Business groups call for education spending, warn productivity must be priority in 2011-12 budget

More money for education and training to help ease the skills shortage and boost productivity, along with an increased focus on infrastructure spending, are just some of demands being laid out by the business community in this year’s round of pre-budget submissions.

In documents prepared by the Australian Industry Group and the Business Council of Australia, the Government is warned that productivity will decline unless more money is provided for training, apprenticeships and skilled migration.

The Government is also warned, including by the Australian Chamber of Commerce and Industry, that spending must decline and the budget must be brought back into surplus as quickly as possible.

“Any new measures and programs should, therefore, be financed by reducing existing spending,” the AIG has warned.

The Business Council says that on the whole, “the need for fiscal policy to stimulate the economy has passed”.

“The predominant objective should be to move the Budget back into surplus and to target spending towards facilitating structural adjustment and raising productive capacity,” it says.

ACCI chief executive Peter Anderson has also warned that it is time to pull back on the stimulatory spending, telling The Australian that the budget needs to “set the scene for productivity growth”.

The Australian Industry Group, Business Council of Australia and Chamber of Commerce and Industry were contacted for comment, but no replies were available prior to publication.

The tone of the submission is largely positive and recognises lower-than-expected unemployment figures and the potential for the Australian economy to continue its winning streak, especially as commodity prices improve.

“The benefits and good fortune of having an economy approaching full employment and boosted by high export earnings from strong minerals prices should not be underestimated,” the AIG says.

However, the groups warn the risk is that this opportunity is wasted, especially as the Government faces lower tax revenues. A more targeted focus on productivity is needed, the groups warn, saying more money for skills and education is essential.

“AIGroup proposes a total overhaul of the national approach to workforce development that includes lifting funding to make up for the $660 million annual shortfall in current levels of funding for the Vocational Education and Training sector,” the AIG has warned.

The AIG says this should include a new National Apprenticeship Commission “which will upgrade and give coherence to apprenticeship arrangements”, along with starting a National Workforce Foundational Skills Fund.

The Business Council warns in its submission that while the outlook for the economy is “one of sound growth prospects”, tight labour markets require a “well-targeted skilled migration program”. This would include extending the current program, along with a focus on expanding temporary worker visas for large infrastructure projects.

Innovation has been targeted by the AIG, which says the Govenrment’s research and development tax incentive “has serious flaws” that need to be addressed. It says the Board of Taxation needs to review the policy and ensure businesses aren’t being hurt by the new law.

Infrastructure spending is another key area of concern. The council warns that Infrastructure Australia needs renewed funding “and a refreshed mandate”, while the AIG says the Government needs to address shortcomings in infrastructure spending.

“Australia still suffers from an infrastructure deficit that accumulated from the 1980s and over the 1990s,” AIG says. It calls for three studies into motorways, public transport pricing and a congestion report.

The BCA says Infrastructure Australia needs to have its funding renewed for the full 2011-12 year. It also calls for a national infrastructure plan to “translate the large body of policy advice provided by Infrastructure Australia and others into an actionable plan”.

The BCA also calls for a “carefully measured response” to floods-related rebuilding, and the establishment of a new independent authority to scrutinise the financial health of the budget itself.

Yet, despite the calls for more spending on training and infrastructure, there is a simultaneous call for the Government to cut back on spending. ACCI chief executive Peter Anderson has also said the budget needs to “set the scene for productivity growth”, but also warns spending must be cut.

“The budget needs to be a tight budget,” he said. “It will need to restrict spending considerably and set up the budget for a surplus next year… It needs to be the start of a crackdown on government spending programs and duplication.”

Anderson also warns ACCI would be concerned about any new taxes or levies.

Other smaller recommendations have been included, such as the AIG’s call for an education program for employers handing out payments under the Paid Parental Leave scheme.

It also calls for some new workplace relations policies, saying that a former prohibition on enterprise agreement clauses restricting the engagement of on-hire employees and contractors should be restricted.

However, it ultimately says productivity is the key for this year’s budget, and says that reductions in spending should be limited to those areas which do not improve productivity.

“Programs aimed at supporting these objectives should be excluded from general reductions in existing programs,” it warns.