What a stirring speech from Russell – let’s give him another round of applause!
Who can imagine a better representative for Macarthur than Russell Matheson? He’s passionate, he’s a local, you can see that his depth of commitment and understanding of all of the issues is really second to none.
Russell, that is why you are such a powerful advocate for your community. That's why you have been able to achieve so much and why you'll be able to achieve even more in the future.
Ladies and gentlemen, it's great to be with you and, Steve, thanks for the good introduction too.
Can I also acknowledge my parliamentary colleague Angus Taylor, the Assistant Minister for Cities and Digital Transformation. Angus, of course, is playing a big role in the development of our policy which is going to be so important for this region.
And can I also acknowledge Shayne Mallard, Legislative Councillor. And the mayors – Paul Hawker and of course Ned Mannoun and other mayors – I pay great respect to mayors, your worships, I address you all collectively. Of course, my only distinction in local government was to be the first man to the lady mayoress of Sydney. So Lucy became the first woman to be Lord Mayor and we share an absolutely passionate fascination and commitment to cities and the development of Sydney and the development of Sydney as one great metropolis that it is. And ensuring that we work together to ensure that as you were saying, Russell, the future of Sydney, the future of the greater Sydney region is in Western Sydney.
Just as the Macarthurs with the merinos began – that was the beginning of Australia's economy in the years after European settlement, so the future of our city, of our great city, and so important to the future of Australia, is here in Western Sydney.
Now let me give you some good news on the economy. Our economy is growing strongly – 3 per cent real growth last year. Over 300,000 jobs created last year – the highest number since 2006, since before the global financial crisis. Our growth is higher than any G7 economy and it's well in excess of the average of the OECD which is the developed nations club. Our economy is in a state of transition, however.
We're moving from one which was really fired up by the mining construction boom, where investment in mining and resources infrastructure got up to nearly 8 per cent of GDP – extraordinary level. That of course couldn't go on forever but mining of course continues forever, the production of commodities continues forever, but the big hit, adrenalin shot from the construction boom, couldn't go on forever. And so a lot of people felt Australia would fall back as a result of that when that construction came to an end or tapered down. But it hasn't. We've maintained strong growth. Why is that? Well, one of the reasons is strong business confidence. It's very strong. Business confidence and consumer confidence is strong.
Australians are confident about the economic future of their country and what we are doing is ensuring that every single element of our policy is designed to drive greater growth, more jobs and better jobs for our children and our grandchildren. Every lever of policy is designed to secure our prosperity and economic security for the 21st century.
Now Russell talked about our Innovation and Science Agenda. Believe me, this is critically important.
To be successful in the 21st century, you have to be more competitive, more productive, more innovative and that doesn't – we're not just talking about a biotech company or Internet company. Every business has to be more innovative. You have to be.
I think all of us in business understand that. And so that's why we are doing everything we can to drive that through our Innovation and Science Agenda. We're providing real tax incentives for people to invest in start-up companies and you're starting to see more investment in the start-up sector. We're ensuring that our researchers at our universities collaborate with industry and business.
We have some of the best researchers in the world. I think no-one has better researchers and better scientists but for reasons which are historical, I guess, we have been very poor at the collaboration between university research and business.
In fact, depending on which lists you look at, we're either the worst or second worst in the OECD. And that's the wrong end of the table to be on. We want to be up at the top and so we're providing - Christopher Pyne, the Minister and I - are providing the right incentives for that. And also there's a whole range of other measures, ensuring our kids get the right digital training, the computer science in schools, that's critically important.
And then I imagine many of you have observed over the years that the laws on corporate insolvency in Australia are really – really do not encourage business continuity. One of the great strengths of the United States is that they have that chapter 11 process where when companies get into financial difficulties they are able to restructure, the directors are able to restructure the company with the shareholders and debtholders and the show can go on. And that preserves jobs, it preserves all of the benefits of business continuity.
Well, again, we're addressing those issues and our bankruptcy laws to ensure we have a greater emphasis on business continuity.
