Speaking at the State of the Nation conference, the Treasurer addressed the growing housing concerns felt in some of Australia’s largest cities as part of his wider keynote address that discussed Australia’s current economic position and the Turnbull Government’s 2017 budget.
“If you hack away at negative gearing or take the axe to other integral tax concessions, as Labor continues to propose, you invite a hard landing in the housing market that would create havoc in the wider economy. It would cost jobs and wages,” Mr Morrison said.
“And because we don’t have a single housing market in Australia, sweeping changes to such policies would have crippling effects on fragile markets like Perth.
“This is where APRA’s ‘small-step’ approach to addressing market concerns is the most effective weapon in our arsenal. It is about using the scalpel rather than the chainsaw.
“A hard landing hurts people. It has flow on consequences for the Australian economy.”
Mr Morrison said he is optimistic about the Australian economy and the overall global economy, saying that while “global growth has taken a battering in the wake of the GFC” and that the recovery from the GFC may have been slower than predicted, “downgrades in growth forecasts around the world are now becoming the exception to the norm”.
He said he believes Australia can continue its “golden run of 25 years of economic growth”, but that we will have to fight for it.
The Treasurer acknowledged that some states and territories are doing better than others, with Queensland and Western Australia “doing it tough”. While investment in New South Wales and Victoria has been growing faster than their decade averages, reflecting an up-tick in non-mining investment.
He said that Australia now stands at an important juncture, where making the right choices will be key to continue Australia’s ongoing growth.
He described the Turnbull Government’s 2017 budget as “proactive and pointed”, stating that it would be focused on “regenerating growth” with the belief that as the business sector grows, it provides job opportunities and pay rises to the Australian public.
Mr Morrison stressed that Australia’s growth can’t be taken for granted, and that our future growth would be tied to lowering the company tax rate.
“On the eve of the Budget, the NAB Monthly Business Survey saw its business confidence figures jump to a seven-year high, strengthening from the solid results recorded in the previous month and confirming a new reality in the business sector – that confidence is the new black,” he said.
“Importantly, this was the first survey to occur after the Turnbull Government’s success in legislating substantial tax cuts for 3.2 million small and medium businesses.
“Clearly, there is a deep understanding that such tax cuts will drive economic growth and deliver more and better paid jobs.”
He warned that Australia risks becoming uncompetitive in the international market, saying that France is planning to take the company tax rate to 25 per cent, the UK to 17 per cent and the US to 15 per cent.
Mr Morrison said an agenda to keep the Australian company tax rate for 10 years, as the Labor Government proposes, would drive Australian jobs offshore as companies seek to do business in countries where the costs are lower.
“That is not a vision to grow your economy,” Mr Morrison said. “It will put the economy to sleep if we telecast that to the world that is what the future tax regime will be in this country.”
The Treasurer concluded his keynote by saying a key focus of the budget and for the Turnbull Government was “living within our means, so we can ensure our debt is not lumped on the shoulders of future Australians.”
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