Business Western Sydney Federal Budget Luncheon Speech

Well, thank you very much, David. It's great to be here in Western Sydney, this booming part of our nation and the national economy. It would be the fourth biggest city and the third biggest economy if it were a standalone city and of course, when in government, we very strongly backed Western Sydney with $5.3 billion for the Western Sydney International Airport, $11 billion across state and federal coalition governments for the 23 kilometre long Metro Railway from St Marys to Bradfield - by the way, I had nothing to do with the name of Bradfield. That was a great name, but I had nothing to do with that. But I was very consciously involved in the decision to have the rail running north - south, not east – west, because my view was, it would be the spine of the new Western Parkland City, and I think over 10, 20, 30, 40, 50 years we'll see that play out.

Infrastructure decisions take a very long time to play out but I think that was the right call. And so I'm delighted to be back here in this booming region of Australia. Can I acknowledge first of all, David Borger, David, your leadership for Western Sydney and the business community and including in the very strong policy debates around Western Sydney Airport and then how to leverage that was so important.

Professor Perry spoke about agglomeration and that was central to our thinking with the Western Parkland City with the airport. We didn't just want to build an airport, we wanted to attract jobs, attract businesses. Have a land use planning approach which allowed people to have good housing close to jobs, close to parkland. And I think in years to come this will be looked back upon, as a very good piece of integrated planning.

While we're talking about integrated planning, can I just acknowledge the late Lang Walker and his vision at Parramatta Square. I think the last time I was here was probably at one of these lunches a couple of years ago and I'm just amazed at seeing this vision come to fruition. It’s a very good example of the power of planning to make people’s lives better.

Can I also acknowledge Professor Andy Marks, who also has been a strong leader in policy for Western Sydney and can I acknowledge, of course, local member Andrew Charlton. I acknowledge Senators Sharma and Kovacic. Can I acknowledge Liberal candidate for Parramatta Katie Mullens, and can I acknowledge Peter Collins, very distinguished Liberal former parliamentarian, and community leader, and Western Sydney resident.

So look, I'm very pleased to be in Western Sydney. I was pleased in the Budget Labor put back in some of what they had cut from our Western Sydney infrastructure commitments. Mulgoa Road I think has come back in, but St Marys and Werrington commuter car park cut and they haven't come back. So it's good to see some of what we committed to restored but not all of it.

Friends, there are things in this Budget that we can agree on. We certainly support $3.4 billion to add life changing and life saving medicines to the Pharmaceutical Benefits Scheme, $925 million for the Leaving Violence Program, and some other things. But fundamentally our concern with this Budget is that this is a big spending Budget. $315 billion of additional Labor spending to date.

And please don't be fooled by the spin that this is a surplus Budget because the surplus that Treasurer Chalmers has been quoting is for the year we’re about to come to the end of. The Budget that he was bringing down is the Budget for (FY) 24 - 25, which has a deficit of $28.3 billion. And actually, if you add in all these special investment vehicles, or the so-called off-balance sheet spending it's actually $19 billion worth of money. Worse than that, there's a lot more cash going out the door than is coming in the door and that gets worse year after year. 

You know, I went back and looked at the size of government spending at the end of the Howard government. It was just over $253 billion. By 2027 - 2028, which is the last of the out years in this project, it’s projected to be $826 billion. So that is a size of government up almost 150% on the size of government at the end of the Howard years.

And when you look at some of those numbers, they are quite remarkable. Interest will go up 10% each year. When you compound that over 10 years, that gets you a number that interest spending under the Commonwealth Budget will be 259% of today's spending. So this is a big spending Budget. A lot of money that goes out the door and one of the reasons that is very problematic because it means it's a Budget that fails to tackle inflation effectively.

And that is what a lot of independent economists are pointing out. The chief economist at BIS Oxford economic said any loosening of fiscal settings is of course inflationary and may delay interest rate cuts. 

Chris Richardson said “if the government wants to do something about the cost of living, then more than anything else, it wants something to be done about inflation.” 

So the big spending character of this Budget is bad news because it means that it is not a Budget that focuses on inflation.

And one of the reasons why it's so important to focus on inflation is because we have seen a drop in the living standards of Australians. Over two years, people are worse off by 7.5%. That's a drop in living standards. The average Australian household with a mortgage is $35,000 worse off and we are not seeing in this Budget the measures to restore the damage that has been done. The simple reality is Australians are poorer under this Government.

