Well, “hashtag” good afternoon I suppose is the appropriate welcome. Thank you all for being here today. It's great to see so many of you here interested in what we've announced in the Budget last night.
I particularly want to acknowledge my colleagues who are here, numerous and many, but particularly the Deputy Leader of the Liberal Party’s here with us today. Mathias Cormann, the Finance Minister, a partner in this Budget, we've worked so closely on with the Prime Minister. The Small Business Minister Michael McCormack who I can see here and I think I saw Christian Porter as well here, who's been a member of our ERC team. Darren Chester, I’m doing the full roll call now, we’ll be here all day. It's wonderful to have my colleagues here today who have been such an important part of pulling this Budget together.
Can I also say, it's great to see Jenny – haven't seen her for a little while. She was down last night. It’s great to have her here today and it's great to have my brother-in-law, Gary, and sister-in-law, Michelle, here today and I want to talk about them a little later in my presentation.
This is a Budget that is about fairness. It’s about security. It's about opportunity. It's a Budget that understands that we need to make the right choices to secure what I believe are better days that are coming for our nation and for our world economically. It understands the new reality that we're working in, in this place. Canberra is a strange place. People watching this program I think understand that. There's a strange gathering of my best friends in the media here as well, joining with politicians. That's not a usual crowd that gets together for lunch on any day of the week out there in Australia.
But here we all are, looking in on what happens inside Canberra on a day like today. But the new reality is it is governing the way budgets are now done. A reality requiring practical budgets, credible budgets, where we must take reasonable and measured approaches to above all get things done. Australians are tired of the politics. They want the politicians they elect to get things done. That’s what matters. Not the ideology and the politics and the personalities and all the things so many people in this place focus on endlessly.
But outside of here they don’t. They want to know what we’re doing here to get things done for them and increasingly that means in this Parliament, wherever we can, meet in the middle to make sure that happens. That means many of us have to move from positions we've been holding previously. We have to. Otherwise, we all just run around this building making excuses as to why nothing has happened and that won't cut it in this new reality of Australian politics.
This is a Budget that recognises that Australians aren’t interested in those political games. They are interested in governments that will focus on getting things done. And as Chris Richardson would know, Budgets have to be credible. The forecasts have to be real and we will debate those amongst the economic circles when all the economists get together. That's a great lunch, that one. And we’ll pore over that. They have to be credible. I want to commend John Fraser and Nigel Ray and the team at Treasury for the excellent work they’ve done in pulling these Treasury forecasts together in this Budget. They're real, they're credible, they are conservative and I think they can be relied upon in terms of the documents which we've presented in this Budget.
In this Budget, we have sought to make the right choices to secure these better days ahead. It's exactly what we've endeavoured to do. It's a fair Budget. It's an honest Budget. And it's a responsible Budget. And there's a lot in it. I think as Australians perhaps, I'm not going to be so vain to think they stayed with us for the full 30 minutes of the speech, let alone the hours of coverage that followed later – that all of us in this building seemed to watch – but there was a lot in it.
There will be time to digest as a nation what we've announced last night and to absorb it and understand it and see that we are identifying problems that Australians feel and understand and we're putting forward solutions practically to those problems. In some cases we're running trials. We've run trials before – Alan Tudge is here – the cashless debit card has been a tremendous tribute to Alan's efforts in this area. When we brought it in, people were saying, “Oh you can't do that, that will never work, communities won't accept it”. Well, guess what? They have. We're expanding it as we should, because we're not a Government that is afraid to try things. If they don't work, guess what? We will stop doing them. If they do work, guess what? We’ll keep doing them and we’ll expand them because that's what practical people do. Practical people who aren't pushed to and fro by ideology and personalities and things of that nature.
So I'm going to focus on a few things today. It was a very comprehensive Budget and I just want to focus on a few items and I'm sure that the media colleagues who are here today will be able pick up the issues they want to raise specifically in questions.
