Introduction
Thank you, Tom, and to the board of the Press Club, sponsors, members and guests.
My last appearance at the Press Club was earlier this year when I had the pleasure of debating Chris Bowen. As seems to be the custom at these events, at the end of the debate, Tom kindly gifted me one of those Press Club membership cards that comes with one’s name inscribed on it.
It wasn’t until I arrived back at my apartment and emptied my pockets that I noticed the name on the card I was given wasn’t Ted O’Brien but rather Chris Bowen.
To be honest, the only reason I accepted the invitation to speak here today was in the hope I may be presented with a new card – whether it’ll have my name written on it, or Jim Chalmers’, who knows?
We must keep Jess front of mind
But I’m not here today to talk about membership cards.
I’m here today to talk about Jess.
Jess is 38 years old. She’s married to Matt, and together they’re raising their two little kids — one in primary school and the other in kindy.
And they’re doing it pretty tough.
They rent a little two-bedroom townhouse in the outer suburbs. Their girls are sharing a bedroom, and their lounge room is really more of a playroom, with toys piled up all over the place.
They dream of one day buying a place of their own. But every time Jess checks the online mortgage calculator, the numbers just don’t add up.
This is not how Jess thought her life would be.
And she’s angry because, if the Australian dream of home ownership is out of reach for her, then her kids won’t even know that dream.
In recent years, their rent has gone up 20%, their electricity bill 40% and their weekly grocery shop is nearing $300.
Jess is working her tail off – looking after the kids while working part time – but it all feels futile.
Matt does long hours as a brickie and odd jobs on the side to earn some extra money to treat the kids.
And, if worrying about their kids wasn’t enough, Jess’s Dad has Alzheimer’s and her mum is struggling to care for him on her own.
This is the Australian story in 2025.
When talking about economic policy, it’s easy to get caught up in a whole lot of technical detail and big numbers.
But strong economic management is really about Jess.
A strong economy is not an end in itself – but a means to an end. It is the means by which Jess, Matt and their kids can aspire to a better life.
But the sad truth is that, today, our intergenerational compact is disintegrating – and all signs point to it disintegrating further.
As Liberals in 2025, our mission must be to assure Jess and the millions of Millennials just like her, the younger Gen Zs and the younger-still Gen Alphas that we see them and we are here to serve them.
In today’s address, I’m going to be running through a lot of economic detail. But, as I do, please keep Jess front of mind.
We must pay down Labor’s trillion-dollar debt
Little more than an hour ago, the Australian Office of Financial Management issued another $700 million in new debt on behalf of the Albanese Government. I’ll forgive you for not having noticed, as it happens two or three times a week, nearly every week.
Just yesterday, they issued $400 million in new debt. And on Friday they’ll issue another $900 million. That’s two billion dollars – or two thousand million dollars – in new debt in just four days.
The Albanese Government has already issued $58 billion in new debt this financial year, and it plans to take that up to around $150 billion in new debt before the end of the financial year.
Our national debt will soon exceed $1 trillion for the first time. And Labor’s plan is for it to exceed $1.2 trillion by the next election.
That’s why many are calling Jim Chalmers the “Trillion-dollar Treasurer”.
But we shouldn’t forget that the states and territories also owe, collectively, more than $600 billion — liabilities that are ultimately backed by the Commonwealth.
That takes government borrowing in Australia to more than $1.5 trillion – a debt so big it has lost all meaning to the everyday Australian.
But what it really means is that our governments have taken out a credit card in Jess’ name, in Matt’s name and in the names of each of their kids in the order of $60,000 each.
Every child born in Australia today enters the world $60,000 behind, and every minute that goes by they fall further behind still.
But it wasn’t always like this.
By 2007, the Howard Government had paid down our national debt. Through the two economic crises since, debt ratcheted back up.
As RBA Governor Michelle Bullock reminded us recently, we’re meant to replenish our fiscal buffers in the good times to prepare for the bad times. But, believe it or not, these are the good times. Yet Labor is planning 11 deficits in a row.
To those who think our debt is no big deal: never forget the dangers of compound interest.
At around 35% of GDP, Australia’s debt today is roughly where America’s was before the September 11 attacks. But US debt has now passed 100% of GDP — near its all-time record following the second world war – and it’s hurtling towards 120%.
Now, Australia isn’t the US. But we also can’t afford to get anywhere near that point. Though I fear that’s the direction we’re heading.
And, make no mistake: if we are ill-prepared for our next major crisis, it will be the young people entering the workforce who will bear the brunt.
The best time to act was three years ago. The next-best time is now.
We must stop Labor’s spending spree
Our dire financial circumstances are no accident. They aren’t the result of bad luck, or of mismanagement by the previous government.
