A Rudd Labor Government and Business

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Prime Minister Kevin Rudd was elected on a positive agenda for reform focussed on six key areas:

An Education Revolution;
A national plan to fix our hospitals;
Decisive action on climate change and water;
Balance and Fairness in the workplace;
Maintaining a strong economy that delivers for working families; and
Maintaining our national security.

Kevin Rudd is an evidence-based politician focussed on delivering outcomes but who recognises that consultation is important.

His period as Leader of the Opposition was characterised by his efforts to draw together leading thinkers from government, business, academia, the workplace and the third sector to seek a broad consensus on a number of important issues including climate change and housing affordability.

That said, Prime Minister Rudd will set a clear and strong direction for the Government and has been granted unprecedented power by the Federal Parliamentary Labor Party to determine the Ministry and policy. During his election night acceptance speech Rudd said of his government:
I will be Prime Minister for all Australians. And I make this solemn pledge to the nation:

“I will always govern in the national interest. And my door will always be open to men and women of goodwill who want to participate in making our country even greater in the future.

Friends, tomorrow the work begins. Australia’s long-term challenges demand a new consensus across our country. I’m determined to use the Office of Prime Minister to forge that consensus. It is necessary for us to embrace the future as a nation united, forged with a common vision.

I want to put aside the old battles of the past, the old battles between business and unions, the old battles between growth and the environment, the old and tired battles between Federal and State, the old battles between public and private.”

Rudd Government Priorities

The Economy

Kevin Rudd is a self-declared “economic conservative” who is committed to tight fiscal policy, enhancing the independence and transparency of the Reserve Banks and the involvement of the private sector in the appropriate provision of public infrastructure and services. Treasurer Wayne Swan has made fighting inflation his number one priority.

As Rudd has repeatedly pointed out, there is effectively a bi-partisan consensus on macroeconomic policy and a Labor Government will be committed to keeping downward pressure on interest rates and ensuring budget surpluses of at least 1 percent of GDP over the forward estimates. Rudd demonstrated his commitment to fiscal conservatism by pledging less than a quarter of the amount the Coalition promised at Labor’s campaign launch, making promises of substantial savings in the lead up to and during the election campaign and by committing to a “Razor Gang”.

The Rudd Government sees the core economic challenge for Australia as the need to re-build productivity growth, which has waned in recent years. Rather than relying on revenue from the terms of trade, in particular continuing high commodity prices, Rudd has indicated his Government will invest in the future productive capacity (skills, participation and infrastructure) in order to maximise productivity growth. The Treasury will be given renewed influence under a Rudd Labor government.

The Rudd agenda for boosting productivity includes:

Increasing investment in human capital, including skills and health. See Labor’s ‘Education Revolution’ and Labor’s national plan for hospital reform.
Investing in the new infrastructure, known as ‘capital deepening’, including a National Broadband Network and Labor’s Infrastructure Australia program.
Enhancing and rewarding participation in the economy, in particular the labour market. This is evidenced by Labor’s commitment to substantial personal income tax cuts and reform and additional access to childcare services.
Reducing the regulatory burden on Australian business.

The COAG agenda

An important area (which did not receive much attention during the formal election campaign itself) will be Rudd’s commitment to re-invigorate the COAG reform agenda.

Research done by both the Victorian Government and the Business Council of Australia (BCA) confirmed well-known inefficiencies in existing intergovernmental structures. Access Economics, on behalf of the BCA, estimated that duplication and other inefficiencies total over $9 billion per year. Rudd has identified reform of federalism as one of Australia’s major remaining frontiers for microeconomic reform.

Having Labor in Government both federally and across the states and territories provides the Rudd Government with a unique opportunity for greater federal and state co-operation and reform. Rudd has signalled “Fixing the Federation” as one of his top priorities, and has flagged the areas of health, infrastructure, housing and education for immediate reform.

