04 APRIL 2013, Sydney. Full text of the speech

2013 is a decisive year for our nation.So today, I want to speak about two things – the facts and the future.

Where we are – and where we need to be.

First, the facts.

We have more jobs and stronger growth than any of our peers in any of the major developed nations.

Over 900,000 jobs created since we came to office, while millions have been added to jobless queues around the world.

Unemployment at 5.4 per cent, less than half the rate in Europe at 12per cent.

We have lower interest rates than we’ve had since 1996.

They’re much lower than when Labor came to Government, saving $100 a week for the average family.

We have the highest median wealth in the world.

That is, we’re not just good at creating wealth – we’re also good at sharing it.

We have low inflation.

Annual underlying inflation has been at or under 2.4 per cent for the whole of the last year, the first time this has happened since 1999.

We have a triple, triple-A credit rating.

By that I mean we are for the first time ever triple-A rated with a stable outlook by all three major ratings agencies.

We have joined a very exclusive club with only 7 other countries as members.

The fact the club is so exclusive proves the difficulty of being triple, triple-A rated.

We have a strong record of economic growth.

We’re now the 12th biggest economy in the world, up from 15th when we came to office.

Over the same period, our economy has grown more than five times faster than Germany and the United States.

And even on productivity and industrial disputation, which has seen more barrels of ink spilled and trees felled than any other economic topic, the facts tell their own story.

Labour productivity growth for the market sector through the year to December 2012 is significantly above its 10-year average annual growth rate.

Industrial disputations are, on average, about a third of rate under the previous Government– which included the draconian Work Choices regime.

Enterprise bargaining is doing its job and, as a result, there hasn’t been even a whiff of a wages breakout from the mining sector into the wider economy – like there was in the last mining boom of the early 1980s.

It’s hard to reconcile this Australia with either the economic cringe which discounts our national economic achievements – or the political negativity which denies them.

I know foreign correspondents and your home bureaus aren’t strangers to this conundrum.

It seems hardly a week passes when a respected overseas journal or international organisation doesn’t point out Australia’s good fortune and puzzle over our fractious politics.

The UN Human Development Index puts Australia in second place; the OECD Better Life index puts us first.

The Economist recently ranked countries according to the “best place to be born”, and Australia came second after Switzerland, up from 18th place in 1988.

The UK Guardian recently noted that as “the world lurches from crisis to economic crisis, the land of Oz is powering ahead”.

And even the stern conservatives at the Heritage Foundation have praised our “impressive economic resilience.”

I don’t mean that our nation should be boastful.

Things can always be improved – and improving them is my mission, my driving purpose.

But all Australians are entitled to be quietly proud of what we have achieved together.

In a loud and clamorous political marketplace where bad news sells and crazy fear campaigns abound, the facts don’t always get to speak for themselves.

In the nature of politics, no one has entirely clean hands, and we can all do more to lift the standard of debate.

But make no mistake; ignoring the facts is not just an insult to the quality of political debate.

It is an insult to the Australian people because those facts are the result of hard work and unremitting reform by the Australian community.

So my first point today is to urge everyone involved in the political process – elected leaders, commentators, business and civil society – to argue on the facts.

Anything less is a disservice to our people and our democracy.

A consideration of the facts then takes us to the future.

The future that will, in so many ways, be decided on September 14.

One thing this will not be is a contest about some “lost golden age”.

This is not a time for cosy bed-time stories.

There should be no false nostalgia for the days that preceded the global financial crisis: the days when our household savings ratio hit zero, when easy credit and rapidly rising terms of trade created a sugar hit that could never be sustained.

Even then, with rivers of gold flowing into federal coffers, a priceless opportunity was squandered.

Taxation receipts as a share of GDP were higher in the entire period between 2002-03 to 2007-08 than in every year since and every year before bar one.

Had the Howard Government collected the same amount of revenue as a unit of GDP as we currently do, the last seven years of the Howard Government would have been in deficit.

But rather than invest it in the future, this revenue was spent on quick fixes, at the same time bequeathing a legacy of declining productivity, rising inflation and skills shortages.

Not days we want to bring back.

