Private Health Care Australia Annual Conference
06 March 2015
Adelaide Convention Centre
It is great to be here. Thank you for the opportunity. Firstly, can I apologise on behalf of Sussan Ley, who would have been here if she could've but unfortunately couldn't make it.
And so you've got, literally, the stand-in. So, I apologise for that. But it also means I can make all sorts of promises that she then has to fulfil. Michael did ask me to promise the reinstatement of the private health insurance rebate. Anyway, we won't do that.
It's a really good time to have your conference, particularly given yesterday we launched the latest version of the Intergenerational Reports. I think it's the fourth version since Peter Costello started the practice of the Intergenerational Reports. Which are really designed, ultimately, outside of the normal budgetary consideration or context—to think about policy, fiscal settings, and therefore expenditure settings for the longer term. To look where we're going as our country inevitably gets older, our population lives longer, largely because of the innovation of many of you in this room. And the capacity for you to fund that innovation in a way that means that we are now living longer than what we have before. I think the Intergenerational Report predicts that by the mid part of this century we'll be living to our mid-90s as an average age which is quite extraordinary. And that is in large part due to the fact that your industry continues to find ways to ensure that we are living a longer and healthier life.
And that's of course to be celebrated. That is an opportunity. I think Scott Morrison said that we've got an aging boom in our country coming, and there is great opportunity with that. But what the Intergenerational Report does, I think, is highlight the challenges which we need to confront to ensure that we can make the most of those opportunities in the future. And it's pretty stark reading. I think all four of them have been stark, but this one again, in a timely fashion I think—given the current debate about the budget and what's happening with the Senate, and the challenges we've had as a Government on getting through what we think is important reform. It does remind us of the task that we've got. It is true to say that on the settings that we found in coming to Government, and if you look at page five in the executive summary of the Intergenerational Report—we would have headed towards, without changing any of the policy settings, by 2054, 2055—a debt position of over 12 per cent of GDP.
In today's terms, that would be $550 billion, unless we change the settings. What we've done with the Budget last year in some of the policy changes we've been able to get through the Senate is reduce that direction to somewhere around 5.9 per cent of GDP at that same period.
And if we got through all of our proposed Budget last year, we would have surpluses throughout the next 50 or 40 years. Obviously without taking into consideration shock events which occur in the economy. That's the settings that Treasury have highlighted.
So, there is a task on the fiscal side of the Budget for governments, no matter who they are—to ensure that we continue to live within our means because eventually someone's got to pay. And if we don't make decisions today to ensure we've got a sustainable Budget, then tomorrow's generation will either pay by higher taxes or less services. Many of the services that you deliver, which are funded by the taxpayer—will be put into question if you don't have the capacity to pay.
While at the moment our fiscal position is relatively good compared to the rest of the world, our direction is not. Our debt has grown faster than any developed country over the last five years. And if we keep going down that path, inevitably governments are going to be confronted by harder choices. If you look at the situation in Greece—and we're not Greece, and I'm not suggesting for a moment we are—but if you look at the situation in Greece, they have in the last four or five years, lost 25 per cent of their GDP. They are, in effect, un-developing. Normal expected social safety nets, which people are relying on, have disappeared. There's outbreaks of childhood diseases which you associate with developing countries because the government has no longer got the capacity to service the population to the expectation of what we—what you would have in a developed country.
So, this is a serious discussion we need to have and we need to do a better job of having that discussion, and obviously in the last month or so we talked a lot about that internally and we talked a lot about that externally but it's a discussion we must continue to keep having with your industry, importantly. I know Brian Owler is here; with the AMA, importantly. With the broader community, importantly. Because everyone's part of this.
In the end, the Federal Government does three main things: it protects our national security; it ensures that the national economy is running as efficiently and productively as it ought to be; and it is responsible for the social safety net of our people, for our people. And unless we get the budget right—that's that question about the social safety net gets raised or put into question. And that's the context and the discussion that we are having with the budget that we handed down last year and the budget that we'll hand down in two months' time. I think the Intergenerational Report plays into that discussion because it puts our—not just the next four years in expenditure, which is what the budget does—but it puts into perspective where we are going over the next 40 years and the challenges that we face in that respect.
So, there are many opportunities that we see for our economy, for our country, but there are challenges as well and we must deal with those challenges. But what we're trying to do in dealing with those challenges, which gets a lot of attention, we are also trying to ensure we've got the capacity in the economy for growth so we can as a country continue to enjoy the prosperity we've seen over the last 30 years. Australia is an extraordinary success story in the last 20 to 30 years, or really since Paul Keating and Bob Hawke took a decision in 1983 to open our economy to the globe, to rip down fortress Australia if you like. We've grown since the early 1990s richer as a country in—to the extent above real growth of about 90 per cent per person, which is phenomenal.