And, as I mentioned earlier, Angus Taylor is helping me on the cities policy and what this is designed to do – and I'll come to a little bit more detail in this part of Sydney in a moment – what this is designed to do is ensure that the Commonwealth Government is an active partner with state and local governments right across the urban landscape.
Historically, Federal Governments have been pretty much passive suppliers of grants, like an ATM – that's probably a bit unkind but there hasn't been a lot of interaction. What we want to do is work collaboratively with local government, with local government, your worship, with state governments and work to reach an agreement on what the big urban outcomes you want to achieve; more affordable housing, better connectivity, more jobs in a particular area in Western Sydney or it might be on the Central Coast, areas where too many people leave the area every day to go to work and there's not enough local jobs. So agree on your plan and then ensure that everything we're doing is calculated to deliver that outcome.
This is based on the city deals model that is being used very successfully in the United Kingdom. It's really no more than saying that we should all be pulling in the same direction and will have the outcome – this I can assure you – of stronger job creation, more consistent policy, better urban development and urban renewal, increasing the supply of housing and of course improving amenity because what is the big objective of cities policy? Better liveability. That's what people want. They want their cities to be more liveable and this, you may have heard my wife Lucy speak about this in her capacity as Chief Commissioner of the Greater Sydney Commission – that is what everyone seeks to achieve. But we've got to make sure that all levels of government are working together for the same objective.
Now I want to just touch on a couple of issues that are going – that are very relevant in the political debate at the moment and I want to do so in an objective way. I'm not here to give you a rip-roaring politically-partisan speech, but you will have seen lot of commentary about the restoration of the Australian Building and Construction Commission.
This is of course an issue with the Senate at the moment and we're bringing back the Senate on 18 April to consider that bill and either pass it – thank you so much – either pass it or, if they don't pass it then we will have an early election. It won't be that early an election, it will be an election on 2 July as opposed to August, September, October, and that will enable us to break the deadlock between the House and the Senate.
For those of you that aren't familiar with it, a double dissolution is an occasion where when there's a deadlock between the House and Senate on legislation and they haven't been able to agree on two occasions with three months intervening. And then on that – if that's established then you can dissolve both the House and the Senate, all of the Senators, then there's an election and they come back and then they vote on those bills in a joint sitting and that's how you resolve the deadlock.
So that's the only reason we would do it and of course if the Senators pass these bills – Registered Organisations and the Building Construction Commission – then there won't be a double dissolution.
You've seen Senator Bob Day, who of course is a man who's worked in the property sector all his life, he is very supportive of the restoration of the Building and Construction Commission, trying to get six Senators together to support it. We'll see what happens – but certainly our objective is to get the laws passed.
Now, why is it important? This is not an anti-union exercise. I respect, I understand, the role of unions, believe me. My mother actually was a labour historian in her youth, so if we look at the Australian Dictionary of Biography you'll find my mother as the author of the entry on William Guthrie Spence, one of the founders of the Australian Workers Union. So I don't come from an anti-union background at all, quite the contrary,
But it is clear enough, I think we all understand that the level of lawlessness, the level of thuggery, the level of waste and inefficiency in the construction sector is unacceptably high. And the Heydon Royal Commission demonstrated that yet again, as if we didn't need to.
When the Building and Construction Commission was in force under the Howard government, productivity in the sector grew by 20 per cent. Since it's been abolished by the Labor Party, days lost to industrial disputes have increased by 34 per cent. Two-thirds of all industrial disputes in Australia, which are at their highest level since 2010, are in the construction sector.
So the support for the ABCC is simply about ensuring that the rule of law applies, that industrial agreements are complied with, which will mean more construction, more affordable housing, more jobs in construction and, frankly, more jobs for members of unions in construction. It's absolutely a win-win. The only people that will lose will be union officials who want to continue this style of confrontation.
I mean, as the Australian Industry Group CEO Innes Willox said last week, "Because of the industrial risk associated with the unlawful actions of construction unions, every school, every hospital, every office, every residential tower and every road costs a lot more than it otherwise would. The community, every taxpayer, every union member and every consumer pays the cost of the actions of Australia's construction unions."
