Budget 2015: Speech by Joe Hockey, Treasurer

Madam Speaker, I move that the Bill for the
2015 Budget now be read a second time. Tonight I am speaking directly to you the
people of Australia. I want to inform you of the next steps in
the Government’s plan to strengthen our nation’s economy. As we all know over the past twelve months,
Australia has had to deal with its fair share of challenges. We have stared down terrorist events in Sydney
and Melbourne. We have had to deal with a terrible drought
in Queensland and New South Wales. On the economic front, iron ore prices have
fallen dramatically and the recovery in the global economy has been weaker than expected. But I say to you, the economic plan laid down
by this Government more than a year ago, is in place and it is helping us to deal with
these challenges. Through careful planning we are successfully
navigating the difficult transition from a mining investment boom, to one of broader-based
growth across our economy. In the past 12 months we have coped well with
weaker than expected global demand, lower commodity prices and falling revenue. Even in the face of the largest fall in our
terms of trade in half a century, which has contributed to a significant fall in tax receipts,
our economic plan has helped Australia to have one of the fastest growing economies
in the developed world. I can report tonight that despite the headwinds,
our timetable back to a Budget surplus is unchanged from last year. We inherited $123 billion of deficits when
we came to office. We have now brought that down to $82 billion over the next 4 years. This is despite the fact that we have lost
$90 billion in expected tax revenue over the same period. A $40 billion improvement in the bottom line
is good, but we need to do more. On a daily basis we borrow $96 million just
to pay our bills, which is down from the $133 million a day that we inherited when we came
to Government. So today we have taken steps to continue repairing
the Budget with sensible savings and a prudent approach to spending. We are redirecting funding
to areas, such as small business, child care and infrastructure, which will boost growth
and create jobs. At the same time we have been repairing the
Budget, we have overseen a strengthening of growth in employment, housing construction,
retail trade and exports. This is not an accident. Since we came to Government, we have abolished
job-destroying taxes like the carbon tax and the mining tax. We have helped create a quarter of a million
new jobs and there are more to come – a lot more. We have abolished 50,000 pages of regulation
and red tape which was costing our economy nearly two and a half billion dollars a year. We are rolling out the biggest infrastructure
programme in Australia’s history, with new road and freight corridors being built right
across the country. We have helped to bring down the cost of living
-Australians today are paying less for their electricity and less on their mortgages. I say again, our economic plan is working,
and things are getting better. A lower Australian dollar is now providing
a boost to sectors like manufacturing in South Australia and Victoria, and tourism and education
in Queensland. On election night, the Prime Minister declared
that Australia was back open for business. His words have been proven true. Since then
we have seen a significant increase in approved foreign investment applications in Australia,
up 23 per cent in the past year alone. The world has expressed its growing confidence
in Australia’s economic future. I too share that optimism. This Budget is the next step in our economic
plan. This Budget empowers small business to invest,
grow and create jobs. This Budget gives Australians the opportunity
and freedom to participate in the workforce – no matter what their circumstances. This Budget continues to implement our plan
to build new roads, new rail and new infrastructure that will generate new growth opportunities
across all parts of Australia, from our cities to regional areas, from Tasmania to our northern
frontier. Madam Speaker, the global economy is turning
for the better. The United States is back to near full employment,
Europe is looking a little stronger, and Japan is finally starting to grow. And our biggest trading partner, China, continues
to grow at nearly 7 per cent, despite a recent slowdown. With more than 1.3 billion consumers living
in China, the demand for our exports will continue to grow. For every dollar we spend buying Chinese goods
and services, the Chinese spend two dollars buying our goods and services. We are the big winners out of this relationship. Each year we send enough iron ore to China
to build the Sydney Harbour Bridge, from Sydney to Perth, and then back to Sydney again. And in the next five years we will become
the world’s largest exporter of Liquefied Natural Gas. Together with our annual exports
of coal, this is enough energy to power Tokyo, Singapore and Mumbai for an entire year. And while prices are lower, and we wish they
were higher, the opportunities from Asia for our resources are enormous. People ask me where are the future jobs going
to come from. Well consider this, if we could lift our service exports like higher education,
tourism, health care and financial services, to just half the level of our commodity exports,
it would add $50 billion to our economy each and every year. That’s why, in order to open that door, we
are investing $6 billion in new trade agreements with China, Korea and Japan. And we are expanding
that to India, which is the fastest growing economy in the world, but still a very small
trading partner of Australia. Australian based businesses, exporting our
own home grown skills, in everything from advanced manufacturing to services, will be
the big new drivers of wealth creation and job creation over the next decade. This is the growth opportunity that Australia
has been patiently waiting for, and it is here and it is available now. So as part of our economic plan we need to
do more to help business, particularly small business, take advantage of these opportunities. Madam Speaker, I like so many of my colleagues,
grew up in a small business family. That small business put a roof over our heads.
