E&OE…

PRIME MINISTER:

Thank you very much, Karen, and I’m sure Nanna Turnbull is very thrilled to be getting a herogram from the State Council.

It’s wonderful to be here back on the Central Coast. As usual, I came up here on the train – great train journey up to Woy Woy and we’ve had a great sort of day and morning here with Lucy Wicks and Karen McNamara who are two outstanding advocates and representatives – passionate advocates in fact – for the Central Coast and doing a phenomenal job here.

Let's give them both a round of applause.

And we have so many of our great parliamentary representatives and ministers here today. I will just note my federal colleagues Philip Ruddock, of course, the father of the house, his service is extraordinary, an absolute pillar of the Liberal Party and somebody who in his leadership, particularly as immigration minister, really has more than any other individual in our Parliament created the great nation, the great multicultural nation we have today. Phillip's combination of compassion, understanding, discipline, a really keen legal mind, which of course he put to great use as Attorney General, has made an enormous contribution. He has had an enormous impact on Australia, and all of us in the Liberal Party are so proud of Phillip. Thank you, Phillip.

Scott Morrison, our Treasurer is here of course and Scott and I are working away getting ready for the Budget. He's doing most of the work, I hasten to add – that's his job, he's the Treasurer – with Mathias Cormann.

And of course, we also have Marise Payne, the Minister for Defence. Now, can I say, Marise, the work you've done in pulling together the Defence White Paper has been remarkable. It is a formidable piece of work. This is the most significant Defence White Paper produced since 2000 in the sense that it is fully costed, all of the programs are set out and the costings are externally verified. It is a major piece of work, but above all, it is a work of innovation, focused on innovative industries, it is all about driving the investment in Australian defence technology from which we will draw, to secure our physical safety, our Defence needs, but also, from which will come all of those spill-over benefits that provide such a stimulus to the whole economy. This, the Defence White Paper is more than just a story of regional security and ships and planes and guns; it is about innovation; it's about science; it's about the industries upon which our future depends. So I really commend it to you. It's a very, very important piece of work.

Now, of course, Arthur Sinodinos, our Cabinet Secretary, is here today. Arthur was a pillar of the Howard government, as he is of mine, and Arthur, thank you. And of course Tony Nutt our new Federal Director, New South Wales' loss, the federal party's gain, are making sure that we maintain those strong traditions of solid, traditional, Liberal Cabinet government all the time. Because that is how we ensure we make the right calls on the big issues. Thank you very much, Arthur.

And Paul Fletcher, that Minister for Major Projects is here. Paul is bringing that keen intellect which he brought to bear as my assistant minister for communications. He's now bringing it to bear to the big projects the Federal Government is engaged in, not least of which, of course, is the Western Sydney airport and Paul, you are doing formidable work there.

Connie, Concetta Fierravanti-Wells, after a great effort as the assistant minister for multiculturalism, is now working with Julie Bishop as the Minister for International Development in the Pacific, and she's bringing her talents to that very important sector of our whole foreign policy.

And of course, Alex Hawke is here – assisting Scott in the preparation of the Budget as his Assistant Minister.

Can I also acknowledge Craig Kelly, Louise Marcus, John Alexander and John, I was listening to you on Radio National this morning, talking about cities and value capture and infrastructure. And you and I are absolutely of the same mind as to how we should, the Federal Government, in the future should engage much more cooperatively, much more constructively and indeed, much more in a much more innovative way with our cities instead of just being a passive donor of money. And John's heading the committee on infrastructure and cities, and the work he's doing on value capture and infrastructure is really leading the way to enable us to put more money into infrastructure in a much more effective manner.

And can I also, of course, acknowledge Trent Zimmerman, who said this week there has never been a more exciting time to be the member for North Sydney!

Gladys, the New South Wales Treasurer, is representing the Premier and of course, leading the State Ministers and members here and I thank you all very much for your great support to our federal team. And Gladys, thank you for the great work you do. I was – there was a tinge of disappointment for me, being the most enthusiastic supporter of public transport in New South Wales, other than Opal Man, but I was worried when you left the transport ministry, but the team, what you're doing as Treasurer, and what the whole team is doing and the commitment of the State Government to public transport is so impressive. So congratulations to you.

And of course, we have mayors and councillors here and as I always say, you, local government leaders, you are absolutely in the front line of all of us in Federal Parliament when we've been door knocking. I find that most of the time we're asked about local government issues. Those of us who don't want to get elected give the person we're speaking to a lecture on constitutional law and remind them that it's not part of the federal jurisdiction. Of course, they tend not to come back. Those of us who do want to get re-elected say, we know the mayor, we know the councillor, and he or she is doing a great job and we'll make sure your problem is fixed. I just want to thank you very much, because local government is absolutely in the front line of politics.

