Opinion article

Growing angst for short-term fixes: Professor the Hon. Stephen Martin

As the year draws to a close, CEDA's latest survey reveals the Federal Government needs to undertake a major rethink on innovation, R&D and its broad approach to education with angst growing in the community about the consequences for our long-term economic future if current policy directions are too focused on short-term fixes.

CEDA's Big Issues survey, a short questionnaire aimed at capturing a snapshot of the business community's views on the significant economic issues in the year ahead has just been released.

It is patently clear through the survey's findings that there is growing concern from respondents about the increasing public policy focus on short-termism rather than implementing long term plans that embrace innovation, R&D, education in its broadest sense, and taxation reform, which must be priorities to protect and grow Australia's economy.

What was particularly interesting in this year's results was a definite swing away from previously suggested priorities of blunt policy changes or cuts and the use of fiscal policy levers to improve our economy to longer term planning around education and skills and genuine broad-based taxation reform to improve both our competitiveness and productivity.

As a relatively small player in the global economy, innovation and R&D are vital for the survival of Australian businesses and industry because if businesses can't adapt and innovate then they can't compete globally.

Just last week the Australian Office of the Chief Scientist released a report that benchmarked Australia's performance in Science, Technology, Engineering and Mathematics (STEM) skills compared to 12 other countries. Needless to say the results were an indictment of government commitment in these vital areas.

Perhaps what is required is a large scale review that engages the broader public into innovation, R&D and skills and training that focusses on Australia's long-term future workforce needs.

Revisiting Gonski combined with a national review of the skills Australia needs for the future and how we develop them from early childhood through to further education and training and tertiary education should be part of this.

Currently it seems as if the Government if fixated on short-term solutions in an effort to repair the Budget, such as cuts to the CSIRO, education and health, without seeing the bigger picture or considering the longer term implications and consequences for our economy.

It is struggling to gain traction both with the broader public and parliament with little making it past the Senate. A genuine effort to explain its policy positions is needed. Leadership is required to ensure Australia's prosperity in the face of falling oil and commodity prices, budget revenue haemorrhaging and falling real wages can be sustained.

At the moment changes such as the deregulation of tertiary education fees seems like it is based on an ideological position and it has been picked off in isolation as a Budget saving measure instead of part of a consistent national strategy and narrative on where, why and what Australia needs to change to deliver the tertiary education and skills Australia needs.

Deregulation in some form may well be the path we need to take, but if we are going to make significant changes there needs to be a broader conversation and strategy about why and what the long-term objectives are for higher education and indeed our economy, because having the right skills is vital to the long term stability of our economy.

On the other hand, and to its credit, albeit at a slow pace, the Government has committed to examining reforming the Federation and Australia's creaking and complex taxation system - important and overdue big ticket items. Obviously, we will have to wait to see if the results of these reviews live up to expectations and if they will amount to real change.

These issues however are bigger than a short-term fixation with the GST. They are about which level of government should have responsibility for the delivery of what services, how they do so and importantly what mechanism is employed to enable them to pay for it. This is why the parallel white paper recommendations must ultimately converge.

Taxation reform is a vital part of the equation. But so too is ensuring governments provide the necessary services communities expect, and that those most able to do so contribute through a fair taxation system.

Read more on CEDA's Big Issues survey results.

About the authors

Stephen Martin

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Professor the Hon. Stephen Martin
Chief Executive, CEDA

Professor the Hon. Stephen Martin has had a long and distinguished background in the Australian Parliament, academia and the private sector.

Read more about Professor the Hon. Stephen Martin.