Business leaders today called for an action plan for the economy focused on productivity improvements, saying Australia’s strength and resilience as an economy were likely to erode if major reforms were not started quickly.
The Business Council of Australia’s federal Budget Submission released today urges the federal government to commit to a program of action to reform Australia’s workplace relations, tax, infrastructure and regulation making systems.
The submission also calls on the government to avoid commitments in the 2005–06 Budget that might inhibit these reforms being quickly progressed.
The BCA’s submission says Australia’s living standards and average wealth have risen significantly due to an unprecedented level of economic growth over the past 10 years which has seen the economy grow by more than 40 per cent.
However, the submission says economic reforms over the past two decades that had lifted Australia’s productivity and performance need to be reinvigorated.
“We have an opportunity to lock in our current economic position for the long term,” BCA President, Mr Hugh Morgan said.
“Australia cannot rely on past reforms and investments for future growth. There needs to be a commitment to a package of reforms that position the economy for strong growth over the next decade and beyond.”
The submission argues that while growth has continued strongly in recent years – on the back of increasing household credit exposure but concurrently, with poor export performance – we are reaching capacity constraints and the economy requires reforms to increase national competitiveness and maintain growth.
The submission highlights parallels between Australia's current economic position and that of Japan in the 1980s, the United Kingdom in the early 1990s and the United States in the late 1990s, which all experienced strong growth which could not be sustained.
“Australia does not need to follow the same path as these economies. But making sure the current level of expansion is sustainable will depend on whether we are willing to act now to lock in growth.”
These are not issues just to be addressed by politicians and policymakers, but need the understanding and support of the whole community. The majority of Australians are enjoying prosperous times because the community was prepared to make hard decisions in the past.
“To continue that prosperity in the longer term requires hard decisions and a broad understanding that action is preferable to complacency, indifference or inaction.”
The submission in particular highlights the need to increase Australia's labour productivity, which despite gains in the last 10 years lags significantly behind many of our OECD competitors.
It also advocates reforms to expand Australia’s workforce pool to offset the impact of an ageing population and global competition for skilled workers.
“The BCA is advocating a program of reform in four key areas: tax; infrastructure planning and coordination; regulation; and workplace relations.
“Reform in these four key areas of the economy will provide the basis for strong jobs growth and continuing rising wealth over the long term.
“The submission argues that these reforms should commence now, as they involve relatively long lead times before the benefits take effect.”
The BCA will release major policy positions on each of these areas in the next three months to provide objective and informed direction on the reform debate.