And finally, Chris Stone, congratulations, new State Director. This is always an exciting time to be the New South Wales State Director.

Now, Lucy and Karen, our local federal Members here, bring a great enthusiasm and energy to the Parliament and a great passion for their region. But they also bring something else: a deep experience in the world of business, in telecommunications and the community sector, and that experience in business is something that defines us as Liberals.

Our side of politics understands what it means to back yourself, to invest, to create jobs. To put everything on the line, and when things don't work out, to pick yourself up and have another go. And when you look around at our side of politics, at our party, we hold up a mirror to Australia. Our members are from every walk of life, from big business, from small business. We have farmers, we have very professional people, we have military people. It is hard to find an occupation or a calling that does not have a representative in our party rooms.

So, we're not just the extension of one interest group or another. We have every line of work represented and we know the pressures every business faces. We are a true grassroots party. So when we have a discussion about economic matters, or business matters, there are back grounds and views brought to bear in our party room and in our Cabinet with a rich range of diversity that enables us to work them through carefully and come to the right decision on the big issues of the day.

Now, earlier this week we celebrated the 20-year anniversary of John Howard's victory in 1996. That moment was a watershed in Australian political history. Not just because it put behind us 13 long hard years of opposition and of course Labor government; it was a watershed because it reintroduced a style and substance of government that is absolutely crucial to our continued prosperity.

At the heart of it all was John's appreciation of what Australians would regard as fair and reasonable in the national interest. John Howard called it the pub test. On every tough call, you had to earn community support, you had to make your case compellingly, you had to win the public trust. Now, this enduring respect for the intelligence and fair-mindedness of his fellow Australians was absolutely central to the success of John Howard's government. His government was upfront about the challenges and the choices and explained plainly and directly why changes, reforms, were necessary to improve the lives of Australians. Respecting the people who put us into Parliament is our first obligation. Respecting their intelligence is the principal thing we have to undertake if we want to win their trust – and hold it.

Now, the defining challenge for our times is: how do we successfully transition our economy from one that is led by the mining construction boom, to one that is led by the diverse range of huge opportunities opened up in the new global economy? How do we take advantage of the fact that we're living in the most dynamic region in the world? A region that already has nearly half of the world's middle-class consumers, a number, a percentage that is growing all the time. How do we, in an age when technology is evolving at the most rapid clip in human history, use those tools to help us export more of our agriculture, our advanced manufacturing, and of course, services. In short, how do we continue to create the the high-wage jobs, fund the generous social welfare safety net, to ensure that our children have the best jobs, the greatest opportunities in the decades in the future?

Now, the answer to those questions, my friends, lie in innovation, they lie in investment, they lie in infrastructure, they lie in opening up the big global markets. They lie in ensuring our children have the skills to compete in the global economy. They involve backing our entrepreneurs, so they back themselves. And that is why, as I've always said, the values that we hold so dearly as Liberals are the values of our time. Because they are values of entrepreneurship, of enterprise, of freedom, of economic freedom, because as Liberals , deep in our DNA, we know that the role of government is to enable our citizens to do their best. Whereas Labor, in their DNA, believes that government's role is to tell citizens what is best. That is the fundamental deference between us. And I will elaborate this in a moment. You will see that this is – this is still so clearly, that division is so clearly set out today.

It was our party, our Government, which has brought in the immense opportunities presented by sealing big trade deals with the economies of China, Japan and Korea and most recently, through the TPP.

Andrew Robb, who as you know has retired as Trade Minister, he's not running again in Goldstein, Andrew has done a most extraordinary job as our Trade Minister. Andrew didn't so much unlock the doors to those huge markets and all the growth potential of their enormous middle classes; he flung the doors wide open. And you know, when I travel around Australia, I'm overwhelmed by the extent to which these big trade deals have captured the imagination and driven prosperity of Australians.

In Tasmania, our dairy and farmers, dairy farmers, and farmers generally, our exporters of food products, are exporting so much of their produce now, prices have risen rapidly as all the farmers in the room, including myself, are very aware of, that in Tasmania, they now describe themselves as China's delicatessen, and the economy there is thriving. They're having the best years they've had for a very, very long time. It would not have happened without the trade opportunities our Government has made available.

And we're exporting services throughout the economy. Of course, tourism and education, the biggest of all. But also architects, health care services, teachers and lawyers. Of course, many people think exporting lawyers is a good thing, because they mightn't come back. You always get a laugh if you say something about lawyers. We're a beleaguered group.

