Investing in Australia's Future (Continued)
Ensuring rising Australian living standards
Australia has experienced 22 years of continuous economic growth but we do face challenges in coming years. Sustaining growth in living standards in the context of declining terms of trade and an ageing population will require an improvement in Australia's productivity growth performance and international competitiveness.
National Competitiveness Agenda
The core of the Government's national competitiveness agenda will be an agreement between government, business and unions to lift our annual productivity growth rate to two per cent per annum or more.
This collaborative approach is crucial to ensure all sectors of the economy have a shared sense of ownership of the reform agenda so that reforms are developed collaboratively and implemented smoothly. Thus far, the Government has agreed on seven priority areas to boost Australia's productivity performance.
- A key priority is reforming domestic electricity price regulation, moving to an emissions trading scheme, and ensuring the future availability of competitively priced domestic gas supplies.
- The Government will continue to examine any unintended rigidities arising in the labour market and will work with businesses and unions to harness the full productive potential of the Fair Work Act 2000.
- The Government will consider improvements to business productivity, with the Business Council of Australia recently identifying project management and effective use of capital by management as areas for improvement. Businesses also need to improve company board and executive‑level Asia‑relevant experience if Australia is to capitalise on opportunities in the Asian region.
- The Government recognises that Australia needs a new approach to the regulatory impost on business from all levels of government. This particularly applies to multiple and conflicting environmental assessment requirements for state and territory governments and the Australian government.
- Australia's national objective must be to build the best‑educated, best‑trained, and best‑skilled workforce in the world. Vocational education and training is particularly important, given the recent withdrawal of effort by many of the states.
- Australia needs to embrace new forms of infrastructure financing.
- We must improve the operating environment for small business in this country. This involves access to capital and other productivity drivers, such as the effective take‑up of the NBN.
Better Schools Plan
The Government's Better Schools Plan will provide a historic investment in Australian schools, delivering over $15 billion additional funding over the next six years if all states and territories sign up to the agreement.
In partnership with participating states and territories, the Government is putting in place reforms of Australian school funding arrangements to better align funding with student needs, delivering greater consistency in the distribution of funding and helping drive improvement at the student, school and national levels. The extra funding will enable more one‑on‑one individual attention for school students. It will also help Australian children compete with those in Asia, and get highly skilled, highly paid jobs for the future. This reform is critical to boost Australia's future productivity and, thus, its prosperity.
To date, partnerships have been settled with New South Wales, South Australia, the Australian Capital Territory, and Tasmania. The Government has also reached agreement with the Catholic and independent schooling sectors. The Better Schools Plan now covers 63 per cent of Australian students.
Improving vocational education and training
The Government has a track record of reform and investment in vocational education and training (VET), skills and workforce development, with total annual Australian Government funding growing from $2.3 billion to $3.4 billion between 2006‑07 and 2012‑13, an increase of about 25 per cent in real terms.
To drive VET reform, the Government entered into a five‑year, $1.75 billion National Partnership Agreement on Skills Reform with the states and territories, with implementation plans now signed with all jurisdictions.
A new skills and workforce development partnership with industry was also created through the Building Australia's Future Workforce package, which includes a National Workforce Development Fund to support training and workforce development for more than 170,000 workers across six years, and additional funding to expand the Workplace English Language and Literacy Program, which trained more than 72,000 employees between 2007 and 2011.
Higher education reform
The Government has implemented a suite of reforms to higher education that will create the educated and productive workforce of the future, including an uncapped funding model for undergraduate university places; generous indexation arrangements across learning, teaching and research; and stronger support for research excellence.
This has resulted in a 75 per cent increase in Commonwealth funding for university places between 2007 and 2013, from $3.5 billion to $6.1 billion, supporting an additional 190,000 students to access higher education. Greater, more equitable access to university means that Australia is on track to achieve the goal of 40 per cent of the 25‑34 year old population holding a bachelor degree qualification or above by 2025.
Investing in infrastructure
The Government has, and continues to, invest strongly in nationally significant economic infrastructure. Since coming to Government we have allocated around $60 billion to roads, rail and public transport through the Nation Building programs. One of the Government's key achievements has been completing the full duplication of the Hume Highway, Australia's most important freight corridor.
We established Infrastructure Australia (IA) in 2008 to help drive the development of a long‑term, coordinated national approach to infrastructure planning and investment. IA has put in place a National Priority List to guide investment in the projects that offer the highest economic and social returns. The Government has continued to prioritise funding for projects ranked as 'ready‑to‑proceed' by IA.
The Government recognises that the future growth of infrastructure will require a new approach to funding and financing. We will need to foster greater private sector involvement in infrastructure and unblock the current bottlenecks that are preventing the construction of new infrastructure projects.
Building the NBN
The NBN is the largest single nation‑building infrastructure project in Australia's history. It will underpin productivity improvements across the economy, transforming the way business operates. It will deliver download speeds of up to one gigabit per second to 93 per cent of homes, schools and businesses via optical fibre. The remaining seven per cent of premises will have access to a combination of next‑generation fixed wireless and satellite technologies, providing peak download speeds of up to 25 megabits per second. On 4 July 2013, NBN Co announced that it had met its revised fibre rollout targets, passing around 207,500 homes and businesses. Fibre rollout to over 4.8 million Australian homes and businesses is scheduled to be underway or completed by the middle of 2016.
Building an innovation culture in Australia
Innovation is essential to the future success of Australian businesses.
The Government has increased overall funding for science, research and innovation by 30 per cent from $6.6 billion in 2007—08 to $8.6 billion in 2013‑14, supporting all parts of the innovation chain from basic research to commercialisation. Funding for university research has increased by 58 per cent, from $1.8 billion to $2.8 billion.