Fixing the Federation

The Federation Reform Program will encompass a broad productivity-based agenda that is likely to see the reinvigoration of National Competition Reform, the National Reform Agenda proposed by the Victorian Government. This reform agenda was particularly focussed on human capital reform and infrastructure.

Policies

Health and Aged Care

A $2.5 billion national reform plan with the states and territories, as part of the re-negotiation of the broader Commonwealth-State Health Agreement, to improve the delivery of health and hospital services and health outcomes including:
- 2,000 extra aged care beds to take the pressure off acute hospital beds.
- GP SuperClinics around Australia to take the pressure of accident and emergency departments.
- A $600 million national fund to eliminate elective surgery waiting lists beyond clinically acceptable times.
Significant investments in prevention and early intervention and chronic disease, including cancer; and
The re-establishment of a Commonwealth Public Dental Program and a Commonwealth Teen Dental Plan.

Education and Skills

Labor’s Education Revolution includes:

the provision of 15 hours a week for 40 weeks a year in pre-literacy and pre-numeracy play-based learning for every four year old in the country.
a 50 per cent Education Tax Refund to enable parents to claim a refund for their investment in the modern tools and resources of their children’s education.
halving HECS for maths and science at university, and halving it again for those graduates who go on to teach maths and science in our schools.
a comprehensive Asian language education across the school system to equip the next generation of Australians with the languages of the major economies of the future.
building state of the art Trades Training Centres for each of Australia’s 2,650 secondary schools.
funding of an additional 450,000 training places over four-years across Australia, including up to 65,000 more apprenticeships. Two-thirds of the new places will be allocated to training people who need to update or lift their skills. One third of these additional places will be allocated to people currently outside or marginally attached to the workforce – to equip them with the skills they need to gain employment;
a new body, Skilling Australia, to coordinate and better anticipate demand to make skills needs and training places
connecting Australia’s more than 9,000 primary and secondary schools to Labor’s National Broadband Network – at speeds of up to 100 megabits per second. Most remote schools will be provided with alternative high speed systems, where fibre optic can’t physically be delivered.
a National Secondary School Computer Fund to provide for every Australian secondary school student in years nine to 12 with access to their own computer at school or to upgrade the computers they already have.
doubling the number of national undergraduate scholarships to a total of 88,000 by 2012 and doubling the number of post graduate scholarships to nearly 10,000 students across Australia by 2012.
creating 1000 high-value mid-career research fellowships, valued at $140,000 each, to help retain Australia’s most talented academics at home.
establishing a national curriculum, working collaboratively through a National Curriculum Board with the States and Territories and the Catholic and independent schools sector.
a $62.5 million pilot program to fund the construction of shared facilities between government and non-government schools.
a commitment to funding all schools, whether they are government, non government, religious or secular, based on need and fairness, including maintaining the current SES-based schools funding formula

Infrastructure

Rudd Labor will:

establish ‘Infrastructure Australia’, a body which will set the agenda for government investment in infrastructure, working collaboratively with the States and Territories, local government and private sector coordinating the planning, regulation and development of key infrastructure;
commit to substantial ongoing funding of road, rail and inter-modal infrastructure transport and logistics through AusLink;
establish a National Broadband Network, with an investment of $4.7 billion (over five years) in partnership with the private sector to connect 98 per cent of Australians to high speed broadband internet services at a minimum speed of 12 megabits per second; and
provide a Western Australian Infrastructure Fund to invest in State infrastructure projects by setting aside 25 per cent of future Commonwealth Petroleum Resources Rent Tax from the Gorgon Gas Development.

Housing

Rudd Labor will:

re-negotiate the Commonwealth State Housing Agreement as a tripartite agreement with the state and local governments;
establish a $500 million Housing Affordability Fund, with local governments applying through a competitive process to receive grants to cover some of the cost of new housing infrastructure. The Housing Affordability Fund will also consider innovative, development-specific proposals from state governments that cut development costs;
invest up to $150 million over five years with the aim of halving the number of homeless people turned away from homeless shelters by establishing up to 600 new houses and units across the country for families and individuals who are homeless.
establish a National Rental Affordability Scheme that will help create 50,000 new affordable rental properties across Australia. Costing $603 million over its first five years, the Scheme will use tax incentives and financial support to provide rental housing to up to 50,000 low and middle income families at 20 per cent below market rents through:
- an annual $6000 Commonwealth tax incentive to investors who construct new affordable rental accommodation;
- at least $2000 per year in direct or in kind financial support from State Governments for investors who access the tax incentives.

