2018 Outlook Conference - Melbourne
- Minister for Jobs and Industrial Relations
- Minister for Women
*CHECK AGAINST DELIVERY*
It is my pleasure to join you this afternoon for your 12th Outlook Conference.
Fairness is a concept that goes to the heart of what it means to be Australian.
We very much believe in the idea of a fair go.
It is deeply ingrained in our culture.
It is steeped in our attitudes with regard to sport, to business, to our workplaces, to our democracy and to our justice system.
Fair is in the title of our national anthem, although in its original iteration possibly referred more to the country’s natural beauty than to its egalitarian ethos.
Section 51 of the Australian Constitution, which provides that the Commonwealth can only acquire property from any person “on just terms”, is most likely the only part of the Constitution most Australians can recall.
And our most important horse race is a handicap event designed to even out the chance of winning for the younger horses competing against older horses, and for horses who have been successful in previous events.
I think the idea of fairness stems from Australians’ deep sense of justice, its rejection of formality and a European class system, but also from a shared sense of wanting as many of us as possible to be able to enjoy the extraordinary opportunities our country offers us.
However, at a time when grievance politics is being cynically exploited around the world, we must be very careful here in Australia not to misrepresent what fairness means.
Fairness is not sameness.
Fairness is not compulsory equality for all – or equality of outcomes for all.
In a speech in 2015, I noted that fairness in Australia has been hijacked as a one-word slogan by Labor and the Greens to encapsulate the idea that if someone is doing well it must mean that someone else is doing badly as a result.
They believe fairness starts and ends with redistributing from those who have more, to those who have less with no regard to anything else.
But to illustrate the complexity of fairness, I want to take you back to a hypothetical example I used then of fairness. And fairness, like beauty, is very much in the eye of the beholder.
I want you to think about David who finds himself fighting for his life in the face of a cancer diagnosis. The all-in treatment cost is likely to be very substantial, potentially running into tens of thousands of dollars over time.
Ask yourself, do you think it's fair that he has to bear these costs?
Or do you think it's only fair for the Australian taxpayer to bear them?
Does your attitude change if you learn that David has been paying tax and the Medicare levy at the top marginal tax rate as a PAYE taxpayer for 20 years and never once turned to the public healthcare system?
What if you learned that he inherited a $5 million estate last year?
What if you learned that David is a middle income earner who chose not to take out private health insurance because there wasn't enough room in the family budget?
What if that was because he was squirreling savings away for his first home, or paying for his children's education at an independent school?
What if he habitually travels first class overseas to stay in a five-star resort on his annual holiday?
Does your attitude change if you learn that it's a rare cancer that appears to stem from genetic factors rather than behavioural factors? What if you learn that it's a skin cancer and that David refused to wear sunscreen? Or lung cancer and David smoked two packs a day?
Does your view change if you learn that David had been to the doctor on several occasions and, each time refused to act on advice to have the skin cancer removed before it spread?
Does your attitude change if you learn that David is a five year old child?
Most Australians know that fairness is multidimensional and complex in practice.
There is no question that fairness includes assisting the truly disadvantaged and marginalised, but it also involves us asking deeper questions that reference intergenerational fairness, personal responsibility, reward for effort and that of the hidden winners and losers.
Our Government does not believe it is fair to prohibitively tax small business people who have invested years of sweat and heartache into their enterprises, who have put their homes and their reputations on the line in order to create wealth and opportunity for themselves, for their families and for the people they employ.
That is why the Prime Minister has announced today the biggest tax cuts to small and family businesses since the Howard Government era, reducing the tax from 30 per cent when we came to Government, to just 25 per cent by 2021-22.
This will provide relief to more than three million businesses that employ nearly 7 million Australians, creating more investment opportunity and more jobs into the process.
In terms of fairness our Government also does not believe it is fair to suddenly decide to tax older Australians who have scrimped and saved all their lives to acquire some shares in Australian listed companies only to have income they were expecting from investment in those companies, taken from them.
And nor do we believe it is fair to be heavily taxing a person who works hard, perhaps doing extra hours in overtime or at the weekend, in order to subsidise the living arrangements of another person who refuses to work at all, when they have the capacity to do so.
The politics of envy is a crude form of politics – one that seeks to exploit or whip up the discontent or misfortune of one section of society by blaming another person’s better circumstances.
