Senator the Hon Michaelia Cash, 

Minister for Employment, Skills, Small and Family Business 

Address to The 500 Club Breakfast

18 November, 2020

Ladies and Gentlemen – I am delighted to join you – in person – for this 500 Club Policy Breakfast.

Today we are talking about COVID-19 – the Morrison Government’s Support for Business and Australia’s Economic Recovery. And believe me – there will be an economic recovery.

I would like to acknowledge Eleni Evangel – 500 Club CEO, recently elected Senior Vice President of the WA Liberal Party – Kate O’Hara, 500 Club Committee Chair - our sponsor for today - Mark Burns from Programmed and Ian Goodenough – Federal Member for Moore.

Who would have thought that when we woke up on New Year’s Day 2020, that within weeks, COVID-19 would hit us and your Federal government would have to make the tough decision to close parts of the economy down.

This year, we have been tested like never before. So let me say thank you for everything you have done, you are doing, and you will continue to do to weather this storm.

The Great Depression and two World Wars did not bring Australia to its knees, and neither will COVID-19.

Where we have been

When we look at the situation here in Australia – compared with other developed nations – we have performed remarkably well.

To give you a global update:

There have been over 54 million confirmed cases of COVID-19 globally, and over 1.3 million deaths in total.

In Australia we have had 27,750 confirmed cases – and sadly, 907 deaths.

However, the death rate of around 35 people per million in Australia – is a fraction of other developed economies.

By comparison, the United Kingdom’s death rate is around 21 times Australia’s – the equivalent of over 19,000 deaths in Australia.

Without a doubt – our actions have resulted in lower loss of life, lower transmission rates and lower economic impacts than in most other countries. However – there is no denying we have been impacted!

Where we are now

So where are we now economically? The global economy is expected to contract by 4.5 per cent this year – compared to just 0.1 per cent during the GFC.

Australia’s economy has been hit hard. COVID-19 will see our deficit reach $213.7 billion this year, falling to $66.9 billion by 2023-24.

Net debt will increase to $703 billion or 36 per cent of GDP this year and peak at $966 billion or 44 per cent of GDP in June 2024.

While this is a heavy burden, it was a necessary one to responsibly deal with the greatest challenge of our time. We have done well on the international comparison.

Australia’s net debt as a share of the economy will peak at half of that in the United Kingdom, around a third of that in the United States and around a quarter of that in Japan today. Australia’s economy contracted by 7 per cent in the June quarter. By comparison, there were falls of around 12 per cent in New Zealand, 14 per cent in France, and around 20 per cent in the United Kingdom.

The World Bank expects more economies to experience contractions in per capita GDP than at any other time since 1870.

As you know, in response, to COVID-19 – our Government committed unprecedented support. But we could only do this because we entered this crisis from a position of economic strength. We had brought the Budget back to balance for the first time in 11 years and had maintained our AAA credit rating.

This gave us the fiscal firepower when we needed it most.

In fact, the RBA noted that without the support measures we introduced, around a quarter of small businesses currently receiving income support would have closed.

And without early and decisive action, 700,000 more Australians would have lost their jobs and 200,000 businesses would have run out of cash by the end of the year, many to close their doors and never reopen.

Initial COVID-19 Support Measures

In terms of our initial COVID-19 support measures – we moved quickly – and put in place a suite of measures to support the economy and households.

This suite of measures was important – there was no one measure for businesses – but rather – businesses could choose which measure or measures suited their needs.

Importantly, our measures are temporary, targeted, and proportionate.

That is the fundamental difference between our approach and the approach that Labor took in responding to the GFC – where it baked in measures and structurally changed the budget – measures that Australian’s continue to pay for!

To recap in terms of the measures we put in place.

In March when uncertainty was at its highest and Treasury was forecasting hundreds of thousands of cases and potentially tens of thousands of deaths - we put in place the $101 billion JobKeeper wage subsidy. JobKeeper was put in place to keep employees connected with their employers. It is currently supporting around 3.6 million individuals and over 1 million businesses, with around $70 billion of approved payments already made.