We know this because the Albanese Government has been, quite literally, the luckiest government in Australian history.
Over the four budget years this government has overseen, it has been the beneficiary of an all-time-record $255 billion in net budget upgrades.
Record terms of trade have driven record corporate tax revenues, while decades-high inflation has driven record personal income tax revenues.
And yet Labor has driven the budget into deficit and will keep it there for a decade.
The rivers of gold flowing into the Treasury have driven a deep complacency in this government’s economic management.
They have allowed the Treasurer to act as though his decisions have no cost. But they do have a cost — what economists call ‘opportunity cost’.
Labor’s windfall could have paid off a quarter of our national debt in just four years.
Imagine if you had received an unexpected windfall that allowed you to pay down a quarter of your mortgage in just four years.
In fact, when I talk to the banks, they tell me that’s exactly what everyday Australian households do. When interest rates are cut, most people use the extra cash to pay down their mortgage.
When it comes to their own finances, the Australian people are prudent because they understand a massive debt burden consigns them and their children to a poorer and more vulnerable future.
But this Labor Government does not reflect those same values.
The Treasurer doesn’t like to admit this but, if you study his budget papers, you will see he has taken decisions that have raised the national debt by around $100 billion.
In the financial year just ended, government spending grew at the extraordinary pace of 5.5% over and above inflation. If you go back to the Coalition’s final budget in 2022, you will see that we planned real spending growth in that same financial year of just 0.4%.
So Labor delivered real spending growth last year that was thirteen times higher than the Coalition budgeted for.
And, in case you think that was driven by things like the NDIS or debt interest, think again. It was primarily this government’s discretionary decisions.
Last financial year’s $10-billion deficit would have been a $12-billion surplus under the Coalition’s budget settings in the 2022 Pre-Election Economic and Fiscal Outlook prepared by Treasury.
Chalmers’ decisions turned a Coalition surplus into a Labor deficit.
Over the last three years, Australia’s economic output has grown by $300 billion per year. Over that same period, government spending has grown by $150 billion per year.
That means the Albanese Government has been buying up half of all new economic output – double the Government’s usual share.
This government has been out there competing with everyday Australian households for products and services, bidding up the price of everything.
And as we saw just an hour ago in the latest inflation figures from the ABS, inflation is back up to an extraordinary 3.8% – above market expectations and well above the RBA’s forecasts, both in headline and underlying terms.
With just 29 days until Christmas, this is the worst possible news for struggling mortgage holders who can now kiss any additional rate relief goodbye.
And that dream of home ownership just keeps getting further and further away for Jess, Matt and their kids.
That’s why many are calling it the ‘Jimflation’ effect.
And that’s also why living standards have fallen more sharply in Australia than in any other advanced economy.
Jim Chalmers boasts that real wages are growing again. Notice he says “growing” but avoids mentioning the level of real wages – because they’re actually 2.2% lower today than when he took office.
If real wages continue to grow at their current pace, it will take more than thirteen years to get back to where they were when Labor took office.
We must prevent Labor’s half-trillion-dollar tax hike
But there’s another, even more direct way young Australian workers are paying for Labor’s spending spree.
Under Labor, personal income taxes have already reached an all-time record as a share of the economy. That remains the case even after Labor delivered the Coalition’s Stage-3 tax cuts.
Personal income taxes last financial year were $74 billion or 28% higher than under the Coalition. That’s $5,000 a year for every taxpayer. Could you imagine what Jess and Matt could do with an extra $5,000 each?
But this is only the beginning. The Treasurer’s own budget makes clear his assault on young workers will only intensify over the coming decade.
Jim Chalmers is proud of his path back to surplus in 10 years’ time.
But what he doesn’t admit is that his budget only returns to balance because he’s planning to hike personal income taxes by nearly half a trillion dollars over the next decade.
This isn’t speculation. It’s right there in his own budget papers.
If instead personal income taxes were to remain at today’s all-time-record share of the economy, then Labor’s deficit would actually widen, from 1.5% of GDP today to 2.1% of GDP in a decade’s time.
Debt wouldn’t stabilise — it would keep growing without limit. Labor’s plan is to paper over its growing deficits by letting personal income taxes rip even faster.
That’s why Opposition Leader Sussan Ley has made it clear we will take a personal income tax cut package to the next election.
Because young Australian workers can’t afford half a trillion dollars of personal income tax increases under Labor.
We must breathe new life into the Charter of Budget Honesty
Cleaning up after Labor governments is what Coalition governments do. It’s the natural order of things.
After the Hawke and Keating deficits, it took years of discipline by the Coalition to balance the budget. But we did it.
After the Rudd-Gillard-Rudd deficits, it took years of discipline by the Coalition to balance the budget. But we did it.