We can only become a stronger nation, a nation of prosperity for all, if we correctly diagnose today’s challenges and enable our nation to seize tomorrow’s opportunities.

This means we must document and explain our plans for the future at a level of detail and financial costing which honours the intelligence of the Australian voters.

Bluff and bravado may have served our opponents well to date, but they are no answer now.

No answer this close to an election.

No answer now the carbon pricing fear campaign has been exposed as nonsense.

No answer now my own side of politics has resolved its leadership debate.

Now, the times demand better.

The times require deeper thought about the nature of our economic growth today and our economic opportunity tomorrow.

Our economic growth today is creating jobs.

But that growth has not been generating government revenue in the way in which it has in the past.

Most federal taxes are aligned with nominal GDP, the actual dollar price we receive for our exports and our economic production.

But, unusually, nominal GDP is growing more slowly than real GDP simply because while production volumes have continued to grow, the prices they command have moderated.

This unusual divergence between nominal and real GDP growth has happened only a handful of times in the half century since the Bureau of Statistics began producing quarterly national accounts.

It means government revenues are lower than our experts reasonably predicted them to be.

This revenue challenge puts an even greater focus on the need to ensure that future Budget expenditure is matched with responsible and targeted savings.

This is the discipline with which we all must live – every politician, every commentator, every advocacy group.

This discipline should not be obscured by a false debate about debt and deficit.

Our net debt is at ten per cent of GDP, the equivalent of a person earning $100,000 a year having a mortgage of $10,000.

To keep this in perspective, our net debt as a percentage of GDP is around one tenth of the expected peak across major advanced economies.

This net debt is obviously manageable and exists, not because of ongoing expenditure decisions, but because of the huge revenue hit we’ve seen due to the GFC and the unusual global economic conditions we’ve seen since.

Anyone who pretends this debt should not exist is effectively denying the GFC happened.

Anyone who pretends the GFC didn’t happen should be treated as the same kind of amusing curiosity as those who believe the earth is flat.

Certainly, it is impossible for such a person to play any role in the hard decision-making necessary in our nation’s life.

Similarly, it is impossible for any person of reason to deny the revenue effects associated with today’s particular economic circumstances.

As a government, we will show through our May Budget our continued focus on fiscal discipline.

As a government, we will also continue to describe and prepare for what we have called the “Asian Century”.

The economic order of the world is changing, in turn the strategic order of the world is changing, and we are on the frontline of the challenges and the opportunities that those changes bring.

By 2030 there will be more than 3 billion middle class consumers in the region to our north.

Thanks to the relationships and capabilities we’ve built over four decades, Australia is pushing on an open door as we enter the Asian Century.

But once we enter, everything that follows depends on our skill and ingenuity.

Nothing is guaranteed to us – success is not pre-ordained.

Asia has the wealth and the demand.

Whether we meet that demand is entirely up to us.

And let’s not imagine we have the field to ourselves.

Europe and the Americas are eyeing the same opportunities as we are.

As are Asian countries – they are selling more goods and services to each other than ever before.

The Asian Century will also involve difficult adjustments, and the high dollar is a clear example of this.

It’s painful to many sectors.

But like Germany under the towering deutschmark in the days before the Euro, a high currency need not be a barrier to making products and services of such quality that our partners still want to buy them.

The sustained strength of our dollar is now a feature of the economic landscape – on a trade weighted basis, it recently rose to its highest level since 1985.

And it may persist for some time given Australia’s status increasingly as something of a safe haven currency – Australian dollar to US dollar exchanges are now estimated to be the fifth highest traded currencies in the world.

While the high dollar has put significant competitive pressure on many industries, the answer to this is not low wages; in a high-skill advanced economy, it should never be.

It takes a more sophisticated approach – policy-rich, detailed, comprehensive.

That’s why my Government has a plan for Australian jobs which has just those features.

A plan that means we will be seizing the opportunity in our region as well as the opportunities at home.

It’s a plan to make sure that we have many diverse sources of strength in our economy.

The next election must be a referendum on policy.

It must be a test of who has a blueprint for our nation’s future in the Asian Century.

And it is only Labor that has that plan.