Now, it was our party that recognised that for all the great ideas we produce in this country, we often don't do a good enough job at keeping our entrepreneurs on our own shores, or commercialising those great ideas and that great research into dynamic businesses.

Clearly, innovation is at the key of our future. It absolutely – it is absolutely crystal clear, and I have to say, every other major economy recognises this, the key to success in a more competitive – in a larger, more competitive economy, where there are more opportunities than ever, is to be agile, fast, competitive, innovative. You cannot assume that you will do anything tomorrow the way you did it last week. You've got to be prepared to change and that is why I talk about innovation so much, because it is the key to our success in the future.

Now we unveiled a $1.1 billion innovation package last December. It helps our researchers and start-ups bring their ideas to market. It will ensure that our universities and researchers are working together in a way – with business – in a way they haven't done to date. It is a curious feature of the Australian research and scientific landscape, that, notwithstanding our similarities to North America and Europe, in many respects, we do not have anything like the same degree of collaboration between research and science and industry on the other.

So, working with Christopher Pyne, our Minister for Innovation and Science and Industry, what we are doing is providing the right incentives so that that happens and we have a new Chief Scientist, Alan Finkel, who is a man that has been a great academic, Chancellor of a university, great researcher, and also has brought those ideas to market, and made a fortune, in fact, as an entrepreneur. That's the type of vision, that's the type of culture we need to have to ensure that our children, our grandchildren, have those great jobs in the future.

We're going to ensure that children across Australia are learning coding, machine languages, science and maths, in school to prepare them for the 21st century. We've backed small business with a 1.5 per cent tax cut from our $5.5 billion small business and jobs package, so they can get on with doing what they do best. And you know, I think often as Australians, we are reluctant to be seen to be seen to be boasting or talking about ourselves, but the fact is, we have so many good stories to tell about our businesses which are innovating and having an impact.

It's not just technology. I mean, there is – in Adelaide, I visited an 85-year-old plumbing parts manufacturing company. If I said to you: Adelaide, 85-year-old manufacturing company in the plumbing parts business, I don't think you would feel it had great prospects. But you know something? It is a world leader. Employs 300 people. It's adding another 30 and expanding its premises. Why? Because they have found a niche in a global market where they have absolutely the best product and they're going for it.

And then we forget that technology applies in agriculture as much as it does anywhere else. Right across-the-board from sensors checking out soil moisture and making sure that the right amount of water is provided in the right place or spectacularly, in Bundaberg the other day, where I visited an avocado farmer and macadamia farmer there who obviously has a problem with bats, flying foxes and birds eating his crop. He's losing 30 per cent of his crop. That's a lot of money. He's developed, with some local technologists, some computer-guided drones which make loud noises and flash lights, they look like something out of Star Wars, and so when a mild-mannered flying fox is just about to plunge into the avocados, out of the darkness comes the drone. And the flying fox goes off and eats someone else's avocados.

But Craig Van Rooyan, for that is his name, has reduced the losses on his crops just by being innovative, imaginative, smart, using technology from 30 per cent to 5 per cent. That is a lot of money, and that shows what you can do if you think out of the square.

Now, we are making a record investment in infrastructure, whether it's roads or public transport, infrastructure for the digital economy, or for our oldest resource – water. Barnaby Joyce, the new Leader of the National Party, often says – the new Deputy Prime Minister, often says – how delighted he is to have as a partner a Prime Minister who is equally obsessed with water and dams and pipelines and pumps as he is. As you know, it's a great passion of mine from the days when John appointed me to be responsible for national water policy.

Look at the NBN – this massive project which the Labor Government came up with after 11 weeks of careful thought. Not! Normally, as all the builders and contractors here know, normally bad projects only get worse. This is one of those very rare cases where a bad project gets better. We inherited the mess, we've gotten on with the job. Since the election, 1 in 50 Australian premises are able to connect to the NBN. By 30 June, it will be 1 in 4. By 30 June in 2018, it will be 3 in 4, and the project will be complete within 2 years after that.

Here on the Central Coast, and Newcastle, 95,000 premises can connect to the NBN and the roll-out will be complete here by the end of next year. And we officially opened or launched 30,500 new premises, Lucy and I, at Ettalong yesterday, that were being connected to the NBN. We had a very enthusiastic young customer who came along and used a new term, Lucy, he said, when I asked him what the experience was like, he said it was ‘cruisy as’. There you go. He was smiling when he said it, so I guess that's very positive.

