Hawker Britton Occasional Papers and Media

A Rudd Labor Government and Business

December 2007

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

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:

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
Education and Skills

Labor’s Education Revolution includes:

Infrastructure

Rudd Labor will:

Housing

Rudd Labor will:

Water

Rudd Labor will:

Climate Change

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

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:

Clean Coal Initiative
Clean Energy Plan
Farm Adaptation
Balance and Fairness in the Workplace

Rudd Labor will:

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

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

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

Labor’s new system will also ensure that:

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
Tax Cuts and Reform
Childcare

Rudd Labor will:

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:

Australia As A Financial Hub - Boosting Financial Exports

Rudd Labor will:

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

Rudd Labor will:

A Superannuation Clearing House

Rudd Labor will:

Competition Policy

Rudd Labor will:

Industry and Innovation

Rudd Labor will:

Defence

Rudd Labor will:

Trade

Rudd Labor will:

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;

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