ENGLISH - VIETNAMESE

Australians are overwhelmingly optimistic and confident people. Our optimism, and that
confidence, is well founded – because it rests on our ability to navigate difficult times
together, and emerge stronger.

Australians know their government changed hands at a time of instability, uncertainty and
volatility – around the world and at home.

Today, through this Parliament, I want to explain to Australians what this means for you –
for your living standards, for the economy you work in, and for the Budget that funds the
services you rely on.

I will explain some of the international factors we are buffeted by.

Detail the domestic economic and budget pressures we are dealing with.

Provide some revised Treasury forecasts that try to reflect the circumstances we have
inherited – in advance of a full update in the October Budget.

And outline our plan to deal with these conditions.

This is about giving you the best sense we can of what is really going on.

Because there is no use tiptoeing around the pressure that people are under.

You know what we are up against. You see it every day. At the supermarket. In your pay
packet. When the electricity bill arrives.

And you did not send us to this place to bury the bad news, gloss over the glaring issues, or
wish away the warning signs –

Or to pretend that our problems will solve themselves with more waiting, and more
wasting time.

That approach has already given our country a wasted decade of missed opportunities and
messed up priorities.

You are already paying too much for that in the form of:
• High and rising inflation;
• Falling real wages; and
• A trillion dollars of debt that will take generations to pay off – without a generational
dividend to accompany it.

Nine years of mess can’t be cleaned up in nine weeks – it will take time. Australians know
this too.

And they know that progress begins by us facing up to these hard realities, these hard
truths.

Because only by facing up to these challenges can we transform them into opportunities.

And this time of great challenge for our country is also a time of great opportunity.

The opportunity to build a stronger and more resilient economy – that converts the
potential of our people into prosperity for our nation.

An economy powered by cleaner, cheaper, more reliable energy.

Where more people have the right skills, in secure jobs, with decent wages growing
strongly and sustainably.

And a better future, built with more opportunities for more Australians in more parts of
our country.

Inflation challenge
Once again, Australia is outperforming much of the world, but that doesn’t make it easier to
pay the bills at home.

More Australians are in jobs than ever before – and that’s a very welcome outcome – but
fewer Australians are feeling confident about the choppy waters our economy is in.

Because they see the impact that high inflation is having on their living standards – in an
environment where workers aren’t getting wage rises sufficient to match price rises.

Our high inflation is primarily but not exclusively global. It will subside but not overnight.

It’s been turbocharged by a decade of domestic failures on skills, on energy and on supply
chains which just aren’t resilient enough.

Left untreated, inflation which is too high for too long undermines living standards and
jobs, and wrecks economies.
But the medicine is also very tough to take – and millions of Australians with a mortgage
are feeling that pain right now.

Rate rises began before the election, they rose by a full per cent across June and July, and
the independent Reserve Bank has told us to expect more to come.

There’s no point pretending these rate rises don’t hurt – they do and they will.

Every extra dollar Australians have to find to service the mortgage is a dollar that can’t help
meet the high costs of other essentials.

Governments shouldn’t make it harder for the RBA on the demand side but, more than that,
we should be working to address problems on the supply side.

Some of the conditions determining this inflation problem are outside of Australia’s control
and largely unavoidable.

But there are things we can control.

And some of these conditions have been building for a long time and were avoidable:
• A decade of energy policy paralysis – with not enough investment in cleaner,
cheaper more reliable energy, and not enough certainty for investors – that’s pushed up
power bills.
• A lack of the right investment in skills and local manufacturing capability – that’s
seen our productivity flatline and supply chains break.
• And an objective to keep wages low as a deliberate design feature of the economy –
that’s contributed to a decade of stagnant pay.

And let’s be really clear about something.

Inflation is high and in the near term will get higher – but the primary cause of this is not
higher wages – nowhere near it.

We don’t have an inflation problem because workers are earning too much or because we
are in some kind of a wage price spiral.

Real wages growth over the past decade has averaged just 0.1 per cent a year.

In the year to March, real wages fell 2.7 per cent – the worst result in more than two
decades.
And once wages growth data for the June quarter is released in a few weeks, it’s likely this
fall will have accelerated, given yesterday’s inflation outcome.

The wages of Australian workers are not causing this inflation.

The fault lies with a decade of wasted opportunities, wrong priorities and wilful neglect –
that Australians are all now paying for.