Liberals: Choice and Opportunity

Address to The Sydney Institute

17 June 2024

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Thank you for the kind invitation to address the Sydney Institute.

Despite any Victorian parochialism, I have always felt an affiliation with the Sydney Institute, if for no other reason than it was founded in 1989 - my first year of university.

What a year that was; tank man in Tiananmen Square, the fall of the Berlin Wall. Margaret Thatcher marked a decade as Prime Minister. Bob Hawke cried over marital infidelity.

When I left university in 1992, economic reality struck.

Proudly clutching my commerce degree, and all the requisite grit and persistence, it was a harsh welcome to adulthood - I couldn't get a job.

My graduating peers were in a similar boat.

And we weren't alone.

Youth unemployment in Victoria was over 30%.

The economy had tanked. No one was hiring.

We were experiencing an unemployment rate not seen since the Great Depression.

Insolvencies were daily news. Commercial properties were empty. Double digit interest rates crippled businesses and households.

My generation walked straight into Paul Keating's 'recession we had to have'.

Labor’s economic management had forced us to trade our youthful optimism for a future of uncertainty and debt.

It was the election of the Liberal Party in my home state of Victoria in late 1992, and then federally in 1996, that heralded a genuine shift in the prospects of my generation.

Opportunities began to reappear - opportunities for meaningful employment and career choices, opportunities to save and invest, to take risks; opportunities to start a family, start a business, buy a home, build a life.

It wasn't a coincidence.

Liberal governments were not just custodians of that transformation. They were the drivers of it.

Liberals have always believed in the power of markets and the ability for economic freedoms to deliver prosperity; the confidence of private enterprise that comes with de-shackling from regulation combined with prudent fiscal management of the public purse.

These were the drivers of the choices and opportunities of the later 1990’s and, indeed, early 2000’s, and my generation were the beneficiaries of that Liberal tradition.

Today, with Labor in power at both the state and federal level, I see the experience of 1992 being re-lived.

Rising inflation, higher taxes, unaffordable housing, and crippling debt.

Worst of all, we are seeing the first generation of young people in Australia who sincerely believe that - even if they do everything right - they will never do as well as their parents.

Their choices and opportunities - their dreams - have been hijacked by a downturn in economic freedom.

It's not just the young who feel it.

And the statistics don't lie.

The economy is grinding almost to a standstill. In the last quarter, our economy grew only 0.1%.

This is the lowest level of quarterly growth outside the pandemic since that fateful year - 1992.

The latest data confirmed we are in an entrenched per capita recession - five quarters in a row of negative growth per capita.

If recent economic data continues and the government fails to act, Anthony Albanese and Labor may be about to deliver the recession we didn’t have to have.

There are two related stories here: productivity and inflation.

As Paul Krugman said,“productivity isn't everything, but in the long run it is almost everything.”

Unfortunately, productivity in Australia has actually fallen 5.2% during Labor’s brief tenure.

Instead, the only economic growth that we have seen was driven by population - almost all of that coming from migration.

Relying on immigration for growth is not an economic plan, it's an economic Ponzi scheme.

The second story is inflation; the thief in the night, economic enemy number one.

It erodes purchasing power, it saps savings, and it undermines confidence.

Put simply inflation reduces your standard of living.

The latest monthly data showed headline inflation sitting at 3.6%, while our core inflation remains well above the RBA’s target band at 4.1%.

We are now well and truly living with “Jimflation”.

A catchy sobriquet perhaps but a serious problem.

It reflects the sentiment of the RBA governor that Australia’s sticky inflation is now homegrown, and we should worry if inflationary expectations are now baked in.

Moreover, for households, soaring energy bills, mortgage repayments, insurance bills and grocery prices mean what Australians are feeling - the actual cost of living - is far worse than the headline inflationary figure suggests.

As Chair of the Senate’s Cost of Living Committee, we have heard of the personal and individual pain that this is creating - from parents struggling to put food on the table and small business owners struggling to keep to keep the lights on and the doors open.

But unfortunately, Labor seems to have their head in the sand, relying on monetary policy to do the heavy lifting to slow aggregate demand, while fiscal policy continues on an expansionary path.

Recently, Labor was trying to sell the recent energy Default Market Offer as a win for consumers.

If having power bills increase by 18% under Labor is a win, I’d hate to see a loss.

