Thanks very much, Mark, and to Angie for asking me along today and to all of you. Thank you for the opportunity to come along. Really, this is an opportunity to hear from you and to engage in the conversation about the issues that matter most to you, but I do want to say emphatically how much I appreciate, and how much we appreciate, what you do as small businesspeople.
I grew up in a small business family and I know it can be really tough. In fact, interestingly we just heard that Malcolm Fraser just passed away, which is the end of an era in many ways. And you know, as a young boy I grew up and was the youngest of four children in a small business family and it was pretty tough in that family. My parents started the real estate agency in 1969. I remember back in about 1973-74, I was only eight years of age and dad came home one day and said, ‘look, I think it's all over. I think we're done. We've lost the business, the house, and everything’. As an eight year old, it's a pretty chilling moment.
But my mother, like so many mums, said, ‘like hell, Richard. We're all going to work; we're all going to make it’. So, my two older brothers were responsible in the real estate agency for driving people around and showing them houses on the Saturday even though they didn't have driver's licenses and my sister answered the phone. I was in charge of sweeping out the front of the shop and mum and dad worked seven days a week until I was 18.
The business is still going; third generation about to take over, and it's a story of hard work. It's a story of trying to be nimble, looking at an ever-changing world, and wanting to compete. That's the story of small business. And I know small business is facing huge challenges, particularly in retail. The advent of the internet, the fact that you can buy goods 24 hours a day, seven days a week, sitting at a screen in your home is a real challenge. But it's not a challenge that can't be overcome and I say to you emphatically it can be overcome because small business can always react faster than big business. Small business always has the capacity to swim faster, to be more malleable, to be more responsive to the needs of clients.
One of the things that's always stirred me a [inaudible] is to think of the thing that has changed our lives most, the technology that has changed our lives most, and go back to where it all started. Because when I was Small Business Minister, people used to say to me, ‘we need a subsidy, we need this, we need that, please give us a grant, our industry is struggling’, and there was a – it was 10 March 1876, this 29-year-old guy and his 22-year-old offsider thought they came up with a pretty good idea. 1876, and they thought, yep, this is pretty spectacular. But they didn't have the money to commercialise it – to put it to market. So, they went to Western Union, and it was in the United States. They went to Western Union, which is a money transfer company, and said, ‘do you want to invest in our new invention?’ And in the most famous rejection letter in the history of humanity, the general manager of Western Union wrote a letter saying this, ‘Dear Mr Alexander Graham Bell, your proposal for a telephone is an interesting novelty that has no future commercial value. Good luck’.
So, Alexander Graham Bell at the age of 29 and Thomas Watson, his offsider, at the age of 22, having patented the phone quietly, they didn't write to Washington and say, ‘please get us a start-up grant, an incentive, or anything else’. They went around and begged everyone for money and eventually found enough money to start up the Bell Company, which became not only the most successful company in the history of humanity but completely transformed humanity forever. And that was a small business. That was a bit of innovation – having a go. So, I want to say to you that in the development of our policies we keep looking to small business to have a go. And it's going to be small business that is going to drive employment over the next 50 years. Why? Because innovation is the best friend we have ever had. Innovation, through the use of technology, is going to transform our lives like no generation before us. Because for all of our lives, we've been hamstrung by government regulation, working hours, restrictions on trade, licences that you need, requirements that you have.
Consumers are smashing that regulation whether governments like it or not; whether we like it or not. Just think of what Uber's done to the taxi industry. Think about what YouTube and Netflix has done to free-to-air television stations. Think about what online gaming has done to casinos. The list goes on. So, governments can issue a licence, or they can say we're going to regulate working hours, but people shop when they want to shop. People travel when they want to travel. People engage in commerce when they want to engage in commerce, whether we like it or not.
So, we can't keep looking back and saying, ‘gee, that worked in the past, that'll work again in the future’. We actually have to change. But in order to change, we've got to do everything we can for small business, because it's small businesses that are doing that change – they're undertaking that change. They're the ones that are initiating it. So we brought small business into the Treasury. So, the Small Business Minister in the Abbott Government is actually a Treasury Minister. Why? Because I have responsibility for the ACCC, I have responsibility for the Tax Office, I have responsibility for ASIC; all these agencies that actually impact on your lives in one way or another.
And what have we done? Already, we've got rid of 55,000 pages of regulation. More than 10,000 pieces of red tape, which reduces the cost burden on business by about $2.4 billion a year. Currently, business spends $19 billion a year on compliance costs. We reduced that by $2.4. We want to go further; simplification in the tax system, increasing thresholds to recognise small business to two million, if we can afford it, maybe five million, which means that you have simplification and depreciation and a range of other things. Pre-populated BAS’ from the Tax Office.
But importantly, we want to give a tax break to small business, which we'll be talking about in the upcoming Budget. And why? Because we want to give small business a chance to reinvest. Very important. Very important, because especially start-up businesses, they're capital-poor when they start up, but they're intellect-rich. And what we want to do is find a way to facilitate their growth, their investment, their commercialisation, without government picking and choosing winners and losers.
