Speech by The Hon Lindsay Tanner MP
Minister for Finance and Deregulation
Crown Casino, Melbourne
Friday, 13 November 2009
At the beginning of last week the Government released the 2009/10 Mid-Year Economic and Fiscal Outlook. MYEFO, as it is commonly known, provides updated economic and budget forecasts based on information since the Budget was released in May.
Our economy has begun to move along the long road to recovery, having survived the most dramatic synchronised global downturn in three quarters of a century.
The figures in MYEFO indicate our economy is stronger, our unemployment lower, and our budget healthier than the forecasts in the May Budget. We now expect the economy to grow by 1½ per cent in 2009-10 and unemployment to peak at 6¾ per cent.
While I am confident in saying that we have now come through the worst of the global recession, the economic hazards are not behind us yet.
Falling terms of trade are putting pressure on business profits and declining hours worked are doing likewise to household budgets. Business investment remains weak, and we still expect private activity to contract this financial year.
Whilst we cannot afford to ignore these issues that are immediately in front of us, our focus is increasingly turning to the longer-term challenges that Australia faces to improve our productivity performance and to meet the needs of the country’s changing demographics.
In the coming months the Government will release a new intergenerational report. The report will detail the economic and fiscal pressures that will stem from our ageing population.
One of the headline pieces of information from that report is the projection that Australia's population will grow by 65 per cent over the next 40 years, reaching more than 35 million people by 2049, up from around 21½ million people now.
I am sure that you have all seen the commentary in the media in the few weeks since that data has been released. People are questioning where the additional 13½ million people will live, where they will work and where they will go for recreation.
These questions are not new. You can almost guarantee that every time a new population forecast is made a fresh round of debate will ensue. It has been happening in Australia for decades.
An article in The Economist a couple of weeks ago noted that an essay predicting that population growth would outstrip the world’s food supply entitled ‘The Principle of Population Growth’ was first published by the economist Thomas Malthus in 1798.
Although the modelling done now by Treasury is going to be a little bit more sophisticated than that done 210 years ago, it is important to remember that they are still only forecasts. Some of the more alarmist commentary about Australia not being able to cope with a growing population needs to be put in perspective.
In the 1920s, Prime Minister Stanley Bruce pursued a policy of ‘Men, Money and Markets’. After the Second World War it was ‘Populate or Perish’ and only a few years ago we had the then Treasurer Peter Costello telling Australians to “have one child for Mum, one for Dad, and one for the country.”
The projected population figure of 35 million is not a target, it is a projection. The uncertainties of technological, environmental and cultural change make it impossible to predict our population level in four decades time with any certainty. And they make it pointless to try and target a supposedly ideal population level so far into the future.
The argument that Australia is already overpopulated is nonsense. According to ABS data, Melbourne had 487 inhabitants per square kilometre in 2006.
Most major European cities are much more densely populated, often housing several thousand people per square kilometre. Even Dublin has a population density of 1,273 per square kilometre. Bangladesh is roughly twice the size of Tasmania, and home to about seven times the population of Australia. If Australia seeks to persuade the rest of the world that we are overpopulated, we will be rightly laughed at.
The primary source of stress on our urban and natural environments is bad management, not population growth. For most of the last century we treated natural resources like land, water and forests as if they were infinite. We’re now paying the price.
In recent weeks, both radical commentator George Monbiot and The Economist have argued that rich world profligacy is the primary obstacle to sustainability, not poor world population growth. The Economist also pointed out that declining fertility rates around the world suggest that world population levels will peak around 9 billion in 2050 and then start falling.
Population growth is not irrelevant, but as both Monbiot and The Economist point out, it’s hard to defend the notion that poor Africans and Asians should have fewer babies in order to save the world from the consequences of rich world excess.
The possibility that Melbourne and Sydney will become cities of 7 million people and that Brisbane will have 4 million people within the next 40 years does mean that the future planning of our major cities is undoubtedly one of the major challenges this country will face in the next quarter of a century.
A couple of weeks ago the Prime Minister spoke at a Business Council of Australia dinner about how quality urban planning is critical to achieving our goals of lifting productivity, tackling climate change and improving quality of life for Australians.
The Federal Government has for a long period been almost completely absent from the urban policy arena. The shortcomings in our nation's infrastructure planning and development are evident.
The Rudd Government is setting out a reform agenda for our nation's cities; an agenda that does not replace the roles of the other tiers of Government, but builds a new national partnership for better planning and productivity.
At the BCA Dinner the Prime Minister announced the development of national criteria for the future strategic planning of our major cities - the first in this country's history.
The focus of these criteria will include; balancing in-fill and greenfield development; implementing credible plans to reduce greenhouse gas emissions; and emphasising world-class design and architectural integrity.
The Commonwealth will consider linking compliance with the criteria to all future infrastructure funding.
The Government wants our cities to have strong, transparent and long-term plans for growth and high-quality urban development.
The British Government recently established an Infrastructure Planning Commission to make sure the UK has the appropriate infrastructure in its cities. In the US, President Obama has established a White House Office of Urban Affairs to guide the development of American cities.
The Rudd Government understands the need for national governments to be involved in urban planning. We established Infrastructure Australia – which includes a Major Cities Unit – almost immediately after we took office in 2007.
We have committed to record investments in infrastructure with billions of dollars being earmarked for infrastructure projects that will enhance the productivity, liveability and sustainability of our cities.
They include projects such as the regional rail express that we have committed more than $3 billion towards here in Melbourne.
This infrastructure is vital in improving the productivity and liveability of our cities, but in catering for the needs of growing populations in our urban areas we face more challenges than simply providing adequate infrastructure.
As part of our stimulus package in February this year, all the states committed to develop overall strategic plans for their major cities where such plans currently do not exist. From this process a number of key challenges have emerged as issues that all Australian cities are facing.
