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The Coalition's economic action plan [and] Table of savings



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The Coalition’s Economic Action Plan

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EXECUTIVE SUMMARY

The top priority of a Coalition government will be to restore Australia’s finances.

After three years of Labor, Australia is heading down the wrong track.

Reckless spending, nearly $90 billion debt, six interest rate increases in a row, a $57 billion deficit and Labor Government borrowings of $100 million each day have put the Australian economy in a highly vulnerable position.

The Coalition offers a better way - real action, prudent financial management and sustainable growth, driven by policies designed for higher productivity, to get Australia back on the right track.

Our Economic Action Plan includes the following elements:

1. DEBT REDUCTION Our number one economic priority will be to get Labor’s debt under control as quickly as possible. Proceeds from the sale of Medibank Private will be quarantined for paying off Labor’s debt. Through better budget management we will also deliver savings over the forward estimates to be used to further tackle Labor’s debt. Our Debt Reduction Taskforce will manage this process.

2. STOPPING THE WASTE Ending Labor’s waste and reckless spending will help restore the budget to surplus and get Labor’s debt under control, enabling the Coalition to deliver lower, simpler, fairer taxes in our second term. We will immediately suspend payments under Labor’s wasteful ‘Building the Education Revolution’ programme and redirect this funding directly to school communities to ensure value for money. Other practical measures to reduce waste include the establishment of an Office of Due Diligence to examine government spending proposals for their potential for waste and mismanagement before they begin, and a Waste Action website to enable the Australian public to report waste and make suggestions for savings.

3. TAX REDUCTION The Coalition will stop Labor’s higher taxes. We will remove the threat of the mining tax and the carbon tax, and cut company tax, providing targeted and economically responsible tax relief in our first term. We will also provide a clear medium-term pathway to further tax relief that can be delivered once Labor’s debt is under control.

4. BOOSTING PARTICIPATION AND PRODUCTIVITY The Coalition will boost productivity to deliver economic growth. Key productivity measures include measures to boost workforce participation for young Australians, women, and seniors. The Coalition’s mental health reforms will further drive workforce participation and productivity gains. Our comprehensive package of small business initiatives will help to drive the growth of the ‘engine room’ of the economy. In addition, we will reform the way economic infrastructure is delivered and provide a new funding stream to boost infrastructure investment. Further regulatory reform will also help drive growth.

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5. SUSTAINABILITY Economic policies must take into account social harmony, quality of life, the provision of adequate infrastructure and the preservation of the environment. The Coalition will establish the concept of sustainability as the cornerstone of economic decision-making by reconstituting the Productivity Commission as the Productivity and Sustainability Commission. We will also implement our fully-costed direct action plan on the Environment and Climate Change and our water policy that will provide sufficient water for the environment while preserving Australia’s capacity for food security.

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HOW LABOR HAS FAILED

Despite inheriting a $20 billion surplus,1 no net debt and a government net worth position of $71 billion2 Labor has delivered:

• $80.6 billion of net debt in 2010-11 - $3,600 per person;3

• $4.2 billion of interest paid on net debt in 2010-11 - $187 for every Australian;4 and

• a Budget deficit of $40.7 billion in 2010-115 (the second biggest deficit since World War II - the biggest being last year’s $57.1 billion Labor deficit).

To fund its reckless spending, Labor needs to borrow more than $100 million every day.

One of the key reasons Australia was able to withstand the Global Financial Crisis is because the previous Coalition Government left the country’s finances in extraordinarily good shape.

The Coalition left office with a budget in healthy surplus and no net debt.

In just three years Labor’s reckless spending and borrowing has delivered a dramatic turnaround and undermined Australia’s capacity to meet future economic challenges.

Labor’s budget deficit in 2009-10 was a record $57.1 billion. This year it will be nearly $41 billion. Net debt is approaching nearly $90 billion and Labor is borrowing an additional $100 million a day.

The Budget is not predicted to be back in surplus until 2012-13, and even then it will only be a modest $3.5 billion or 0.2 percent of GDP.6 Labor’s spending commitments over the course of the election campaign are likely to reduce this forecast surplus.

Should Labor be re-elected, this projected surplus is likely to disappear altogether, wiped out by further waste and mismanagement which has become a hallmark of Labor’s last three years in office.

The economic impact of Labor’s debt falls most heavily on the taxpayers of Australia. The taxes of hardworking families and businesses are increasingly required to service Labor’s debt interest.

Net interest payments will exceed $5 billion7 a year in each of the three years 2011-12 through 2013-14. This means interest payments in excess of $100 million a week for three years.

On Labor’s own Budget projections, cumulative interest payments are likely to total $33 billion before the debt is repaid. This massive ongoing liability could instead be used to reduce taxes, invest in better services, or provide improved support for low income Australian families.

Labor has also failed on tax.

New taxes and higher taxes are part of the Labor Government’s DNA. Labor’s approach to tax reform is to introduce new taxes.

1. Final Budget Outcome 2007-08, Sept 2008, p1. 2. Ibid, p11. 3. Pre-election Economic and Fiscal Outlook 2010, July 2010, p15. (ABS population estimate: 22.4 million) 4. Economic Statement, July 2010, p16. 5. Final Budget Outcome 2007-08, Sept 2008, p1. 6. Ibid. 7. Economic Statement, July 2010, p16.

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Since coming to office in 2007, Labor has not removed a single tax. Instead, Labor has needed to increase the tax burden to pay for its wasteful spending.

