Again, it is great to have the Treasurer of Australia, Josh Frydenberg, here in Latrobe. It's a really special day. Also, from APT we have Nikki and Richard just have grown this incredible business. And I thank them very much for their hospitality today and also Peter, who is going to talk on behalf of the business community.
Can I just say what I find fantastic about this area, we are very focused on innovation, we are very focused on advancement. The great news this week is Federation University has now received another $41 million from the Federal Government to expand again. Their big focus is innovation, advanced manufacturing. Another [inaudible] farm creating another 10,000 innovation, advanced manufacturing jobs. So anyone who says that there is no advanced manufacturing in Australia, just come out to Latrobe and we take great support from the Federal Government, in particular the Treasurer, Josh Frydenberg, thank you very much for having us here today.
Welcome, ladies and gentleman. This announcement today was a great announcement for a company like APT. It will enable APT to grow, to be more efficient, to be more competitive, and which will create more jobs, employ more apprentices, more casual employees, especially engineers, and we are really grateful.
So, thank you Jason, and especially thank you, Josh Frydenberg.
Well thanks Jas again for your hospitality, Peter Strong for being here representing small business, Richard thank you for driving this business and its transformation following the closure of Australia’s car industry. And you do represent the hope of the sign, you show the way for so many other businesses across the country and you are giving opportunities to young engineers, young quality control people, young people who are focused on new export markets for your businesses. So thank you so much.
Well, today there are three bits of good news for the Australian economy. I am very pleased to report just a few minutes ago that the Australian Bureau of Statistics has released new figures showing that wages have grown by 2.3 per cent through the year. The strongest growth in wages in three years and this comes off the back of unemployment falling to 5 per cent, its lowest level since 2012 and we have also seen new numbers showing that consumer confidence is up too.
So, not only is the Australian economy growing at its fastest rate since the height of the mining boom, not only has Australia had its triple AAA credit rating recently reaffirmed, not only is our budget coming back to balance a year earlier than expected in 2019-2020, but today we have heard and seen new figures, showing that real wages are improving and these 2.3 per cent growth in wages is good news for Australian workers across the economy. There is still a way to go, but with unemployment falling with more than 1.1 million jobs being created, today’s figures are good news for millions of Australian workers.
The second piece of good news today is that the Parliament has passed the Government’s legislation to change the distribution of the GST. There were members of the Labor Party who said pigs would fly before you could change the distribution of the GST and we know that the people of Western Australia in particular were only getting 30 cents in the dollar and the future of the GST was being brought into question because this was unsustainable and certainly unfair.
So, Scott Morrison as Treasurer and now as Prime Minister has overseen an important reform to the GST, a reform which will see more than $9 billion of additional money go to the states and the territories, and which will leave every state and territory better off. This is good news for people right across the economy ensuring that the growing GST pie is shared more fairly across the country.
And the third bit of good news is why we are here at APT. Because we want small businesses, more than the 3 million of them across the economy, to get access to affordable finance and we want to encourage smaller lenders and smaller banks that are not the big four to be able to offer competitive prices to have more liquidity and more competition.
So two initiatives that we have announced today, the first being the $2 billion securitisation fund will be really important in ensuring that those small businesses who want to grow are able to get access to more affordable finance.
And the second initiative where we are working closely with banks and other key members of the financial sector is to develop a growth fund, a business growth fund, which is modeled on what happened in the United Kingdom and in Canada, which is enabling these banks and other institutions to take passive equity stakes in small businesses, if that is what a small business wants, as opposed to receiving debt. And these equity stakes again will enable them, and it could include a businesses like APT, to grow and to employ more people.
So, today is good news for millions of workers across the economy, today is good news for those who understood that the GST’s integrity and fairness was being brought into question, today is good news for small business owners and the millions of people that they employ, with changes to financing which ensure more competitive rates and more jobs can be created.
Thank you. Thank you, Treasurer, thank you, Jason, thank you people from APT.
What a great place. This is what we fight for and what is worth fighting for. And when it comes to financing, I can tell you, I walk my dogs at a local park and there’s a fellow down there who runs a local production company, turns over $25 million a year. He said that recently he had to fly to England to get a loan. He got the loan. He’s in the same business plan that he couldn’t get the loan with here in Australia and that’s just wrong. And the announcement today is going to confront that sort of issue. I know another business that went to Canada and got a loan straight away from the Canadian fund.
So, what we’re doing is saying to people, what the Government’s doing is saying to people, yes, you want to grow and the money is going to be there. It’s not going to be easy to get money, it should never be easy, you should have a plan, but it means that it will be possible to get some money, and that’s going to make a lot of people out there feel more confident. It’s great news to see wages are up, unemployment’s down; the economy is in a great position. We need to make sure we keep it in this great position and the announcement from the Government, from Josh Frydenberg, will help to do that.
So, thank you. Thank you, Josh.
You mentioned that the new fund will would be classed as an asset and won’t contribute towards net debt, is there a risk at all that the new fund will pose a risk to the budget?
No. The answer is that the Australian Office of Financial Management have a great deal of expertise in this area. Australia has participated previously, or Australian governments have participated previously in the securitisation market back in 2008 in the residential mortgage-backed securitisation market.
This time, we are doing it for small business. That time they ended up making money for the government, for the taxpayer, it is hoped that it will be a similar experience this time. But we will be undertaking proper due diligence through this process and AOFM will be working closely with the ratings agencies.