Small businesses are pummelled under rising costs and changes in consumer behaviour.

Charities are feeling it from all sides - operating costs are rising, volunteers are drying up, and all the while demand for their services are increasing exponentially, often from people who have never sought help before. Families with two incomes, people with a mortgage.

You can understand why; despite Labor’s election promises, Australians with an average size home loan are paying $35,000 more each year and the hope of a rate cut this year is rapidly fading.

As the RBA Governor told the Senate only a fortnight ago that they will not hesitate to raise rates again if inflation persists.

Indeed, the central bank has pushed out the forecast date for inflation coming back to band four times since Labor came to government.

In the face of persistent inflation and retreating productivity, Labor’s policy responses have been at best wrong-headed, and at worst wilfully ignorant of the economics.

You don’t increase productivity with economic interventionism.

You can’t cool inflation by throwing more money on the fire.

Recovery and prosperity seem further and further away, and this means, less choice and fewer opportunities for everyone.

Getting the settings right, clearing space for private sector ingenuity and endeavour, making tough decisions where they’re needed, isn't the easiest path politically. But we have our proof points.

Our Party has consistently delivered economic freedoms for Australians whenever we have been in government, and they have led to increased prosperity.

It is our values - the marrow of our party - that has delivered us electoral victories in 19 of the 30 elections we have fought.

It is why I know the Liberal Party, celebrating its 80th birthday this year, is the best hope for the next generation of economic freedoms for all Australians.

That may sound a little abstract.

But tonight I want to show you through a real life example how the values that my party holds dear have been effectively applied in policy to bring about prosperity.

And I want to discuss why those Liberal values are the values that deliver the most for the two cohorts of our society that will be the drivers of and greatest beneficiaries of Australia’s future prosperity - young people and women.

Choice and Opportunity

Before the last election, my Ministerial responsibilities included superannuation.

And I am proud of the work we did in making our super system fairer, more efficient and more transparent.

This year Rainmaker reported that superannuation fees were at record lows. That is not an accident.

That’s an outcome of good policy developed and delivered with a Liberal lens.

Superannuation must work for the individual before anyone else - not the super fund manager, not the unions, not the government.

This is because it is one of the most significant government interventions we have within our society.

The government compulsorily takes wages from workers today, and tells you to quarantine your own money, for young people potentially for up to 45 years, to provide financial support for retirement tomorrow.

It’s the ultimate social contract, which is why participants rightly get annoyed with governments who change the rules. It’s a breach of that contract.

Right now, superannuation funds are a $3.9 trillion pool of money that grew 4.2% in the March quarter alone.

Today, you are saving 11% of everything you earn for your retirement. Exactly two weeks from today, that will become 11.5%. And in another year, it will become 12%.

This is not a small amount of money.

If I offered anyone in this room a 12% pay rise, you might start thinking about what you could do with it.

Indeed for many workers that amount of money would be life-changing.

For someone on an average wage, that’s more than $10,000 a year on top of what they are taking home.

Yet successive governments were content to let increasingly large proportions of people’s earnings be directed into a fund chosen by their employer or a union, managed opaquely and with no consequence for poor performance.

A significant Liberal reform was the passage of the Your Super, Your Choice legislation, which was based on a very simple idea; that super is your money, your deferred wages, and that you should be able to choose who looks after it.

But the pushback on this - from the industry, from unions and from Labor - was enormous.

Because Labor and the unions knew what had been occurring; enterprise agreements were used to force workers to only pay superannuation into a set number of funds, many of them controlled by the unions.

Our changes ended that practice.

But is it any wonder then that one of the first acts of this new Labor Government was to legislate for greater multiemployer enterprise bargaining?

Our reforms meant that hundreds of thousands of Australians, some of the lowest paid, finally had the choice to move their own money from poor performing funds.

And if funds persistently underperformed, the regulator showed them the door. It made their money work harder for them, not for anyone else.

It created prosperity.

But our reforms didn’t stop there.

We also required the funds to be more transparent, and not just act in the best interest of members, but the best financial interest of members.

Again, the super funds, Labor and the unions pushed back on these obligations. And under this government you can see why.

It’s not just because it stopped super funds spending Australians retirement savings on donations or activism (although our reforms certainly did that - did anyone notice that super funds didn’t campaign in The Voice Referendum?)

