Dec 12, 2008

Transcript of Building Our Nation announcement

Transcript of Joint Press Conference at Parliament House with Prime Minister, Deputy Prime Minister and Treasurer

Friday, 12 December 2008

The Hon Anthony Albanese MP

The Minister for Infrastructure, Transport,

Regional Development and Local Government

Leader of the House

Member for Grayndler

Subject: $4.7 Billion Building Our Nation Plan; Budget; Early Childhood Education; Fiji; Indigenous Communities

PM: Today the Government announces a $4.7 billion nation building plan to strengthen the Australian economy and help create 32,000 Australian jobs at a time when the global financial crisis continues to bear down on the Australian economy.

I made a commitment to the Australian people that this Government would use nation building infrastructure to boost Australian jobs and to strengthen the economy. Today’s $4.7 billion statement represents a significant instalment delivering on that commitment.

The global financial crisis continues to affect not just economies around the world but here in Australia as well. Five of the world’s largest economies have already fallen into recession, including the US, Japan, Germany and France.

And the OECD has predicted that we’ll see something like eight million jobs lost across the advanced economies in the period ahead. Australia is not immune from this crisis and our response to it will obviously confront the fact that we have long term challenges ahead.

There are no quick fixes. We will need to deal with what will be a long and drawn out crisis. And we’re already beginning to see the impact on Australian growth and jobs.

Today’s statement builds on earlier action taken by the Government, drawing your attention to the $10.4 billion economic security strategy announced in October and on top of that a $6.2 billion long term plan for support for the automobile industry.

$300 million worth of investment in local infrastructure through the meeting of the Council of Australian Local Governments and most recently $15.1 billion invested in a national plan for education, health and housing reform delivered through the Council of Australian Governments.

Today’s package, today’s statement, is capable of creating a further 32,000 Australian jobs. That comes on top of the 133,000 jobs which we’ve argued are capable of being created as a consequence of the package agreed by the Council of Australian Governments and the 75,000 jobs capable of being created through the Economic Security Strategy.

Secondly, the reason for this nation building statement is not just to respond to the global financial crisis, although that is of central importance. It is also to look beyond the crisis for the long term capacity we need for this economy and build on long term productivity growth.

That is why we are focusing on infrastructure because infrastructure is one of the key drivers of productivity growth. That’s why we are also focusing on education.

This package will deal with critical infrastructure in transport. It deals with rail, it deals with roads. It also deals with education. It also deals with how we support private investment.

Firstly on infrastructure. There are three key infrastructure components to this package. First in rail. This represents the single biggest Australian Government investment in rail in the history of the Commonwealth.

And in two years what this Government will be investing in the ARTC represents more than the previous Government invested in 12 years.

We will inject $1.2 billion in new funds into the Australian Rail Track Corporation. For example, $580 million of today’s investment will be used to expand capacity and rail corridors to service the Hunter, the Hunter Valley coal mines and of course their connection to the Port of Newcastle.

This $1 billion plus project will more than double the export capacity at Newcastle, from 97 to 200 million tonnes per year.

Secondly on roads. The Government is bringing forward $711 million in roads spending to this financial year and next, and will more than double funding for the Federal Black Spot program.

Also, this effectively brings forward a total of $4.7 billion in the AusLink II Roads program.

The third component of infrastructure lies in education. This is a $1.6 billion investment made up of 11 specific education research projects, which have been evaluated separately by the EIS.

And secondly the investment also of two amounts, one of half a billion dollars into the immediate capital needs of the universities to deal with additional teaching and learning spaces. And a further investment of an additional half a billion dollars in the provision of teaching and learning spaces for Australia’s TAFE and VET facilities.

Those are the three infrastructure elements of the package.

If I can now turn to the business measures. There are two sets of business measures here and one relates to the small business tax instalment program.

Small business is critical to the future of the Australian economy. This measure advantages some 1.3 million small businesses and we are very mindful of the fact that small business across Australia employs some 3.7 million Australians.

What we are doing is in effect reducing the December quarter tax instalment on PAYG by 20 per cent so that businesses pay less tax up front, giving them effectively a cash flow boost.