Treasurer, we’ve got one of the strongest banking sectors in the world, what’s wrong with the industry that we need this government intervention?
Well, as the Reserve Bank of Australia has commented, and numerous business surveys as well, small businesses have found it difficult at times to access finance and the Productivity Commission has noted that the interest paid by small businesses on secured loans can be up to four percentage points higher than if the same person was seeking a home loan. What we want to do is to bridge that gap. The big banks control over 80 per cent of small business loans under $2 million. So, we want more competition in that market, we of course, want to give small business people options, both in debt and in equity, that’s what today’s announcements are about; more competition, more liquidity, stronger securitisation markets will ensure lower rates in doing business.
In terms of the Israel embassy on that issue. Indonesia confirmed is that the Israel embassy issue is holding up the Free Trade Agreement. How big of this step was that by your government?
Well, a couple of points to make. We have always said that we are beginning that process and no final decision has been taken with respect to the location of Australia’s embassy in Israel. But it is only right that we take a look at this issue and we do so as a sovereign government, who determines where Australia’s embassy is located.
I have to point out that West Jerusalem, which is the site where the United States embassy is now located in Israel, would be the capital of Israel under any two-state solution. So while no decisions have been taken, a process has been begun and I think that it is the right approach from the Prime Minister and from the Government.
In relation to Indonesia, quite clearly this is a critical relationship for us. Indonesia is the fourth most populist country in the world, the third largest democracy in the world and Australia’s second nearest neighbour and the world’s largest Muslim nation. So, they’re a giant by any standing and we have a vitally important relationship with Indonesia, whether it is strategic, political, and economic. We will continue to have that relationship, of course a Free Trade Agreement would benefit for both nations and we will continue to work with Indonesia on that.
Indonesian Presidential election is in next April. Are you confident that the Free Trade Deal will be signed before they go to the polls?
That’s going to be a matter for the internal processes with Indonesia. What we do know is the Liberal and National Government, that Jason and I a part of, has delivered more jobs through free trade agreements that we have entered into. The good work of Scott Morrison and his predecessors has seen free trade agreements with China, Japan, Korea, the Trans Pacific Partnership, and of course Indonesia would be another chapter in our free trade book.
But, the Labor Party have said that they want to revisit the free trade agreements. That they are not so keen on them as we are, even though 1 in 5 Australian jobs are related to free trade agreements. And indeed this business is earning export dollars by creating advanced manufacturing goods that can be ready for export.
So, we know that Australia looks across the world for market opportunities, free trade is good, and that is why the Coalition will continue to support it.
If free trade agreements are so important, how could you possibly put a decrease by, you know, continuing, to talk about the Israel embassy issue?
Well, when it comes to the location of Australia’s embassy, whether it is in Israel or in any other country, they’re the issues for Australia to take.
I think most Australians would agree that’s sensible, that foreign policy is the prerogative of the Australian and should always be that.
Woodside CEO said that there should be a price on carbon, to help build the emissions reductions. What do you think about this? Do you agree?
No we don’t. What we do believe is that we need to get energy prices down, which helps small businesses, indeed helps large businesses employ more people. And we have been successful today with the initiatives that we have undertaken, with ensuring more gases available from the domestic market, or whether it is through the work we have already done. We have seen prices come down across NSW, SA and QLD from the first of July this year. But there is more work to be done and that is why we are proceeding to implement the ACCC’s recommendations, including setting a default price to remove the complexity and confusion when people are paying for their energy bills, including also using the government’s balance sheet to support the construction of new generation assets in Australia.
So, we are focussed on getting power bills down. When it comes to emissions and climate change, again emissions on a per capita GDP basis are the lowest level in Australia in 28 years. We easily beat our first Kyoto target, we’re on track to beat our second Kyoto target and no doubt we will beat our 2030 target as well.
The fact these companies were initially opposed to the carbon price but now they’re indicating interest, does that signal that there has been a big shift in big business and the government has been left behind?
Well, the government is focussing on getting power bills down as well as reducing emissions, but they’re not mutually exclusive, I believe we can do both at the same time. When it comes to business decisions and announcements and policy decisions that they may take, that is a matter for them and I know they are also focused on reducing power prices because lower power prices means more jobs and more competitive businesses that they run.
Is there any realistic chance of an emissions trading scheme?
Not on our watch, but under Labor’s watch you will get a carbon tax, you will get higher power bills and they’re pretty silent on their 50 per cent renewable target. And you may remember they weren’t sure if it was an objective, goal, an aspiration or legislative target.
Now you don’t hear them talk about their 45 per cent emission reduction target of what that would mean for industry or the transport sector, what that would mean for the agriculture sector.
They are trying to cover up the real impact on power bills of their policies, that’s the reality of the Labor Party’s position. When they were last in government energy prices doubled. We saw in South Australia the Labor Government conduct a big experiment with dramatic consequences for that state, Bill Shorten wants to take that failed experiment nationally. Bill Shorten wants to sell out the blue collar workers in the mines, in the factories across the this country in order to impress the green left flank of the Labor Party in those inner city suburban seats. He has got a big choice to make, whose side is he on. We’re on the side of the consumer; we’re on the side of the household. Labor, unfortunately, is showing to be on the side of the big energy companies and higher power prices.