Labor pushed back on these reforms because they are desperate for super funds to use their immense capital to invest in “nation building” projects identified and prioritised by government.

This includes housing.

My colleague Senator Bragg pointed out the irony here to this Institute; Labor is happy for a super fund to own your home and rent it back to you - with your money - but they call it financial vandalism for you to use your super to buy a home for yourself.

Of course, self-managed superannuation funds can invest in whatever they deem to be in their own best financial interests.

That’s their choice.

But Labor have found their solution to this outbreak of free will.

The new super tax on unrealised capital gains, will essentially tax SMSF’s out of existence.

So much for rewarding those who take responsibility for their financial future.

Labor’s approach to tax on super is a triumph of intervention over independence.

Despite this, these Liberal reforms make a calculable difference to people’s retirement outcomes; paternalism was an economic handbrake, whereas giving individuals agency and choice enables greater prosperity and economic freedom in retirement.

We like to think that governments, in liberal western democracies at least, don’t intervene with an intention to cause harm.

Tempting as it is to use the powers of the state to fix the problems of the world, any government intervention is as fallible as the human nature that inspires it.

A new statutory agency here, a new Commissioner there, and the whole world will regulate itself onto the right path.

It is fashionable to say that the role of government has changed in a post-pandemic world.

That globalisation and liberalisation are no longer fit for purpose, if they ever were.

Claims of “this is not old-fashioned protectionism or isolationism – it is the new competition” fit neatly into this category.

And these claims are made against a backdrop of a world that is increasingly becoming uncertain and unstable.

In this environment, is it any wonder that some claim that the system is broken and that we should organise our societies, our governments, and ourselves along a new paradigm.

But often intervention, even well meaning, ‘the Government’s helping hand’, leads to the denial of options and opportunity to those who may need them most.

When government advances, free will is overridden and free markets retreat; those very same markets that create the prosperity that governments promise.

Choice and Opportunity in the Economy

The Wall Street Journal and the Heritage Foundation generates an annual Index of Economic Freedom, and Australia has enjoyed an upward trajectory since it was first published in 1995.

We are frequently measured as having high ratings for our property rights, the effectiveness of our legal system, and the freedoms we have in business, trade and finances.

In 2021, we were ranked 3rd in the world.

That upward trajectory stopped in 2022.

In a single year, Australia fell from 3rd to 12th.

This year we are in 13th place.

What led to this decline?

To take a famous quote well out of context - It’s the economy, stupid.

The index points to Australia’s deterioration in fiscal health, our levels of non-pandemic Government expenditure, and our eroded labour market freedoms.

Decisions of all levels of Government - Commonwealth, State, Territory and Local Government - have contributed to this.

In my own state of Victoria, net debt as a percentage of the state’s GDP has risen from 5.5% to 24.4% in just six years.

Why does Government debt impact economic freedom?

There is the obvious interest burden on future generations, with higher taxes placing a straight-jacket on their choices and opportunities.

But persistent and rising level of public debt also accompany stalling productivity growth, receding investment both private and public sector recedes, and the setting in of economic stagnation.

The same is true of government expenditure.

Persistent levels of high spending and public sector growth leads to misallocations of resources and loss of economic efficiency.

You don't need to look very far to see this in Australia. Let me point to two examples.

A Future Made in Australia propping up industries that, even according to the Labor appointed Productivity Commissioner, will be forever reliant on taxpayer subsidy rather than a free market.

And 36,000 new public service positions created since the election - that is around 50 new public servants appointed each and every day.

And I simply ask the question: do you feel 36,000 public servants better served?

Is the proliferation of bureaucracies and bureaucrats making us richer or poorer?

Giving you more choices or fewer choices?

Does Labor’s big tax and big spend modus operandi empower or impoverish?

And how is this approach tackling the most urgent issue - getting inflation under control and restoring the disposable income and the standard of living that has been lost?

With a stagnant economy and less disposable income, we have fewer choices.

Fewer choices to work, to invest, to plan, to save - fewer opportunities to prosper.

There are two cohorts of Australians in particular who will be key drivers of our country’s economic future.

And in order to fully activate their potential they don’t need regulation, intervention, paternalism, or compensation.

They need choices and opportunities.

