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Economic headwinds drive our focus on growth

Opinion Piece

Date : 24 May 2019

Author: The Hon. Josh Frydenberg MP

Publication: The Daily Telegraph

With the election over, the clouds of uncertainty have lifted.

Households and businesses can look to the future with confidence and the government can get on with implementing its economic plan.

In my discussions in recent days with some of Australia’s biggest employers, I’ve been buoyed by their confidence and their desire to work with the government, to support continued economic growth and job creation.

The Australian economy faces significant headwinds. Trade tensions between the United States and China have increased, with the potential to negatively impact global growth.

Were there to be another round of US tariff increases, the potential for which has been flagged publicly, the proportion of global trade covered by recent trade actions would double from 2 per cent to 4 per cent.

Australia is a great beneficiary of free trade and it’s in our interest for these differences to be resolved amicably.

Domestically, flood, drought and fires have all taken their toll and a slowdown in the housing market is weighing on dwelling investment and impacting consumption.

These challenges underline why our pro-growth agenda is so important and time critical.

Tax relief, as promised in the Budget and endorsed at the election, must be supported in its entirety and as a priority. It is our first item of business when Parliament resumes.

The Reserve Bank Governor has pointed to the positive impact our tax cuts will have on household disposable incomes. Let’s not forget, too, that $7.5 billion will flow to households in the coming financial year, as a result of these tax cuts.

This benefit to households and the economy is equivalent to two 25 basis point interest rate cuts and is one reason why growth and household consumption is projected to pick up.

Allowing people to earn more and keep more of what they earn is good news for all, increasing spending and economic activity in every local business – big and small.

The tax reforms we are putting to Parliament are not just providing immediate relief, but leading to long-term structural change. This will tackle bracket creep and reward aspiration. Earning more is nothing to be ashamed of and should be encouraged, not punished. Rewarding aspiration is in the Coalition’s DNA and will be a fundamental driver of our policies.

Tax, infrastructure and skills are essential to our productivity agenda, and productivity growth is in turn essential to driving higher wages and creating more jobs.

We have an ambitious infrastructure agenda. This is important not just because it will increase demand for labour, but because it will add to the economy’s productive capacity. For every dollar spent on infrastructure, it ultimately produces a four dollar pay-off. We will roll out our $100 billion infrastructure plan, improving people’s lives by busting congestion in the cities and unlocking the potential of our regions.

We are committed to creating an economic environment that generates 1.25 million new jobs over the next five years and 250,000 small businesses. We met our previous one million new jobs target and we will do it again.

One of the clear messages from this election was the importance of jobs: getting a job, having a job and keeping a job. Supercharging small business with tax cuts, red tape reduction, increased access to finance and expanding the instant asset write-off is also part of our plan for a stronger economy. With these reforms, small business has every reason to be confident to invest, confident to hire and confident about its future.

At this election, voters rejected Labor’s high-taxing, anti-business, “magic pudding” approach to economics. In contrast to Labor’s policies, which divided Australia, the Coalition has an economic plan to make every Australian’s life better and to make our nation stronger.

Josh Frydenberg is the federal Treasurer.

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