Gary and Michelle Warren are extraordinary Australians. Forgive me as I try to get through this, as Gary will too. They live in Peakhurst Heights in southern Sydney in the same home Gary grew up in. They have four sons. Gary's mum lives upstairs. Her and Roy, who we lost not that long ago, raised their family in this house. Gary's younger sister is my wife, Jenny. The oldest of their boys, we all went to his wedding in January of this year, he studied at Wollongong University and he's now studying at Bible college. We're very proud of him.
There are two other middle brothers. They're both completing apprenticeships. One works for a plumber in the Shire, and the youngest of the four boys is a local independent school and he's a very bright young boy, doing incredibly well. After Gary left school he trained to become a fireman, something he really wanted to do. In my family, my father was a policeman, my brother’s an ambo and my brother in law a fireman, so we pretty much got the services covered. I'm a politician, they don't talk about that. Well, my mum does.
He loved his job. He was passionate about being a fireman. He did it for 20 years. He’s a very physical guy, Gary, I remember going on hikes, canyoning – I wasn't doing that, but he was. Very physical guy. He had a very physical job. It was a very physically demanding job. But in 1999, Gary was diagnosed with progressive MS. The aggressive form of MS and he knew it at the time. The oldest son at that time was just eight years old. The youngest son had not been born. He remained with the fire brigade for another five years and we both thank the NSW Brigade for the tremendous support that they gave to Gary over that period of time. They did everything they could for him. He still does work with them now today and after doing that they changed his duties to ensure that he could continue to work with the fire brigade and share his experiences as a trainer with other young fire brigade officers.
Gary was able to draw down, after he left the fire brigade, on an annuity but he has kept working and sought to work every single day from then until now. Because of his annuity he hasn't had to draw down on a disability support pension. He hasn’t claimed on Newstart. The family is supported by the carers payment and, equally, a mobility payment – as should be the case. Gary has worked at the Triple Zero call centre for the ambulance service. He’s worked for call centres at Fair Trading and court systems in NSW, where he does a great job. He's amazing with people. He can explain anything to anyone – in fact, he should probably be up here explaining this.
When their youngest son went to preschool, Michelle went to the Australian Catholic University and she trained to be a schoolteacher. Five years raising four boys, studying, supporting Gary – that's a big job. It's a tremendous tribute to her of what she's been able to achieve. A few months ago they bought their first home – an incredible achievement. For the last five years or so, as you can see, Gary is now in the chair, before that he had a segway, and at family events everyone loved riding the segway. Gary would show us how it was done. I remember doing it myself one day and it was a pretty poor effort. But for the last five years that's how he's got himself around. And recently when the van was off the road, that he used, Gary had to catch public transport. At the time he was working in Parramatta, that's an hour and a half both ways from where they live on public transport. That's being committed to working. But Gary told me just how helpful his fellow commuters, his fellow Australians were. “People”, he's told me, “are enormously generous, not just happy to help, but keen to help.” And he said, “It's not flash being disabled.” It's not flash. “But if there's anything good about it”, he said, “it's that you're disabled in Australia”. That's an incredibly generous statement about the big heart of Australians. He and I both know that they have big hearts and I don't know a finer man than Gary Warren.
So last night, I was very proud to declare that as a Treasurer in the Turnbull Government, we would fully fund the National Disability Insurance Scheme. That's what this is about. That story.
Guaranteeing this vital service for Australians desperately in need of care and support, and they deserve it. We're asking Australians to chip in for this compassionate cause. Through a half a per cent levy in two years' time, in addition to the Medicare levy – and we strike the levy when the bills come in, not before. That's when the increased bills come in on the NDIS. That’s when the unfunded component of the NDIS starts and that's when we’ll be asking Australians to come to the table and share with all of us to ensure that this program can be delivered.
Australians look after their mates, particularly those who are less fortunate than ourselves. It's our nature. It's our values as a country and that's what fully funding the NDIS is all about.