You often hear the doomsdays story about the impact of that change on certain industries like manufacturing here in South Australia, but you don't often hear about the positive aspect of it, and the positive aspect of it, of course, is that we now have industries which compete globally successfully; export intellectual property successfully. Not just digging resources up from the ground or producing agricultural product, but our services to that growth in our region. And the growth in our region is like nothing before.
Nothing in human history has ever seen so many people move from poverty to the middle class in such a short period of time. In China and India, we are seeing a mass movement of people from abject poverty to the middle class in a period of 20 years. India itself—I was there in January with Andrew Robb on a trade mission—in the next decade expect to see some 600 million people move from rural subsistence and poverty to urbanised middle class, and that will put enormous pressure on the resource needs but it will also be a huge opportunity for us to take advantage of with agriculture products, with resources, but importantly, services, where your industries will play a role—will have opportunity. And I think one of the great achievements of the Government has been in that respect to open up these new markets through free trade agreements with Japan, Korea, and of course with China, and hopefully in the coming 12 months indeed with India as well, which means our people have got more opportunity to export.
Australia's challenge, of course, is we've got a huge land mass and a very small population, and we've got a very small market but we've got a very well-developed and sophisticated economy, which means that we are producing products we should export to the world. We export 60 per cent of the agricultural product that we produce. Increasingly, we need to export more of the services that we produce, more of what you deliver already in Australia, and there is much more opportunity because of what we are doing in that respect with free trade agreements.
To allow you to take advantage of that, we are trying to unlock the bureaucracy around the economy through the red tape reduction work that Josh Frydenberg did and now Christian Porter, and it's been something governments announce in opposition all the time: we're going to get rid of red tape. You would have heard it a thousand times. But we've genuinely done, I think, a terrific job in the first 12 months in getting rid of the low-hanging fruit when it comes to red tape. Now we are moving into more difficult and challenging areas of red tape but important areas of red tape because we want an economy which is nimble to suit the times.
We are now competing globally, constantly. John Howard said in 2007. He said it about 1000 times,I think, that economic reform is like a never-ending foot race. You don't ever win. You've got to continue to run faster and faster to stay in front of the field and that's the challenge that we've got to ensure that our economy's nimble and sophisticated enough to be able to compete and businesses can compete with an ever more competitive globe. And so that's why we've focused very heavily on ensuring that we've got an economy which is free as much as possible from that bureaucratic red tape that holds you back from competing. In my own portfolio, we've put a major focus on infrastructure because by building the infrastructure throughout our cities, particularly, we are allowing our businesses to compete better by moving through—or getting product to market more efficiently, allowing our people to move around our cities more efficiently will lift our productivity.
That's why we put $50 billion over the next five years into infrastructure and last year's budget because we want the states to get on and deliver the infrastructure, particularly, in our major cities that allow that productivity increase and we're doing it here in Adelaide with the upgrades to South Road and in Sydney with the WestConnex project which is the biggest ever transport construction project in our history, in Brisbane with the Gateway Motorway, in Perth with the Perth Freight Link, in each of our major cities we've committed to significant new projects which will help not just create jobs today but also in the future, ensure that we've got an economy which is growing.
So, we're trying to fix the Budget through measures that we've put in place and we're having a constant discussion about that and the Intergenerational Report plays into that but importantly, we're trying to ensure we've got growth in the economy for the future. We've got the settings right so you can continue to grow into the future and I think, in the end, that is the job and the task of the Government to ensure that we can, as a country, continue to be as prosperous as we need to be. It is a remarkable thing that anyone who is 40 or under, has not, in their working life, experienced a recession in Australia. We have not seen, from my age group and under, a time when there's been mass unemployment, where our economy is contracting, where our prosperity is in question. And that's been because governments have taken hard decisions in the past and they've talked to the community about why that's been necessary. It's meant that when the resource boom occurred in the 2000s, we were able to take advantage of that growth in the globe because our economy was nimble enough and sophisticated enough to be allowed—so businesses could take advantage of that growth. It didn't just happen by chance; it happened because we put in place with successive governments, policies that meant you could take advantage of those opportunities.
And that is our challenge, ultimately as a government ensuring that your businesses can do the best they can do to ensure we've got that growth in the economy that we've come to expect. So, we've got a very, I think, positive plan about what we are trying to achieve in government. They are not easy decisions to tell people that what you were expecting, necessarily, a government might be able to do—we're not able to do as much, obviously—but they're important because unless we get that sustainability in the Budget, we will face increasing challenges in funding what are necessary services.
So, I think this is another great opportunity for us to hear your concerns, hear your views as a government, but also for us to talk to you about what we're trying to achieve and put in place so we've got the Australia we all want in the future.
Thanks so much for listening to me. I'm happy to take a few questions if there are any but I wish you well for the rest of your conference. Michael tells me that Kate Ceberano last night was the highlight so far. I'm not pretending that I'll take it on but I think my fees are less than Kate's though so that might make it a little bit easier. But look, thank you so much for listening and if there are any questions, I'm happy to try and answer them as best I can.