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Penrith Chamber of Commerce: address.



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Address to Penrith Chamber of Commerce

Jackie Kelly, Minister for Sport and Tourism 12th June 2001

Good evening.

I’m delighted to speak to you this evening.

Penrith is such a vibrant part of the Sydney region. You have a national reputation for putting on great sporting events. You also have some first-class sporting venues, like the International Regatta Centre. The Centre is a wonderful facility for the City of Penrith — and was the site of the 2001 Australian Masters Rowing Championships just two weekends ago.

Now on to the main business of the evening... You invited me here to talk to you about the Federal Government’s Budget for the next financial year, and the initiatives the Government is supporting to help business grow. 

I know that the Penrith business community takes a great deal of interest in initiatives which encourage growth and prosperity. 

As you all know, business success is not just about putting more money in pockets. It’s also about creating good jobs for our children, and building a strong sense of community where we live. 

These values are particularly relevant to the City of Penrith, as it has a such a young population. At the last census, the 0-4 year old age group was the largest in the region. 

Building a future for Penrith’s children is a key issue in the community, and this is where business development plays a large role. 

The Government has a vital role to play in encouraging business growth.

This Budget builds on the solid work the Government has done since coming to office in 1996.

Budget 2001 will deliver real benefits for Australia’s 1.1 million small businesses.

The Government’s commitment to sound fiscal policy has delivered the lowest small business interest rates in 30 years.

And keeping interest rates low is one of the most important things a government can do.

The Government has delivered a surplus of $1.5 billion which will help keep both interest rates and inflation low.

The Budget has cut company tax rates from 34 to 30 per cent. This $2 billion tax cut will boost small businesses which utilise a company structure.

Small businesspeople will also benefit from the immediate bring-forward of full input tax credits for business on new car and truck purchases. This initiative will deliver savings to business of over $600 million.

A small business person who goes out and buys a $35,000 vehicle tomorrow will save $3200. That’s a pretty good deal.

All future half-yearly indexations of fuel excise have been abolished from 1 March 2001. As well, the Government has delivered reductions in excise and customs duty of 1.5 cents per litre on petroleum fuels.

The abolition of the Financial Institutions Duty keeps another $1.2 billion in the hands of businesses — this will particularly benefit small businesses with high turnover whose deposits were slugged with the duty every time they visited the bank.

Simplified Tax System

1 July 2001 also sees the introduction of the Simplified Tax System for small business.

Small business tax payments will be cut by more than $1 billion over three years and provide eligible small business with cash-based tax accounts, simpler depreciation and trading stock rules. 

As an example, under the Simplified Tax System, assets costing less than $1000 receive an immediate deduction.

The due dates for lodging quarterly activity statements, such as the Business Activity Statement, or BAS, have been extended.

Businesses with an annual turnover under $2 million also have the option of lodging their BAS annually, but still making quarterly GST instalments.

In this Budget, the Government is also introducing  a number of measures to specifically address the needs of older Australians.

The tax-free threshold for single self-funded retirees will be lifted to $20,000, and $32,612 for couples. Qualifying self-funded retirees will pay no income tax until their income exceeds those amounts.

In addition, the Medicare levy threshold for senior Australians will be lifted from the 1999-2000 rate of $13,550 to $20,000. So a senior Australian pays no tax and no Medicare levy until they earn more than that amount.

These measures will apply to the current financial year, so senior Australians will receive a tax refund after lodging their tax return this year. That’s great news for older Australians!

Budget Initiatives for Small Business 

This is a terrific budget for small business.

The Business Entry Point, www.business.gov.au has been boosted with funding of $8.2

million. This business portal has just won a gold Government Technology Productivity Award for the provision of the Australian Business Number Online. The Business Entry Point provides 24-hour a day access to government sites.

This new funding builds on this Government’s financial commitment to the Business Entry Point over the past four years. 