It paid the bills. It gave all of the family a chance at a better life. Small business is often a family business.
A business of brothers and sisters, uncles and aunts, cousins, parents and children.
And for those who work in a small business, who are not related, well they often become
family. Our future growth will come from growing small
business into big business. Every big company in the world started small. Every big idea in the world came from just
one person, or a handful of people working together. That is why tonight, I am announcing a package
of measures that will make a genuine and permanent difference to small business in Australia. To start, every small business will get a
tax cut. We are giving you back more of your own money. From 1 July this year, small companies with
annual turnover of less than $2 million will have their tax rate lowered, from 30 per cent
to 28 and a half per cent. This is the lowest small business company
tax rate in almost 50 years. Most small businesses are not run as companies.
So we will also give an annual 5 per cent tax discount of up to $1,000 a year for unincorporated
businesses. We are the only Government that will deliver
tax cuts for small business because we want small business to grow and employ more Australians. But we recognise that small business, in order
to succeed, needs better cash flow and better tools for innovation as well. So I announce, that from 7:30pm tonight, small
business can claim an immediate tax deduction for each and every item they purchase up to
$20,000. From tonight, it can be instantly written
off to reduce your tax liability. And this will benefit the 96 per cent of Australian
businesses – more than 2 million of them – that have a turnover of less than $2 million a
year. This will be of enormous benefit to their
bottom line and help businesses with their cash flow. It means innovation. It means jobs. It means more money to invest and grow your
business. If you run a cafe, it might be new kitchen
equipment, or new tables and chairs. If you’re a tradie, it might be new tools
or a computer for the home office. Cars and vans, kitchens or machinery – anything
under $20,000 is immediately 100 per cent tax deductible from tonight. We also want Australians to start a new business,
and we want them to grow. Why? Because new businesses create new jobs. That is why we will ease the financial strain
by allowing business owners to immediately deduct the costs incurred when starting up
a new business, or receive tax relief when restructuring their existing business. In addition, we are expanding the tax concessions
for Employee Share Schemes, to make it easier for small start-up companies to attract the
skills and talent they need to grow. Unlike the old system, under the old government,
employees won’t have to pay tax on their shares until they actually receive a financial benefit
from those shares. This is great for workers and it is great
for innovative start-ups. And to help small business grow, we are facilitating
new opportunities for crowd-source funding, making it easier for small investors to marry
up with growing small businesses. And in a further new policy initiative which
is just common sense in the digital age, we are abolishing Fringe Benefits Tax on all
portable electronic devices used for work, like mobile phones, laptops and tablets. We need to keep up with developments in the
new digital economy. Accordingly the Government is investing $255 million to make your dealings
with the Tax Office, Centrelink, Medicare, and other government agencies easier, simpler
and faster. Madam Speaker, in many ways farmers are the
most resilient of all Australians and they are also our best environmentalists. They have to deal with the varied conditions
of a big land, fierce global trade and ever increasing competition. At the moment, we have parts of our country
that remain in drought. As such, we are committing over $300 million to help them get through
these tough times. Equally important, as part of our economic
plan, we need to start preparing for the droughts beyond today. So all farmers will get an immediate tax deduction
for new investment in water facilities, and a three-year depreciation allowance for all
capital expenditure on fodder storage assets. In addition, all farmers will be able to fully
deduct the cost of new fencing from their tax bill. This initiative will help to improve
productivity and environmental management of the land. Over the next few weeks, after further discussion
with farmers, we will be releasing more details about our plans to strengthen agricultural
production across Australia. Madam Speaker, this is a Budget that unleashes
our nation’s potential. An extraordinary area of untapped promise
is Australia’s North. This is an exciting frontier for economic development that is
filled with abundant resources and talented people. Its tropical climate is shared with two thirds
of the world’s population, and of course it’s closer to our key trading markets than any
other part of our country. But the North needs new infrastructure to
get things moving. We need to build in order to grow. I announce tonight a new $5 billion Northern
Australia Infrastructure Facility which is the first major step in our plan for our great
North. We will partner with the private sector and
governments of Western Australia, the Northern Territory and Queensland, to provide large