In an economic downturn the first people to go are apprentices and trainees. And so we introduced the $2.8 billion Supporting Apprentices and Trainees wage subsidy. It is currently assisting over 56,000 employers to keep almost 100,000 apprentices on the job! In WA it is supporting around 4,000 employers and over 7,000 apprentices.

We understood that businesses needed cash flow and so we put in place the taxfree cash flow boosts of up to $100,000. Around 800,000 employers have now benefited from around $32 billion in assistance.

Businesses also told us they needed measures to support the flow of credit in the economy – and so we implemented the Coronavirus SME Guarantee Scheme, where we provided a 50 per cent guarantee of eligible loans. To date we have provided over 21,000 loans worth almost $2 billion.

And we listened to feedback and responded as we needed to. And if this meant tweaking policies if that was what was required – then we did it.

Confidence and Recovery

The Australian economy is now fighting back. The recent outbreak in Adelaide should not deter us. What it reminds us is – that as a State – we need to ensure our testing, tracking and tracing is up-to-date and fit for purpose. It is also a reminder though that we will be living with COVID-19 until we have a vaccine.

The positive news is that more than half of those who lost their job are back at work.

Business and consumer confidence is rising – as restrictions are lifted. In fact – this week - consumer confidence rose for an 11th straight week to reach its highest level since February. This is a good thing.

Evidence from Commonwealth Bank chief executive Matt Comyn is that the number of customers who remain in a loan deferral arrangement is down by 75 per cent since the end of June, as more people are confident in resuming their payments.

Confidence is important and, this year’s Budget builds on this confidence and putting in place the policies to embark on our recovery.

2020-21 Budget Announcements

The 2020-21 Budget is all about jobs. There is a reason we refer to Job Keeper – Job Maker – Job Trainer – the JobMaker Hiring Credit. Because we are committed to jobs – jobs and more jobs.

Government’s don’t create jobs – you do! And that is why as a part of our Economic Recovery Plan we are investing in further measures to rebuild our economy and create jobs.

Our $74 billion JobMaker Plan is central to job creation and bringing more Australians back into work.

For example – our $4 billion JobMaker hiring credit will give employers who take on an eligible young job seeker an incentive of up to $200 per week.

We have brought forward Stage 2 of the Personal Income Tax Plan to deliver tax relief for over 11 million hard-working Australians.

Tax relief makes a real difference to people – it gives them back their hard-earned money – and demonstrates our understanding as a government that lowering taxes is good for the economy.

We are also supercharging the Instant Asset Write-Off!

We have announced the largest set of investment incentives any Australian Government has ever provided. From Budget night, over 99 per cent of businesses are able to write off the full value of any eligible asset they purchase for their business. This policy was based on feedback we received directly from businesses.

It is available for small, medium and larger businesses with a turnover of up to $5 billion until June 2022.

It is a game changer.

It will unlock investment.

It will dramatically expand the productive capacity of the nation and create tens of thousands of jobs.

A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a food manufacturing business will be able to expand its production line.

This will boost the order books of the nation.

Small businesses will buy, sell, deliver, install, and service these purchases. Every sector of our economy, every corner of our country, will benefit.

This is how we will get Australians back to work.

COVID-19 has also turned fundamentally sound businesses into loss making businesses. Normally, businesses would have to return to profit before they can use these losses. But these are not normal times.

In order to keep their workers, these businesses need our help now. They cannot wait years for the tax system to catch up. So, on Budget night we announced companies that have been doing it tough throughout COVID-19 will be able to use their losses earlier. Losses incurred to June 2022 can be offset against prior profits made in or after the 2018-19 financial year.

We are doing everything we can to give Australian businesses their best chance to succeed and keep more people in work.

