CEDA ECONOMIC AND POLITICAL OVERVIEW – TREASURER TIM PALLAS
First, can I thank Melinda Cilento and Michael Camilleri from CEDA. CEDA makes an invaluable contribution to public life in Victoria through hosting events like today’s lunch and publications like the annual Economic and Political Overview.
Can I also thank Michael Blythe and Damien Augustinus for their contributions.
And finally can I thank all of you for attending today.
Paul Keating once said that when you change the Federal Government, you change the country.
As is often the case, he’s a hard man to disagree with.
It’s a principle that applies to all levels of government.
Just as voters have a choice at the ballot box, a newly elected government also has a choice.
It can twiddle its thumbs, play safe and gear everything towards winning the next election.
Or see it as a privilege and an opportunity – to leave an indelible mark, to build something bigger than itself, something bigger than politics.
Keating personified this, with his big-picture reformist view of the world and our role in it.
Keating also understood the importance of the private sector to a thriving economy.
We maintain that tradition here in Victoria. I am a Labor Treasurer, part of a Labor Government that is unashamedly pro-business.
The Premier has made it clear that it’s vitally important we don’t deviate from the values that propelled us to office.
We said we’d be a government that believes in something – a progressive and fairer Victoria.
But we’re also a pragmatic government. We’re about getting things done.
We will work with those that deliver results, and we’ve demonstrated that when government works with business and not against it – Victorians are the beneficiaries.
You may ask yourselves why, as a Labor Treasurer, I am so unashamedly pro-business – and the answer is simple.
We know that ultimately it is the private sector that is the main generator of jobs in this state, and indeed the country.
Together we are generating record employment growth in this state.
Since we were elected in November 2014, more than 316,000 jobs have been created in Victoria.
That’s the largest increase in both absolute and percentage terms anywhere in the nation.
Over the last two years, full time jobs growth in Victoria has been more than double the national average.
In fact – in just the last 18 months – we’ve created more jobs than in the four slow lost years of the previous government.
And this resurgence is not just occurring in metropolitan Melbourne.
Crucially, around 50,000 of those jobs have been created in regional Victoria – more than five times what the Coalition managed in four years.
We’ve supported jobs growth in regional Victoria with Australia’s first regional payroll tax cut – slashing the rate by 25 per cent.
As with so many initiatives in Victoria – where we led, other states soon followed.
All up we’ve invested more than $570 million in tax cuts for Victorian businesses – more than double what the Liberal Party achieved in four budgets.
And from 1 July this year, 38,000 businesses will get a further tax cut, as we increase the payroll tax threshold yet again – this time to $650,000.
So many new jobs, of course, are a direct result of the infrastructure projects that are currently transforming our State.
All up, our infrastructure projects are generating more than 50,000 jobs.
That’s thousands of engineers, labourers, apprentices and former auto workers – all playing their part in the transformation of our State.
The government’s annual infrastructure investment will average $10.2 billion over the next four years – more than double the average during the previous 10 years.
This record infrastructure investment is only possible because we’re partnering with the private sector in new and innovative ways – including using Public Private Partnerships for Outer Suburban Arterial Roads, the Metro Tunnel, High Capacity Metro Trains, and new schools and hospitals.
The economic value of PPPs is that they engage private sector expertise while also freeing up the state’s capital to invest in other priorities. Make no mistake, what we’re left with are enhanced public assets.
PPPs also make it much easier for a Government – and particularly a Treasurer – to deliver an ambitious infrastructure agenda.
When you have multiple multi-billion dollar projects underway at one time, the risk transfer we achieve through PPPs becomes an essential part of responsible financial management.
Victoria now has 30 PPPs in place, making us a global leader in this field.
At a time when the United States is talking about a $1 trillion infrastructure pipeline – the opportunities for Victorian firms to export their expertise are enormous.
To help build local capability we strengthened the Victorian Industry Participation Policy to ensure our major projects are creating opportunities for Victorian businesses and suppliers.
Under this Policy, 81 procurements worth more than $53 billion have been designated Strategic Projects. This is expected to support over 20,000 local jobs.
Figures like this can be a little overwhelming but when you drill down – pardon the pun – you see that these projects make a real difference to Victorians’ lives.
From the Level Crossing Removal Program to the Metro Tunnel, these projects improve the lives of Victorians not only today, but for our children and grandchildren.