And it's important that we now end the political debate about how it's funded. We tried to fund it through savings. We respect the fact that the Parliament, and the Senate in particular, rejected those savings. But I'm not saying no to Gary and the other 500,000 Australians who are counting on this, have asked for nothing but we deserve for them to show our support.
So we should end the political games around this. We should gather together and meet in the middle as a Parliament and finish the funding job that was started. Coming together in the middle as a Parliament to maintain support for this important program.
That's what the change is about to the Medicare levy. Reflecting our values, helping our mates, and doing what Australians always do for those in need. And so I call on the Parliament to support us in this important effort as a team, as Australians expect us to do.
Now I want to talk about Simon and Meagan Turner. They're oyster farmers. Rowan Ramsey knows them. Rowan and I came into parliament together almost ten years ago. They farm oysters for domestic and overseas markets at their business, Turner’s Oyster Farm in South Australia. They treat their ten employees like the family blood runs through their veins. That's not surprising, given Turner's aquiculture was started as a family business by Simon's parents. They wanted to take charge of their destiny to better themselves and pass on the opportunity they created with their own bare hands to Simon. Funnily enough, Simon wants to do the same for his own two kids – despite them being too young to object at this point in time.
But before he does that, he wants to grow the business. You know, of course, he can. Because last night, to back him in, we announced a further extension of the instant asset write-off rules for another twelve months. Giving businesses with an annual turnover of up to $10 million – that's five times what it was when we first started this program several years ago – with the chance to instantly deduct the cost of equipment and assets less than $20,000 in value.
It's a policy that Simon is very familiar with. He's used it in the past, to free up cash flow and help his business function more efficiently. The good news for the local boat shop owner down there is Simon's coming your way. He let us know he'll be using the instant asset write-off this year again to buy more outboard motors and oyster grading equipment. A purchase he wouldn't have made without this measure being in place. Courtesy of the small business tax cuts we delivered and legislated in the weeks leading up to the Budget and I announced in last year’s Budget, Turner's Oyster Farm now pays a tax rate of 27.5 per cent and well before his kids take over the business, that rate will be 25 per cent. It's pretty helpful when they freely tell us that their business runs close to the line, like so many small businesses. They're true champions of our economy and they deserve our respect and our support. The Turnbull Government continues to back them in. The Turners are what this Budget is about.
Now there's Joel and Ashleigh Thomson, who are blessed to live in the Shire. A hooray just went up somewhere in southern Sydney for all of those of you. Four days a week, Ashleigh heads out the door to work as a personal assistant and Josh drives trucks for a Sydney metro trucking company. After a day with their grandmother, Ma, their two children go to the childcare centre three days a week, taking up a large chunk of the household budget. A bit less now as a result of the childcare affordable reforms we've passed. It means the Thomson family has had to be pretty diligent to keep a lid on their spending, like the Government needs to. Given that rent gobbles up a fair chunk of their take-home, they're not excessive. They often balk at the idea of going out to dinner as so many Australians know, or to the movies. And they are very pro-active to ensure their power bills are affordable, turning off power points before bed. Despite putting away savings for several years, Josh and Ashleigh think it will take about five or six more years before they have enough money for a home deposit, and that's at current Sydney house prices.
Our critics say we can't help the Thomsons. That the levers to tackle housing affordability are only in the hands of state governments and that this couple is at the mercy of market conditions. But we can't afford to sit on our hands and watch the fond ideals of the great Australian dream slip from the hands of the Thomsons. That's why we're helping first homebuyers, like the Thomsons, by allowing them to use their own salary that they've worked for, to sacrifice it, and to put it into a readymade account that gives them a tax advantage and it means that they will get to their dream of home ownership on their own savings 30 per cent faster. If you could move 30 per cent faster, you'd go there, wouldn’t you? And that's what we've done with our first home Super Saver account in bringing that into being.