These two groups are younger Australians and women.

This decade, Millennials will begin to be the dominant generation, taking over the mantle from the Baby Boomers.

This is the largest demographic transfer that has occurred since the Second World War.

At the same time, women are achieving higher rates of educational attainment and participating in the workforce at record levels.

The increasing presence and dominance of the young and of women in our economy will chart the course of Australia’s future.

If they are empowered, as the Baby Boomers were, Australia will remain the lucky country.

Choice and Opportunity for Women

According to the ABS, today’s average Australian is a woman between 30 and 39, living in a coupled family with children.

The untapped potential of female economic participation is a story mostly expressed in terms of employment versus unemployment, full time versus part time.

But here’s a statistic worth thinking about.

Today, one in three small business owners in Australia are women, and that number is growing.

Between 2006 and 2021, the number of female small business owners increased by 24 per cent.

Despite this incredible growth, there are still barriers for women-led small businesses owners like access to finance.

But studies in Australia suggest boosting the number of female business owners to equal that of men could add between $70 to $135 billion to Australia’s economy.

However, if Labor’s Women’s Budget Statement is to be believed, equality is only achieved through welfare policy.

It is patronising in the extreme to insist that women need to be compensated for their gender.

For Liberals, real women’s empowerment comes from creating opportunities for participation, the removal of barriers - institutional and cultural, so women can genuinely choose their own path.

As a former Minister for Womens’ Economic Security, I spent a lot of time thinking about this problem.

I am proud of the work we did, but I know there is much more to be done.

For example, in Australia, women trail men in financial literacy.

I am often asked what my one piece of advice to women is. It’s to become financially literate - or better still - financially capable.

Get your finances in order. Know how to budget. Learn how to save and invest. Understand your superannuation.

Because once you have that foundation stone of economic independence, it gives you choices and opportunities.

I find it amazing how many women - leaders in their fields in many cases - still turn over the household finances to the man in their lives.

Whether it be through a lack of confidence, or reinforcing traditional roles, “Bob’s always done the family finances” should never be a woman’s default position.

Let’s face it, Bob might not be very financially literate himself. He might have a gambling problem. He might have taken credit cards out in your name.

He might leave you, or you might leave him. He could die.

In the worst cases, absence of that empowerment leads women to feel like they have to stay with their partners in unhappy marriages, or worse where they’re subject to domestic or family violence, because they do not have financial literacy.

Investing in the financial education of Australian women is an investment in our society’s prosperity and our economy.

Government’s role should ensure women are supported to make their own choices, not be trapped by choices made for them.

Our economy and our society will be better for it.

Choice and Opportunity for Young Australians

The second group that will determine our future economic strength is - fairly obviously - younger Australians.

Younger Australians are seeking an economic compact that delivers on the future that they were promised; opportunities and choices that ensure they can forge their own path to financial security.

To get a job, to own a home, to find a partner or raise a family; not as a path set for them, but as paths that are within reach for anyone that wants them.

In short; the Australian Dream. That if you work hard, you will get ahead.

That evaporation of the Australian Dream should concern every generation.

It has significant economic and social implications.

For the first time, we have seen the decline of younger voters in both their engagement with major political parties and their faith in liberal democracies to deliver them that better life.

One poll reported that Australians aged 18–44 are less likely than Australians over 45 to say democracy is preferable to any other kind of government.

And that view is increasing, with the gap widening by five points in the two years since 2022.

Not unrelated, is the ANU Australian Electoral Study that confirmed that 18-44’s are more likely than any other age group to vote for independents and minor parties.

Another study has shown only 44% of respondents aged 18-34 believed that they would ever be able to buy their own home.

This hopelessness - and indeed that is what it is; a loss of hope - has devastating consequences.

Owning your own home - not your superannuation balance - is the greatest indicator of economic security in retirement.

For Liberals, the home has always been at the centre of political discourse, in contrast to the Labor Party whose focus had been the workplace.

Robert Menzies’ efforts to have Australians own a piece of the society they lived in were successful.

At the beginning of the first Liberal Government in 1949, home ownership was around 53%. By 1966, it was 73%.

Homeownership as an idea is embedded on a cultural level in Australia in such a profound way that makes it inseparable from how we view ourselves.

It is folkloric - one need only think of that modern tale of forgotten people, the Kerrigans in The Castle.

