“The two key messages from the Federal Government’s Intergeneration Report (IGR) released today are that rising living standards will rely more heavily on productivity growth and that we need to give priority over the medium term to re-establishing the fiscal buffers that permitted the successful large fiscal response to COVID (and the GFC),” Innes Willox, Chief Executive of the national employer association Ai Group, said today.
“The fiscal buffers are critical to ensure that the next generation of taxpayers get the head start that we enjoyed if or when there is a significant downturn.
“To achieve this we need:
- Continued growth in the size of the economy so that more tax revenue can be allocated to reduce public sector debt
- Greater emphasis on improving productivity in the provision of health and aged care in particular to help stem the pace of increase in these areas of spending
- To move to a better tax system that raises revenue in a way that is most conducive to further advances in living standards.
“The keys to lifting our productivity performance are working and managing smarter. This involves:
- Raising the skills of the future and current workforce;
- Improving Australia’s business and public sector management capabilities;
- Investing in key infrastructure projects;
- Shifting Australian businesses and other organisations to world-leading practice; and
- Supporting, rewarding and encouraging innovation.
“There are clear roles for businesses, financial institutions, individuals and governments in achieving progress in these areas.
“Productivity growth also requires smarter regulation and regulator practice and greater adaptability of workplace practices and more flexible industrial relations.
“Skills remains one of our biggest national challenges and the generational shortcomings exposed in the IGR emphasise once again that we have to get our approach to skills and training right. Skilling-up young people more effectively for the jobs of the future and investing in reskilling initiatives for the existing workforce are key directions.
“Immigration is part of the solution to our skilling challenges. A reopening of our national borders which will enable a return to pre-COVID immigration levels and a return to recent levels and age-profile of net immigration can slow the pace of population ageing.
“On tax reform, the Federal, State and Territory governments all need to step up to the plate and deliver a phased overhaul of Australia’s taxation and intergovernmental finances. We need to:
- Get rid of the most damaging taxes;
- Improve the design of the remaining taxes; and
- Ensure that the states and territories have their own sources of revenue that better match their considerable responsibilities.
“Another top priority to addressing the IGR challenges is the imperative to improve certainty over energy and climate policy as a foundation for investment in reliable and affordable energy and in low and zero-emissions technologies and practices.
“COVID has dented confidence and has imposed huge costs on our community and our economy. But the fact remains that most of the challenges identified in this report pre-date COVID. Hopefully the need for action to maintain the COVID recovery will spur governments, businesses and the community more broadly to act more decisively on the numerous issues that have been clear for many years,” Mr Willox said.