"Victorian industry has benefitted from the shift down in the value of the dollar over the past few years which has boosted exports and import replacement, and low interest rates, which have reduced borrowing costs and contributed to the residential building boom. A number of industry-facing government programs have also been had a positive impact on confidence.
"However, Victorian businesses continue to face high costs, an internationally uncompetitive taxation system, slow productivity growth and a burden of regulation which combine to hinder industry's ability to compete in world markets. The recent rise in the value of the domestic currency is also of some concern. Activity in the state in recent years has been over-reliant on residential building which appears set to slow later this year. The looming end of the local auto assembly is already placing significant pressure on businesses in automotive supply chains. While some are transitioning to new opportunities, many businesses are likely to downsize or close altogether.
"Ai Group believes that, to address these challenges, the Victorian Government should build on its achievements so far and announce measures to:
- Reduce business costs through changes to taxation - including addressing inefficient state-based taxes by further harmonising payroll taxes and reforming land taxes in a way that allows the phasing out of inefficient stamp duties;
- Reduce regulatory burdens (including not repeating the two additional public holidays gazetted in 2015 for Easter Sunday and Grand Final Friday);
- Build capacity through investments in skills - including by adequately funding the provision of VET in Victoria and support measures to increase apprenticeship commencements;
- Ongoing support of rigorously-assessed infrastructure - including delivering the strong Government pipeline of projects on time given the need for construction activity in the state; and
- Grow opportunities for Victorian businesses by investing in innovation and supporting trade.
"The Victorian Government has announced a series of programs aimed at boosting the opportunities available for Victorian businesses and their employees. These have been welcomed by industry but must be ramped up and expanded to ensure meaningful outcomes," Mr Piper said.
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