concessional loans for the construction of ports, pipelines, electricity and water infrastructure
that will open our Northern frontier for business. This commitment to nation building adds to
the record $50 billion in transport infrastructure we announced in last year’s Budget. Infrastructure
that is now, as I speak, under construction. Through this new investment we are laying
down strong foundations to get Australia ready for its economic future. Madam Speaker, a nation that lives as a family
must help to strengthen and support all of its families. Next year we will spend $38 billion to support
families, which includes more than $7 billion on child care. Australian parents work hard to juggle the
demands of modern life. It is a difficult balancing act. Just weeks after coming to Government in 2013,
I initiated a Productivity Commission inquiry into child care. Since that time, we have
consulted widely and as a result we are allocating an additional $3.5 billion to reform the child
care system. We want to give parents a choice about work,
and by investing this money we are responding to the demands of 165,000 parents who want
to work more, but are prevented from doing so by the current costly and complex scheme. Our reforms will make the system simpler,
and ensure child care is more affordable, accessible and flexible. Madam Speaker, this Government knows there
are many Australians who want a job and can’t get one. As part of our economic plan, we
are doing more to help. The level of youth unemployment in Australia
is too high. So tonight I announce this Government will
invest more than $330 million to help young and disadvantaged Australians get their start. This will include a new $212 million Youth
Transition to Work programme that will fund community workers, on the ground, in high
youth unemployment areas. Furthermore, there will be an additional $106
million of intensive support trials for job seekers of all ages, who are facing the most
significant barriers to employment. We are also improving the national work experience
programme so that 6,000 people can get genuine work experience in a real workplace. Whether you are young or old and no matter
where you live, we want all Australians to have the opportunity to get a job and stay
in a job. This Budget will have a $1.2 billion National
Wage Subsidy pool to target long-term unemployment. Following consultations across the community,
we are reshaping the pool, including the Restart programme for older workers, to ensure that
the subsidies are available when and where they are most needed. Madam Speaker, I want to reassure all Australian
workers they can have confidence in their retirement plans. There will be no new taxes on superannuation
under this Government. And the Age Pension will continue to increase,
twice a year, this year, and every year – at the highest available indexation rate. The Age Pension is our Budget’s biggest item
of expenditure, $44 billion a year. This is more than 10 per cent of all government spending. The Age Pension is a critically important
safety net for many Australians. That is why as our population ages, we need
to ensure the pension is sustainable and affordable. So from 1 January 2017, we will make changes
that benefit pensioners with fewer assets beyond the family home. But we will also tighten
eligibility for those pensioners with higher levels of assets. Importantly anyone who currently has a Pensioner
Concession Card will continue to receive a concession card that provides the same benefits,
such as subsidised utilities and transport, bulk billing and cheaper PBS prescription
medicines. These measures are all intended to provide
security and certainty for older Australians in the years ahead. Madam Speaker, we are building a stronger
and more sustainable health system. The Pharmaceutical Benefits Scheme has, for
over 60 years, given Australians affordable and reliable access to a wide range of drugs. In this Budget, the Government continues its
commitment to new listings on the Pharmaceutical Benefits Scheme, at a total cost of $1.6 billion. To give you one example, around 1,000 people
will now benefit each year from subsidised access to better treatments for certain types
of melanoma. Some of these treatments have until now, cost up to $131,000 per course
of therapy. Now they are accessible for all Australians. It is however not enough to subsidise existing
drugs. We need to find the next generation of treatments
and cures. Last year I announced the creation of the
Medical Research Future Fund, which will become the biggest medical research endowment fund
in the world. Starting this year, and over the next four years, the Government will distribute
$400 million from the Fund, to help our best and brightest medical researchers develop
the drugs and cures for the future. Madam Speaker, the highest responsibility
of any government is the safety and security of its citizens. When it comes to national security, there
can be no shortcuts. This year we will commit a further $1.2 billion
to make Australia safe and secure. This builds on the $1 billion of extra funding we committed
last year. This is an essential investment for our nation
and it is working. As we know from events as recent as last weekend,
the more work we do, the more likely we can prevent tragic incidents from happening in
our community. The threat of terrorism is rising and ever