More than 35 per cent of all ABN registrations are now done online through the Business Entry Point. And over 800,000 Australian Business Register searches are done every month. So the Business Entry point is clearly proving to be a valuable resource for small business.

The Business Entry Point also contains links to Government agency sites which allow small business people to do a range of things — from advertising a job vacancy and searching resumes, to becoming a Government supplier, to lodging a patent application, to creating an Australian Workplace Agreement online, to applying for an R&D Tax Concession.

This new injection of funding will enable the Business Entry Point to meet the changing and increasing demands of a diverse business community.  It’s great news for small business owners who don’t have enough time to visit government offices during work hours.

Small business skills development programs will receive a boost with the injection of $2.2 million into the Small Business Enterprise Culture Program. Funding offers have been made to 24 small business training providers across Australia.

The providers will deliver a variety of projects. More than half are located in rural and regional areas.

The Government allocated $6.4 million over three years in the 1999 Budget for the Small Business Enterprise Culture Program. Funding applications are now being accepted for Round Five.

In another initiative, $5 million has been allocated to the Small Business Incubator Program. This funding will help to ensure that eligible small businesses get help in the crucial early stages of their development.

An integrated suite of business advice tools will be developed to help all industry sectors understand and operate effectively within the existing regulatory environment. This initiative is being delivered through the Department of Industry, Science and Resources.

The Budget also includes significant incentives to help small businesses take on new apprentices.

Almost $2 billion is being provided over the next four years for the highly successful New Apprenticeships initiative, including $1.5 billion for incentives for employers and assistance to New Apprentices.

Backing Australia’s Ability

The budget also delivers substantial funding for research, development and innovation through the Government’s Backing Australia’s Ability innovation statement, announced on

29 January 2001.

Around $3 billion will be provided over five years to fund programs which recognise that translating ideas into dollars will continue to improve the international competitiveness of Australian business by stimulating innovation.

Backing Australia’s Ability includes a range of initiatives.

Funding has been doubled for the Australian Research Council’s competitive grants. The ARC’s grants program includes funding for industry-university collaboration.

Funding has also been doubled for the successful COMET program, Commercialising Emerging Technologies. This program has been set up to specifically help small business. Currently, about 90 per cent of COMET clients are businesses with an annual turnover of less than $500,000.

The Government has provided $100 million over five years for an Innovation Access Program which will support a range of collaborative projects, including helping Australian industry to access new technologies.

The R&D Start Program is continuing with funding of $535 million over five years.

The R&D tax concession has been reformed. This includes providing a premium rate of 175 per cent for additional R&D activity, and a tax rebate for small companies.

The Cooperative Research Centres Program is being expanded with an additional $227 million in funding. The Government is also encouraging greater access by small and medium enterprises.

Backing Australia’s Ability reinvigorates the research base, and provides targeted support to drive commercial outcomes.

Each initiative addresses a priority area and is designed to have maximum impact while being fiscally responsible.

Two weeks ago, my colleague, Nick Minchin, the Minister for Industry, Science and Resources, launched a new National Innovation Awareness Council to help established and aspiring entrepreneurs to transform research and technology into successful businesses.

The Council will be chaired by David Miles, formerly Chair of the Innovation Summit Implementation Group. It will help the Federal Government to raise community awareness of the importance of innovation, science and technology.

The Council will provide advice to the Government on implementing the $35 million National Innovation Awareness Strategy announced in Backing Australia’s Ability.

In particular, the Council will address the longstanding need to promote awareness of the importance of entrepreneurs in the community — particularly among young people — so that they can consider a business career.

Our economic future depends on our ability to encourage people to become entrepreneurs in

order to generate many more new small enterprises with high growth potential.

Another initiative that will benefit business was just announced by my colleague, Tony Abbott, the Minister for Workplace Relations, Employment and Small Business. Minister Abbot announced that $24 million will be provided for training Indigenous Australians.