This will mean there will be a $440 million effect for small business sitting in small businesses’ accounts and tills, rather than the treasury coffers. That’s the first measure.

The second is a most significant measure indeed. This is a $1.6 billion investment by the Government in the provision of a 10 per cent temporary investment allowance for the Australian business community to encourage capital investment for the period ahead.

It comes into effect immediately and applies for a 12 month period for capital acquisition decisions made up until the middle of next year, which must be deployed within a 12 month period following.

It is a temporary measure. It is also a temporary measure that we have spent some time consulting with our friends in the Australian Chamber of Commerce and Industry on.

Why have we done this? We believe that it is important to provide a positive incentive for the private sector, making investment decisions for the period ahead. And to know that in this period, where we are faced with considerable economic pressures from abroad, that they can expect this additional 10 per cent temporary investment allowance to assist them and encourage them in making those decisions.

Overall the Budget will remain in surplus once this and other packages announced this year are taken into account.

To conclude, before I turn to the Treasurer, the Government has made this decision today because we believe that the challenge arising from the global financial crisis is very basic.

When the private sector is under great challenge and great threat and we are seeing a contraction in private sector activity, Government must step in. Government must step in, in a temporary and targeted fashion and as well, do so with our investments, while building the nation’s long term economic infrastructure and encourage private sector investment in capital as well.

That is why we have framed this package in the way in which we have done. We believe it is the right package for the times. We believe it is the right level of stimulus that we need to invest at this time.

But as I said before, this significant infrastructure statement precedes what will be a more substantial statement in the early part of next year. Treasurer.

SWAN: Thanks Prime Minister.

This package recognises the fact that we experiencing a very difficult time in terms of the global economy. We have the Economic Security Package out there at the moment, focused, focusing on households and lifting consumption.

The important thing about this package today is that it focuses on business. It gives a cash boost to small business and it gives that at the beginning of next year. And I’m sure that will be welcome.

But what it also provides is an additional incentive, a 10 per cent tax deduction for business to invest in capital items. And that will be important as we go through next year. And combined with the Government’s initiatives when it comes to infrastructure, that will give a very significant boost to our economy.

These actions are all necessary in the face of the most uncertain period in the global economy in living memory. Over to you.

PM: Just before we do. This – and we’ll take questions across each element of the package and the Deputy Prime Minister and Infrastructure Minister here, are here to respond to questions as well.

The Government unequivocally believes in nation building. We’ve said that from day one, we believe it today. It will be our doctrine into the future as well.

We believe in nation building because it provides stimulus to the economy now, at a time of great stress, coming off the back of the global financial crisis. We also believe in nation building because it is necessary to lay out the infrastructure and the productivity enhancing measures for Australia’s long term future.

Nation building for stimulus now. Nation building for long term productivity growth. Over to you.

JOURNALIST: You said the Budget will remain in surplus but how much do today’s announcements wipe off the surplus? What is it now down to? For this year.

PM: Let me go to those questions, and then I’ll ask the Treasurer to supplement.

As I said at the outset, this is a $4.7 billion package. Some of this, a large proportion of this, is new money. Some of it, consistent with our previous statement is a bring-forward of money from our outer years in the existing forward estimates.

We are confident that in delivering this package, based on our advice from the Treasury that it can be delivered, together with other announcements made in this year, 2008, while maintain a Budget surplus.

SWAN: The package is affordable. The Budget does remain in surplus over the forward estimates but it is the case that we don’t publish on a package-by-package basis all of those figures. The previous Government never did that and we don’t intend to be doing that either.

We have a Budget in surplus, it’s an affordable package and it’s one that is necessary and timely given the international economic environment.

JOURNALIST: (inaudible).

SWAN: Because the previous Government never published those figures.

JOURNALIST: (inaudible).

SWAN: No I think what we do is account in a timely way for what we do. We’ve had the mid-year economic review. Those figures were published in November.

There are swings and roundabouts in terms of Budgets and developing Budgets and putting them together takes time. You have upwards swings and you have downwards swings in terms of your spending.