One is making our cities liveable and affordable.
Everybody is aware of the impact escalating house prices have had on people trying to achieve the ‘Australian dream’ of home ownership. The Rudd Government is working to support Australians to achieve that dream.
Figures released last month show that the First Home Owners Boost has helped 171,000 first home buyers to enter the housing market.
We have established the Housing Affordability Fund to help reduce the costs of new homes by tackling the barriers developers face in supplying affordable housing.
And delivery of our Social Housing Initiative is on track, with around 20,000 new dwellings approved for construction and an additional 60,000 to be refurbished.
But there is still significant work to be done on this front. The sprawling lateral growth of our major cities has complicated the supply-demand equation in housing. Increased transport costs like petrol and increased infrastructure development costs are effectively incorporated into the cost of new housing developments on the urban fringe.
The emergence of the National Broadband Network will help to solve this problem, but only over an extended period.
Regardless of what form of development is used, integration with transport networks, infrastructure and services is vital. Isolated communities breed social exclusion. Urban planning is essential to ensuring Australia is economically productive and socially inclusive.
The second challenge is making sure our cities are sustainable.
Approximately 70 per cent of Australia’s output of greenhouse gases is linked to our cities.
Most Australian cities are now facing serious water problems. Our infrastructure, design and service systems largely reflect a bygone era where the concept of sustainability was virtually unknown.
The Rudd Government is working with the states and territories to meet these challenges.
Through our Water for the Future strategy we are investing close to $13 billion in securing Australia’s long term water supply.
The strategy includes a ‘National Urban Water and Desalination’ plan that aims to reduce our reliance on traditional rainfall and secure water supplies in urban areas by supporting desalination, water recycling and storm water harvesting projects.
Through the development of a website – yourdevelopment.org – we are providing Australians with practical information on how to create sustainable urban residential developments.
The Government is also providing funding for the retro-fitting of commercial buildings. Last week I announced nine businesses in my electorate would share $4.7 million worth of funding from our Green Building Fund to reduce the energy consumption of their existing office buildings.
It’s also good to see that Australian business is addressing these challenges.
Last week I participated in the launch of the new ANZ headquarters at Docklands. This 6-star rated building that will house 6,500 people will use on-site gas-fired trigeneration, solar cells and wind turbines to generate much of its own electricity needs. It has 500 bicycle racks and uses Yarra water to drive underfloor air conditioning.
It’s expected to produce about 70 per cent less greenhouse gas emissions and use about 50 per cent less potable water than an equivalent traditional commercial building.
The Rudd Government’s deregulation agenda is designed to increase economic productivity by reducing the regulatory burden on business and citizens.
Whilst nearly every person I meet who is involved in the operation of a business is able to cite examples of unnecessary or excessive regulations that they deal with, all are surprised to learn that redundant red-tape costs the Australian economy an estimated $40 billion per annum.
In November last year the Council of Australian Governments (COAG) signed the $550 million National Partnership Agreement to Deliver a Seamless National Economy.
The five-year agreement commits the Commonwealth, states and territories to implement 27 deregulation priorities and a number of competition reforms as well as ongoing regulatory reform. The COAG Business Regulation and Competition Working Group, which I co-chair with my colleague Minister Emerson, is overseeing those reforms.
In the year since its signing there has been substantial progress on a number of reforms in the National Partnership Agreement that will be of particular interest to those in the property industry, and I would like to discuss a few of those with you today.
The costs for employers operating across state boundaries in complying with multiple regulatory regimes can be considerable. Analysis undertaken for the Government indicates that the model act could reduce compliance costs by up to $200 million per annum.
The implementation of the legislation is on track for the new national OH&S regulatory regime to commence in December 2011.
Draft legislation was released for public consultation earlier this week with the licensing arrangements for an initial tranche of occupations - including property agents, builders and plumbers - due to commence in the first half of 2012. Other trade occupations will follow shortly after.
National performance measures for Development Assessment (DA) that will contain information on the number, type and length of assessment of DAs are currently being developed with the first national performance report to be publicly released by June 2010.
COAG has also agreed to work towards harmonising code-based development assessment standards between jurisdictions, increasing the proportion of code-assessed DAs, and developing stand-alone assessment codes for houses, units and commercial developments.
Code-based DA systems mean that simple development proposals can be assessed more quickly and free-up planning resources to assess more complex proposals.
Progress in these areas takes time. I would not blame anyone in this room if they were to tell me that they “will believe it when they see it.” The strict monitoring and reporting of the COAG Reform Council and the $550 million incentive for the States and Territories to deliver the outcomes, should mean that results we all want will materialise.
Although this deregulation agenda was committed to long before the global recession began, the global economic stresses we are now facing remind us of the importance of delivering micro-economic reform efforts that enhance productivity.
In speaking to business owners and operators across the country one of the initiatives that is creating the most interest is the Government’s Standard Business Reporting project.
Every business reports to Government on their activities, most businesses to multiple government agencies.
This project is streamlining the computerised reporting systems of federal, state and territory governments to enable business to use a standardised reporting framework to report on financial matters to a range of agencies.
So rather than having to fill in separate forms for the tax office, for APRA, ASIC, the ABS and for state revenue offices for example, you will be able to fill in a single set of paperwork online that will meet all requirements.
I understand that it is not the sexiest piece of work but simplifying these complex, time-consuming reporting processes is expected to save Australian businesses close to $800 million annually when the program is fully operational.
In facing our long term challenges we have to be positive. We have no cause to wring our hands about population growth. We have an urgent need to address the problems we have inherited from the past. The Rudd Government is tackling these complex issues. The States and Territories are doing likewise, and I’m delighted that business organisations like the Property Council are playing their part.
-ends-
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