As a Government, we recognise that our greatest natural resource is not the minerals buried under the ground, but you, the people walking on top of it. So, we've introduced a $3.2 billion child care subsidy, making it easier for parents to go back to work. And particularly those on lower incomes. Of course, we need to get this through the Senate which I will come to in a moment. The equivalent of 20,000 new full-time workers will join, the workforce as a result of this new approach to child care.

Now, my friends, when it comes to the big economic decisions, we will get them right. In the face of what we recognise as global headwinds, you don't have to look very far to see that there's a fair bit of turbulence out there in the global economy, our Australian economy is confident and strong.

This week as the Treasurer related in the Parliament, we saw real GDP, measure of the growth of our economy, grow by 0.6 of a per cent in the December quarter and by a strong 3 per cent compared to a year ago. We are growing faster than any of the major economies in the G7, and well above the OECD average. The key drivers of economic growth include household consumption, new housing construction and services exports, more than offsetting the continuing declines in resources investment as the mining construction boom declines, as it was always going to go.

We are successfully making this transition, from a mining construction boom-led economy to one of more diverse growth. Last year, calendar year, we saw more than 300,000 new jobs created – the most since 2006, the last full year of the Howard and Costello government. Now, in November, the female participation rate in the labour market, the percentage of women working in full-time jobs in the labour market, hit a record high.

So this transition is well under way. But at this vital moment in our transition, our opponents are standing in the way of our progress to the new economy and the jobs of the future. They are getting the big decisions wrong.

Take, for example, Labor's policy to limit a person's ability to offset investment losses against their personal wage or salary to new residential housing. The so-called negative gearing policy. So you won't be able, under Labor, in future, to negative gear an investment in established residential housing, or commercial property, or shares.

It's an extraordinary restriction on economic freedom, and the scope of it goes far beyond the housing market. Indeed, the scope is so wide that Labor is not clear as to how far it goes. They have produced a policy of enormous impact on the economy, not just on the housing market, and have no idea what its impact will be. That's what happens, ladies and gentlemen, when you develop tax policy on the run. That's what happens when you don't think things through. That's what happens when you abandon, as they have done, the solid, thoughtful Cabinet processes that underline so much of the success of the Howard government and, to be fair, also of the Hawke government. Policy on the run. Snap decisions. These are the way you make big mistakes.

Now, under Labor's policy, if you want to borrow to invest in an income-producing asset, other than new residential property, you won't be able to claim a loss on the loan against your wage and salary income. So that will cover, in addition to existing residential housing, it will cover shares in public companies, shares in private companies, existing residential property, or any type of commercial property.

Now, if you think about the path to enterprise, the path to business, the path to entrepreneurship, so often it involves somebody who starts off in life with just their human capital, what they're standing up in – their own brains and brawn and energy. So they get a job. And then they borrow some money and they take a risk. They invest in a business, maybe it's with a friend, maybe it's with family. And then they build it up. And in the early years, the business will probably lose money and they will claim the loss, offset the loss on the investment against their personal income. And then over time, it will build up and that's how the economy grows.

Labor is going to make a person in that situation unable to deduct the interest on the personal loan against their wage and salary income. So that would apply if you wanted to invest in a shop or a business, cafe or a restaurant. And if that is not bad enough, they're proposing to increase the capital gains tax by 50 per cent. Now, at a time – what do we need now? What do we need now? More investment, more entrepreneurship, we want innovation, we want people to have a go, we want them to be imaginative, we want them to be confident, we want them to be optimistic and invest and what is Labor doing? They are restricting dramatically people's ability to do so and at the same time, saying but if you do manage to invest, and if you do manage to make some money, we're going to increase the tax by 50 per cent.

When governments want people to do more of something, they lower the tax. When they want them to do less of something, they increase the tax on it. What Labor is proposing to do has the inevitable consequence of reducing investment. It is calculated to slow down, to obstruct, to even stop our successful transition to a diverse, successful 21st century economy. You know, and this is why I say there is a clear dividing line – in our Innovation policy agenda, what are we doing? We are actually giving exemptions or breaks – we're making capital gains tax free, investments in certain start-up companies, early-stage companies, because we felt there was a market failure there and there wasn't enough money going into the early stage, so we're providing tax incentives.

So we're encourage people to invest. The Labor Party is making it more expensive to invest, in every respect. And just think of what they're doing to the residential housing market. About a third of demand for residential housing is investors. Who would invest in residential housing or indeed any form of property, if they were not able to offset a loss against their other income? It's a gigantic risk. You might go in there with a very modest loan. And your rents may be above your interest payments but what if the tenant doesn't pay the rent? What if you can't rent the premises? What happens if there are some big repairs? And you make a loss? No fault of your own, you weren't anticipating it, but these things happen in business, as we know and Labor doesn't. In those circumstances, you can't offset it against your personal income. So who would take that risk?