And after the Albanese deficits, it will again take years of discipline by the Coalition to balance the budget. But we will do it.
But balancing the budget doesn’t happen by itself. Just ask Peter Costello. That’s why he laid down the Charter of Budget Honesty.
Reading it now, nearly 30 years later, it feels every bit as vital.
But, as former Treasury Secretary Ken Henry has noted: we need to “breathe new life” into the Charter.
It doesn’t need to be rewritten. It just needs to be followed.
The starting point is to commit to quantifiable fiscal rules, so Treasurers can be held accountable if they do not abide by them.
I believe that’s why Jim Chalmers, on becoming Treasurer, threw out the fiscal rule book. He simply didn’t want to be held to account.
In Senate Estimates recently, under questioning by my colleague, Senator James Paterson, a Treasury official was asked to search, excruciatingly, through the Treasurer’s fiscal strategy just to find a single numeral — but failed to find even one.
After admitting there were no numbers, in a scene straight out of ‘Yes, Minister’, the poor public servant offered that there were things “quantitative in here without numbers”.
That sums up Chalmers’ fiscal strategy beautifully. It’s a word salad.
The key problem with his lack of quantifiable fiscal rules is that, without them, his budget forecasts are simply not credible.
They are predicated on the Treasurer doing two things. First, immediately halving the rate of growth in spending he’s been racking up to date. And second, raising personal income taxes by nearly half a trillion dollars over the next decade.
If the Treasurer doesn’t intend to deliver that plan, laid out in black and white in his own budget papers, then he should explain to the Australian people how else he intends to deliver on his forecasts.
Either way, the starting point must be for the Treasurer to commit to a set of quantifiable fiscal rules so he can be held to account for doing so.
Fiscal rules are vital. That’s my challenge to Jim Chalmers today.
We must start growing the economic pie
Whenever I talk about economic policy, I frame the challenge around two imperatives.
The first is to stop the spending spree.
Ensuring your budget is sustainable, that taxpayers are getting value for money – that is the foundation of strong economic management. As Liberals, that’s our bread and butter.
But, once that’s bedded down, there’s a second imperative that’s even more important.
And that’s to start growing the economic pie.
There is simply nothing more critical to raising the living standards of our children and grandchildren than the capacity of our economy to deliver it.
Today, we are living off the productivity gains of the generations before us. The generation before you builds your foundation; then you build on it for the next generation. That is the intergenerational compact.
But that intergenerational compact is breaking.
As the Productivity Commission has shown, for the first time in our history, those entering the workforce today are not experiencing higher living standards than those who came before.
And it’s getting worse, not better. In the last three years, productivity growth hasn’t just been sluggish – it has gone backwards, by an extraordinary 5%.
This has dire implications for our children and grandchildren. Not just for their real wages, but for their capacity to pay down that massive debt and for the sustainability of the essential services on which they rely.
Immigration has played an important role in our economic development throughout our history. But, more recently, it has been stretched beyond breaking point. Labor’s overreach has tested the patience of the Australian public – and it has frayed our social bindings.
As my colleague, Senator Dave Sharma, warned in a speech to the Sydney Institute recently, economic stagnation will generate political frictions as we resort to fighting over a shrinking pie.
None of this augers well for our future – or for the future we bequeath to our children and grandchildren.
And I fear Labor has given up on them.
Labor governments of the distant past understood, that before you cut up the pie, you have to have a pie to cut up.
But today’s Labor doesn’t think like that.
They seem to believe that you can tax your way to prosperity and regulate your way to productivity.
The Treasurer entered this term of government with a plan to tax unrealised capital gains – solely with an eye to raising revenue to fund his spending spree, and without a second’s thought for the economic consequences. It’s all about redistributing a shrinking pie.
And, as my colleague, Senator Andrew Bragg has rightly pointed out, Labor’s uncapped 5% deposit scheme will simply expand housing demand, force up house prices and push home ownership further out of reach for many. When we all know supply is how you grow the pie.
Meanwhile, Labor’s enabling of the “Cartel of Corruption”, as my colleague Tim Wilson puts it, benefits their union paymasters at the expense of the taxpayers and first homebuyers forced to pick up the bill of an 18% fall in construction productivity over a decade.
We must lead on AI
But there’s probably no better example today of how Labor’s misguided economic agenda is robbing our future than AI.
The world stands on the threshold of a profound economic transformation powered by data centres, AI and advanced computing.
Data centres supply the foundational infrastructure, advanced computing monetises that infrastructure at scale and AI drives demand for both.
It is impossible to know for sure just how big this opportunity is – but global capital markets are betting it will be the most profound economic transformation since the advent of the internet. I think they’re right.
We can already see the potential of AI as what economists call a ‘labour-augmenting technology’, which will generate higher real wages for Australian workers.