evolving and our response must be swift and uncompromising. We must have the best counter-terrorism capabilities
possible. Tonight the Government is committing an extra
$450 million for our intelligence capabilities, to ensure that we have the very best equipment
and skills necessary to keep our communities safe. Overseas, our military personnel are leading
the fight against terrorism. The Government is providing $750 million for
military operations this year, including our efforts to disrupt, degrade and ultimately
destroy D’aesh in Iraq. To help pay for this, our tough stand on border
protection is delivering a dividend. Our border protection policies have stopped
the boats and they have saved lives. As a result, we are saving more than $500 million
from closing unnecessary detention centres and we are saving on the costs of processing
new boat arrivals. Madam Speaker, fairness is essential to the
integrity of our taxation system. So I say to all Australians, rather than introducing
new taxes on you, we simply want people or companies who are avoiding their tax to pay
their fair share. As a result of Tax Office investigations we
have identified 30 large multinational companies that may have diverted profits away from Australia
to avoid paying their fair share of tax in Australia. Everyday Australians rightly believe that
if a dollar of profit is earned here, then you should pay tax here. Unfortunately this is not always the case
for some multinationals. Many have the capacity to aggressively minimise their tax. What that means, is that families and small
businesses are forced to carry more than their fair share of the tax burden. Tonight I am releasing the details of a new
Multinational Anti-Avoidance Law, that will stop multinationals using complex schemes
to escape paying tax. Under this new law, when we catch companies
cheating, they will have to pay back double what they owe, plus interest. In addition, it is unfair that overseas based
businesses selling services into Australia may not charge GST when local businesses have
to charge GST. A local business that employs Australians,
pays rent in Australia, pays tax in Australia, and helps build our economy is disadvantaged
by the current system. We will level the playing field for Australian
businesses by mandating that foreign businesses supplying digital products and services are
subject to the GST. Madam Speaker, tonight I am also tabling for
Parliament’s consideration a second Bill that directly addresses this issue. Everything we spend in this Budget is being
paid for by prudent savings in other areas. We don’t want to increase taxes on Australians,
but we do want everyone to pay their fair share along the way. In this Budget, we are amending the Zone Tax
Offset so that it is only available to those who have genuinely moved to specified remote
areas, saving $325 million. We are limiting Fringe Benefits Tax entitlements
on overly generous meal and entertainment expenses, capping them at $5,000 a year per
person, saving $295 million. And anyone on a working holiday in Australia
will have to pay tax from their first dollar earned, rather than enjoying a tax-free threshold
of nearly $20,000. This will save the Budget $540 million. And the need for fairness and a level playing
field applies in other areas. We are making changes to strengthen Australia’s
foreign investment framework by introducing a new fee regime, better enforcement and stricter
penalties. This will deliver $735 million of revenue to the Budget. These integrity measures protect those who
are doing the right thing. They promote trust. And they’re all part of responsible budgeting. Madam Speaker, as I said last year, the debt
and deficit mess that we inherited was not of our making, but we have taken positive
action that is delivering results. Australia’s budget position is getting stronger
each and every year. From a $48 billion deficit we inherited, to
$35 billion next year, down to a $7 billion deficit in another three years’ time. And over the same period, we are reducing
the size of government as a share of the economy. Of course there is more work to be done on
Budget repair. Every nation must live within its means, and Australia is no different. But we cannot tax our way to prosperity. And
we must continue to look for sensible savings. When we invest taxpayer money, we must do
so with great care. Despite the iron ore price having halved,
we are still on a clear and credible path back to surplus and gross debt in a decade
will be over $110 billion lower than what we inherited. Madam Speaker, this Budget is responsible,
measured and fair. We are creating opportunities for job seekers,
young and old. We are caring for our most vulnerable. And we are keeping the country safe and secure. This is a Budget for small business people
who want to innovate and grow. This is a Budget for young people wanting
to get a foot in the door. This is a Budget for parents juggling the
complexities of modern life. This is a Budget as much for the miners of
the Pilbara, as it is for the farmers in the Mallee. It is as much for a family in Brisbane,
as it is for a start-up business in Adelaide. This is a Budget that helps build a stronger,
safer and more prosperous Australia. Madam Speaker, I believe our nation’s best
days are ahead of us. So now is the time for all Australians to get out there and have
a go. I commend the Budget Bill to the House

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