But it is not the only thing that we've been doing to address housing affordability to take that pressure off those rising costs of living. We're acting in partnership with state and territory governments to boost supply by ensuring the money we supply to state and territory governments each year, under the previous affordable housing agreement, is a two-way street, not a one-way ATM. And we're expecting states and territories to meet targets to build more homes in every state and territory in this country. And we're expecting them to do it by streamlining their planning systems and dealing with the regulations that frustrate development and supply.
We're working with those state and territory governments to do just that. We're forming a Commonwealth land bank of all Commonwealth land to ensure that developers know the land that’s there and available for them to put more homes. And in Maribyrnong in Melbourne, 6,000 homes will be able to be built on that land. And I'm not just talking about the straight out detached dwellings – I'm talking about affordable housing. I'm talking about social housing, I'm talking about private rental housing, I’m talking about first homeowner housing, I'm talking about housing for people who are changing in life, disabled accommodation – it can do all of those things.
And we're launching the $1 billion national housing infrastructure facility to fix infrastructure bottle-necks at a micro-level working with state and territory and local governments – micro-city deals – to ensure that we can clear the way so those homes can be built. And on affordable housing, we've introduced a package which hasn't been seen for some time. The National Housing Finance and Investment Corporation is offering low cost long-term finance to community housing associations to build more affordable homes.
Foreign investors will be able to invest in affordable housing development and owning affordable housing in this country – and that's where they will get the tax incentive. Not to compete with first homebuyers who are out there in the market trying to buy their first home. We will welcome and channel that foreign investment into building the housing we need which is affordable accommodation, and so much of the housing debate talks about Sydney and Melbourne, but there are people living in Hobart who are paying more than 50 per cent of their income in rent and this addresses their need.
We've also announced $375 million for those who slept rough last night while I was delivering the Budget. The National Partnership Agreement on Homelessness is a fine initiative. It was started by our predecessors in the former Government. We backed it then and I've backed it as a Social Services Minister and now as Treasurer. We've renewed it on several occasions and now I'm making it permanent. Because people who sleep rough, who are feared of being homeless, people who are suffering from domestic violence, people who have are young and are couch surfing – whether it’s in my electorate in Cronulla or across the other side of the country in Western Australia in the town of Bunbury. That funding reaches them and it works with community organisations, not-for-profit organisations who know how to deliver on the ground to fix those problems.
And for those who are downsizing, we're saying downsize and you can invest the proceeds, up to $300,000 back into your superannuation without penalty – non-concessional contribution. Whatever your level, if you've reached the cap, it won't matter, we're allowing you to invest that back in and that ensures that you're in a position to be able to boost your own retirement income as a result and not be penalised because of your downsizing.
And you know, those who say that the Super Saver account is somehow going to undermine people's superannuation savings – that's just a political trick. That's just an ideological opposition to something they didn't think of themselves. This is about people using their own savings. If they're not going to put it in their super account, they’re just going to put it in a bank account and pay more tax on it. They're still paying their mandatory contributions. So don't fall for that one. The reason others have said they’re not going to support this is because they just want to play politics. And that approach is actually going to help young people to ensure they can get in to a house and there will be other opportunities later to go into more detail when it comes to this comprehensive package that we've put together on housing – using the scalpel, not the chainsaw. Making sure that on foreign investors that we put back the cap on what they can borrow, so what they can buy in residential real estate. That cap was actually lifted by the former Labor Government – it was actually lifted by Chris Bowen himself. I'm putting it back on. And on top of that, we're removing the Capital Gains Tax exemption for principal residents for foreign investors and we're tightening up the compliance to make sure they pay their CGT as well. We're tightening up the depreciation arrangements and other deductions for visiting your investment properties as well and you won't get a deduction for that. So we're tightening it up, we’re making it fairer. But at the end of the day you have got to have a scalpel, not a chainsaw, to deal with this otherwise you run the great risk of causing a housing shock which can have ripple effects right through the economy.
Now, when you pore over all the Budget numbers, you see something which you will always see in a Coalition Government Budget and that is we live within our means and we've chartered a fair and responsible path back to Budget balance.
