Allegra Spender (Wentworth, Independent) Share this | Hansard source

Australia prides itself on being the lucky country, the land of the fair go, but since the end of the mining boom, Australia's economic certainty has been less self-assured. We're not making the businesses and innovation that will drive the next golden era of growth. Business investment is down, particularly in non-mining sectors, where it has fallen from nine per cent of GDP to four per cent of GDP over the last 30 years. As a result, Australia has had the worst decade for productivity in the last 60 years and Treasury has downgraded our long-term productivity assumption.

Productivity is the key to growing prosperity and living standards. Over the last 40 years, productivity growth has been responsible for 80 per cent of real wages growth—not to mention that, in a cost-of-living crisis, boosting productivity is the only sustainable way to both lower prices and increase real wages. And people are noticing this gap in productivity. Only eight per cent of the country, according to a recent Redbridge Group poll, believe that the standard of living in Australia will be better for the next generation. This is unprecedented. At the heart of this is our failure to address productivity. We need strong economic reform to drive productivity. While I respect the contribution that the government has made in this term, it is nowhere near enough. When I speak to businesses and I look at the productivity report, there are four key areas: we need reform of the tax system, we need to make it simpler to do business, we need to ramp up innovation and we need to make our tax dollars work better.

Firstly, on tax: with the last major reform of our tax system introduced in 2000, nearly one in three Australians have never seen a substantial change to the way that tax is collected. In that time, the shape of our economy has transformed and our society has fundamentally shifted. We need reform in the tax system, both to avoid taxes that distort the economy, such as stamp duty, and to create a tax system that incentivises the changes we know we want to make, such as increasing investment in our economy, as well as boosting aspiration and work.

Secondly, we need to make Australia the best place to start and grow a business. Every government promises to cut red tape but underdelivers. We're adding greater regulation—we're very good at that, in this House, but we are not very good at removing it. I speak to medical researchers who spend a quarter of their time writing grant applications, childcare workers who spend less time with the kids because of their burden of paperwork, and clean energy companies waiting seven years for a windfarm approval.

Part of this also relates to the industrial relations burden on businesses, and policy setting that has become overly politicised in this country, swinging like a pendulum depending on who is in power. Research conducted by the e61 Institute shows that it has led to perverse outcomes on business decisions, including driving casualisation in the workforce and an increase in capital investment instead of investment in people. In the construction industry alone, productivity has declined by 18 per cent on a per-hours-worked basis since 2012. We need genuine review of workplace settings and an increased threshold at which these laws apply, particularly in terms of the effect on small and young businesses.

Thirdly, we need to ramp up innovation. Australia is a more challenging place for companies to go from startup to scale-up relative to our peers. On a per capita basis, Australia has half the early-stage investment funding available compared to the UK, and around a third compared to the US. This is despite having the third-largest pension scheme in the world. We've come a long way in this last decade, but data from the Reserve Bank of Australia shows that it is international investors, not domestic, who are doing the heavy lifting. The proportion of early-stage investment made from superannuation has declined from 60 per cent to 30 per cent in the last decade. This has several causes, but, principally, we need to look at: RG 97; Your Future, Your Super; and some of those incentives around early-stage investment, as well as how we make sure that contracts—particularly government contracts—are also open to young, innovative Australian firms, so they can bring the best of world-class innovation to Australia, not just overseas.

Finally, government is responsible for around 40 per cent of spending in this country and, frankly, government spending is a major drain on our productivity growth. This has to be an area of greater scrutiny, making our tax dollar work better. I think the place to start, time and time again, is infrastructure spending. We spend billions of dollars a year in this space, but we are losing $30 billion at the current rate on cost overruns.

So, finally, I urge the Treasurer and the government to come back to us honestly about the Productivity Commission's report on advancing prosperity and tell us which ones they're going to back, because these policy settings are not nice-to-haves. If we do not get this right, the economic opportunities that we took for granted won't be available to our children.

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