$24.3 million in Federal funding will provide training and access to employment opportunities for almost 3000 Indigenous jobseekers. That’s fantastic news for Indigenous Australians!

The 112 projects funded by the Structured Training and Employment Projects, or STEP, will provide private sector employment for Indigenous Australians.

The Future

These initiatives will boost the Australian business sector. And they’ll go a long way to helping you with your business.

I’m confident that the year ahead will be a positive one for business. And I’m confident that the Penrith business community will see real results.

As Australia celebrates its 100th birthday as a nation, the statistics suggest we’ve done well.

Over the past few years, interest rates and inflation have been low, while economic growth and job creation have been high.

Last year’s Olympics enabled us to showcase Australia to the world.

And the benefits didn’t end when the Olympic flame went out. There are fantastic export opportunities for the companies which provided goods and services for the Sydney Games.

In February this year, I launched Game Plan 2006, a strategic national plan for the sport and leisure industries.

The Government has committed $1 million to implement the strategies outlined in Game Plan 2006. The centrepiece of the Plan is an export target of $1.3 billion by the year 2006. 

Capitalising on the international exposure we received from staging the Games — as well as Australia’s reputation as a great sporting nation — is a vital element of the sport and leisure industry strategy.

Austrade recently announced its Reflections initiative which will showcase the 300 companies which helped to stage the Games.

The Government is committed to assisting the development of young industry sectors. 

The future looks bright for all industry sectors, including the sector for which I am responsible in Government — our tourism industry. 

The Tourism Forecasting Council has predicted that Australia’s international visitors will more than double, from the current level of five million a year, to ten million a year by the year 2010.

This is brilliant news for our tourism industry. And it’s great news for a whole range of other industries. 

I’m pleased to say that the tourism sector is already developing strategies to meet this enormous demand. 

I recently co-chaired, with the Minister for Trade, the Hon Mark Vaile, the inaugural Export Tourism Roundtable. 

This group is made up of peak industry bodies across the tourism sector. It’s great to see industry actively involved in long-term planning and working together to achieve common goals.

The tourism industry stimulates the rest of the economy. There are flow-on effects for the food and beverages sector, the construction industry, the automotive sector, and the financial sector — to name just a few.

The Government plays a role in creating the right economic climate for business development across the board.

New National Accounts figures

As you know, economic growth rebounded very strongly in Australia in the March quarter 2001.

The National Accounts show that, in seasonally adjusted terms, GDP rose by 1.1 per cent in the March quarter and grew by 2.1 per cent through the year.

As predicted in the Budget, the slowdown in the second half of 2000 largely reflected one-off factors such as the unwinding of the stimulus from the Olympics and the transitional effects of A New Tax System on construction.

Most of the impact of these events is now likely to have passed. The National Accounts again confirm that inflationary pressures remain low.

To illustrate this:

Household consumption grew by 2.2 per cent in the March quarter. This was the strongest quarterly growth since September 1994. The growth in consumption was underpinned by exceptionally strong services growth of 4.2 per cent — the strongest in 25 years — and supported by very strong growth in retail trade expenditure of 1.9 per cent.

●

Purchases of new motor vehicles have moderated from the September quarter peak in sales but remain at historically high levels. ●

Housing investment rose by 0.8 per cent in the March quarter, coming off the sharp decline in activity in this sector in the September and December quarters, unwinding the record level in the June quarter 2000.

●

Forward indicators for housing construction, such as private dwelling approvals and finance approvals, have strengthened over recent months, consistent with solid growth ●

in this sector over coming quarters.

The recovery in residential construction will be greatly assisted by recent cuts in interest rates and the Government’s $14,000 grant for new housing under the First Home Owners Scheme.

●

The benefits of these policy changes for new home owners, and the expected positive impact on residential construction, are yet to be fully realised. ●

Investment in new plant and machinery rose by 2.0 per cent in the March quarter, and is now 2.3 per cent higher than a year ago. ●

New investment in buildings and structures rose by 2.3 per cent in the March quarter, driven by a 3.7 per cent increase in new engineering construction, after falling substantially over the past two years following the peak in 1998-99.