Sadly, today, the rate of homeownership has fallen to the lowest levels since 1991 at 66%.

And we know that it is acute for young Australians.

In 1981, 67 per cent of 30-year-olds owned a home. Today, the figure is 45 per cent.

Labor’s response to the demise of the great Australian Dream is to borrow $10 billion to invest, the returns of which are then invested in social housing.

In order to pass this legislation $3b more in sweeteners were paid directly to the states - with no KPIs and no strings attached.

A year on from the passage of that legislation and we are yet to confirm the completion of a single home.

The Liberal Party’s response is very different.

The Super Home Buyer Scheme - announced two years ago - is designed to ensure all Australians, particularly young Australians, can access their own stake in their country and their future, using their own savings.

When that first home is sold money is returned to super, plus pro-rata growth in value.

Retirement outcomes stay intact, but that first run on the property ladder is achieved.

In Peter Dutton’s first Budget in reply this policy was extended to older women who find themselves unexpectedly single and without a home later in life.

Detractors are - you guessed it - the super industry, Labor and the unions.

But, if the biggest indicator of economic security in retirement is owning a home, isn’t this what superannuation was meant to be doing?

And it's not a compulsory scheme. It's simply an opportunity. It is their money - it should be their choice.

There is a Better Way

My colleagues and I have started to outline our vision and what you can expect from a Liberal Government if we’re given the privilege.

From tax to industrial relations, it will be placing choice and opportunity back in the hands of individuals.

We believe in making sure that everyone has the opportunity to reach their full potential.

To achieve their goals, whatever that means for them.

It’s not just a manifesto, it’s at the core of the social contract.

But that also means that we need to hold up our end of the bargain.

And making sure that while creating those opportunities, we are ensuring opportunities for all, not just some.

That the next generation should be able to aspire for greater heights than the last.

Back in 1989, when I was more likely to have been at the college bar than reading The Australian, John Howard wrote that the then-Treasurer delivered a Budget more as a commentator than as the leader of the national economic policy.

He said:

“[T]he Treasurer sounded like a sportsman who had left the playing field to sit in the grandstand.

Inflation, he told us, was bad and likely to remain so. Interest rates would stay high for some time…

When it suits the Treasurer he tells all of us that many of our economic problems are beyond the control of his Government...”

Jim Chalmers is no Paul Keating.

But after two years and three Budgets his approach is the same.

‘Inflation is concerning, but not our problem.’

‘Low productivity is a global thing, not our fault.‘

But Labor can’t credibly point to any of their policies as a productivity driver. Not energy, not tax, not deregulation, not industrial relations.

Instead they have asserted that things are different now; that a new economic orthodoxy has found its time.

But this is just a ruse.

It is the patter of a second rate magician trying to make the audience look elsewhere while the trick is prepared.

The Labor Government’s policy agenda is predictably traditional - brazenly interventionist, expansive and expensive, protectionist, and more often than not using public money for ideological outcomes.

In this third Labor Budget, don’t believe the hype - there is no new economic paradigm, only repeated mistakes and old excuses.

We have seen this movie before and it doesn't end well.

This year, 35 years after her mother, my daughter started at university.

And like history repeating itself, it's a year of international events and geopolitical turbulence.

If she completes her degree in 3 or 4 years time, I worry about the Australia she will confront.

It will be decisions made by governments now that will determine whether she and her peers will be able to get a job, whether they will be able to own a home.

The health of the economy she walks into will have profound impacts on her choices - when and if to have a family, the size of that family, alternative career pathways, whether or not to start her own business, her standard of living and quality of life, her security in retirement.

What economic freedoms will this government guarantee?

I joined the Liberal Party because I know that if we get the economics right, we can help individuals and households to get ahead and help our nation to prosper.

And so I say to you tonight – not just as a member of the Liberal economic team, or as a spokesman for the cause.

But as a young woman who lived through the last time that a Labor Government walked down this path:

That the only way to get inflation down is to change the government.

That the only way to get economic growth up again is to change the government.

That the only way to boost home ownership is to change the government.

And the only way to put opportunity and choice at the centre of government is – you guessed it – to change the government.

This is what the Liberal Party, our values, and our policies have delivered time and again.

Choice and opportunity are what lead to prosperity for all.

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