoming eligible for the age pension every single week, long term reform is essential and unavoidable. 3

4 To keep our commitments, there will be no changes to the pension during this term of parliament but there should be changes to indexation arrangements and eligibility thresholds in three years time. There are other social security benefits where indexation arrangements and eligibility thresholds could be adjusted now. Adjusting indexation slows the rate of increase and helps to ensure that a strong social safety net can be preserved for everyone s future. And everyone will benefit from the abolition of the carbon tax which damages our economy without helping the environment and which is costing the average household $550 a year. I know that most families are doing it tough, including many families with above average incomes but heavy commitments. Not for a second would I label families as rich just because they are earning $100,000 a year. A teacher married to a part-time shop assistant with children to feed, clothe and educate is certainly not rich especially paying a capital city mortgage. But the best way to help families on $100,000 a year is long-term tax relief and more business and job opportunities, not social security. The changes in this budget will make personal tax cuts much more likely in four or five years time. Come budget night, I suspect that there won t be many without a potential grumble but involving everyone in repaying Labor s spending binge is the only way to be fair. The budget pain will be temporary but the economic improvement will be permanent. I can assure you that everyone will be involved, including high income earners such as members of parliament. I know that the tendency on budget night is to focus on what s happening to me but we need to focus on what s happening to us because everyone needs to be involved in fixing Labor s debt mess if all of us are to prosper in the years ahead. This will not be a budget for the rich or the poor; it will be a budget for the country. It will be a nation building budget, even though it cuts spending, because you can t build a nation by spending money you don t have in ways that don t build up your economic strength. Everything about this budget is calculated to boost the long term strength of the economy; spending less on consumption so that we can spend more on capital including human capital in the areas at which we excel. Business programmes will involve less bureaucracy and be more about backing businesses own judgment. Training programmes will focus less on trainer priorities and more on employer needs. Universities funding will shift but they will have much more freedom to innovate and to build on Australia s strength as a magnet for students, teachers and researchers from around the world. School leavers will be earning or learning not becoming accustomed to unemployment. 4

5 Starting in this budget, for older people, people with disabilities and women with young children, our aim is to maximise everyone s ability to participate in the economy; it s about driving change, but even more about empowering choice. And, of course, in a modern economy, that means more freedom to move around our cities rather than spending hours in some of the world s longest parking lots. This budget will fund our biggest ever national roads programme and make it easier for the states to fund the metro roads and rail that commuters need. I said earlier that budgets reveal the character of governments; they also show the mettle of countries. This budget is about shifting our focus from entitlement to enterprise; from welfare to work; from hand-out to hand-up; from our own short-term anxieties to our nation s long-term opportunities. Government s job is to make it easier for people to make big decisions: to build a house, begin to study, start a business, employ someone or save for the future and to make it more likely that people will decide to have a go because we can t be a generous society unless we are a productive one. For the government, of course there are political risks in this budget. But we owe it to our country; we owe it everyone who elected us to clean up Labor s mess; to take decisions rather than to defer them. Without a clear economic plan, our standard of living will decline; with the plan this budget embodies, Australia can continue to be a beacon of prosperity, freedom and hope to the wider world. Serious people and serious countries must be able to have an adult conversation about the choices we face. That s what the Sydney Institute has invariably tried to promote and our country is the better for it. For too long, governments talked about being economically responsible but squibbed the big challenges. I don t expect the government to be more popular the day after the budget but hope that we might have earned people s respect for saying what we mean and doing what we say. [ends] 5