25/02/2016
“This is particularly the case when it comes to infrastructure investment,” he said.
Speaking at the Melbourne release event for CEDA's EPO report, Mr Pallas said the government’s approach to borrowing and fiscal strategy Mr Pallas said that net debt to Gross State Product (GSP) will remain below the level inherited from the previous government.
“There will be continued investment allocated year on year to deliver growth to the states core capital stock. There is also considerable capacity factored in for major projects going forward…(as well as)…additional borrowing capacity or head room available to government in future years while under normal economic conditions, remaining safely within the limits required to maintain our prized AAA credit rating.
“The credit rating is vitally important. It sends a message to the business world that we are a government capable of running a responsible budget, but we will use our balance sheet.
“This rating status awarded to less than 12 sub-sovereign jurisdictions in the world, combined with unprecedented levels of supply in international capital markets, means the cost of funds to the Victorian Government is at the lowest ever levels.
“Government investment in high quality projects has a direct and positive impact on GDP. Stronger GDP means an increased ability of the economy to support public borrowings which reinforces the credit rating.”
Mr Pallas also spoke on the Port of Melbourne privatisation deal.
“I do concede that the political noise around the port lease transaction has been distracting but decisions of this magnitude are never uncontroversial,” he said.
“We’re in a position where I think we’ve got an outstanding asset that will be able to be brought to market.
“If you asked me if it is the Bill I would have drafted myself I’ll be honest I think we’ve been dragged to an outcome that I probably would have preferred to be somewhat different but…I think we’ve got a very valuable consensus position.
“We have demonstrated that we are a government willing to make the hard fiscal decisions required to deliver the infrastructure ingredients this government needs to maintain its rise on the growth curve.
“Recycling the states equity in the Port of Melbourne to eliminate suburban level crossings and in doing so, transforming the capacity of the urban rail network, is a case in point.
“The fact is that economic conditions, the need of the community and a firm commitment to fiscal responsibility should determine the government’s budget strategy.
“It can’t be denied that the level crossing project is vital and would not be possible without the strategic use of the state’s balance sheet.”
Mondelez Australia and New Zealand, Managing Director and EPO report contributor, Amanda Banfield discussed how the company was embracing innovation and collaboration to ensure a successful future.
“The focus on innovation has been really important in an overall transformation and certainly we see the opportunity to collaborate ever more broadly,” she said.
“The (Mondelez) innovation centre has enabled us to drive the innovation culture through our business but it has actually been the collaboration which has helped us to build further out insights.
“We’re working with SMEs, we’re also working with the Australian Research Council and we also have a great partnership with the University of Melbourne and we really welcome those as ways of expanding our thinking and generating much further out insights which we see as important to anticipate the future…and start building towards that.
Ms Banfield said the partnership with the University of Melbourne also aims to improve workforce diversity and encourage increased female participation and engagement with engineering and science.
“We co-developed a masters in innovation in food and packaging for example, precisely for that reason. I think it's key for us to offer as many opportunities as we can for graduates to come in and work for us and again we have a program doing that at the moment.
“I think the other thing…in the diversity space is really publicising…and encouraging more women to think about jobs in industries like ours.
“We are certainly running a big diversity and inclusion program…we’re very focused on having a clear commitment to some targets about gender diversity and holding ourselves accountable to that throughout the entire organisation, from senior management to factory floor. Also being very open about our commitment to flexible working, and making sure that’s visible and real.
“The other thing that we’re doing is mentoring female talent right across the region now as a means of…building role models so that we can actually show we are a place that welcomes and develops women and more diverse talent and growing from there.”
Former Victoria Premier, the Hon. John Brumby also discussed the importance of innovation.
“We’ve got a lot of big issues facing Australia to state the obvious. We’ve had a great record for 25 years but really the world has caught up to us,” he said.
“We need to be in the new business: new ideas, new ways of doing things, new start-ups, new businesses, new enterprises, that’s really where the jobs are going to come from in the future.