Water

Rudd Labor will:

invest $1 billion in urban desalination, water recycling and stormwater capture projects that are consistent with environmental best practice and are carbon neutral;
invest $250 million modernising and repairing existing water systems and infrastructure in our towns and cities;
establish a national target of recycling 30 per cent of wastewater by 2015;
invest $250 million in direct rebates for rainwater tanks and grey water systems in households;
help households with low interest green loans of $10,000 so they can more easily install water and energy efficient products, such as rainwater tanks and solar hot water;
work with industry, farmers and community groups to return water to rivers and conserve water in towns and cities; and
bring forward $400 million in spending under the National Plan for Water Security to fast-track improvements in water efficiency, significantly invest in key water infrastructure projects and address over-allocation.

Climate Change

In one of his first acts as Prime Minister, Kevin Rudd Labor ratified the Kyoto Protocol. Rudd Labor will also:

set a 20 per cent Renewable Energy Target by 2020;
provide $8000 rebates for solar power, $1000 rebates for solar hot water systems, $500 rebates for grey water piping and rainwater tanks, $500 rebates for landlords to install insulation and $10,000 in low interest Green loans for solar systems and water and energy savings measures;
invest $15 million in a Clean Energy Export Strategy;
invest $20 million in a Clean Energy Innovation Centre;
invest $500 million in a Green Car Innovation Fund to develop and build green cars in Australia; and
provide up to $50 million to assist companies seeking to develop geothermal energy – also known as “hot rock technology” – with the cost of drilling geothermal production wells.

Further Climate Change initiatives include:

Solar Schools – Solar Cities

There are currently 30,000 solar rooftops across Australia. Rudd Labor aims to double this number within the next eight years, as well as make every Australian school a solar school, by:

investing an additional $153 million in a National Solar Schools Plan to make every Australian school a solar school, installing up to $20,000 worth of solar technology in each school and offering up to $30,000 worth of energy and water efficiency improvements. This will bring total funding for schools up to $489 million;
providing a rebate of up to $500 to help landlords install energy-efficient insulation in 300,000 Australian rental homes in a practical measure to help fight climate change. Rudd Labor’s $150 million Low Emission Plan for Renters will reduce the power bills and greenhouse gas emissions of 300,000 rental properties; and
investing an extra $25 million in the Solar Cities program, including funding for new solar cities in Perth and Coburg, Victoria, and the establishment of high profile Green Precincts around Australia.

Clean Coal Initiative

$500 million Clean Coal Fund to accelerate the development and deployment of clean coal technologies in Australia. $50 million of the Fund will go towards a National Carbon Mapping and Infrastructure plan; and
$25 million over 4 years funding increase for the CSIRO for clean coal technology research and development.

Clean Energy Plan

$500 million Renewable Energy Fund to develop, commercialise and deploy renewable energy in Australia
$240 million Clean Business Fund to help business and industry deliver energy and water efficiency projects, with a focus on productivity and innovation.
$150 million Energy Innovation Fund to keep world leading scientists and researchers in Australia, rather than losing them overseas.

Farm Adaptation

$130 million package to help farmers adapt to climate change and harness new economic opportunities.

Balance and Fairness in the Workplace

Rudd Labor will:

abolish Work Choices laws;
scrap Australian Workplace Agreements while implementing transitional arrangements; and
ensure employees will have rights if dismissed unfairly.

