CPA Australia’s vision for Australia is a nation with improving standards of living for all, achieved largely through sustainable economic growth.
The Australian economy has weathered the global financial crisis relatively well to date. However, given that the global economic outlook remains uncertain, there is no room for complacency in economic and social policy making, and no time to waste in a very competitive global market place. To ensure Australia retains a robust, competitive economy that provides the right environment for business growth, jobs growth and investment, the following policy initiatives are required.
Fiscal responsibility
CPA Australia supports fiscal responsibility, which includes returning the Federal Budget to surplus as soon as the economic cycle permits. Returning the Budget to surplus too soon may reduce the scope for the government to stimulate the economy should the global economy remain weak or even go into another recession.
Governance and accountability in government
Over many years now examples of governments’ management of expenditure has sharpened public awareness of the difficulties where there is shared responsibility and unclear accountability for performance. Those with responsibility for public funds and outcomes under such arrangements need to have clearly defined lines of responsibility and accountability and associated governance arrangements. And citizens are entitled to know whether public resources are being properly used, and what is being achieved with them. The issue is essentially who is accountable for what.
Tax reform
CPA Australia supports tax reforms that emphasise competitiveness, efficiency and productivity. Tax reforms the government should consider in the next three years include:
- a new intergovernmental agreement to implement state tax reform and eliminate the inefficiencies and duplication in the commonwealth / state tax regimes
- reduce the top personal marginal tax rate to 40 per cent in the short term with consideration being given to a further reduction to 37 per cent at a later date and / or implement the simplified personal income tax rates scale proposed by the Henry tax review
- Australia’s total tax to GDP ratio (inclusive of the superannuation guarantee charge) to be no more than 30 per cent
- the company tax rate be reduced to 28 per cent and then 25 per cent with a longer term aspirational target of 20 per cent
- development of an action plan to implement other priority recommendations of the Henry tax review, particularly those relevant to enhancing worker participation and productivity
- reviewing the GST rate and base in order to consider options for funding tax reform initiatives
Infrastructure
To enhance productivity, CPA Australia strongly supports investment in long-term infrastructure projects, particularly in respect to:
- rail, roads and port infrastructure
- more efficient and user friendly public transport
- large-scale building programs in hospitals, universities and TAFEs
- expansion of Australia’s broadband capacity
Education
The government must ensure its investment in this sector is sufficiently robust to maintain the high quality standards necessary to enable this sector to continue to grow and compete internationally. This includes enabling both retention of, and attraction of, the best and brightest academics and teachers to our tertiary education sector.
The higher education sector can make an important contribution to enabling Australia to achieve its objective of becoming a financial services hub. The government should begin dialogue with relevant stakeholders to consider the opportunities in this regard.
Education opportunities at all levels should be enhanced. This would help address some of the key issues impacting the robustness and competiveness of Australia’s economy, namely skills shortages, productivity and participation rates.
Business regulation
The Federal and State Governments should complete the business regulation reform agenda identified by COAG under the National Reform Agenda as soon as possible and reduce duplication of tax collection administration / mechanisms. For example, have the ATO collect some state taxes (e.g. payroll, land tax) instead of each state performing this function, or one state to collect such taxes on behalf of other states.
Access to adequate retirement savings
The proposed increase in the compulsory superannuation guarantee (SG) to 12 per cent must proceed to ensure more Australians are able to save adequately for their retirement. Ultimately, the SG is a wage trade-off by employees and should not be confused as a tax on employers.
With the increase in the SG, it is vital the $450.00 per month SG threshold be removed to ensure Australians with broken or casual work patterns have the opportunity to properly save for their retirement.
The self-employed require appropriate incentives and opportunity to adequately save for their retirement. The arbitrary ‘10 per cent rule’ for the tax deductibility of superannuation contributions must be removed to ensure the opportunity is available and all workers have equal access to the superannuation concessions available.
Skilled migration
CPA Australia supports a more demand-driven skilled migration program that attracts highly skilled migrants to work in areas of critical need. Such migration is part of a package of policy initiatives required to address skills shortages and create Australia as a financial services hub.
Sustainability and climate change
A price on carbon is key to any carbon emission reduction policy, however such a price — in the absence of a global carbon market — would be largely ineffective in reducing overall global emissions. Further, it would potentially have a negative impact on Australian businesses and their ability to compete internationally.
Other than a price on carbon, in the short-term a suite of other policy initiatives is needed to encourage carbon emission reduction. Such initiatives should not only aim to achieve such reductions but should also be beneficial to economic activity.
Water reform is essential to Australia having a competitive and robust economy; finalisation of the Australian Water Accounting Standards that cover both water volumes and quality is fundamental to such reform.
The government needs to engage closely with regulators and industry through such groups as the ASX Corporate Governance Council and the International Integrated Reporting Council, to:
- determine the most appropriate mechanisms to encourage greater reporting of environmental,
social and governance performance by listed entities, and - promote the integrating of financial, non-financial and narrative information in corporate
reporting
Tax Agents Services Regime
Financial planners who provide tax agent services should be appropriately registered under the Tax Agent Services Act 2009.
Future of financial advice reforms
The law must be changed to enable appropriately qualified professional accountants to provide non-product specific advice, including advice on superannuation structures.