We are going through the Budget process in the normal way and as we go through next year we will publish all of those estimates and a full bottom line and a full accounting in next year’s budget.

JOURNALIST: How much of the $4.7 billion is new money? Over what period will this money be spent? And are all these projects new or are some of them as promised by the Howard Government and have just been re-badged under this package?

PM: Let me be specific on your question. For the $4.7 billion that we’ve announced in this package today, $1.5 billion flows through in 08-09, $2.7 billion flows through in 09-10, $700 million flows through in 10-11.

What’s the rationale for doing that? What are we most concerned about in terms of the impact of the global financial crisis? What happens this financial year and what happens in the subsequent financial year? And if you look at all the IMF projections about what’s happening in the global economy that is where all of our concern should lie.

Also, you may bear in mind that what I said at the time of the Premiers’ Conference before last in terms of a bring-forward; that we were concerned about bringing forward to the greatest extent possible longer-term projects in order to get activity flowing straight away.

Let me give you an example. Auslink. All those projects, which are detailed in the document and you’ll see it fully outlined project by project, were scheduled for start later. We’ve now, through bringing forward funds, having those projects start much earlier in the cycle.

Why are road projects in particular important in terms of overall economic activity? They are dispersed across the country.

Secondly, the ARTC proposal for example, the rail proposal is significant new investment and again is dispersed across the country.

What we are looking at are a series of measures which give a reasonable spread of economic activity geographically in infrastructure which is necessary, but bringing forward all that can physically be brought forward to maximise activity now and in the financial year ahead.

JOURNALIST: Prime Minister Rudd, did the (inaudible) Australia board advise you on the priorities in this package? And will it still be possible to get the spending on that Infrastructure Australia priority list flowing in the next financial year?

PM: Firstly, the advisory boards, both for infrastructure and for health and hospitals, and for education, continue to do their work. We anticipate that the principal flow-through of their work will come through in what I’ve described as the more substantial infrastructure package for early next year.

What we have done here is in the case of the education package is take some deliberations from the advisory work that’s been done in relation to the Education Investment Fund. On top of that we have added initiatives of our own. For example, a half billion dollar investment in teaching and learning spaces. A half billion dollar investment in vocational education and training teaching and learning spaces as well.

So, you will see the principal flow-through from those advisory boards into the substantial infrastructure statements that we make next year.

JOURNALIST: WA, the economy’s powerhouse, is not even getting double Tasmania’s money. What’s the thinking there? And, what about Oakajee Port for example?

PM: Well, can I just say that one of the proposals put to us by the WA Government which falls outside the framework of the three funds is concerning a possible significant expansion of agricultural land in the Ord. That’s why we have indicated through this statement a preparedness to co-invest with the West Australian Government up to $195 million, subject to the conclusion in about a three-month period, of a joint and final feasibility study between us.

If, for example, that feasibility study is not successful, then that money will flow through to other infrastructure projects in WA.

Secondly, you raise the question of Oakajee. The Commonwealth is supportive of the Oakajee project, this is the Oakajee Port project, it’s significant for the WA economy, significant for the national economy. And we will work with Infrastructure Australia and the WA Government to determine its final feasibility and any (inaudible) contribution to the project.

More broadly, on WA, you’ve got allocations coming out of the half billion dollar fund for university, teaching and learning spaces, half billion dollar fund for the vocational education training spaces, as well as the 195 allocation that I’ve spoken about in relation to the Ord.

As for, and to partly build on the answer that I gave before, as for many of the significant larger, longer lead time infrastructure projects which have been the subject in large part of deliberations by the three advisory boards, they will flow through to the substantial statement we make on infrastructure early in the New Year.

JOURNALIST: Two questions actually. One on the investment allowance for business. Can you just clarify what the size of the business is that would qualify for that? And are there any estimates on the impact of the $1.6 billion that you offer and what that would mean for business investment generally? Would it stimulate further investment?

And the second question is on infrastructure, some of this stuff would seem to be export related infrastructure, shouldn’t there have been a focus on more export related infrastructure, is that something that Albo may like to comment on?