Labor’s new system will be built on the following key foundations:

a universal safety net of 10 National Employment Standards;
a modernised award system based on 10 basic award conditions so that conditions such as penalty rates and overtime are protected; and
protecting the right of all Australians to join together and bargain for fair pay and conditions;

Labor will also provide flexibility for both employers and employees in these new arrangements by allowing:

more flexible common law agreements for employees earning $100,000 or more per year. The award system will not apply when employees are on pay arrangements above $100,000;
new flexibilities in the award system through a model flexibility clause but with a strong safety net which will prevent award conditions being stripped away; and
enterprise agreements will also have new flexibility clauses.

Labor’s new system will provide finite transition arrangements for those businesses that are currently using AWAs by:

enabling existing AWAs to continue to operate for their full term; and
for those businesses currently using AWAs, during the two year transition period to the full implementation of Labor’s new industrial relations system in January 2010, individual transitional employment agreements will be made available for new employees or those already on AWAs. These finite transitional employment arrangements must ensure that employees are not disadvantaged against the relevant award or enterprise agreement.

Labor’s new system will also ensure that:

existing right of entry laws are retained;
existing secondary boycott provisions in the Trade Practices Act are retained;
tough restrictions on industrial action will be kept, including mandatory secret ballots to be conducted in workplaces before protected industrial action can occur; and
no pattern bargaining.

Labor’s workplace laws are designed to ensure that negotiations on wages and conditions continue to occur at the enterprise level and are built on productive gains in the workplace.

Participation in Work

Rudd Labor will seek to enhance participation in work by:

Work and Family

Establishing a Parental Leave Standard, under which each parent will be entitled to separate periods of up to 12 months’ unpaid parental leave to be taken in conjunction with the birth of their child. This will give families the choice of having a parent at home for the crucial first two years of a child’s life. Where a family would prefer one parent to take a longer period of leave, that parent will be entitled to request from their employer up to an additional 12 months’ unpaid leave.
This standard includes a right for parents to request flexible work arrangements from their employer until their child reaches school age. Flexible work arrangements might include part-time work, non-standard start or finish times, working from home, working “split shifts” or job sharing. Employers will be able to refuse both of the above on reasonable business grounds.
Investing $12 million in a national initiative that will:
Provide grants to small business to meet the set up costs of family friendly measures such as flexible rosters, school holiday leave arrangements, family rooms and mentoring;
Distribute business and industry specific information to support work-based family friendly practices; and
Ensure experts are available through Fair Work Australia offices to help small business develop new family friendly arrangements in their workplace.

Tax Cuts and Reform

$32 billion in personal income tax cuts for all taxpayers;
An Education Tax Refund for all families receiving Family Tax Benefit A with children at school. This will benefit the education of around 2.3 million Australian school children; and
A six year goal (to 2013-14) of flattening Australia’s income tax system by reducing the number of personal income tax rates from four to three – with a personal income tax scale of 15 per cent, 30 per cent and 40 per cent.

Childcare

Rudd Labor will:

increase the Childcare Tax Rebate to 50 per cent – covering up to $7,500 of out-of-pocket costs per child;
pay the 50% Child Care Tax Rebate quarterly – so parents no longer have to wait one or two years to receive their money;
establish up to 260 new child care centres around Australia on primary school and community grounds; and
invest $450 million to give every Australian four-year old the right to fifteen hours of high quality preschool every week, for forty weeks a year, delivered by a qualified teacher.

Regulation, Financial Services and Superannuation

Reducing Regulation

The Productivity Commission estimates the cost of compliance with business regulation is up to four per cent of GDP, or $40 billion dollars per annum. Rudd Labor’s coordinated national strategy to reduce the regulatory burden on productive Australian businesses is likely to include:

setting national objectives in partnership with the States and Territories to harmonise key regulations imposed on business operating across jurisdictions;
holding the States and Territories accountable for meeting harmonisation objectives;
providing a financial incentive fund to reward State and Territory governments that implement reforms (similar to that established by the Victorian Government across its departments and agencies);
introduction of “one-in one-out” rules and other measures designed to protect protects businesses from new, unnecessary regulations; and
implementing a common commencement date to new regulation, such as July 1st, to reduce uncertainty for business.
introduction of a simple, standard disclosure form for financial services products – standard disclosure forms will be no more than 3 or 4 pages and will reflect different products and providers.

