If Australia is to improve its living standards and move up the ladder of Premier League nations the economy must grow at an average of 4 per cent a year for the next decade, the Business Council of Australia said today.
Speaking at the Council’s annual strategy forum, the President of the BCA, Dr John Schubert, outlined a range of public policy initiatives to build on Australia’s position as one of the very best places in the world to live, learn, work and do business.
The Council believes Australia stands at an important point in its history, he said. As a result of considerable reform, a long historical decline in our relative living standards has been reversed in the past two decades. At the beginning of the 21st century, the challenge we face is new. For the first time in more than 100 years, Australia is doing better than nearly all of its international peers and has done so for the past decade.
If we can continue to grow at an average annual rate of 4 per cent for the next decade, we will continue to put distance between the size of the Australian economy and the next rank of countries, which includes Sweden, Norway, Taiwan and Russia. Most importantly, this level of economic outperformance will allow us to tackle the social and environmental improvements all Australians desire.
While we recognise the 4 per cent figure is a stretch target ¡V considering likely growth rates over the next decade of between 2 and 3 per cent for most developed countries, we have demonstrated our ability to compete internationally and win. And it should be a national aspiration, because economic growth underpins our capacity to improve society.
Dr Schubert said economic modelling undertaken by Access Economics showed the 4 per cent growth target could only be achieved by embracing further necessary reform and boosting Australia’s population.
He said the Council had identified five priorities for immediate attention. They are:
The Business Councils interest in education and training recognises that a well-educated workforce is critical in ensuring a large number of Australians continue to be in good jobs in progressive and innovative companies. It also provides greater equality of opportunity for all Australians and contributes to social cohesion. High standards of education benefit individuals, governments and the whole community. More than anything else, it is the quality and relevance of Australian education that will determine whether we remain internationally competitive and in the Top Tier of nations. Our specific short term interests are:
The Australian higher education sector is made up of 38 publicly-funded universities and two private universities. Australia needs to have at least one if not several world-beating, internationally recognised university. We are not there yet. There is a need to focus on the outcomes of the sector, and whether it is achieving the levels of excellence and international recognition that are essential. Over the next 12 months, the BCA will develop an accurate set of statistics on inputs and outputs; promote the need for educational excellence; support the establishment of international, discipline-based benchmarking of educational outputs; support the creation of a more diversified sector through funding models that reward outcomes; and support the creation of a more informed market about university performance.
Improving Year 12 or equivalent completion rates
International benchmarking in literacy, numeracy and science competencies at age 15 suggests that Australia is performing well overall but poorly at the lower levels. In other words, lower performers in the test results in Australia are scoring more poorly than other countries. Further, Australia continues to experience retention rates of 73 per cent for Year 12 or equivalent, compared with 77 per cent 10 years ago. Both highlight the need to focus on providing equality of opportunity. Over the next 12 months, the BCA will promote the need to target resources to improve educational outcomes for those at risk; and promote the on-going development of national and international benchmarks to identify performance gaps and improvements.
If Australia is to achieve the 4 per cent decade long growth target and improve the quality of life of all Australians, then work force participation must continue to rise, and we must build on the remarkable productivity gains of the last decade. While the Council will retain a keen interest in encouraging on-going workplace flexibility and productivity improvements, its key focus will be population.
Given declining birth rates, the Access Economics modelling points to an increase in immigration of 50,000 people a year, rising to 80,000 a year by 2012. This is additional to the ABS projected intake of 90,000 migrants a year. This would increase the population from the projected 21.3 million to 22.1 million in 2012.
Raising the quantity and productivity of investment is central to Australia¡¦s ability to meet the BCA target growth rate of 4 per cent. There are a number of elements to an improved investment performance, many of which overlap with work being done in education and the regulatory environment. In the short term, the BCA will look to improve the pattern of taxation in Australia, with particular immediate emphasis on the international tax system. We are framing and costing our priorities for the international tax review announced by the Federal Government.
Australia’s response to climate change and Kyoto
Australia’s response to climate change is critical to jobs, investment and our quality of life. It is important Australia plays its part in reducing greenhouse gas emissions, towards the Kyoto objective, while protecting our national interest.
We must work as a nation cooperatively, in national and international forums, to retain policy flexibility, to develop new and emerging technologies, attract investment, ensure our companies and products remain competitive and ensure jobs are not lost. We do not support ratification of the protocol without participation of all countries. We need co-operative, flexible and participative approaches that recognise national circumstances and provide the right incentives rather than coercive, restrictive and complex approaches.
Trade Practices Act
Regulation has an important role to play in achieving public policy objectives. However, it is in the best interests of Australia to ensure that regulation achieves those objectives efficiently, and with regulatory processes being transparent and accountable. In the year ahead, the BCA will focus on the review of the Trade Practices Act announced by the Federal Government.
While the terms of reference of the review of the Trade Practices Act have not yet been announced, the Council has three broad areas of interest:
- To ensure the Act protects strong domestic competition without obstructing Australian companies from achieving the scale and efficiencies necessary to compete internationally;
- To rebuild business confidence in the Act and its administration by improving transparency, certainty and accountability; and
- To rationalise and modernise the Act to reflect best practice competition regulation.
In a highly-competitive world, Australia cannot afford regulation that is out of date, open to very broad interpretation, is inefficient or in any way hamstrings the capacity of our economy to grow. Many of the challenges we face, such as remoteness from major markets, customers and investors, cannot be changed, but we can do something about regulatory dysfunction which affects more than corporate competitiveness and profitability to impact on jobs, investment and quality of life.
Dr Schubert said if the country was to meet the 4 per cent growth aspiration, it needed broad community support.
People universally acknowledge that Australia is a great place to live, learn, work and do business, but there is little understanding of the link between a robust and successful private sector and community well-being, he said.
The impact of the reform of the public sector over the past decade through privatisation, contracting out, national competition policy and the pace of industry restructuring has, in some cases, created anxiety and a distaste for further essential economic reform at a significant cost to the private sector.
The BCA believes there is a task to build a cultural understanding of and support for the private enterprise economy system. We understand this brings with it obligations for our members and for all business, but if Australia is to reach its potential we must have a dynamic, well-respected and well-understood private sector capable of paying higher wages and employing more people.
Business transformation and the resulting productivity improvements and economic growth are not an end in themselves. Rather, they are critical to our ability to fund a fair, clean, safe and prosperous society.