15 August 2014
Speech - #2014010, 2014

Address to the Australian Property Institute’s 50th Kiparra Day Conference

Check against delivery

Thank you for welcoming me today. I am delighted to be here representing the Prime Minister to open your conference.

Can I start by acknowledging the Australian Property Institute’s National President, Robert Hecek and your New South Wales President, Tyrone Hodge.

It’s great to see so many attending this conference - particularly because this Kiparra Day is a real milestone, as you celebrate 50 years.

And in that time Kiparra Day has changed from a simple professional development event, into an annual conference, with hundreds of delegates.

Of course, the Australian Property Institute has been instrumental in this growth. I was pleased to see that the Property Institute will be celebrating another milestone in a couple of years when it celebrates 90 years.

As you know, the Prime Minister was unfortunately not able to attend today, but he has asked me to read a short message to you.

[Message from the Prime Minister]

I am pleased to provide this message for the Australian Property Institute’s 50th Kiparra Day Conference.

For almost 90 years, the Australian Property Institute has encouraged the highest standards of professional practice, education, ethics and conduct in the property profession.

This event continues a long tradition of discussing the trends that are shaping the property industry.

A profitable property sector creates jobs and growth, and that creates security and prosperity for the Australian community.

The Government is committed to helping businesses grow and prosper and is creating the right economic conditions to make it easier for you to succeed.

The Government’s Economic Action Strategy will benefit the property industry in NSW and across Australia.

We are doing this by reducing company tax and cutting red tape costs by $1 billion every year.

One-stop shops are being established for environmental approvals and our record $50 billion infrastructure programme is underway.

All of Sydney, and Western Sydney in particular, will benefit from the Government’s decision to proceed with a second airport in Sydney – or as I call it, Western Sydney’s first airport.

We will re-establish the Australian Building and Construction Commission to ensure there is a tough cop on the beat tackling lawlessness. We have repealed the Carbon Tax and your sector will benefit from lower costs.

I send my best wishes to all attendees and thank you for your contribution to our nation’s growth.

[End message from the Prime Minister]

I’d like to follow the Prime Minister’s message with a few of my own remarks.

First, I’d like to discuss our economy, and the way that the property sector contributes to it.

Next, I’d like to talk about the G20 growth agenda and infrastructure. I will also mention our Budget measures and the Asset Recycling Initiative. We all know the crucial role infrastructure plays in relation to property.

Finally, I’d like to comment on the move towards private sector valuers, which I know is an issue you are all interested in hearing more about.

Australia has experienced 22 years of continuous economic growth, and the next four years look to continue this trend. As a result, Australians now enjoy some of the highest living standards in the world.

The major driver of growth in recent years has been the unprecedented investment in the resources sector.

To meet demand from our trading partners, mining investment increased from less than two per cent of our national income before the mining boom, to almost eight per cent in 2012-13.

This has seen the capital stock in the mining sector triple in the space of a decade. But now, investment is starting to wind down as projects are finished.

We are at the critical point of the mining boom, with rising production and export volumes, but falling commodity prices and investment.

Resources investment will detract from growth, while resource exports will increase as completed projects go into production.

But the net effect of these two forces means that the economy will need to rely on other sectors if it is to return to trend growth over the medium term. The economy faces some challenges in navigating this transition.

Activity outside of the resources sector is expected to strengthen over coming years. Supported by low interest rates and an exchange rate that has retreated from its highs of early 2013, there are signs that non-resources activity is picking up.

Economic growth in the March quarter 2014 was above its usual rate. This was driven by a strong contribution from resources exports and solid contributions from household consumption and home investment.

The property market is an important part of the rebalancing of the economy, as the non-resources sectors become drivers of growth.

Activity in Australia’s property market has strengthened since mid-2013, as it responds to historically low interest rates. This of course improves returns from buying and investing in properties. House prices, auction clearance rates, and other leading indicators of housing construction have increased strongly over the past year.

Dwelling prices grew by 10 per cent over 2013, but appear to be growing more slowly in 2014. Leading indicators of home construction, such as building approvals and credit for the construction of new dwellings, have also been strong over the past year or so.

National accounts data suggests that the strong leading indicators have started to flow through into increase construction activity. Home investment grew strongly in the March quarter – up 4.7 per cent in the quarter – and investment is forecast to continue to rise over the near term.

Higher house prices should also help generate increased consumption by increasing the wealth of Australian home owners.

Ultimately, a sustained pickup in demand for dwelling investment and consumption will encourage an increase in non-mining business investment more broadly.

And this is of course important for growth.

As will be discussed at the G20 meeting later this year, promoting stronger economic growth is a core theme of the G20 agenda.

G20 Ministers and Governors have agreed that although there are some signs of improvement in the global economy, growth is still too low.

So the G20 is focused on developing actions across a range of policy areas, and to generate private-sector growth through investment.

Countries have limited fiscal and monetary policy options available. So we need the private sector to lead the growth we want to see. The G20 investment and infrastructure agenda aims to increase private sector investment in infrastructure.

There is a significant need for infrastructure investment and no lack of private capital. We must connect them if we are to provide the quality infrastructure that’s needed to lift productive capacity and increase long-term economic growth.

Governments have an important part to play to facilitate private sector-led growth, by providing a sound investment environment.