Australia As A Financial Hub – Boosting Financial Exports

Rudd Labor will:

halve the 30 per cent withholding tax on distributions from Australian managed funds to non-resident investors, aligning Australia’s tax rate with the United States and Hong Kong, abolishing the need for overseas investors paying withholding tax to lodge a tax return and claim debt as a deduction.

Low Tax First Home Saver Accounts – Larger Deposits and Higher National Savings

Rudd Labor will:

establish superannuation-style First Home Saver Account eligible for preferential tax treatment, in particular:
a low tax rate of 15 per cent on the first $5000 of income deposited in accounts each year ; and
interest earned would be taxed at 15 per cent or less.

A Superannuation Clearing House

Rudd Labor will:

retain choice of superannuation funds but implement it in a far simpler, cost effective way by allowing businesses the option to make payments into a central Superannuation Clearing House;
contract a clearing house facility to the private sector. It will handle the form filling, checking and distribution of contributions to funds;
small business with less than 20 employees will be offered this service free of charge and larger businesses will pay a small transaction fee for the service.

Competition Policy

Rudd Labor will:

strengthen section 46 by dealing with recoupment and the definition of “take advantage”;
enable the Federal Magistrates Court to hear S46 and S83 cases so that small business has a low cost jurisdiction in which to raise its concerns;
abolish the dollar threshold for cases under S51AC;
review the need to give the ACCC power to deal with “creeping acquisitions”;
impose prison penalties for serious cartel operations;
strengthen the powers of the ACCC to gather necessary evidence;
ensure the second Deputy Chair of the ACCC has a small business background;
keep a permanent watch on petrol prices by appointing a new Petrol Commissioner; and
give the ACCC the power to monitor grocery prices and to publish regular surveys of prices to inform consumers.

Industry and Innovation

Rudd Labor will:

Commit $100 million over four years to establish a ‘manufacturing network of centres’ to foster innovation in small and medium Australian manufacturing businesses;
Commit $200 million to establishing 10 Enterprise Connect innovation centres around Australia to connect business people with new ideas; and
Commit $500 million to a Green Car Innovation Fund designed to generate $2 billion in investment to secure jobs in the automotive industry and tackle climate change by manufacturing low emission vehicles in Australia.

Defence

Rudd Labor will:

commission a new Defence White Paper to ensure that our expenditures produce the force structure we need for the future;
conduct a comprehensive independent national audit of the Defence budget to determine the true position of that budget. In response to that audit, Labor will develop a strong, flexible and well equipped Australian Defence Force.
build a new generation of submarines in Adelaide. The submarines will be built by ASC at its Port Adelaide site and the aim will be to have the work commence before the last Air Warfare Destroyer is completed. It is expected that construction of the first new submarine would commence around 2017, near the time that work on the Air Warfare Destroyer project will be tapering off.

Trade

Rudd Labor will:

invest $50 million into Exports Australia. Exports Australia is Labor’s plan to drive export growth across the whole economy;
conduct an Exports Policy and Programs Review. This will be a thorough review aimed at developing a policy and program mix that will position exporters and the nation to take maximum advantage of the ongoing resources boom and to develop our full export potential in other sectors.
revitalise Export Market Development Grants and increase funding by $50 million in 2009- Austrade will be revitalised and restructured to provide
better service for exporters. Austrade will have its own business advisory group.
assist the Services Sector to expand its export base.
with the Financial Services Sector to build on its export successes by improving taxation and marketing arrangements.
make Australia a hub for the export of clean energy technology.

Multilateral and Bilateral Relations

The Government will support bilateral FTA’s where appropriate, but has indicated they will need to be built on multilateral agreements;

Multilateral trade negotiations will have the highest priority;
Review current the FTA’s to ensure concerns raised by industry are dealt appropriately.