Growth platform needed to boost economy: MCA

In its Pre-Budget submission, the industry body said that Australia needs to press ahead with building national capacity.
MCA chief executive officer 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.
“Without the Federal Government’s strategic leadership to facilitate investment and to drive regulatory reform, Australia risks revisiting the past when capacity constraints resulted in a loss of global market share in key minerals commodities and an opportunity cost to national income and economic welfare.”
He said that for long-term prosperity to be realised, economy-wide policies in areas such as taxation reform, climate change management, R&D and workplace relations must enhance, not detract from, the competitiveness of Australia’s minerals sector.”
“On tax reform, the industry is looking to work closely with the Government as it considers its response to the Henry Review,” said Hooke.
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 Submission identifies three policy imperatives that should guide both the framing of the 2010-11 Budget and broader policy settings.

1. 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 an ageing population. The focus in closing the fiscal sustainability gap should be squarely on spending restraint, not raising revenue. 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.

2. Systemic improvement in the quality of infrastructure and of its regulation, along with wider streamlining of regulatory processes across Australia. With capacity constraints re-emerging in the economy and Federal and State Government budgets under strain, the ‘margin for mediocrity’ in supply-side policy has narrowed even further.

3. Key economy-wide reforms to enhance the long-term efficiency and competitiveness of Australia’s globally-engaged industries, including the minerals industry. The Government’s response to the Henry Tax Review will be very significant in this context, though other policies in areas such as climate change, education and training and workplace relations remain critical.

The Pre-Budget submission identifies four areas of concern to the minerals industry. These are:

1. Climate change measures that would impose new costs on Australia’s trade exposed industries ahead of major emitters and trading partners;
2. Proposed changes to research and development arrangements that would impose higher compliance burdens and reduce incentives for innovation activity in Australia;
3. Provisions in the Government’s Fair Work Act that undermine flexibility, productivity and cooperative relations in the workplace; and
4. The prospect of a “tax grab” in lieu of genuine reform of Australia’s taxation and minerals royalty arrangements.

The Pre-Budget submission is available at www.minerals.org.au