PM: Well I’ll take the second first and having hopefully delivered the ball close the boundary, I’ll then ask Albo to lift it over the boundary.

Look carefully at the ARTC and the significant investment that is attached here to Hunter Valley, and I made reference to this in my remarks before. This represents a significant expansion of the rail network which services the Port of Newcastle and is therefore highly relevant, and I’ll ask Albo to add on that and other export-related elements of the rail proposal in particular.

Also bear in mind when it comes to other export-related infrastructure projects, we have more to do in terms of the significant, more substantial infrastructure statement next year.

Albo.

ALBANESE: Yeah, the ARTC project is aimed very much at boosting productivity. If you take the Hunter proposal by itself, it is a $580 million injection by the Commonwealth towards the ARTC.

That will be backed up or supplemented by $420 million of borrowing by the ARTC. That will more than double the capacity of the rail network in the Hunter. That is critical, critical for our export performance.

If you look at the other ARTC projects that are outlined, if you look at the upgrade – we’re asked about WA – the Adelaide to Kalgoorlie link, that is very much aimed at exports. As is the Western Victoria link.

These ARTC projects are very much aimed at boosting our productivity. We’ll have the benefit also in terms of passenger rail when you have duplication or triplication of lines, then you free up capacity for passenger rail network.

But the ARTC is primarily concerned with freight, and primarily concerned therefore with boosting our exports. These projects is the largest, as the Prime Minister said, the largest investment, single investment by the Commonwealth in rail since Federation.

Aimed very much at that productivity agenda, which is one of the reasons why we chose to bring it forward as part of this nation building package.

PM: On the investment allowance. Can I just answer the second part of the question too, well the first part of the question which I skipped over before.

On the investment allowance question, we worked reasonably closely with ACCI on this. The threshold that we’ve agreed on is investments in plant and equipment over $10,000, which are acquired or ordered by the end of the current financial year.

This of course is in addition to any other deductions which may be applicable, after the purposes of capital investment by firms. And again, this is a significant slice of money. We want to go out there and say to people in the private economy, that private capital investment is so important, the overall shape of our national accounts, the overall shape of growth.

We understand the pressures they are under and here is an effort on the Government’s part to provide a helping hand at making critical infrastructure decisions in the year ahead.

JOURNALIST: Could you just clarify how much in the $4.7 billion is new money?

PM: As I said before, the $4.7 billion is made up of, the flow-through in 08-09 is $1.5 billion and 09-10 is $2.7 billion. On the new’ question, you have a budget bottom line impact in terms of new allocations of $2.5 billion and a bring-forward of the rest. And that includes the investments in education as well as in the bring-forward of Auslink.

As I’ve said consistently, this is bringing forward and it is new money. There is a combination there.

SWAN: $2.5 billion over the pool.

PM: But what you’re looking at in terms of the totality of the package is the concentration of funding that we’ve indicated before.

Which is $4 billion by the way into the economy, over the next 18 months when it is most needed in these areas.

REPORTER: Given that you’ve spending, you’re pumping a lot of money into construction projects, you know railroads, whatever, have you, are you adequately staging it so that in putting all this money out there you don’t actually drive up the cost by contractors?

PM: You know, at the end of the day you don’t have perfect knowledge on these things. But we’ve taken a lot of soundings out there from the business community, there’s a lot of emerging spare capacity in construction around the economy at present.

It’s different in different parts of the country. There’s no one-size-fits-all here. But in, for example, underpinning positions to provide a significant boost to capital investment in the universities and TAFEs, which as you know are spread across the country, we’re quite confident there’s a lot of spare capacity out there to basically rise to that challenge.

SWAN: The rails, something like $1.2 billion I think, Minister Albanese can tell you the plans for when that can be spent because the focus here is on projects which we can get going relatively quickly.

ALBANESE: Well we’ve outlined a few, if you look at your booklet. Project by project is outlined in terms of the timeframe we expect to bring forward. There are major benefits for jobs, we certainly sat down and consulted with the ARTC about the timeframes of their agenda.

