Business looks to election policies that will deliver a robust, balanced and sustainable economy

"The government to be elected on 21 August will have to deal with a domestic and world economy facing renewed economic uncertainty, while meeting the demands of a booming resources sector and all the pressures that entails, such as skill shortages, a high dollar and further pressure on interest rates," Australian Industry Group Chief Executive Heather Ridout said today.

"At the same time, Australian industry is facing enormous volatility in business conditions and a recovery which is far from assured.

"Underneath all of this, there are big structural issues which business will be looking for all parties to address over the next term of the Parliament. In particular, the incoming government will have to make some wise decisions to lift our flagging productivity performance and boost workforce participation to underpin efforts to address our big demographic challenge.

"Ai Group will be seeking from all parties, policies to build a balanced, robust and sustainable economy. Our policy priorities in key areas include:

Skills and Education

• Raising our education and training performance will add to both productivity and workforce participation, specifically we propose:
  • Increasing real levels of funding in VET by $660m per annum to accommodate 3% annual VET participation growth;
  • Allocating additional funding to demand-driven funding models such as enterprise-based productivity programs and workforce development initiatives;
  • Linking eligibility for public funds to quality performance;
  • Developing and implementing a National Adult Language, Literacy & Numeracy (LLN) strategy and adequately resource it to achieve a real lift in Australia's LLN levels; and
  • Making permanent the Apprenticeship Kickstart bonus for apprentices in traditional trades.

Workplace Relations

• Address the impact of the announced Superannuation Guarantee increases by implementing a systematic wage trade off within the Fair Work Act;
• Restore the “character of the business” test in the transfer of business laws; and
• Implement a mandatory flexibility term for enterprise agreements to prevent unions blocking meaningful individual flexibility arrangements.

Tax Reform

• Reduce the company tax rate to 25%;
• Streamline depreciation arrangements;
• Reduce the number of business taxes;
• Coordinate comprehensive state tax reform and reconfiguration of intergovernmental financial relations; and
• Re-design personal income tax and social security arrangements and their interaction as part of a concerted effort to reduce the disincentives that impede greater workforce participation.

Innovation and Business Capability Development

• Clarify that the existing R&D tax arrangements will apply for the entire 2010-11 year;
• Put aside the proposed changes to the R&D tax incentive in favour of a more balanced and targeted approach that ensures ongoing eligibility of mainstream business experimental development;
• Double the coverage of the Enterprise Connect program and resource additional TradeStart advisors;
• Increase the annual minimum allocation for the Export Market Development Grants Scheme (EMDG) to $200 million per year; and
• Develop a well-resourced and strong anti-dumping regime to address the growing trend of below-cost imports unfairly challenging competitively-priced local goods and services.

Defence Industry

• Fully implement the Defence White Paper and Defence Capability Plan commitments including the initiatives in the Defence Industry Policy Statement aimed at growing skills in the defence industry; and
• There should be a strong focus on assisting locally-based companies to access global supply chains in the defence industry.

Climate Change Policy

• It is absolutely vital that business engages in the climate change debate and that there is an active engagement and positive collaboration between business and government to address the climate change challenge;
• Ensure risks of an erosion of competiveness are addressed as part of the rebuilding of consensus over longer-term climate policy;
• Encourage, inform and provide incentives so that businesses and households improve energy efficiency and reduce direct emissions;
• Avoid new and remove existing programs that carry a high cost of abatement (relative to global carbon prices);
• Undertake and encourage R&D aimed at developing cost-competitive renewable energy and other low-emission pathways; and
• Continue developing the architecture of a longer-term approach to climate policy both nationally and internationally including in relation to competiveness measures; carbon sequestration, and the machinery of a broad-based carbon price.

Infrastructure

• Improve infrastructure planning and coordination capabilities at all levels of government;
• Encourage the development of a wider range of options for private sector investment in pubic infrastructure than under the current Public Private Partnership model; and
• Pursue regulatory and market reforms to improve competition and utilisation of, and investment in, energy, water, telecommunications and transport infrastructure.

Broadband

• Maintain as a priority the building of a national high speed broadband network;
• Ensure openness to improved ways of achieving the underlying objectives; and
• Require prime contractors to ensure competitive participation of Australian suppliers in the network rollout.

Regulatory reform

• Prioritise and accelerate the regulatory reform processes initiated by COAG;
• Ensure regulatory burden assessments are more firmly entrenched in policy decision and implementation processes;
• Benchmark business regulatory burdens and measure progress in reducing these burdens; and
• Enhance the efficiency with which business regulators administer regulations in order to minimise the administrative burden on businesses.

"While we have been world leaders in our economic performance through the global economic and financial crisis, we face the significant structural pressures from the re-emergence of the two-speed economy and we have not seen a commensurate boost to productivity. The most recent OECD data ranks Australia’s productivity behind levels in nations such as Norway, the Netherlands, the United States, France, Germany, Sweden and the UK. Australia’s labour productivity level is approximately only 80 per cent of that in the United States. Moreover there has been a step down in labour productivity growth, from an average annual growth rate of around 3 per cent in the mid to late 1990s, to just over 2 per cent in the following 5 years and approximately only 1 per cent per annum since 2004-05.

"So much comes back to productivity improvements: our ability to improve living standards and social opportunities; our ability to compete internationally; our capacity to create stimulating and secure jobs and our capacity to address the significant challenges posed by demography and environmental pressures. In addition, longer-term productivity improvements, particularly in sectors such as manufacturing, tourism and agriculture, are central to addressing the substantial challenges posed by the two-speed economy phenomenon associated with the minerals boom.

"In the context of the structural pressures created by the continuing surge in commodity prices, all parties need to refocus on building Australia’s long-term capabilities with a particular emphasis on non-mining export and import-competing industries such as manufacturing, tourism, education and agriculture. Currently, we face the substantial risk of an unbalanced growth path and an over-reliance on a narrow range of commodity exports concentrated on a small number of national economies. While the national benefits of the minerals boom are substantial, we can and should take positive action to ensure we build a balanced economy with a robust capacity to adjust to longer term structural challenges," Mrs Ridout said.

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