The Business Council is calling for the establishment of a new national fund to provide states and territories with financial incentives to undertake reform that drives productivity and better outcomes for the economy, consumers and businesses.
A Commonwealth National Reform Fund could provide funding to the states and territories across a number of areas, including faster and better planning approvals for housing, folding payroll tax arrangements into one national system, fixing ineffective rules and regulation, and replacing stamp duty with land tax.
Business Council Chief Executive Bran Black said being productive as a nation means getting more out of every dollar invested and hour worked, not working ever harder, and that in turn increases prosperity for the nation and quality of life for all.
“Our last decade saw the slowest average rate of productivity growth in 60 years and that has consequences for real wage growth, and if we don’t fix it soon it will put pressure on inflation and interest rates,” Mr Black said.
“By increasing productivity in our economy, all Australians can benefit through lower prices, high wages and better services,” Mr Black said.
“The creation of a new National Reform Fund can turbo charge a range of policies which will transform the lives of Australians across the country, particularly in creating more housing, which is an urgent need.
“Each state and territory will have different needs, and some reform will be big and take time to implement, such as replacing stamp duty, but other options could be much quicker, such as creating faster and better approvals for housing and reforming retail trading hours.
Mr Black said the current system acted as disincentive for reform at a state level – for every $1 of revenue raised from growth-enhancing reform about 80 cents goes to the Commonwealth and about 20 cents to the states and territories.
“National Cabinet has already entered into significant agreements for financial incentives for reform in housing, health and disability services. There is now an opportunity to support the states and territories with necessary funding while addressing the patchwork of productivity sapping regulation across Australia,” Mr Black said.
“Currently a national business has to comply with eight different payroll tax systems, so this inconsistency and duplication has a chilling effect on jobs and investment.
“A National Reform Fund is not a new approach and was used successfully to incentivise the states and territories to implement the National Competition Policy reforms in the late 90s and early 2000s. The Commonwealth made $5 billion in payments to the states and territories, but the implementation of the reforms added $60 billion to the national economy.”
The Business Council believes the first step towards reform is the establishment of a five-year ‘Ease of Doing Business’ agenda through National Cabinet, guided by a Productivity Commission review of regulations across the Federation.
“National Reform Fund payments would need to be of a size that acts as an incentive to fully implement reforms, and payments should only be made when the states and territories meet their commitments,” Mr Black said.