Just to give in terms of some job examples. On rail we’ll need as a result of this over one million new concrete sleepers. The major plants for producing those are at Grafton, Wagga Wagga and Geelong. 120 jobs in the manufacturing sector in each of those regional towns. And of course there is the multiplier effect of that.

On road, for example the projects that we’re bringing forward for the Hume Highway. For this, they’ll produce small concrete bridges on site. The stone for the pavement comes from local quarries and is crushed by local contractors. The sand is sourced locally and local contractors do all the jobs such as fencing and landscaping around the site.

So in terms of stimulating local economies and local jobs, if you look at each of the projects, they are timed to maximise the output that we can have in terms of stimulating jobs at this time.

PM: What we’ve tried to do with this nation building document is maximise local jobs, maximise early stimulus, and maximise long term economic benefits in infrastructure.

JOURNALIST: Can (inaudible) enough to avoid an Australian recession next year?

SWAN: We have to do everything that is possible to strengthen our economy, to support businesses and to support households.

This package I think will add or boost GDP by about a quarter to one half of a per cent, and it will create up to 32,000 jobs.

And of course it must be seen in the context of the Economic Security Strategy, and those monies now are flowing through into the economy. They will through the December quarter and also through the first quarter of next year.

And in addition to that, we have the other initiatives the Government has put forward in terms of our COAG spending and so on.

And on top of that, we have a very significant depreciation of the Australian dollar which will also boost the competitiveness of this economy. So I think, in addition to that we also have a very substantial easing of monetary policy.

All of those things are now working in tandem to strengthen our economy, to support households and to support businesses. So we’re giving our best shot.

PM: Can I just say on the five drivers of our national accounts, where does this fit into the overall strategy – consumption, private residential investment, capital expenditure by firms, capital expenditure by governments, and net exports – they’re your drivers of the national accounts.

What we’ve done through the Economic Security Strategy is provide significant stimulus to private consumption. We’ve been upfront about that, that’s what we’ve been on about.

Also, through the $1.6 billion component of that economic strategy in dealing with first home owners, first home buyers, we have sought to boost also our private residential investment.

And there has been early, early, very early positive signs that we may have helped on that score. But you know, one swallow doth not a summer make.

Thirdly, on the question of CAPEX, private capital investment, that underpins the logic of this significant 10 per cent temporary investment allowance that we have provided to private firms.

Then on infrastructure, what governments themselves do and invest, fourth driver of our national accounts. That is why you have got such significant investment in this statement on roads and rail and of course in education, and net exports, the Treasurer has just addressed.

JOURNALIST: Can I ask you and the Deputy Prime Minister to respond to the UNICEF report that says that we are near the bottom of the table of 25 countries in terms of early childhood care and education. Given your emphasis on education and early childhood, how much more are you likely to have to spend to improve those standards?

PM: I will ask Julia to respond to that.

DPM: Thank you very much Karen. People would have seen reported today the new study about how this nation has fallen behind on investment in early childhood education particularly. Now sadly that is not news. We knew through OECD studies and the like that this nation was coming pretty close to the back of the class. We believe that’s the legacy of more than 10 years of neglect of this vital agenda, when all of the worldwide research was telling us that intervention in the early years can make the biggest difference.

This government was elected with a broad range of policies to make a difference in the early years and we have already started the roll-out of them, including our very significant investment in bringing universal pre-school right around the country.

So whatever setting children are cared for, whether they are at home and going to a stand-alone kindy or in childcare, they will get the benefit of those vital literacy and numeracy programs, pre-literacy, pre-numeracy programs – pre-literacy, pre-numeracy – to make sure they get off to a good start at school.

We are also investing in the early learning workforce, very significant investments there. You would have seen those all through the last COAG package in the last few weeks. A lot of money rolling out, making a difference. In addition of course we are developing an early learning framework, work is underway on that and more work will be done there during the course of 2009 to bring all of these initiatives together in an early years framework to make a difference for Australian kids.

But you are right, desperately neglected agenda under the former government and we have taken quick action to deliver our promises to make a difference.