I'd love to do more in industrial relations, I really would. But we have no mandate for it. We want the Fair Work Commission to be fairer, we want the ABCC to come back, the Australian Building and Construction Commission, which has been a handbrake on construction in Australia. We're trying to get that through the Senate, but it's proving impossible.
But I tell you, the best thing I can do for your businesses is help to grow the economy, a stronger economy, particularly given that you're in the paint industry, to get more construction going. And that's what we've – over the last 12 months, we've actually, nationally, done quite well. Importantly, we've seen housing construction increase by nearly 20 per cent in New South Wales – 13 per cent across Australia in the last 12 months. That's year on year. So, there's been a big surge. It's not uniform, I know. Gold Coast has been tough. Western Australia to a lesser degree, tough. A surge in New South Wales, some degree in Victoria, other parts of the country haven't been as good as we wanted.
But, we're heading in the right direction; building approvals are surging. Partly because of low interest rates – very low interest rates, but also because we are doing everything we can to stimulate the construction sector in the wake of the mining industry coming off. And the mining industry construction phase has been the most dramatic fall we've seen, the most dramatic hit on the Australian economy since 1990 because you had all those people working in construction jobs building the new mines, building the new gas projects.
Those projects are now in the production phase rather than the construction phase, so those people have come back. Fly in, fly out workers looking for jobs in Brisbane, in Melbourne; all around the country, Australia, in Sydney and so on. So, we've had to try and fire up the rest of the economy to get more construction jobs and residential housing construction is a big part of that. Also, a very big part of that is a big infrastructure rollout that we've got.
As exemplified in Western Sydney, we're building a new international airport, rolling out billions of dollars of new infrastructure, including WestConnex. In Melbourne we had the East West Link, which sadly isn't going ahead now because of the change of government, unbelievably. In Queensland, there was a program; I'm hoping that the new Queensland Government will change their attitude. Western Australia's still holding up well. Tasmania is turning the corner, thank God. It's taken too long. And Tasmania, we're actually seeing some good signs of economic growth. South Australia's still not where we want it to be and Darwin is completely out of control. Completely out of control with construction. I mean, it's a fantastic story, Darwin. So, we want to try and get that construction sector going and that flows through, not only to your industry – into paint, but also importantly it flows through to the purchase of white goods and brown goods, furniture of various forms and it gets all those carpenters, electricians and plasterers and so on into work. The next 12 months and beyond is going to be good for Australia. Australia is in good shape; it's going to get better. It's amazing, we've faced incredible headwinds over the last 12 months in particular but even before that and Australia yet still has one of the fastest growing developed economies in the world.
That’s come about because of sensible reforms; governments trying to do better. And we've got to keep reforming, we've got to keep changing the nation. There's no doubt about that. The status quo is no policy option for the future. If we want to maintain our quality of life, we have to change what we do and that's because of the various longer-term pressures that are coming on to our country. Having said all of that, why am I so ambitious for the nation?
You know, if you draw on a world map a circle around China that includes Japan, Korea and part of India, there are more people living inside that circle than the rest of the world combined. So, there are two billion people in our Asian region that are going to go into the middle class over the next 30 years – two billion. The middle class that has driven the world economy over the last 130 years is Europe and the United States, combined 800 million. Two billion people are going to have discretionary money in our region in the next 30 years and what do they want? Well, walk out the door along the beach – Surfers. They want clean air, great environment, they want their children to have excellent education, they want good healthcare, they want to make sure the food they eat is clean and reliable. They want exactly what we want. And they'll be able to afford it for the first time and they want bigger houses, they want architects to design those houses, they want quality tradesmenship, quality advice from people consulting on colours and on paints through to carpenters, kitchen makers, cabinetmakers.
They want what we have but on a scale that no generation in the history of humanity has ever seen. And this is the longer-term opportunity for Australia where they start looking for our architects and our interior designers, our builders, and searching them out and asking them to build what you have there in Australia. What we've done is we've facilitated that growth with new Free Trade Agreements with China, with Japan, with Korea and it'll take a lot of hard work, but maybe even India. So, now you go out and buy a Toyota Yaris, it's $800 cheaper than it was 12 months ago because we signed Free Trade Agreements with Japan and with Korea and the list goes on but, most importantly, we can export into their markets without handbrakes and that's a huge transformation that's going to give us a lot of wealth over the years ahead and a lot of opportunity.
So, that's enough from me. Really it is about you. I want to hear what issues that you think are important to help me better inform [inaudible] for the Prime Minister and my colleagues of the Budget, but also importantly what we can do to help to make business better for you. Finally, I'll finish where it started and that is to recognise your incredible contribution to Australia. We are a nation of small businesspeople even though big business and government has obviously had a huge role to play over many years, it's been small business, innovation, and hard work that has driven the very fabric of our culture and it is in the DNA of our enterprise. So, I want to thank you again for doing what you do, the long hours, filling in the paperwork, which we're trying to get rid of, employing people, buying things, selling things, but most importantly contributing to the community because without your support and your engagement in the community, we wouldn't be the great nation we are today. Thank you very much.