Federalism, tax top CCI election agenda

AS we approach the final week of the 2010 federal election campaign, Western Australian business is disappointed that both sides of politics have so far failed to tackle the key challenges facing the nation.

It is critical that the remaining days of the campaign are spent debating the issues, and developing good policy, to ensure WA is able to meet its economic potential.

Among the comprehensive reform agenda referred to here is the introduction of four-year fixed terms of government, which would give government more time to design and implement good policy, and provide business with more certainty, without the distractions of imminent elections.

Fixing the federation

Relations between the states and the Commonwealth need to be improved. The Chamber of Commerce and Industry WA is calling for an independent review of jurisdictional boundaries to determine allocations of policy, spending and revenue raising responsibilities.

An interim reform is to move to an equal per-capita share of the GST pool, which would enhance equity and transparency while also promoting efficiency among government, resulting in fewer barriers to state based taxation reform.

Tax, budget

There is scope to improve Australia’s tax system. The case for reducing the complexity of the Australian taxation system is compelling, especially when Australia is identified as having the third most complex taxation system of the 20 largest economies of the world. Reducing the complexity and compliance costs with the tax system should therefore be a key area for reform.

CCI wants the next government to embark on a genuine tax reform process based on the findings of the Henry Tax Review. The proposed Minerals Resource Rent Tax and the increases to the Superannuation Guarantee Charge should be scrapped.

It’s also essential that the budget is carefully managed to keep taxes and interest rates down. A proposed limit on real growth in spending is an important start, but it should also be accompanied by a ‘root and branch’ review of all current budget outlays with a view to identifying areas of waste and inefficiency for either reform or rationalisation.

Infrastructure

Neither Infrastructure Australia, nor the State Infrastructure Fund established under the Minerals Resource Rent Tax, provide an adequate level of funding for WA’s critical infrastructure projects. It also remains unclear the exact amount of funding available to Infrastructure Australia.

WA must be allocated the share of infrastructure funding that reflects its importance to the national economy so that the state can continue to grow and support its increasing population.

Key priorities include: upgrading roads that support Perth airport; development of a Kimberley supply base to support planned LNG projects; upgrading facilities in the Pilbara’s major towns; building the proposed 330kv transmission line to the Mid West; and upgrading rail freight links to Bunbury port.

Labour shortages

The biggest issue facing employers is the return of severe labour shortages. In WA, even with the current strong rates of population growth, CCI estimates there will still be a shortfall of more than 210,000 workers by 2020.

CCI wants a national population strategy established to ensure labour needs are met. This must include changing the migration system to make it easier for employers to get the workers they need. Specifically, this would include the removal of the current skills assessment process, and English language competency requirements on the temporary migration program. Incentives to encourage women, indigenous Australians, people with disabilities and older workers into the workforce would also be welcome.

Industrial relations

The current system imposes a costly regulatory burden on employers. CCI is calling for greater flexibility in the arrangements between employers and their staff, rationalising and simplifying modern awards, resolving disputes at a workplace level and restoring the balance of power between employers and unions.

Proposals include: maintaining current penalties and enforcement powers in the building and construction industry; allowing individual flexible arrangements (IFAs) between an employer and employee on any matter in an award; allow IFAs to be offered as a condition of employment and remove the ability for an employee to terminate the arrangement with 28 days’ notice; provide protection for employers from future underpayment claims where an employee and employer have agreed on a genuine flexibility arrangement; and prevent unions from vetoing IFA negotiations.

Education, training

It’s vital that WA has a strong education and training system to ensure the next generation of workers has the right skills. We need programs to help every student achieve basic skills, provide employers with incentives to train workers, and give public schools autonomy.

Climate change

The challenge for climate change policy is that it must mitigate carbon emissions without reducing the competitiveness of Australia’s industries, provide sufficient education and support to small and medium enterprises and ensure that Australia is part of a market based, global solution.

Competition reform

Competition is vital to encouraging investment, creating wealth and making jobs. CCI wants the next government to implement the Council of Australian Government reform agenda, and remove trade barriers and industry subsidies, including financial assistance for the car industry and book import restrictions.

Health

CCI calls for the new government to embark on a genuine reform agenda that ends the blame game and cost shifting between government, adopting strategies to attract and retain the staff needed and shifts the focus of healthcare from hospitals and GP’s to preventative care.

Time is running out. Both sides of politics must deliver policies that meet the needs of WA’s employers and helps to secure the Nation’s future.

• James Pearson is Chamber of Commerce and Industry WA chief executive. This article is an edited extract from CCI’s ‘Strategies for Growth’ document.