“For Australia as a whole, we continue to underinvest in research, in innovation…medical research, support for bio-techs, and so on.
“There’s bigger story here about whether we are investing enough in CSIRO or National Health and Medical Research Council or universities to get us to the level of cleverness and innovation that we are going to need to compete in the future.
“If you look at what’s happening around the world, including with now on many measures the world’s largest economy, China, China is now the second largest investor in R&D in the world.”
Mr Brumby also said that an “ambitious reform agenda” was needed.
“We need it fiscally, in terms of our federation (and) we need an economic reform agenda,” he said.
Sky News and Sydney Morning Herald Political Commentator and former Minister, the Hon. Peter Reith, echoed Mr Brumby’s comments on reform but said it had been difficult to get real reform after the Hawke and Howard governments.
Also speaking at the EPO event was Federal Assistant Treasurer and Minister for Small Business, the Hon. Kelly O’Dwyer who discussed planned changes to Australia’s superannuation system.
“This $2 trillion industry, which is larger than Australia’s GDP, is critical to our broader economy,” she said.
“Australian superannuation assets are projected to increase to over $9 trillion by 2040.
“Given all this, our system can’t simply be ‘good enough’ – it must be an A-grade, 21st Century superannuation and retirement income system.
“Last year we proposed a Bill, currently before the Senate, that will see all super funds having one-third independent directors, including an independent chair on their trustee boards.
“We know that good governance — such as having independent directors on boards — is critical for achieving the best possible long-term results for members.
“A diversity of skills and backgrounds on boards is important to optimising performance, and superannuation boards are no exception to this.”
Ms O’Dwyer said the Government was going to introduce legislation that would enable employees to choose their superannuation fund and also increase the transparency of the superannuation system.
“Currently an estimated two million employees do not have the opportunity to choose their own fund. A common way this can occur is through enterprise bargaining agreements and workplace determinations, which may mandate a given super fund or funds and satisfy choice of fund requirements,” she said.
“Extending choice of fund was recommended by both the Financial System Inquiry and the Royal Commission into Trade Union Governance and Corruption.
“We want people to be able to make choices about their retirement income. We want them to be active in making decisions about their future and so the Government will extend choice of fund to employees under enterprise agreements that are made from 1 July 2016.
“This will eventually give choice to around 800,000 of the estimated two million employees who currently don’t have it.
“The second area where the Government expects to introduce legislation in coming weeks is in relation to our election commitment to improve transparency and comparability of information to help them make choices about where their money goes.
“In implementing our election commitment in this area, the Government is seeking to find an appropriate balance between increasing transparency in the superannuation industry and minimising the current compliance cost.
“Transparency, through improved disclosure, is critical to the efficient operation of Australia’s market based superannuation system. It improves understanding, awareness and engagement across the community.
“The portfolio holdings disclosure regime that we are implementing will require funds to publish, for each investment option, information about the nature and value of financial products or other property that it, or an associated entity, has invested in. Information relating to the first investment in non-associated entities will also need to be disclosed.”
Commonwealth Bank of Australia Chief Economist and Managing Director Economics, and EPO report contributor, Michael Blythe, examined the economic landscape of Australia, providing insight for what to expect in 2016.
“When we’re thinking about the starting point for 2016, what we’re seeing really is the same degree of pessimism that’s been around for a while now about Australia’s economic prospects. We’re seeing the debate about whether there is a risk of a recession or not,” he said.
“In many ways it’s easy to see why the debate is so focused on these sorts of issues because we do appear to be going down this depressingly familiar path where we see downgrades to global growth forecasts, concerns about the (economic) outlook, rising concerns about how Australia fits in that, there’s been plenty of financial market volatility to add to that general fear as well.
Mr Blythe said however that while these discussions were taking place, “when we look back on 2016, we will see an economy that we are reasonably happy with.”