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The medium-term prospects for business investment are positive, with investment in both plant and equipment and non-residential construction expected to grow solidly in 2001-02.

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The return to growth in both residential and non-residential construction has removed the two major drags on growth in the second half of 2000. ●

Net exports contributed a strong 0.8 of a percentage point to GDP growth in the March quarter and 2.3 percentage points to growth through the year. ●

The recent strong net export performance has also contributed to a sharp decline in Australia’s current account deficit, to around 2.8 per cent of GDP in the March quarter. Our current account deficit is now well below the average of the 1990s. And it’s markedly below earlier peaks of more than six per cent of GDP.

●

The National Accounts confirm that inflationary pressures remain low. The household consumption chain price index, which is a broader measure of consumer prices than the CPI, increased by 0.9 per cent in the March quarter. This is slightly lower than the 1.1 per cent increase in the CPI for the March quarter.

●

Both measures of consumer prices were affected by a number of one-off and temporary influences, particularly rises in food prices as a consequence of floods. Looking through these effects, inflation in the March quarter remained consistent with the two to three per cent target band.

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Non-farm average earnings grew by a strong 1.6 per cent in the quarter. In through-the-year terms, non-farm average earnings grew by 4.3 per cent. This includes a one-off 0.5 percentage point contribution from the increase in the superannuation guarantee charge on 1 July 2000.

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The National Accounts wages measure is running a little above a range of other measures of wage increases, such as the Wage Cost Index and enterprise bargaining outcomes, which are in the 3½ to four per cent range.

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Most wage measures point to a gradual step-up in the rate of wage increases. But wages have not increased at rates that would threaten the inflation target band, provided trend productivity growth remains solid.

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Private corporate profits in the non-financial sector rose by a very strong 7.8 per cent in the quarter, to be 3.8 per cent higher through the year to the March quarter. Profits ●

remain around historical highs at around 25 per cent as a share of GDP.

Production growth in the March quarter was particularly strong in communication services, finance and insurance, accommodation, cafes and restaurants, and construction.

●

The medium-term outlook for the economy is very favourable.

The National Accounts release indicates that we can easily achieve the Budget forecast of two per cent growth in 2000-01. The National Accounts also show we have a solid base for the forecast growth of 3¼ per cent in 2001-02.

Conclusion

If Australian business is to compete successfully in the modern economy, it is critical to form and maintain networks and linkages to maximise our competitive advantage. 

Speaking of networks, I was pleased to hear of the recent launch of the Penrith Valley Accommodation Network. This initiative will give local businesspeople opportunities to work more closely together for the benefit of their industry.

Networks are so important for business growth. 

The Penrith Valley Accommodation Network is just one of the latest in a range of networks in health and sports medicine, adventure tourism, and  information technology. It’s a great initiative — keep up the good work!

I’m also pleased to see that the Penrith Chamber of Commerce values the importance of networks in business growth. Holding these monthly events is a great way to develop and maintain networks.

Finally, I’d like to congratulate a member company — the Windmill Nursery — for winning not one, but two, 2001 Western Sydney Industry Awards a few weeks ago.  Windmill Nursery won the Agribusiness Product Marketing and Promotion Award. They also won the award for the Agribusiness Most Outstanding Agribusiness Contribution by a Small to Medium-sized Business.

Well done!

But it doesn’t surprise me that local companies are doing so well.

Ninety-three of Australia’s top 500 exporting companies are located in Western Sydney. And three are in the top ten.

This region is clearly dynamic and innovative. 

I’d like to thank the Penrith Chamber of Commerce for inviting me to speak to you this evening. It’s been a great pleasure to talk to you and let you know what I, my Ministerial colleagues, and the broader Government are doing to help Australian business realise its potential.

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