But, as my colleague, Alex Hawke, recently made clear, prudent guardrails are needed, including: 1) not legalising theft; 2) rejecting the regulatory wild west; and 3) ensuring contracts rule.
And I am pleased the government seems to be responding positively, including this week’s announcement of an AI Safety Institute, which we welcome in-principle.
But we should really be thinking of AI as an enormous opportunity to grow the economic pie. We need to raise our ambition because AI offers potential far beyond helping us out at work or home.
AI leadership in South-East Asia is up for grabs. And we should take it.
We should participate across the supply chain so we can be AI makers, not just takers.
We should seek to host data from other countries here in Australia, and to export AI services from Australia into South-East-Asia and beyond.
Australia is uniquely placed to lead due to three natural advantages.
First, our institutions: our liberal democracy, legal and governance frameworks, our world-class education, science and research capabilities, and our highly skilled workforce.
Second, our geography: our enviable access to an abundance of energy in our own country, and our proximity to markets in South-East-Asia.
And, third, our relationships: not just our close and trusted relationships with our nearest neighbours, but our deep and enduring strategic relationship with the United States, evidenced by their granting us access to Tier-1 advanced AI chips.
Much of my 20-plus years in business prior to politics was spent negotiating large deals internationally – business alliances, outsourcing deals, joint ventures, mergers and acquisitions, and so forth.
It’s that background that leads me to believe there are times when governments need to think like deal-makers, not just policy-makers. This is one of those times.
In a recent speech here at the National Press Club, Scott Farquar proposed the concept of “digital embassies” to “secure, sovereign cloud vaults that host countries’ most important data”. Big ideas, such as this, should at least be considered.
And there are other ideas that should be explored, such as energy-intensive economic development zones in regional areas that could host clusters of critical AI infrastructure, attracting capital, talent and cutting-edge technology.
I look forward to working with Alex Hawke and Simon Kennedy to explore these ideas, along with the Coalition Policy Committee for the Australian Economy, led by Simon and Senator Jane Hume.
AI is an undeniable economic opportunity, having the potential to cure many of the economic ills I have talked about today.
But Labor’s policy settings are actively hostile towards it.
A maze of regulation, whether it be planning, environmental approvals or industrial relations, has pushed out the time it takes to get a data centre approved. Ours is the slowest approval process in South-East Asia, a leading global technology company told me recently.
Meanwhile, this government is intent on taxing the capital needed to finance the AI buildout. Their super tax was just the beginning, as Pat Conaghan knows only too well. Next, Labor will be coming after other capital taxes.
They’ve always been prepared to kill the goose that laid the golden egg. Just ask Senator Susan McDonald about Labor’s mining tax.
But, when I talk to the leaders in AI, they tell me these barriers pale in comparison to the single-biggest blocker to the buildout of our future digital economy – and that is energy.
AI has an insatiable thirst for energy. But, under Labor, we don’t have enough affordable energy to meet the existing demand profile – let alone to power our new digital economy. We can’t even keep our smelters running.
The solution is simple. Every available technology that can generate energy should be on the table. Nothing should be left off.
Yet Labor is forcing the premature closure of coal plants. They’ve been stifling the supply of gas. They’ve stalled their renewables rollout. And they refuse even to contemplate nuclear – a clean energy source that OpenAI, Google, Amazon, Microsoft and Meta are all investing in.
Labor calls its net-zero transition a new “industrial revolution”. But the industrial revolution was all about raising productivity. Labor’s energy transition is lowering productivity. It’s the polar opposite of an industrial revolution. It’s a revolution of de-industrialisation.
Labor’s dogged pursuit of its net-zero energy transition will ultimately hold Australia back from seizing the AI opportunity.
Yet again, Labor is consigning the next generation to a poorer future.
Conclusion
I’m conscious I’ve taken you on quite the journey in my address today – centred around the need for Labor to stop its spending spree and to start growing the economic pie.
But my real message goes directly to Jess.
Jess, we get it.
We’re formulating policies to make it easier for you and Matt to buy that first home. We’re formulating policies to bring down your energy bills. We’re formulating policies to put more money back in your pocket. We’re formulating policies so you, and one day your children, can aspire to a better future with high-paying jobs.
Two potential futures lie ahead for young Australians – one mapped out by Labor and another being mapped out by the Coalition.
Unless Labor stops its spending spree and starts growing the economic pie, it will hand over to the next generation a future Australia that is poor, weak and dependent.
Under the Coalition, because we understand the importance of a strong economy, the intergenerational compact will be honoured. And we will hand the next generation a future Australia that is not poor, but prosperous; not weak, but strong; and, not dependent, but fiercely independent.
Thank you.ENDS