CEDA Big Issues survey indicates short-termism out – innovation, R&D, education and tax reform are priorities

On releasing the results CEDA Chief Executive Professor the Hon. Stephen Martin said they strongly indicated the business community want long term policy solutions rather than blunt cuts or use of fiscal policy levers.

"Survey respondents again ranked the top four policy priorities for the Federal Government as enhancing productivity, improving our competitiveness, encouraging innovation and reforming taxation," Professor Martin said.

"What is interesting is that the response to addressing these key areas has now clearly shifted to focus on innovation, skills and R&D.
"Respondents said the best way for Government to respond to below-trend growth was to incentivise innovation and R&D and invest in education to support workforce capability rather than use traditional fiscal implements and levers.

"Again in response to improving Australia's international competitiveness, the results show incentivising innovation and R&D and enhancing workforce capability through education and training ranked much higher than policy changes such as lowering the corporate tax rate or reducing the burden of government red tape."

More than 875 people completed this year's annual CEDA Big Issues survey, conducted over a two week period starting in late November. The survey's aim is to capture a snapshot of the business community's views on the critical policy choices - the big issues - in the year ahead.

Professor Martin said the survey also showed rising support for increasing or broadening the GST compared to last year's survey.
"This is probably a combination of concern about the Federal Government cuts and recognition that they alone will not be enough to balance the Federal Budget if we are to maintain the same level of services and infrastructure," he said.

"Eighty per cent of respondents support increasing revenue by reforming taxation with priorities being broadening and increasing the rate of GST along with removing middle class and business welfare tax breaks.

"The Federal Government's Tax White Paper process is critically important but it must look more broadly than the GST and look at taxation reform in a more comprehensive way so that the burden of taxation is spread appropriately.

"With respect to reforming our Federation, an issue being driven by CEDA, the survey clearly showed removing areas of duplication between the states and Federal Government should be the priority."

Professor Martin said while assigning a portion of income tax to states specifically for key areas such as school or public transport - hypothecation - has not had much support from government, it was the highest ranked response to how imbalances in revenue allocation and collection could be fixed.

"Obviously there is wider support for this change in revenue allocation beyond government and it should be one of the options considered in the Reforming the Federation White Paper," he said.

Professor Martin said other key results from the survey included:

• With regard to which tier of government should be responsible for key services such as education and healthcare, most responded that they should stay the same with the exception of vocational education and hospitals, with the responsibility to be more evenly split between the State Government and Federal Government for each of these areas.
• More than half of respondents think Australia suffers from entrenched disadvantage and that current government policies do not sufficiently address this issue.
• The majority of respondents ranked early intervention, education system reform and better targeting of welfare as more important to address entrenched disadvantage compared to housing programs or restricting welfare arrangements.

Professor Martin said the results around entrenched disadvantage again point towards the business community wanting long term solutions that deal with the root cause of issues rather than simply the symptoms. This matter will be further investigated in CEDA research, to be released in April.