Federal Budget 2019-20

Despite the Australian economy showing signs of strengthening across a range of measures, such as GDP and employment growth, a number of persistent macroeconomic challenges remain. The Chamber of Commerce and Industry Queensland (CCIQ) is concerned about Australia’s ability to sustain long-term economic growth, as well as its ability to continue to raise national income and living standards. Current high level of household and net foreign debt, weak multifactor productivity growth and Australia’s lagging international competitiveness pose both immediate, and medium to long term risks to the health, sustainability and stability of the Australian economy. This is occurring against a backdrop of a slowing global economy with significant structural imbalances, especially global debt.

CCIQ commends the Government on its ambition to deliver sustainable budget surpluses from 2019-20 and beyond and welcomes recent progress to achieving this goal with the Mid-Year Economic and Fiscal Outlook showing an improving fiscal position. However, concerns remain that this improvement has largely been driven by higher than expected revenues resulting from short-term economic factors, and cautions that any delivered surplus must be supported by further budget repair that addresses structural challenges to the Commonwealth’s finances.

Ultimately, the Government’s tax and spending decisions, as well as any policy announcements made in the lead up to the upcoming federal election should aim to:

  • deliver optimal policy outcomes
  • improve Australia’s ability to manage external economic shocks
  • increase the productive capacity of the Australian economy
  • improve the budgetary and public debt position, and
  • improve Australia’s international competitiveness.

With these objectives in mind, CCIQ has sets out the following policy recommendations for consideration by the Federal Government in the upcoming federal budget.

Policy Recommendations

Government Spending

  • Budget repair that doesn’t rely on temporary fluctuations in Government revenue
  • Cap government spending below 24.7% of GDP  Retain an efficiency dividend of 2%
  • Establish efficiency boards to find savings in the large, complex spending areas of defence, health, education and social security and to ensure spending is fit for purpose
  • A plan to reduce net public debt over the medium term
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Tax & Regulatory Reform

  • Undertake a wholesale review of the Australian tax and transfer system, including a review of tax contribution of offshore service and product suppliers.
  • Implement a single company tax rate of 25% for all businesses (small, medium and large) by 2024-25.
  • Make permanent the instant asset write-off on new investment up to $20,000 - Introduce a 20% instant asset write-down for new investment in eligible depreciable assets valued above $20,000.
  • Lead on regulatory reform
  • Review prudential regulations and capital requirements that increase the cost of capital for small businesses.
  • Reduce the current registration cost and ASIC’s annual renewal fees by 50% for companies with a turnover of less than $5 million per annum.
  • Review proposed changes to R&D tax incentives
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Skills and Education

  • Complete the consolidation of resources focused on labour market and skills needs analysis and allocate sufficient resources to deliver an updated workforce development strategy in 2019-20, and every second year thereafter
  • Rationalise and improve federal government career and labour market websites, upgrade the school-facing career education strategy to a career development strategy for lifelong career advice and information, and make it easier for industry knowledge to become available to career planners, students and job seekers.
  • Maximise the return on investment in apprenticeships by establishing a program to assist each industry to identify the most appropriate pre-apprenticeship and school based pathways in order to deliver the best outcomes for students and job seekers.
  • Implement an additional kick-start apprenticeship incentive from 1 May 2019 to 31 December 2019.
  • Establish a National Apprenticeship Board.
  • Allocate $10 million to the Real Skills for Real Careers marketing strategy, turning it into a well-funded campaign.
  • Increase the caps on VET Student Loans where evidence demonstrates inadequacy in covering the cost of delivering quality courses that are meeting industry needs.
  • Higher education reform should be restarted based on: evidence of graduate outcomes; as part of a review of tertiary education in general; and, the extent to which the education system is meeting the needs of the labour market.
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  • Set the cap for permanent migration at 190,000 and sufficiently resource the processing to achieve outcomes close to the cap. Caps for future years should be set according to the evidence of maximum benefit, including an assessment of economic, fiscal and demographic outcomes.
  • Allocate sufficient resources to address the extensive delays in the processing of visa applications, including in the labour agreement stream  Improve access to temporary and permanent skilled migration for regional employers
  • Promote better community understanding of the value of skilled migration
  • Improve education and access to information relating to rights and obligations under Australian labour laws
  • Halve the SAF Migration levies to improve access to skilled migration
  • Disconnect the SAF levy from the COAG skills partnership agreement, and guarantee funding for apprenticeships at the announced levels
  • Improve the refund policy for the SAF levy so that a refund is available in all cases where the application has not been successful
  • Promote better community understanding of the value of skilled migration
  • Ensure visa fees and arrangements are internationally competitive
  • Improve education and access to information relating to rights and obligations under Australian labour laws.
  • Establish a complementary program for employer organisations and trade unions to provide employment information in LOTE to groups of businesses / workers from migrant communities to redress the information gap for such communities.
  • Fund business organisations to work with migrant run businesses to provide business to business information on employment law obligations and liabilities. There also be reciprocal / matching funding available to unions to improve their interactions with migrant workers.
  • Ensure labour market information is up-to-date and accurate by reviewing Australian and New Zealand Standard Classification of Occupations (ANZSCO) immediately and allocate funds for the review.
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Youth Employment

  • Reform the PaTH model, Linking PaTH training to a job or experience outcome, and reward training providers who organise the work or experience.
  • Fund a trial a new PaTH model by offering long-term unemployed youth structured training concurrent to work experience using a traineeship style model. The experience can then be converted to a structured traineeship.
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Workplace Regulation

  • Continue funding the Australian Building and Construction Commission
  • Provide additional resources to the Fair Work Commission
  • Enhance the compliance capability of the Fair Work Ombudsman
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Workplace Health and Safety

  • Continue to fund Safe Work Australia to provide effective policy and services.
  • Fund the Australian Chamber to provide information and representation to Australian employers, within and beyond its network.
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Trade and International Affairs

  • Release timely data on both importers and exporters to improve the understanding of the characteristics of these companies and to aid policy-making and support services
  • Work with private sector representative bodies such as the Australian Chamber to deliver improved services to exporters in a collaborative approach to improve the reach of initiatives and reduce the risk that Government actions “crowd out” private sector led initiatives.
  • Continue to collaborate with industry representatives, such as the Australian Chamber and its members, to develop and deliver simple resources for SMEs to capitalise on Free Trade Agreements. These resources should be easily accessible to the public and reduce Non-Tariff Barriers to international trade.  Accelerate work on the “Single Window” by incorporating private sector initiatives in trade modernisation.
  • Undertake economic assessment of our existing and proposed trade agreements to ensure they are delivering (or likely to deliver) economic benefits to Australia.
  • Undertake a “stocktake” to consider the value of maintaining bilateral preferential trade agreements where the same nations are party to wider regional agreements.
  • Continue to identify and seek to address non-tariff barriers that adversely affect trade, both domestic and international.
  • Significantly modify the Trusted Trader programme to embrace the concept of “innocent until proven guilty” through a demerits style application for non-compliance.  Restore the Export Market Development Grants scheme to $200 million, and streamline and improve scheme administration.
  • Restore Tradestart to the previous funding and delivery models
  • Cap 2019-20 aid funding commitments, inclusive of climate change funding, at $5 billion. Beyond that, defer the trajectory in increased Aid until such time as the budget provides a secure and ongoing surplus.
  • Ensure the financial resources underpinning the Anti-Dumping Commission reflect the reasonable and justifiable workload of the commission, and discourage investigation of frivolous matters or cases that are unlikely to succeed.
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