They’ll make it safer to get to work, mean less time stuck in traffic and make it easier for many of you in the room to do business.
They make it easier to transport goods and services across the state, and through our ports, internationally.
Cutting commute times also expands the pool of workers that a business can employ –making it easier to find the right person for the job, which in turn, boosts productivity.
Politicians like to talk big and take credit when it comes to these projects.
But sometimes, it’s warranted. Governments have been talking about an alternative to the West Gate Bridge for decades. But it’s this government that’s getting it done.
Likewise, the $11 billion Metro Tunnel project – the biggest public transport project in the nation – will create nearly 7,000 jobs – including 500 apprentices, trainees and engineering cadets.
The enormity of these projects is obvious to anyone that commutes by road or rail.
Less visible, but equally important to ensuring our economic productivity and quality of life, is our investment in social infrastructure.
It’s a cornerstone of what Labor is all about.
And nowhere is this more evident than in our record breaking investment in what is the future of this state: education.
Since being elected, we’ve continued Labor’s proud history of investing in education and enriching the lives of young Victorians.
Across the State we are delivering thousands of new teachers, more than 1200 school upgrades, and 56 new schools.
We build the schools. Our opponents shut them down and sell them off.
They didn’t realise it when in Government – they don’t realise it now – but it’s in these schools that we’ll find the engineers, scientists and designers of the future – the workforce that will build the roads and rail the state needs, and help businesses continue to grow and thrive.
That’s why we’re making Victoria the Education State. Not because it looks good on a number plate. Not just because we believe in giving every young Victorian the opportunity to succeed. But because when it comes to growing productivity the closest thing to a silver bullet is education.
Educating Victorians is key to boosting our international competitiveness.
Elsewhere, our investment of over $2.6 billion in health infrastructure, including the recently announced Victorian Heart Hospital, ensures Victorians receive first class healthcare. We’re now employing 1,500 more doctors and 3,000 more nurses than three years ago.
And of course, we’ve invested around $3 billion in community safety measures, including 3,135 new police officers.
When Prime Minister Turnbull from sunny Bondi beach or Minister Dutton on Sydney shock-jock radio choose to scaremonger and dog-whistle on crime in Victoria, they forgot two things.
First, it was the previous State Liberal Government that cut $100 million from police.
Secondly, Victoria is actually the safest it’s been for a decade, with ABS figures confirming a fourth consecutive annual fall in crime. In fact, youth offending is almost twice as high in Sydney as it is in Melbourne.
The Prime Minister’s contrived concern for Victorians was all the more galling when you look at his track record.
His home state of New South Wales receives more than 45 per cent of federal infrastructure investment, while Victoria receives less than 10 per cent.
Now the Prime Minister is considering a change to GST allocations which could see one billion dollars ripped away from our hospitals, schools and police.
How is this anything other than unfair and punitive? We’re being punished for our success.
The Prime Minister leads a government that loves to talk, but ultimately, does little.
Two years ago – he and his Treasurer were telling us all about the need to reform the Federation. But what have they actually done? Nothing constructive. In fact, they’ve made things worse.
Well, I have some ideas.
They could start by removing the layers of Canberra bureaucracy that duplicates and complicates delivery best managed by state governments.
After all, it’s state governments that are actually in the business of building and managing schools, hospitals and transport systems. It’s state governments that work in partnership with business on the delivery of infrastructure and services.
Instead of making it easier for state governments to do this, the Federal Government makes it harder by failing to deliver on their commitments.
All too often they sign agreements, take a bow, snag a photo-op, only to walk away from what they promised.
This isn’t an isolated incident – they’ve reneged on so many agreements it’s par for the course. We’ve seen it on health reform, school funding, housing and homelessness, early childhood education, dental care, the NDIS, asset recycling… I could go on.
Their yes/no/yes/no approach leaves providers and state governments unable to plan properly. As I’ve said before, the Turnbull Government’s chaotic and punitive approach to Federalism needs a reset. It can’t come soon enough.
While lecturing the states about our responsibilities, the Federal Government fails to address issues which are clearly in their remit. For example, they refuse to use the levers available to them to address housing affordability – like fixing negative gearing.
All we’ve seen from this Federal Government is bloviating and ham-fisted interventions that go nowhere.
