Government | Regulation

MEDIA RELEASE: Industry subsidies should be phased out, loans made available

A National Productivity Policy (NPP) to review government regulation, pricing and licencing arrangements and phase out industry subsidies must be established, according to CEDA's latest research out today.

CEDA's major report, Australia Adjusting: Optimising national prosperity, also calls for reform of the taxation system, the Federation (to reduce overlap), industrial relations policies and education.

CEDA Chief Executive, Professor the Hon. Stephen Martin said the NPP should be supported by a new inter-governmental agreement that provides financial incentives for the states to undertake reforms.

"The NPP would replace the previous National Competition Policy (NCP). The NCP was successful because there were incentives for the states to carry out the agreed reforms and that will be a key ingredient if the NPP is to be successful," Professor Martin said.

"Industry subsidies should be one of the first areas looked at - the Productivity Commission review announced for automotive manufacturers last week is a step in the right direction - because we cannot keep propping up industries that will not be sustainable in the long term.

"Australia is at a cross-roads, we have a new Federal Government and the peak of the mining boom has passed. Rather than hang onto the past, now is the time to identify and focus on the industries that will provide our future prosperity and appropriately skill people to work in these industries.

"Instead of subsidies, to drive growth and develop new industries the Federal Government should provide incentives to increase innovation and its adoption.

"In particular, CEDA is calling for income contingent loans, similar to HECS, for small to medium sized enterprises to help fund innovative activities. This is an area where Australia is significantly underperforming compared to other advanced economies."

On price regulation reform, Professor Martin said key areas that need to be examined are infrastructure based services such as energy, water and transport.

"Tax reform should focus on broadening the GST which would allow for middle class and business welfare tax breaks to be removed and the company tax rate to be reduced to an internationally competitive level," he said.

"Reducing the company tax rate is an important move because to continue growing, Australia is reliant on capital from abroad for major private sector projects, such as infrastructure, and we face strong competition.

"Federal and State Governments should also be required to publish long term infrastructure development plans, which would allow the clarity and stability required to utilise private sector investment in these projects."

Professor Martin said this latest research from CEDA draws together leading thinkers from across, government, industry and academia and provides a reform agenda for government based on their contributions.

"Reform has taken a backseat in politics for too long. This report provides an important blueprint for the new Federal Government to once again develop a strong reform agenda for Australia to position us to be prosperous for decades to come," he said.

Report authors will discuss the report findings and recommendations at events around the country over the coming weeks:

Launch event : Brisbane, 6 November 2013

  • Perth, 15 November 2013
  • Melbourne, 19 November 2013
  • Sydney, 21 November 2013
  • Adelaide, 29 November 2013

About CEDA

CEDA – the Committee for Economic Development of Australia – is an independent, not-for-profit membership organisation.

We identify policy issues that matter for Australia’s future. We work to drive policies that deliver better economic, social and environmental outcomes for Australia. We deliver on our purpose by: Leveraging insights from our members to identify and understand the most important issues Australia faces. Facilitating collaboration and idea sharing to invoke imaginative, innovative and progressive policy solutions. Providing a platform to stimulate thinking, raise new ideas and debate critical and challenging issues. Influencing decision makers in government, business and the community by delivering objective information and expert analysis and advocating in support of our positions. CEDA's membership spans every state and territory and includes Australia's leading businesses, community organisations, government departments and academic institutions. The organisation was founded in 1960 by leading economist Sir Douglas Copland, and his legacy of applying economic analysis to practical problems to aid the development of Australia continues as we celebrate 60 years of influence, reform and impact across the nation.;