But fostering such a culture in Australia is destructive over the long-term, both economically and socially, and ironically would inflict the most harm on the people who are actually some of the most vulnerable in our community including those who want to get a job.
This attempt to divide Australians between the haves and the have nots has been plagiarised from the political playbooks of Jeremy Corbyn in the UK and Bernie Sanders in the US, countries which have very different circumstances to Australia.
So let us look at the facts.
According to the OECD, at $A18.93 per hour, or $37,398 a year, Australia has the third highest minimum wage in the world.
Australia’s minimum wage is higher, and in many cases significantly so, than comparable countries including Belgium, Germany, Canada, the United Kingdom, and of course the United States.
And uniquely in the world, alongside our high minimum wage, we have higher award wages and conditions across 122 modern awards. These modern awards set around 2,000 adult award rates of pay across hundreds of classifications and these rates of pay vary widely.
There are around 200,000 workers on the National Minimum Wage, and there are up to 2.3 million workers on minimum award wages are on around 2,000 different rates. Most of which are above the National Minimum Wage and can even reach as high as $177,311 a year (under the Air Pilots Award 2010).
In comparison, the UK’s system of wage setting currently only has five minimum pay rates (25 years and over, 21 to 24 years, 18 to 20 years, under 18 and Apprentices).
Australia also has subsidised medicines and a universal public health system, that despite its criticisms, consistently ranks Australia in the best performing group of countries, according to the World Health Organisation.
We have a high quality public and private education system that provides our children with the opportunity to go on to university or to do vocational or skills training to enhance their working careers and raise their income prospects.
And we have a public housing system that seeks to reduce the incidence of homelessness because one of the greatest barriers to work is not having a home to go to at night.
And finally, Australia has one of the most progressive tax systems in the world, and a strong social safety net that is one of the most generous in the world.
Our tax and transfer system substantially reduces inequality in our society. And it shouldn't be forgotten that around 2 per cent of individuals pay about 26 per cent of all income tax and at the other end of the spectrum, around 45 per cent of those filing a tax return pay less than 4 per cent of all income tax.
Despite this though there are very disadvantaged cohorts in our society. And I think on this point Dr Leigh and I will be in strong agreement.
Single parents who don’t have a job, large cohorts of Indigenous Australians in different parts of the country and people with disabilities are three groups that face substantial disadvantage.
Government has to continue to work to provide support to these and other groups that find it difficult to get into the workforce.
This is because getting a job is the single most uplifting event that can happen to a person, giving them better financial security, better life choices, and the opportunity to plan ahead in life rather than just surviving until the next welfare payment.
In fact, the single best way to reduce inequality is to help give someone a job.
Overall, sustained economic growth since the early 1990s has significantly improved living standards for most Australians, with average incomes, consumption and wealth growing across the distribution.
Australia’s 27 years of economic growth has significantly improved living standards for the average Australian household in every income decile.
Labor likes to say the only people who are doing well in this country are the wealthiest 1 per cent.
We hear a lot of myths about inequality in Australia, and I can confidently predict we are about to hear a few more in a few minutes.
But we need to look at the facts.
In a recent speech, the outgoing Chairman of the Productivity Commission stated that “Unlike the North Atlantic nations now caught up in a populist vortex, the benefits of income growth since the last recession in 1990 have been fairly evenly shared across every income decile in Australia.”
“At the bottom decile, the 10 per cent with the least income, have done as well if not slightly better than most deciles…Our tax and transfer system has ensured a sound effort in sharing income growth and governments of all stripes have generally maintained its effectiveness, viewed over 27 years.”
Mr Harris went on to say: “This will be instantly rejected by some, since it is not the popular perception. But it is the unquestionable fact.”
Economic mobility across a person’s life in Australia is perhaps one of the best measures of how a person can change their circumstances. Again, according to the PC nearly 90 per cent of people in Australia moved at least three income deciles between 2000-01 and 2015-16. Less than 1 per cent remained in the same decile over the whole 30 year period studied.
If we are honest about our real problems when it comes to inequality in Australia, it is not inherited wealth, or even the wealthy getting wealthier, but inherited poverty.
On our side of politics we know the best pathway for Australians to get out of poverty is to get a job.
Small and family businesses are the drivers of employment in this country, employing more than half of the entire private sector workforce.
But the small business sector needs to have confidence in the tax system, in the industrial relations system and the wider economy to invest in human capital to grow their enterprises.
