In its 2010 pre-budget submission, the council said Australia needed a platform for growth based on sustained government spending restraint, systematic improvement in the quality of infrastructure and regulation, and reforms that take full account of sovereign risk.
“With Australia still short of a ‘third wave’ of economic reform, there is a clear need to press ahead with an agenda focused on building national capacity,” MCA chief executive Mitchell Hooke said.
“The Rudd government has set down positive markers for long-term prosperity, including commitments to control spending and return the budget to surplus, build the nation’s infrastructure, reform business red tape and regulation, and continue trade and investment liberalisation.
“It is time to get on with the job.”
He said for long-term prosperity to be realised, economy-wide policies in areas such as taxation reform, climate change management, R&D and workplace relations needed to be enhanced, not detracted from.
The MCA submission identified three policy imperatives that should guide both the framing of the 2010-11 budget and broader policy settings.
The first was sustained spending restraint to underpin fiscal sustainability given the sharp deterioration in public finances and the long-term cost pressures arising from factors such as the ageing population.
“The focus in closing the fiscal sustainability gap should be squarely on spending restraint, not raising revenue,” Hooke said.
“The budget should signal the government’s commitment to a ‘root and branch’ review of government spending priorities – through an exercise as ambitious as the Henry Tax Review.”
The second policy imperative was the systematic improvement in the quality of infrastructure and its regulation, along with wider streamlining of regulatory processes across Australia.
The third area was economy-wide reforms to enhance the long-term efficiency and competitiveness of Australia’s globally engaged industries.
“The government’s response to the Henry Tax Review will be very significant in this context, though our policies in areas such as climate change, education and training, and workplace relations remain critical,” Hooke said.
Four areas of concern for the minerals industry were climate change measures that would impose new costs on Australia’s trade-exposed industries ahead of major emitters and trading partners; proposed changes to R&D arrangements that would impose higher compliance burdens and reduce incentives for innovation in Australia; provisions to the government’s Fair Work Act that undermine flexibility, productivity and cooperative relations in the workplace; and the prospect of a “tax grab” in lieu of genuine reform of Australia’s taxation and minerals royalty arrangements.
“On tax reform, the industry is looking to work closely with the government as it considers its response to the Henry Review,” Hooke said.
“The MCA considers the best way to progress tax reform is to base the government’s initial response to recommendations on any new national minerals royalty regime on high-level principles and a clear commitment to consult with relevant stakeholders, especially industry and state governments.
“The minerals industry is not a milch cow for repairing the budget or for other policy objectives, such as reforms to state and company taxes or the social security tax interface.”