Now one of the key issues that we are facing as a nation is a housing crisis and there is a notable absence of support in this Budget for first home buyers, or for initiatives aimed at significantly increasing housing supply. We saw an announcement packaged up just before Budget night of a supposed $11.3 billion extra. This was essentially repackaging of money that's already been announced as an extension of the National Housing and Homelessness Agreement.

And the simple fact is, since Labor came to government, we've seen two fundamental things happening and this Budget was a chance to address those things and it was missed. Those two fundamental things are that, first of all, we've seen the rate of construction of new homes in freefall. At the same time, we have seen record levels of migration. 

Overseas arrivals are running at four times the rate of new home builds, so there's a big disconnect there. We are not opponents of migration by any means in the Coalition. We are supporters of migration. We recognise that ours is one of the world's great immigrant nations and has very much contributed to our prosperity and to our success and to our growth. But we have a fundamental disconnect at the moment between the rate at which the population is surging under this Government and a strong sense that that is not in good control, while at the same time we've had new housing starts at the lowest levels for a long time. 

That is a fundamental problem which is being reflected in the surges in house prices that we're all seeing and of course the challenges in people finding somewhere to live, whether it's buying a home or renting a home. And this is why one of the key focuses in Peter Dutton's Budget in Reply speech was our plan to rebalance the migration program. 

So at the moment, what the Budget revealed is almost 1.7 million coming in over five years while we're seeing that slump in the number of new houses being built. The Prime Minister has promised 1.2 million new homes over five years. Most credible independent commentators expect that will fall at least 400,000 short.

And that is why we've announced a plan that includes a two year ban on foreign investors and temporary residents buying existing homes in Australia, and we have said that we will make cuts to the permanent migration program for a period of time to deal with this crisis that we are facing, and crisis is not too emotive a word. This is a very, very serious problem.

So we've committed that we will cut the permanent migration program for two years by 25% from 185,000 to 140,000. Year 3 we'll lift it up to 150,000, Year 4 160,000. But we think that is an important step to get those population growth numbers overwhelmingly driven by migration in line with housing starts. At the moment, there's a big disconnect.

This is also a Budget which takes risky bets with taxpayers’ money. There's a lot of money being allocated to particular industries, to particular sectors, and effectively this is a bet that politicians and bureaucrats are better at allocating capital in the private sector. And it is a bet that the particular choices that have been made are ones where frankly, they're claiming that they know better than the market. 

We saw the announcement a week or two before the Budget of nearly a billion dollars of taxpayers’ money going to PsiQuantum, a company incorporated in the United States, which is going to be manufacturing its semiconductors in the United States and in Germany under its existing contract. We've seen a very poor process to get to that allocation of funding and a determined maintenance of as much secrecy as possible at all stages, including in the Budget papers the amount being committed to PsiQuantum is described as commercial in confidence, and there's been no willingness to disclose that.

Now that is but one of some of the elements of the so called ‘Future Made In Australia’ program. But it is emblematic of the kind of risk that is being taken with taxpayers’ money. Now look, we certainly believe that quantum holds real possibilities. We certainly believe that Australia is fortunate to have a number of leading experts, and deep scientific capability. We think the process by which one particular company was chosen was a very poor process and to bet so much taxpayers’ money on one particular type of the many different competing types of quantum research which are presently being done is extremely ill judged and puts at serious risk the loss of much of this taxpayers’ money.

And we see similar risks being taken through many elements of the ‘Future Made In Australia’ program. In our view, a vastly better approach if you want to encourage business investment, we certainly want to see investment in green hydrogen, we want to see investment in critical minerals, we want to see investment in quantum, we want to see investment across the economy and we think that the best thing to do to stimulate investment is to create the right economic conditions. That means getting taxes down, that means getting energy costs down. 

Energy is one of the critical enablers of business activity. We have seen energy costs going up and up and up under this Government, and it's impossible to have any confidence that that is going to be turned around anytime soon. We are committed to an energy outcome which is more predictable and more affordable, therefore giving the private sector the confidence to invest.

And we certainly believe that if you want to attract investment into this country, encourage private sector investment, you need to have a simpler, less complex and less expensive to comply with industrial relations system. What we've seen from this Government, on the contrary, is hundreds of pages of legislation passed over the last couple of years implementing the wish list of the union movement and making it more difficult for businesses in their operations.

So our belief is that if you want to encourage business investment, and we think that's a very good thing to do, let's concentrate on getting the fundamentals right rather than having politicians and bureaucrats in Canberra making choices and placing bets on which industries they think are going to be the ones that succeed. 

Thank you.