A plan for the future that rests upon five pillars which I’ve described many times:

Skills and education:

It’s not only about uplifting the horizons of every individual.

Independent modelling in 2010 showed that our reforms could provide an overall benefit to the national economy of around $4,000 per person per year.

We cannot win prosperity or create opportunity in this Asian Century if these reforms are stopped.

High speed broadband for all Australians:

Each 10 percentage point increase in broadband penetration is estimated to add around $20 billion to Australia’s GDP.

Without fibre to the premises, a vision only Labor will realise, we will be left in the horse and buggy lane while other nations zoom past us in formula one cars.

Clean energy and innovation:

In the first six months since our carbon price was implemented, electricity emissions went down by 8.6 per cent compared to the same six month period the previous year.

And the volume of energy from renewable sources increased by almost 30 per cent, creating new jobs, and helping to save the planet along the way.

Our nation can’t afford the costs of trying to repeal carbon pricing.

Competition and deregulation:

A Productivity Commission analysis of 17 of our Seamless National Economy reforms estimated that business costs would be cut by $4 billion a year.

Our energy market reforms announced last December will alleviate the burden of future household electricity bills by around $250 a year.

This major reform cannot be delivered if the problem the reform is directed at is denied.

Tax reform:

We’ve increased by six and a half times the tax write-off that small businesses get on new asset purchases – an investment injection of nearly $1 billion into the job-creating sector of our economy.

We’ve delivered three rounds of tax cuts. And we’ve tripled the tax free threshold so that 1 million people no longer lodge any tax return at all.

This means that a worker on $50,000 is paying $2,000 less in tax than they did in 2007.

Small businesses and families can’t afford the tax hikes being promised by the other side of politics.

These are the five pillars this Government has identified as key to increasing jobs, prosperity and productivity.

These support our plan for Australian jobs.

A plan to back Australian firms to win more work at home so that large projects will need to engage in Australian Industry Participation Plans, creating new local jobs on existing projects.

A plan to support Australian industry to increase exports and win new business abroad.

A plan to invest in up to 10 Industry Innovation Precincts which will bring together researchers, innovators, sources of new knowledge and link them with businesses.

Transforming this new knowledge into new products, new ways of doing things, seizing innovation, creating the jobs of the future.

A plan to grow small businesses, creating new mid-sized businesses and helping them to access and prosper on world markets.

This is a serious plan for our nation; a serious plan for our future.

That’s what I meant when I said at the Press Club back in January that we needed to put policies and plans back at the centre of our national discourse.

That time is here.

This is how Labor always governs – this is the modern Labor model.

Doing the things needed for a mature, high wage economy to succeed in a dynamic, emerging region like Asia.

Competing on skills and quality.

Playing to our strengths.

Diversifying our economic base.

Building a culture of innovation.

And perhaps most importantly, leveraging our relationships with Asia as the region grows and rises.

It’s no accident that tomorrow I will leave for a visit to China – a visit long planned and prepared for.

It’s my second visit to China and follows my many visits to the key nations in our region – India, Japan, Indonesia, Korea, Malaysia, Vietnam, Singapore.

Appropriately, 2013 is the 40th anniversary year of the first visit by an Australian Prime Minister to the People’s Republic.

I’ll be leading the most senior Australian political delegation ever to visit China.

I will be among the first Western leaders to meet the new leadership.

I’ll be promoting our trade and economic interests and sharing perspectives on global and regional economic and security challenges.

But I’m not just going to celebrate our existing strong relationship and its underpinnings.

But to look ahead to how we can build the comprehensive relationship envisioned in our Asian Century White Paper, including how leaders can help deliver a relationship of greater depth and durability in a more complex future.

The timing of this visit so soon after the new leadership has entered into office is deliberate and reflects the importance of our rapidly evolving relationship with China and our high-level political oversight of that relationship.

And more broadly, it reflects the centrality of Asia in the story of our nation for the 21st century.

Nothing in our destiny as a nation is certain.

We saw that a decade ago when the mining boom hit and the then-Government had no plan for skills, no plan for infrastructure, and no plan for broadband.

I won’t leave our nation similarly unprepared.

As a result, we will win in the Asian Century.