The “Future directions for the Australian economy” steam proposed several key ideas:
The creation of an independent body to carry out a “clean sheet of paper” review of the roles and responsibilities of federal, state and local governments in areas of major economic activity. This body could be a new Federation Commission or an expanded version of the Productivity Commission. It would be constituted by and report to the Council of Australian Governments (COAG), but would have the power to create and initiate the necessary reform agenda and monitor its implementation. In respect of the latter role, it would absorb the activities currently conducted by the COAG Reform Council.
A comprehensive review of state and federal taxes, within a 2 year timeframe including interim reporting. This review should consider measures to simplify taxes, reduce inefficient taxes, harmonise, ensure a progressive system, as intended, and address negative interaction with the welfare system.
The infrastructure imperative is to create a regulatory and institutional framework to allow timely and efficient investment, especially in key export areas. A specific priority is a simpler, national regime for third party access to give up front regulatory certainty and to promote competitive pricing and adequate returns. The stream endorses a need to coordinate national infrastructure priorities through Infrastructure Australia, underpinned by rigorous cost-benefit analysis and focusing on Australia’s competitive advantages.
With regard to regulation, the speed of regulatory reform should be increased, including to create seamless national markets in key areas, improve productivity and remove barriers to competitiveness, and to reduce the cost of doing business.
The group recommended re-establishing annual budgets as the sole priority-setting mechanisms for government policies.
The group also discussed the importance of Australia nurturing and investing in talent. The group recommended that there should be a single, national education and accreditation system to promote mobility of talent. This objective, treated in depth in The Productivity Agenda stream, is vital to the future of our economy.
These were the priority themes outlined by the group during the weekend:
The stream advocated a fundamental commitment to creating a seamless national economy and single national markets in major areas of economic activity (for example, labour, energy, water, transport and communications). The goal should be to minimise overlaps and bottlenecks and improve competitiveness. They will require clarification of roles, responsibilities and accountabilities between different levels of government. At present, however, Australia’s economy in major markets is highly fragmented: the COAG national reform process has identified more than 25 areas in which Australia has eight sets of different State and Territory regulations. In addition, we have multiple education and accreditation systems. A country of Australia’s size cannot afford this.
Meeting the target suggested for economic growth in the coming decades requires world-class infrastructure. To address this need quickly and efficiently, Australia must set broad national priorities to allow investment to flow to the highest return opportunities and; undertake further regulatory reform to encourage an appropriate mix of public and private investment.
A third major theme concerned the need for a holistic tax system that is fair, simple and efficient. Australia needs a tax system that supports the global competitiveness of our economy, provides incentives, minimises distortions and supports fiscal responsibility.
To read the full Initial Summit Report of the Australia 2020 Summit, click here [MS Word DOC].