Strengthening our recovery and building our capability

COVID-19 has also reinforced the importance of Australia’s sovereign manufacturing capability. Almost overnight, resourceful Australian businesses adapted.

A reconfigured supply chain tripled mask production at a factory in Shepparton.

Production lines for sleep apnoea devices were converted to make ventilators in Western Sydney.

Gin distilleries became manufacturers of hand sanitiser – right here in WA!

We can now build on these strengths with a plan to ensure Australian manufacturing plays an even greater role in our economic recovery.

Our $1.3 billion Modern Manufacturing plan will target six national manufacturing priorities:

• food and beverage manufacturing

• resources technology and critical minerals processing

• medical products

• recycling and clean energy

• defence industry, and

• space industry.

We will play to strengths because this is how we open new markets. The Strategy is all about government backing an enterprise-led recovery. It sends a clear signal that not only is Australia open for business, but we mean business.

And in that regard, I just want to touch on the recent signing of the regional comprehensive economic partnership trade deal. With one in five Australian jobs reliant on trade, RCEP will be crucial as Australia and the region begin to rebuild from COVID-19.

Greater openness within our region, as well as the greater integration of value chains and more common rules of origin which this deal delivers, will make it easier for Australian businesses and investors to operate throughout our region, helping Australia to continue to grow our exports.

There are gains for Australian providers within the financial services sector, education, health, engineering and other professional services, who can become better integrated within the region and have more access within RCEP countries.

Skills in the Budget

As we look to create jobs in a labour market undergoing major change, reforming Australia’s skills and training system is a priority. We needed to ensure that we are training people for the jobs that industry tell us they have now and will have into the future.

We are investing this year alone – around $7 billion in our vocational education and training system. Businesses and Industry have told us that you need a pipeline of skilled workers to support our economic recovery.

That is why we announced $1.2 billion to help create 100,000 new apprenticeships through the Boosting Apprenticeships Commencements wage subsidy.

This measure introduces a new 50 per cent wage subsidy, up to $7,000 per quarter, for all businesses that take on new apprentices over the period of 5 October this year to 30 September 2021.

Already, over 4,000 apprenticeships have been registered under the Boosting Apprenticeships Commencement wage subsidy in WA alone.

I also want to talk about our $1 billion JobTrainer Fund.

This will provide over 300,000 additional free or low cost training places to help school leavers and job seekers access short and long courses in areas of skills need.

That is the key – areas of skills needs. In other words, a focus on training in areas of anticipated employment growth. All States and Territories have signed onto JobTrainer. They have worked with the National Skills Commission to develop a list of qualifications and skill sets that will provide job seekers with the skills that are in demand by employers in that particular labour market.

Courses can differ in each state and territory as we are for the first time directly responding to the labour market needs of individual states and territories.

The WA government has released its JobTrainer course list. You can now go onto the My Skills website and have a look at the courses and which RTO is providing them!

In order to sign up to JobTrainer, the States and Territories had to the sign the Heads of Agreement for Skills Reform.

The Heads of Agreement sets out immediate reforms to improve the VET sector and an approach and priorities for developing a new National Skills Funding Agreement to replace the current one.

We are focusing on three key areas:

• The complexity of a system that is clunky and unresponsive to skills demands;

• The lack of clear information about what those skills needs are; and

• A funding system with little accountability back to outcomes

At the moment under the current funding arrangement the Commonwealth puts $1.6 billion each year – indexed – into the agreement with little to no KPI’s for the States and Territories to meet.

They just need to spend the money on skills! The current system has a funding agreement with little accountability back to outcomes.

National Skills Commission

I’d like to mention another initiative and that is the creation of the Australia’s first National Skills Commission.

The National Skills Commission is a critical new part of Australia’s economic infrastructure, providing expert advice and national leadership on the labour market, current and future skills need and workforce development issues.