This is an extraordinary thing to do to the biggest single asset class in Australia – residential housing. And you know, to give you an idea of how out of touch the Labor Party is with the world of business and the world of sound economic management. I made the point in the House of Representatives this week that if you withdraw 30 per cent of the buyers in a market, then all other things being equal, the price will come down. It's what my father-in-law would call a penetrating glimpse of the obvious. Not so obvious to the Labor Party. The shadow attorney-general Mark Dreyfus called out "You're making it up." What was I making up? The law of supply and demand? Economics 101?

The dividing line has never been clearer. We see the road to a 21st century economy. We see the road to growth. We see the road to jobs. We know it is a transition that we must undertake. We know the measures that will get us there. But it's a narrow road and we have to be very focused. It involves innovation, investment, technology, productivity, competition. All of those things. And every lever of our Government is pulling in that direction. Every lever of Labor's policy is pulling in precisely the opposite direction. The difference could never be clearer.

And consider the industrial landscape. You know, we've had the Heydon Royal Commission, which chronicled the sad story of lawlessness and thuggery and corruption, particularly in the construction sector. Anticipating those findings, anticipating – well the evidence has been coming out ever since the commission was established. We have had in the Senate the Registered Organisation Bill, which has been rejected several times now by the Senate, by Labor, the Greens and the majority of the crossbench. And that Bill does no more than impose on unions and employer organisations the same obligations of accountability and transparency and good governance that applies to public companies.

And you would think the unions, after all of the humiliation they have suffered, as these horrors have been exposed - Craig Thomson, not unknown in these parts, Kathy Jackson, and all of the horrors of the CFMEU’s lawlessness, you would think after all of that, they would embrace it and say, good, this is an opportunity to clean up our act and restore confidence. They've opposed it every step of the way. Just as they've opposed our efforts to re-establish the Australian Building and Construction Commission. Which we are trying to persuade the Senate in the light of the Royal Commission, they having rejected it once, to approve it, because again, we need to restore law to the construction sector. It employs a million Australians. What does Labor do? They say everything's fine, the CFMEU are good blokes, nothing's wrong, nothing to see here. The reality is a key economic reform is restoring the rule of law into the construction sector, and we are committed to doing just that.

Now, as you know, the 2013 election, Senate election, was really an embarrassment for Australian democracy. To have people elected through back-room preference whispering deals, elected on a tiny percentage of votes was a disgrace. So, we are seizing that challenge, and we are setting out to reform the Senate voting practice, so that you will decide where your preferences go, not any preference whisperer, and that will restore democracy. I have seen people speculate as to whether it may benefit our side of politics or another side of politics. The only beneficiaries of this change will be the voters, because they will decide where their preferences go and they can allocate them as they wish. And it will ensure that the Senate is, as closely as possible, a representation of the wishes of the people at the election and that, after all, is what democracy – parliamentary democracy – is meant to do.

Now, my friends, we are resolutely committed to this successful transition from the mining- construction boom-led economy to the new economy of the 21st century. Innovation, technology, investment, infrastructure – these are the keys to unlocking those opportunities, unlocking those open markets that our free trade agreements have delivered. Labor, as we have seen, is standing in the way. Its policies, so far as we have seen them, are calculated to discourage investment, discourage entrepreneurship, discourage innovation. The levers they seek to pull are all in the opposite direction. They're calculated to hold us back.

Now, we believe that every measure, every policy that we bring to bear, must support that transition. And they do. Friends, these are the most exciting times to be alive. The growth of the global economy has never been so large or so rapid. It is not just the scale of growth, it is the pace of it. The pace of disruption around the global economy is immense. The opportunities are gigantic.

Challenges, yes, there are many, but the opportunities will be seized by those that are innovative, agile, courageous, prepared to invest, and take risks and Australians are doing that. That is why we are seeing strong economic growth here. That's why we're seeing strong job growth. That's why we're seeing such confidence.

And my friends, the values that inspire that confidence are ours. The Liberal Party's values are timeless. And they are the values for today, because they are values based on individuals, enterprise, economic freedom, those are the values that will guide Australia to greater success in this century, and I know that this year, when the choice is to be made, Australians will choose our side, the side of freedom, of the 21st century economy, the side of investment, entrepreneurship, enterprise, because that leads us to the growth and the jobs our children and grandchildren deserve.

Thank you very much for your support and your dedication.