So the restoration the ABCC is not a political exercise, it's not an ideological exercise, it is a fundamental, critical, economic reform. And some – nearly 24 per cent of the registered businesses here in Macarthur are involved in construction and that's higher than the New South Wales average of about 15 per cent. So that's why we're talking about the ABCC.
Let me make another observation about negative gearing too because that is very relevant and, again, I want to deal with that in a very business-like, matter-of-fact way. When we talk about negative gearing what we're talking about is the ability of a person to offset against their income, their personal income – in this case their professional or salary or wages income – the interest costs associated with a loan they've incurred to buy an income-producing property. Could be a piece of machinery, could be shares in a company, could be a flat, could be a shop, a commercial property. That's what negative gearing is. As you know, a very large percentage of the, around a third of the loans that are raised to buy housing are borrowed by investors.
Now what Labor is proposing is that after 1 July '17, if they're elected, it will not be possible to negative gear for an individual against their personal income, any investment other than one in new residential property. Okay, and this is said to support housing affordability. Now what that will mean is that in areas where there are subdivisions in this electorate where you’ve got house and land packages, new housing, that is for the most part being sold to home buyers, and often new home buyers, they will be competing with investors because that's the only asset class they'll be able to invest in.
It will mean where you've got apartment developments which are largely owned by investors because most of the occupants are tenants, those investors will not be able to sell them to other investors; they'll only be able to sell them to owner/occupiers. So the price of property will obviously decline because you'll take lot of the buyers out of the market. We had a funny moment in the House of Representatives which Russell remembers where I made the point - I thought it was pretty uncontroversial, I said if you take a third of the buyers out of a market, all other things being equal, the price will go down. One of the gentlemen on the Labor side of the House called out, "you're making that up." I wondered what was I making up, the laws of economics, supply and demand? It is a big deal. What it will do, it will have the result of bringing housing prices down and will send rents up because investors will need to get a better return because otherwise they'll be behind after tax and of course the supply of housing, of rental housing will decline.
We believe it will materially undermine housing affordability. The answer to greater housing affordability is more housing. It is building more dwellings, it is greater supply. The issue's been looked at again and again for a very long time, going right back to studies in fact I commissioned the Menzies Research Centre in 2003 and the Reserve Bank has done work on it and it is very clear what you need is planning that results in more approvals so that you get more DAs and more ability to build. It is a supply-side issue.
So again, that's the point of difference on negative gearing. Read a lot about it, it's described as being a big tax concession. It is income tax 101. There's nothing special about it. Everybody is able to deduct interest that they incur from income if it is used to buy an asset that is an income-producing asset so this is what the Labor Party is proposing is a massive change to the tax system.
And I just also draw to your attention that I think at the moment we would all feel that we need more investment, we want everyone here to go out and invest, have a go, and investment levels are good. We'd like them to be higher. Labor is proposing to increase capital gains tax by 50 per cent and I just make the observation again, and not in a partisan way but just as a businessman, if you want people to do less of something, put up the tax on it. That's how tobacco taxes are justified. Make tobacco more expensive, fewer people will smoke, there's no doubt about that. You make – increase the tax on investments and you will get less investment and that is not what we want. We want more investment because that will deliver more jobs.
Now those are two of the hot issues at the moment. I wanted to turn now to the question of the airport. Now this new Western Sydney Airport will be, will through the construction phase will create more than 11,000 jobs. It’s expected to commence operations in the mid-2020s and cater for an estimated 10 million passengers a year by 2030 and create nearly 9,000 direct jobs in the region by 2031. That will increase to over 60,000 jobs by the 2060s and 82 million passengers are expected to use the airport annually.
Naturally the airport will need transport connections to the rest of the city and the region and without a doubt the fastest and most efficient is rail. Now we are asking ourselves, and as a Federal Government working with the state government, what would it take for rail to be operational at the airport when it opens? How can we use a rail link to improve supply and hence affordability of residential and business premises? Can rail give people in Western Sydney better access to better quality jobs here in Western Sydney?