This is crucial for developing the new technologies, products and processes that will underpin more broad‑based growth in the coming years and decades. Innovation enables businesses to increase productivity through the development and adoption of new technologies and it allows new products, markets and jobs to be created.
Helping Australian industry thrive
The Government wants to ensure that Australia has competitive industries and high skill, high wage jobs for the future. Attracting investment and helping firms adjust to changes in the economy is necessary to achieve this.
The $1 billion Plan for Australian Jobs will ensure Australian firms get fair access to work on major projects, win new business abroad and help small businesses grow. It will create internationally competitive businesses and jobs by promoting collaboration between businesses and research institutions through Industry Innovation Precincts.
The Government is investing $500 million to establish up to 10 precincts around Australia. We have established the Advanced Manufacturing and Food Industry Innovation Precincts in Melbourne, with eight more Industry Innovation Precincts to be announced in coming months. These new precincts will allow industry to lead research and innovation priorities and will involve collaborations with Australia's top researchers, ensuring innovation is focused on real economic outcomes.
Small and medium‑sized businesses and start‑up companies will also be provided with a broader set of business services through Enterprise Connect and better access to finance through the $378 million Venture Australia package to stimulate Australia's venture capital market.
Tax reform to support investment and productivity
The Government has delivered a substantial and continuing program of tax reform, starting with the Rudd Government's first budget in 2008 when it commissioned the Australia's Future Tax System (AFTS) Review — the most comprehensive review of the tax and transfer system in a generation. The Government has already implemented more than one third of the 138 recommendations contained in the AFTS Report and is continuing to add to that record.
A key focus of the Government's tax reform agenda has been reforms aimed at ensuring the tax system better supports national productivity. The Government recognises how important productivity growth is for higher living standards. That is why we are implementing reforms to support businesses responding to changes in the economy and investment.
The Government is supporting businesses to invest and adapt to a transitioning economy through reforms to allow companies to carry back losses to get a refund of past tax paid, worth $150 million in 2013‑14 and growing to $300 million in 2015‑16; an instant asset write‑off for small business, worth $1.2 billion in 2013‑14; and an accelerated deduction for motor vehicles worth $200 million in 2013‑14.
The Government is also improving incentives to support up to $25 billion in nationally significant infrastructure spending by the private sector, by preserving the real value of tax losses over time and making it easier for investors to access these losses.
The Government is supporting investment in research and development (R&D) by doubling the rate of assistance for small and medium‑sized companies and improving cash flow by providing a 45 per cent refundable tax offset. Further refinements commencing from 1 July 2013 will ensure the incentive is targeted at small and medium companies more likely to undertake additional R&D as a result of the incentive.
The Government has also acted to promote greater fairness and sustainability in the tax system by removing out‑dated or poorly targeted tax concessions.
Recent reforms include phasing out the dependent spouse tax offset which imposes high effective marginal tax rates on secondary earners and dates back to a time when male breadwinners supported a housewife. The Government has also consolidated other dependency offsets into a single offset that targets assistance to taxpayers supporting carers and relatives with a disability.
The Government has introduced a number of reforms to better target fringe benefits tax (FBT) exemptions and ensure they operate as intended, including by:
- ensuring the tax concessions for living‑away‑from‑home allowances and benefits can only be used for the expenses of people who are legitimately maintaining a second home in addition to their actual home in Australia, for a maximum period of 12 months;
- removing the concessional FBT treatment for 'in‑house' fringe benefits that are accessed by way of a salary sacrifice arrangement; and
- targeting the FBT exemption for car fringe benefits to actual business use rather than including personal use, providing a more level playing field for all workers.
The Government's vision for a stronger tax system that supports productivity and economic growth also extends to reform at the state and territory level. The AFTS Review found that some of the most inefficient taxes are levied by the states and territories and identified reforms to improve or abolish taxes that are a drag on the economy. The Government supports the efforts of state and territory governments to reform their tax system, in line with the Government's vision in commissioning the AFTS Review.
Supporting Australian small businesses
The Government assists small business in improving its management and business processes through Small Business Advisory Services and the Enterprise Connect programs. It also established the first national Small Business Commissioner to provide a one‑stop shop for small business services and information, and to ensure that the interests of small business remain at the forefront of Government policy making.
The Government has implemented a number of substantial and ongoing reforms to assist small businesses including: personal income tax cuts as part of the tax plan for Australia's future and, as noted above; an instant asset write‑off for small business, worth $1.2 billion in 2013‑14; the accelerated deduction for motor vehicles worth $200 million in 2013‑14; and loss carry‑back.
The Small Business Superannuation Clearing House is a free service that takes the pressure off small business owners and reduces the time spent by employers on paying different superannuation funds for different employees. It has distributed more than $1 billion in superannuation payments on behalf of small business owners across the country.
The Government has delivered a national business names registration system. This saves businesses both time and money by replacing separate state and territory systems with a single national system. Previously the cost of registering a business name in every state and territory was over $1000 for three years, now it is only $76.
The national business names registration system is complemented by a new online Australian Business Account to help businesses manage online interactions with all levels of government in a smarter way. The new Australian Business Licence and Information Service also enables businesses to access licence, permit and other important information through one online portal.
The Government is also expanding the online Standard Business Reporting (SBR) initiative, which makes it simpler, easier and faster for businesses to meet reporting obligations. Under SBR, businesses are able to use SBR‑enabled accounting software to prepare and lodge key government forms directly from their software to agencies participating in the SBR program.
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