The G20 is working to achieve this in a number of ways. It is encouraging domestic reforms to policy and regulation, which will provide certainty to investors.

It is improving information on investment opportunities.

It is developing best practice approaches for project planning, prioritisation and delivery, so that there will be numbers of investment-ready projects lined up for the future.

It is supporting the efforts of multilateral development banks to improve infrastructure investment.

And finally, it is working on capital market development to channel long-term finance to investment.

Coming from the Gold Coast, I am only too aware of the strains put on existing infrastructure and the need to build infrastructure for the future.

I’m sure you’re all too well aware of that here in Sydney too.

So we have a number of measures of our own to increase investment in infrastructure, by both government and through private investment, which are part of the G20 strategy.

We are pursuing significant structural reforms.

We’re investing $50 billion in vital road and rail projects through to 2019-20 to increase infrastructure supply.

This includes a new $11.6 Infrastructure Growth Package, which I will talk about shortly.

We are also working to reduce regulation and the costs of doing business.

We will further simplify approval processes for major projects. We will also improve the operation of Infrastructure Australia, so that high-quality, high-benefit projects are made a high priority.

We are committed to delivering a 'one-stop shop' for environmental approvals, so there is a single environmental assessment and approval process for matters protected by national environmental law.

This is designed to cut red tape and streamline the approvals process for businesses. In turn, this will improve Australia's investment climate, generate investment and create jobs, while maintaining high environmental standards.

This Government’s focus on infrastructure demonstrates the way that budgets can be returned to sustainability, while still supporting growth and investment.

As you know, our Government has focused on repairing the budget. This will strengthen our national economy so that we can handle any future shocks in the global economy.

So our Budget this year shifted our expenditure from unproductive spending, such as interest payments on debt, to productive and sustainable spending.

Currently, Australians are paying more than a billion each month on interest payments.

We realised that we could make a huge difference to our economy if we put this kind of money into productive investments such as infrastructure.

This approach contributes to growth, giving us more value for our dollar. It will create jobs for the future and build a stronger environment for investment.

The Budget allocated over $11 billion extra to the Infrastructure Growth Package, bringing the Commonwealth’s total infrastructure investment to $50 billion through to 2020.

Our $5 billion Asset Recycling Initiative will provide state and territory governments with an incentive to recycle idle capital on their books towards productive purposes.

The Commonwealth will offer $5 billion in incentive payments to state and territory governments which sell their infrastructure assets and reinvest the proceeds into infrastructure.

States and territories will receive up to 15 per cent of the value of assets sold that is reinvested into new productive infrastructure projects.

The $5 billion spent will support close to $40 billion of infrastructure investment by the states and territories and will help develop a chain of new infrastructure developments.

It’s a time-limited offer and a competitive pool of funds, but we expect this initiative to bring about over $125 billion in new infrastructure spending, including from state and territory governments and the private sector.

Investments like this will rouse the construction sector and generate thousands of jobs nationally, at a time when our economy is in transition.

Because we must get the non-mining parts of the economy moving, as the economy transitions from mining investment and construction, to more broad-based production.

And what’s more, this movement will be spread across the country. There will be major new capital works in capital cities and regional Australia, with massive projects like the Westconnex here in Sydney, the East-West Link in Melbourne, the Perth Freight Link, the Toowoomba Second Range Crossing, and the North-South Road in Adelaide.

The Victorian Government has announced it will sell the Port of Melbourne, and the NSW Government has announced its intention to sell further electricity assets, along with a $1 billion package of new roads infrastructure.

These developments are great for capital generation in Australia, great for dealing with congestion, great for job creation and also great for creating investment opportunities, including by property developers.

They’re also great developments to build a stronger economy. And a stronger economy will protect the living standards of Australians in the future.

At the same time as we are investing in infrastructure, we are also making Government more efficient. I’d like to talk about how we are doing that in the context of property valuation, and property valuers.

Australian valuers are skilled and professional; indeed, their work underpins Australia’s property and banking systems.

In January this year I announced the closure of the Australian Valuation Office.

My decision to close the Australian Valuation Office was a practical one, not an ideological one.

The previous Labor Government made the decision for Federal Government departments to drastically reduce their spending on AVO services.

Left with a loss-making government business and a bleeding government balance sheet, the incoming government had little choice but to consider a different future for the AVO.

The AVO was never expected to be profitable again. Keeping it open as a government business, simply for the sake of public sector jobs over private sector jobs, would have been the ideological decision.

Now, there is a highly competitive market of private sector providers, and they are increasingly being used by government.

Since I announced the closure of the Australian Valuation Office, government departments have gone to the private sector to provide valuation services and I am told more tenders will be going on the AusTender website shortly.

I know the Australian Property Institute has worked alongside the Government with the closure of the Australian Valuation Office and I thank you for this.

The government values the role of the private sector, and the property sector in particular. You make a valuable contribution to our economy.

I would welcome an opportunity to talk to you further, either today at morning tea, or at a later time.

By the next Kiparra Day conference, the G20 meeting will be complete, but the Government’s growth agenda and our infrastructure projects will be ongoing and create more jobs for Australians. And I hope the property sector benefits from them.

But for now, I would like to officially open the 50th Anniversary Kiparra Day Conference and wish that you have productive discussions on important topics affecting the sector.