I briefly want to touch on how I see the concepts of fairness and equity relating to my new Ministerial portfolio responsibilities.
Indeed, my responsibilities regarding Jobs, Industrial Relations, and Women are integrally related and equity and fairness is the glue that binds them together.
Fairness and equality in the community is fundamentally related to employment opportunities.
The more people who are in the paid workforce, the more income families derive from employment, and the more we are able to fully utilise the skills and talents of men and women in society, then the more we, as a community, will be able to provide essential services and assist those most in need.
And all of those elements combine to enhance our standard of living.
It might seem trite to say this, but unfortunately, I am not sure that the policies of all political parties proceed on a similar premise.
We need to create the right economic and regulatory settings to encourage investment, growth and the creation of jobs.
This requires an understanding, for example, of what is involved in owning and running a small business, and how red tape and unfair laws can destroy a willingness to employ.
We need to be constantly looking at how we can grow the economic pie, not reducing it and slicing it into ever smaller and smaller pieces.
We need to give our attention to those who face the most difficulty in gaining employment: indigenous Australians, migrants, young people looking for their first job opportunity, people who live in regional locations, women who have family responsibilities returning to the workforce.
Social inclusion is essential to building a just and fair society.
I can explain this best, again, by reference to small business.
Offering a young Australian their first job must be one of the most fulfilling things any small business owner can ever do. That small business owner should feel proud to be able to change that person’s life. And the employee should feel grateful for that opportunity and make the most of that opportunity.
And while the Labor Party decries business profits, the fact of the matter is, for the small business owner, after taking out the wages of staff, their profits are their wages. And they get paid last.
Their collaboration not only improves their own lives, but also those of their families, their customers and the community.
The same factors are at play in any business, regardless of its size.
I believe that creating a job opportunity is the greatest contribution any business can make to our society. We should be encouraging businesses to create jobs and recognising the benefits to society that their investment brings.
And the way a business treats its employees is exactly the same.
Fairness must be embraced by employers.
Embracing fairness will create a harmonious and productive workforce and a harmonious and productive workforce is essential to business success.
Women in particular can have a much greater role than they have historically in filling key roles in our workforce and contributing to the success of our businesses.
Australia will benefit immensely if we can fully unleash the full potential of our women. And I am proud to say that under our Government there are more women in employment than ever before and more in full time employment than ever before.
Business success is essential to wage growth, more employment growth, more investment, more fairness and more equity.
We need to create the environment for job creation and fairness to flourish.
Laws that discourage employers from employing Australians have no place in my vision.
Laws or approaches that encourage conflict at the workplace – rather than collaboration and fairness – should be strongly resisted.
We need to focus on the essential ingredients for fairness and equity and ensure that we are doing everything possible to inspire them.
There is a world of difference between an environment that encourages employment, harmony and fairness and one that encourages conflict and employment restraint.
In coming weeks and months I will be applying these principles to the responsibilities of my portfolio. You will be hearing more from me on these matters.
And I look forward to engaging with you on these matters because the potential benefits of doing so are immense.
The Productivity Commission noted that sustained economic growth and reliable access to employment – complemented by skills and education improvements – were essential to maintaining economic opportunity for future generations.
In other words, that should be the focus of Government – not inflicting a higher tax burden on Australians including changes to negative gearing, lower capital-gains tax concessions, removing refunds for franking credits, higher top marginal income tax rates, higher taxes on superannuation and higher small business tax rates.
Higher taxation hits incentives for investment and savings which ultimately has the effect of crimping economic and employment growth.
In conclusion, we should understand the complexity of the fairness debate, while re-doubling our efforts for people who need a hand up.
Under many criteria Australia is a much more equitable and fair society than most countries in the world. Comparisons with the United States and the UK are dishonest because those countries do not have our safety nets, our tax and transfer systems or our award and wage structures.
Our task must be to build on what we have already begun.
To grow our economy and expand opportunities wherever we can.
To seek to find productivity improvements, which over the longer term do more for wages growth than any other factor.
We need to work together to find employment opportunities in the most disadvantaged groups in our community because that’s where the biggest dividends are for everyone.
And we need to work hard to lower the unemployment rate even further.
It is only with our combined effort, working together, not divided by conflict and class war, will we be able to build an even stronger Australia with opportunity for generations to come.