While the Federal Government has made life harder for workers by cutting penalty rates, here in Victoria we’ve actually done something about the fact that wages aren’t keeping up with the cost of living.
We understand there is genuine concern in the community about it, which is why we’ve made it easier for Victorians to make ends meet.
That’s why we sat down and worked constructively with electricity retailers to give almost 300,000 Victorian households a major saving on their bills – saving them between $250 and $720 this year.
Our Fair Go rates policy has stopped unsustainable and unfair council rate increases.
We introduced flexible, short-term options for car rego payments. Again it’s something governments have talked about for years. Again, we got it done.
There’s our School Breakfast Clubs, free Glasses for Kids, and Sports and Excursion Fund; all supporting students right across the State – and all making life a little bit easier for their parents.
We also tackled the biggest cost of living issue – housing affordability.
By abolishing stamp duty on first home purchases up to $600,000, we’ve delivered a crucial saving for young Victorians as they make the biggest financial decision of their lives. Once again, a policy quickly imitated by other states.
Since 1 July last year, almost 13,000 first home buyers have benefited from our stamp duty cuts.
We also doubled the First Home Owner Grant to $20,000 in regional Victoria – with uptake doubling. The boost to local economies and construction jobs in the regions is already evident.
Some of these are major savings for households, some are minor – but they’re all focused on the same outcome: putting more money back in the pockets of Victorians. This, in turn, benefits Victorian businesses.
In CEDA’s 2018 Economic & Political Overview, it flags a range of risks to the Australian economy – from Brexit, to a slowdown in China, to household debt levels.
Well, if history is any guide the biggest risk to the Victorian economy – is the Victorian Liberal Party.
We’ve seen their reckless approach to the economy from their deals with the Greens Party to block private residential development at Ormond Station, and level crossing removals on the Frankston Line.
Now they’re attempting to stop the West Gate Tunnel project – a project that’s already underway following the most transparent planning and environmental approvals process ever seen in Victoria. A project already employing 700 Victorians.
I want to recognise the business community for calling this out for what it is – political opportunism and economic vandalism.
Menzies wouldn’t recognise his Liberal Party today. The party of the forgotten people appears to have forgotten its roots.
But more concerning than their reckless approach in Opposition are the deep and indiscriminate cuts we know they’ll make to public services and public investment they’d make if elected.
That’s the real threat to the Victorian economy.
We saw it under Kennett – schools and hospitals sold off across Victoria.
We saw it under Abbott – $80 billion cut from schools and hospitals.
We saw it under Baillieu and then Napthine – TAFE gutted, police funding cut, hospital budgets slashed, no major infrastructure projects underway.
The Opposition has already flagged a Commission of Audit type inquiry which only means one thing – cuts.
Cuts to the services Victorians rely on. Cuts which will hurt consumer confidence, which in turn hits business confidence.
Cuts to the training and skilling of Victorian workers means lower productivity, lower wages, and fewer jobs.
A do-nothing infrastructure agenda like we saw under the last Liberal Government would end our construction boom, and with it, cost thousands of jobs.
It’s no coincidence that the state’s economic growth rate was 30 per cent lower under the previous government than it’s been since we were elected.
The Liberal Party isn’t just a threat to Victorians, it’s a threat to the Victorian economy and to Victorian business.
We do things a very different way.
This Government is about doing everything we can to make the lives of Victorians easier. That’s why we’ll continue to work with you – business – to grow the economy. To leverage your ideas, your talents, and your investment.
And, as much as possible, we will ensure our economic prosperity doesn’t result in a state of winners and losers.
For a successful, thriving society, we need people entering public life to make a positive difference.
This may be obvious, but the key is being upfront with the public.
Right from the start we said we’d be a fiscally responsible, socially progressive Government.
We said we’d maintain our triple-A credit rating.
We said we wouldn’t shirk from making tough budgetary decisions.
We said we’d oversee a robust economy, manage strong population growth and build for Victoria’s future.
And we said we’d protect our most vulnerable Victorians.
We’ve kept our word. We’ve achieved so much.
We’re delivering higher surpluses, less debt, more jobs and higher growth.
We’ve worked cooperatively with business, listened to your concerns and responded.
But there’s so much more to do. And in many ways, we’re only just getting started.
Let’s continue to work together to get things done, and make things fair.