National reforms needed to break policy paralysis

The Australian Institute of Company Directors today released a comprehensive blueprint for the nation’s future, which includes specific reform recommendations across six key areas to help improve economic and social outcomes for all Australians.

AICD Chairman Elizabeth Proust said the Institute had a diverse membership of almost 40,000 people, who were collectively responsible for millions of jobs and billions of dollars in investment across the economy.

“It’s time to stop tinkering around the edges and deliver a real plan for our future,” she said.

“Australia has many strengths, but to take advantage of them, leaders in all fields have to play a role in advocating reform. That’s why the report recognises the role of both government and the business community in driving reform and boosting productivity.

“Despite the clear need for substantial reforms, especially in regards to our taxation system and structures of government, we seem stuck in policy limbo and partisan paralysis.

“The Blueprint for Growth recommends serious and achievable measures to boost productivity and prosperity. Our report is not narrow or partisan. It is deliberatively broad and achievable.”

AICD Chief Economist Stephen Walters said Australia’s fiscal position was unsustainable and bold policy action was needed.

“Our deficit is $36 billion and Commonwealth spending is currently set to remain at above 25% of GDP over the next four years,” he said.

“It is clear we have a spending and a revenue problem. It’s time to tackle both, with cuts to industry assistance, middle-class welfare and efficiency dividends on one hand, and comprehensive tax reform on the other.

“We need to get our tax mix right, by taxing smarter, not higher,” said Mr Walters.

“To help achieve these vital reforms, we also need to review our national governance, which has remained largely untouched for over a century,” said Ms Proust.

“Our democracy, and the public’s confidence in it, cannot be taken for granted. Four year terms to reduce short-term thinking, and a review of state and federal responsibilities, are two measures that can be taken now to improve the governance of our country for the future."

Key recommendations in Governance of the Nation: A Blueprint for Growth include;

Reforming National Governance

• Fixed four year terms for federal parliament.
• Review the Federation to clarify responsibilities and accountability.
• Reinvigorate COAG with a forward reform agenda and an independent secretariat.
• Leadership by Australian directors in governance practice and national debate.

Fiscal Sustainability

• Fiscal restraint to reduce expenditure to pre-GFC levels as a percentage of GDP.
• Comprehensive tax reform to deliver a more efficient, sustainable, fair and growth-focused tax system. A broader and higher GST forms part of the AICD’s proposed package of reforms.

Innovation and Entrepreneurialism

• Push back on protectionism in all its forms, including trade and industry support policies.
• A regulatory environment to foster innovation, including safe harbour reforms.
• Boost Australian’s innovation system to strengthen collaboration with business.

Human Capital

• Simplify the award system.
• Increase female participation in the workforce.
• Expand the national focus on education and skills, including tertiary education reform.
• Maintain support for Australia’s non-discriminatory immigration policy and a strong skilled migration stream.

Partnerships with Not-For-Profits

• A target for 5 year funding cycles with 12 months’ notice, and allow for internal investment.
• A nationally consistent and ‘fit for purpose’ regulatory environment including fundraising reform.

National Infrastructure

• COAG to lead a 15-year infrastructure investment plan based on national priorities.
• Boost ‘good’ government borrowing for productive infrastructure investment.
• Support innovative funding options, such as infrastructure bonds.
• Boost private sector investment through asset-recycling programs.

Click here to read Governance of the Nation: A Blueprint for Growth.