Since our re-election, we were able to get $25 billion in Budget improvement measures implemented, getting things done since the last election. We have also been able, since we were elected, to reduce the rate of growth of debt by two-thirds. We've ensured our rate of growth in spending as a Government has fallen from over 3.5 per cent, in what we inherited, down to less than 2 per cent and that remains over the budget and forward estimates. And what we've ensured is we get back to balance in 2020-21, as has now been included in the Budget papers now for the last two years and the last two midyear statements. For four successive statements we projected the balance would be in 2021 and we've dealt with every challenge that has come our way including the Senate's rejection of $13.5 billion in savings measures that we have now reset in this Budget and we've still ensured that we've got back to Budget and balance and we’ve done it a fair way and we’ve done it a responsible way. And we've also done it as you can see from the chart on the right hand side, if you're facing the stage, which shows that it stays in balance over the median term and we remain below the tax-to-GDP cap of 23.9 per cent, which we apply to ourselves and the dotted line you can see there is what happens when you don't apply such a cap. That's the line that you will find on the trajectory of what Labor says their balance will be. That's the higher tax approach, taxes will always be lower under a Coalition Government.
The other thing we've done, what that shows is that this year's budgeted expenditure as a share of the economy is lower over all the forward estimates than what I said it would be last year. For those of you who say we're not keeping expenditure under control, that's the chart. Expenditure falls to 25 per cent of GDP and it hasn't been there for a while.
We've also been respecting future taxpayers and this is where really I wanted to finish. I owe a lot to Peter Costello – finest Treasurer this country has ever had. I don't think I'm troubling him on that front yet – might take me another ten years but I’ll give it a crack. He was a great Treasurer. He's a great Australian. I admire him immensely as you know. He set up the Future Fund to ensure that unfunded superannuation liabilities would be paid for and that future generations wouldn't be burdened by them.
The decision we've taken in this Budget is to not to draw down on the Future Fund in 2020-21. Now, we could – Peter actually wrote the legislation that said we could – but the cost of that is quite dramatic if we do draw on it. If we hold on for another ten years and don't draw down on that fund, it means that after that period of time, it will reach maturity and go to a point where all of the unfunded superannuation liabilities will be paid for and they will draw down together as you can see on that right hand side chart. On the left hand side chart, it shows that if you raid the fund now, the fund depletes quickly, but the liabilities remain.
This is a century decision. There is a century of taxpayers that will benefit from us holding our discipline and holding our nerve and continuing to build that Future Fund up for another decade. And that is certainly our intention and that is what we want to do and that's why you shouldn't draw down on it. And you can be pretty sure Peter made that argument to you very, very persuasively. And he was right – and Mathias and I agreed with him. And that's what we've chosen to do.
The last point I make on debt is this, while we go back into budget balance on the underlying cash balance in 2020-21, there will be another important date before that. I've talked about how debt is treated in this Budget and I’ve provided greater transparency on how debt has been allocated in this Budget. From 2018-19, just over a year away, we will no longer be borrowing new borrowings to pay for everyday expenditure. That is what living within your means, means. In just over a year by continuing to keep our expenditure under control, to continue to be on a responsible and fair path to Budget balance, it means that you don't borrow and put the cost of today's expenditure on future generations. That's what this government is doing. That's what this Budget delivers.
We've made the right choices to secure the better days ahead. In this Budget, choices to grow the economy, to secure more and better paying jobs. Choices to guarantee the essentials that Australians rely on. Choices to put downward pressure on rising costs of living and the choice to ensure the Government continues to live within its means. These aren’t slogans. I said last night, they once accused me of a slogan called "Stop the Boats". It wasn't a slogan, we turned it into an outcome. These aren’t slogans or statements, it's what we intend to do, it's what we are doing, it's what we are going to get done. These are the pillars that underpin everything we now do as a Government based on the principles of fairness and security and opportunity to keep the government moving forward in its responsibilities, so the nation can move forward. This is what Australians expect of a Government that is in the job to do the job and that's what this Budget does.
Thank you for your attention.