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Budget must drive productivity: AiGroup

03-05-2011
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The upcoming Federal Budget must give priority to building productivity and capacity in the economy, says the Australian Industry Group in its pre Budget submission.

"Australia’s is an economy of paradoxes, says AiGroup Chief Executive Heather Ridout.

"The slump in productivity growth over recent years has exacerbated the damage to Australia’s national competiveness stemming from the marked rise in the value of the Australian dollar, says Ms Ridout.

"The way around these paradoxes is to lift our productivity and capacity. 

"In an economy that is testing the limits of its capacity, there is little spare to build new capacity and invest in developing skills, capabilities and productivity without taking away from resources in use elsewhere or adding to inflationary and interest rate pressures.  “We need capacity to build capacity. This calls for a Budget that delivers a major reprioritisation of effort in favour of measures that build productivity and capacity by building skills, innovation and business capabilities. 

“It calls for a Budget that adds to immediate capacity by raising net migration. And it calls for a Budget that ensures we maintain a balanced and diversified economy that is not overly reliant on a small number of commodity exports to a handful of countries.”

In its submission the AiGroup said the Budget to be unveiled next week should invest in lifting the skills of our existing and future workforce by: 

  • Establishing a Workforce Development Agency, led and driven by the needs of industry, that would consolidate and coordinate the policy development and program implementation into one high profile entity. The Agency would develop a national workforce development strategy, administer enterprise-stream funding, oversee apprenticeship reform and focus strongly upon lifting the language, literacy and numeracy skills of the workforce
  • Overhauling the governance and effectiveness of the workforce training sector to lift quality and build coherence and
  • Raising funding to make up for the $660 million annual shortfall in current levels of funding for the Vocational Education and Training sector.
  • Encourage business investment in the innovation that will drive a more balanced economy that will build our capabilities beyond mining in areas such as high value-added manufacturing. 

To contribute to this, Ai Group proposes:

  • Addressing the serious flaws in the current proposal to change the research and development tax incentive with effect from July 1, 2010
  • Extending and strengthening the place of innovation capabilities within Enterprise Connect and
  • Supporting the creation of an Australia-led regional innovation network linking businesses and researchers in the Asia Pacific region
  • Assist in growing the capabilities of our businesses including in the critical areas of exporting and energy efficiency, including by restoring appropriate levels of funding to the Export Market Development Grant (EMDG) Scheme, and helping share best practices in industrial energy efficiency
  • Restore net migration to pre-GFC levels
  • Foster the capabilities needed to fully realise the potential of a nationwide broadband network and
  • Prepare the ground for future investment in infrastructure by:
    - Further improving the transparency and sophistication of processes of assessment, prioritisation and selection of major projects that has begun under Infrastructure Australia
    - Undertaking preparatory research on elements of congestion charging and related urban transport measures and
    - Facilitating the development of alternative financing models to ensure the full participation of both the public and private sector involvement in the creation of productivity-enhancing, intergenerational infrastructure.

Treasurer Wayne Swan will deliver the Budget next Tuesday.

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