Now we have a state and federal, a joint study underway which will give us costed options on how soon it can be developed and how much more value will be created. The 3.6 billion Western Sydney Infrastructure Plan, of which Russell spoke a moment ago, will connect this region by roads. One of the biggest is the Bringelly Road to a minimum of four lanes from Camden Valley Way to the Northern Road. But to be more productive and competitive you don’t just need greatl infrastructure, you need great ideas.
Our businesses at their very core need to be innovative and entrepreneurial and it’s always been the case that the path to new enterprise, the path to entrepreneurship, more often than not involves someone who just starts off in life with their human capital. And that’s one of the reasons why we are so opposed to what Labor’s proposing on negative gearing. Because we start off with that human capital, we start off with some income from a job, or work we’re doing, and then we borrow some money to buy something and we build brick upon brick. Sometimes you build a great business, sometimes you don’t, but that is the road of enterprise and entrepreneurship. We believe that door to entrepreneurship should be wider; it should not be slammed shut.
That is going to be a really big difference, a really big choice in this election. You know small to medium businesses are the drivers of the local economy here and right around the country. 96 per cent of all Australian businesses are small business. They employ 4.5 million Australians and in this electorate of Macarthur small businesses are a critical part of the local economy. Retail trade is the largest employer, with over 11,000 local jobs. And with the Western Sydney Airport the distance between Ingleburn and businesses on the streets of China, Japan and Korea are closing fast. Those massive Asian markets are opening up through our free trade agreements. These are the extraordinary achievements and it’s a really, it is a great credit to Andrew Robb as our Trade Minister that he’s been able to secure in these 2.5 years. Andrew of course as you probably know is not running again so he’s stepped down as Trade Minister. But what an extraordinary job. He’s opened up free trade agreements with Japan, Korea and China. They are driving export growth right across the country.
On the present trends there could be more than 2 billion people in middle class households in Asia by 2021. That’s 2 billion people who want to buy what we do best and one of the early winners of the free trade deal with China is Western Sydney University School of Medicine, in Campbelltown, and an MOU has been signed as I’m sure you know between WSU National Institute for Complementary Medicine and the Beijing University of Chinese Medicine. Together this Campbelltown integrated health hub and this prestigious Chinese University will look at ways to deliver innovation in healthcare to assist another growing concern across the Asian region - the need for better and better and more, and more adaptable, innovative aged-care services.
Now for any business large or small, use of the internet particularly at high speeds is a critical business opportunity. Over 11,000 homes and businesses in Macarthur can already connect to the NBN. Remember the National Broadband Network – when we came into government – was a completely failed project. I think those of you involved in the project’s business would know that the melancholy experience of life is that bad projects generally get worse and worse and worse. This is one of those rare occasions where a bad project has got better. A lot of money has been wasted and we can’t get it back but it’s on track now. So 11,000 homes can already connect, construction’s underway for an additional 21,700. By June 30 a quarter of all Australian households will be able to access the NBN. By June 30 2018 it will be three-quarters, and it will be finished by 2019-2020.
Now your community here in Macarthur is a great place to do business. Because of you, you the human capital of Macarthur. You are the greatest asset this region has. But you are, as a consequence of that, the gateway to the innovative future that Sydney and Australia needs to remain competitive in the global economy. So I want to urge you to grab those new opportunities with enthusiasm and energy. See what we can create with the benefits of the second Sydney airport, with rail links with better roads that will drive an imagination that you represent. I can assure you that as you step out the Australian Government will work with the State Government, with Local Government, with businesses big and small to make the Macarthur region and through it our whole national economy more innovative, more imaginative, more competitive, more productive. And the consequence of that, in this time, the most exciting time to be an Australian, this time in human history where there are more opportunities than ever before because of the unprecedented pace and scale of global growth. What that means is that you here in Macarthur, working with us, all of us, the Federal Government, State Government, Local Governments, with fantastic local members, passionately committed to, engaged with and able to persuasively advocate for their communities. What that will mean is that we will ensure that our children and our grandchildren will have better jobs, better high-paying jobs in the years ahead, and it will be founded on your enterprise and your entrepreneurship. This is the most exciting time to be an Australian and there has never been a more exciting time to be in Macarthur.
Thank you very much.