JOURNALIST: If I could ask you about Fiji, it now appears that the March elections won’t happen. Has Frank Bainimarama been allowed to get his own way? Has the international community not put enough pressure on Fiji?

PM: When I attended the Nuie Pacific Islands Forum, there was an unprecedented statement on the part of Forum Government leaders on the unacceptability of the Fijian leader’s attitudes to the restoration of the normal processes of democracy in his country.

The position of Pacific Island leaders, based on my most recent advice, has not changed. Furthermore, I believe that subject to recent advice from the Foreign Minister that you will see further action from Pacific Island Forum countries on this matter in the period ahead.

This Government takes democracy in the Pacific Island countries seriously. It is not optional. It is what we do in our part of the world. And for there to be any exception, particularly in the way in which this bunch have belted around the free media for example, in Fiji, and have traduced the democratic processes, we are not about to simply stand idly by while that happens.

We have taken a hard diplomatic line on this. Further actions, as necessary, will be taken.

Can I add by the way to the answer on early childhood education, then I will come back.

You know, January last year, the first policy statement I launched as leader of the opposition was on early childhood education. I was completely upfront about the fact that Australia, according to the then OECD analysis, were the international wooden spooners on early childhood education.

This, for this Government will be a signature long term reform. The more we invest in early childhood education, the more we are serious about long term productivity reform. What is the problem for Governments is that for these investments to be yielded over time to show their real effect, you’re looking at a 10 to 12 year lag, which is often an excuse I suppose given by politicians for not worrying about it too much.

We are determined to turn this around and we will do so. Our commitment in terms of providing early childhood education for those kids in the year before their formal schooling commences, of 15 hours a week, 40 weeks a year, with emphasis on pre-literacy and pre-numeracy training remain. It is being implemented. It will take time.

But we are determined to prosecute it.

JOURNALIST: Patrick Dodson today has attacked Warren Mundine, Marcia Langton and also every Government on their position on remote outstations. (inaudible) what is your policy in relation to Aboriginal remote outstations? Do you think there should be a policy to encourage indigenous people to move into bigger centres that are more economic?

PM: Look, without having seen the text of what Patrick has said, I wouldn’t simply respond to it randomly. The Government is determined to prosecute a long term program of reform for all indigenous communities and that means reducing long term welfare dependency, it means moving from welfare to work, it means providing every necessary incentive to do so.

Secondly when it comes to reforms for remote communities, it is not just what Government does itself, it is what we do in partnership with others. In Darwin a couple of days ago I announced a further release of funding by the Commonwealth to the Clontarf Foundation.

The Clontarf Foundation, excellent, the Clontarf Academy, excellent mob who operate out of Perth, teaming up football, football training, with mandatory school attendance. And what I have seen of their early work in so many of the communities in WA and the NT is first class. And in one fell swoop, what we have done is effectively double their budget.

Secondly, I allocated recently, $20 million to the indigenous boarding school initiative being run out of Sydney by Mr Penfold, and that is designed to provide funding for a large number, a very large number of indigenous boarding school opportunities, some of the most elite boarding schools in the country.

Then we have Twiggy’s initiative in terms of Indigenous employment, which has been signed up to in terms of a covenant by a whole bunch of firms across the country. Each part of these reforms is designed around one thing and that is, to reduce welfare dependency, to increase economic self reliance, and to provide opportunities for these communities to stand up.

We intend to keep going on this front.

JOURNALIST: (inaudible) to go into the three nation building funds and how much will be available for each of them when they start being allocated next year?

PM: The answer to your second question is, a lot. And answer to the first part of your question is, we are on track to invest from these funds, big time, because we believe it is necessary for the nation long term.

I have described next year’s statement on this as being more substantial, it will be. These are long lead projects. They have to be deliberated on carefully. We want to make sure that the investment counts long term for the productivity of the economy once we are through the global financial crisis. But can I just say this, nation building isn’t something that we invented in the last three weeks.

Nation building is something I have been talking about since becoming leader of the opposition. Nation building is in this government’s DNA. Nation building is what we are prosecuting through this significant statement today and you will see it up there in lights with our more substantial statement early in 2009. And we’ve got to zip.