Many of you will know Adam Boyton – whom I recently appointed as the inaugural National Skills Commissioner for a period of 5 years. Under Adam’s leadership, we will drive long-term improvements across the skills system, including an annual report each year on Australia’s current, emerging and future workforce skills needs.

The work of the NSC includes: developing closer to real-time data on the labour market – drawing on emerging data sets, such as single-touch payroll, to flag emerging skills shortages and other labour market trends and pressures.

The NSC’s intelligence isn’t just good for business.

The NSC’s data is being used by the National Careers Institute to help jobseekers, students and anyone looking to build their career, by providing guidance on current and future jobs in demand, and the training or education pathways to get there.

Small Business Support

Small and family business are the lifeblood of our communities and the backbone of our economy, employing over 6 million Australians and contributing around $418 billion to our national economy.

Now, more than ever, it is important that there are no unnecessary barriers to the flow of credit to households and business, especially small and medium sized businesses, as the economy recovers.

Small businesses told us we needed to simplify Australia’s credit framework. So, we are! Through a suite of changes to Australian credit laws, we will enable the more efficient flow of credit to consumers and small businesses while maintaining strong consumer protections.

We are also undertaking the most significant reforms to Australia’s insolvency framework in 30 years, which will help more small businesses restructure and survive the economic impact of COVID-19.

As the economy continues to recover, it will be critical that distressed businesses have the necessary flexibility to either restructure or to wind down their operations in an orderly manner.

Small Business Mental Health

I want to take a moment to touch on the human impact that COVID has had on small business owners, both professionally and personally.

Many of you will know small business owners within your networks, family or circle of friends feeling extreme pressure – financially, emotionally, and mentally.

While the financial assistance the government provided to small business is essential, it is imperative to also provide mental health and wellbeing support for those working in small businesses.

Experts are telling us levels of stress among small business operators have increased dramatically because of COVID-19.

Mental health is complex. Running your own business can be hugely rewarding, but for many small business owners having sole responsibility for the company’s future takes its toll.

That is why we made mental health a key priority during COVID-19 and are making record investments in mental health services and support.

We launched Everymind’s Ahead for Business website and digital hub.

It delivers fit-for-purpose resources targeted at small and family businesses to assist them with their mental health and wellbeing.

I would encourage all small business owners to go online, take a look at the website and use this as an opportunity to take stock of your own mental health.

Health Response

Before I conclude I want to update you on the progress of the delivery of a vaccine.

We are committed to providing every Australian with a free vaccine.

We have invested more than $3.3 billion and have entered Advanced Purchasing Agreements with 4 vaccine manufacturers: AstraZeneca, CSL, Pfizer and Nova-vax.

We have secured early access to 134 million doses of a COVID-19 vaccine in 2020- 21 and 2021-22.

We know that a vaccine will not remove the need for ongoing measures to manage the pandemic – but it will play an integral role in our medium-term approach to managing the virus. While we will be living with COVID-19 and its effects for some time to come, a vaccine has the potential to limit transmission and the severity of the disease.

We also announced on Monday that a new high-tech vaccine manufacturing facility will be developed in Melbourne to secure Australia’s long-term supply of critical health products including pandemic influenza, Q- Fever vaccines and life-saving antivenoms.

This is a $1 billion agreement between the Morrison Government and Seqirus and will provides the ability to rapidly manufacture vaccines when responding to health pandemics in the future.

This new complex would be the largest influenza vaccine manufacturing facility in the Southern Hemisphere.

Conclusion

While we find ourselves in a very challenging fiscal position as a result of the impact of COVID-19, we are in a better, stronger, more resilient position than just about any other country in the world and that gives us a very strong foundation from which to build our recovery.

Whilst the challenge is immense, we will get Australians back to work.

Thank you again for giving me the opportunity to speak with you today.

The Morrison Government will continue to do all it can to support the free enterprise that drives the Australian economy.

Because we know that when you do well, we all do well.

ENDS