Decisions taken by Labor that have increased the tax burden include:

• Reducing in the generosity of employee share schemes;

• Removing concessions on fringe benefit taxes;

• Reducing the depreciation benefits for computer software;

• Reducing tax deductions for individuals;

• Tightening the exemption for foreign employment income;

• Introducing the ‘Alcopops’ levy;

• Increasing the luxury car tax from 25 percent to 33 percent;

• Raising the tobacco excise by 25 percent;

• Introducing a great big new tax on mining; and

• Planning for the introduction of a great big new tax on carbon.

Let there be no doubt that, if re-elected, Labor and the Greens will introduce a great big new tax on carbon which will increase the price of everything.

Australians cannot afford another three years of a high taxing Labor Government

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THE COALITION’S ECONOMIC ACTION PLAN

The Coalition has a plan for real action that we will regain control of Australia’s finances and protect and grow our economy.

A Coalition Government will shape a secure economic future for Australia around sustainable, strong growth and prudent financial management.

High productivity, without debt and deficits, will provide the foundations of this secure economic future.

The Coalition’s Economic Action Plan includes the following key elements:

1. DEBT REDUCTION The Coalition recognises the economic threat that Labor’s debt poses to Australia. An incoming Coalition Government will move quickly and decisively to get Labor’s debt under control. Our number one economic priority will be to balance the budget and to repay Labor’s debt as quickly as possible.

Labor’s net debt will peak at $89.5 billion in 2012-13.

To tackle Labor’s debt head-on, the Coalition will:

• Establish a Debt Reduction Taskforce The Taskforce will be co-chaired by incoming Treasurer Joe Hockey and incoming Finance Minister Andrew Robb and will be established within the first week of a Coalition Government. The primary role of the Taskforce will be to ensure that the Coalition meets its publicly announced fiscal commitments so that we can pay off Labor’s debt.

The Debt Reduction Taskforce will ensure that the Coalition’s publicly announced savings commitments are met and manage the process of debt reduction over the forward estimates period and beyond. The Taskforce will also have a special brief to ensure that the focus stays on waste and inefficiency, and that the interests of Australian families, households and businesses are protected.

The Debt Reduction Taskforce will not be a ‘razor gang’. The Coalition does not need a ‘razor gang’ to meet our fiscal targets and pay off debt.

• Reduce net government debt through budget savings The Coalition has already identified nearly $30 billion in recurrent savings over the forward estimates. These savings are from ending Labor’s waste and reckless spending and the cancellation of poorly performing Labor Government programmes.

• Eliminate $4 billion of debt from the proceeds of the sale of Medibank Private The Coalition will proceed with the sale of Medibank Private. Proceeds from the sale will be used to pay off Labor’s debt.

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• Eliminate $18 billion of debt liability by not proceeding with the borrowing associated with Labor’s proposed NBN Labor’s government owned and government run broadband network will be a taxpayer funded ‘white elephant’ when it is completed in eight years time. Labor is planning to borrow $18 billion to build their NBN, loading up taxpayers with significant debt servicing obligations. The Coalition will cancel Labor’s reckless and expensive National Broadband Network.This will eliminate $18 billion of debt liability over the forward estimates and deliver significant interest savings to taxpayers.

These measures will deliver a significant reduction in Labor’s debt. Under a Coalition Government, net debt will always be lower than under Labor and there will be no NBN debt.

The Coalition’s debt reduction strategy will also deliver significant debt interest savings to Australian taxpayers.

2. STOPPING THE WASTE Ending Labor’s waste will help restore the budget to surplus and get Labor’s debt under control, enabling the Coalition to deliver lower, simpler, fairer taxes in our second term.

Key elements of the Coalition’s waste reduction strategy include:

• The immediate suspension of ‘Building the Education Revolution’ payments Billions have been wasted on Labor’s Building the Education (BER) ‘school halls’ programme. We will stop the waste, allow schools get value for money for what they receive and let schools re-invest any savings.

The Coalition will redirect unspent BER ‘school halls’ funds away from state education departments and instead give these funds directly to each school.

Schools that have been allocated funding under Labor’s BER ‘school halls’ programme will still be entitled to receive that money. However, they will have the option of choosing to stick with the project/s they have been told they will receive or to select another option that actually suits their needs.

If schools keep their original project, they will be free to take on the management of that project themselves, including getting better value for money through a proper competitive tender process and the use of local builders and contractors rather than state government controlled providers. The Coalition will consult extensively with affected stakeholders about the most effective way to ensure schools get what they want and achieve value for money.

• Establishing an Office of Due Diligence Under the Coalition, every new major government spending programme will be properly assessed for its capacity for waste, abuse and mismanagement BEFORE it commences. We want to pre-empt problems, not mop up afterwards.

Current arrangements are geared towards the assessment of programmes AFTER they have commenced. For example, the Auditor-General provides important assessment and evaluation of the effectiveness of government programmes, but usually not until these programmes have

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commenced or are completed. Similarly, the Ombudsman investigates complaints after problems have occurred.

The Coalition believes that we can harness the experience of the Auditor-General and the Ombudsman and their record of uncovering government waste, mismanagement and poor treatment of Australians to make better policy.

Central to our strong approach to stop the waste will be the establishment of an Office of Due Diligence within the Department of Prime Minister and Cabinet.

The Office of Due Diligence will comprise officials seconded from the Australian National Audit Office and the Commonwealth Ombudsman as well as people with private sector contracting expertise.

The role of the Office of Due Diligence will be to examine programmes before they are approved by Cabinet to ensure that each project is:

• efficiently designed;

• has a detailed implementation plan; and

• will be implemented in a manner that provides maximum value for the taxpayer.

All proposed spending programmes with a value of more than $100 million will require the preparation of a detailed implementation plan. This implementation plan will be assessed by the Office of Due Diligence and advice will be provided to Ministers and the Cabinet on the potential for waste, mismanagement and abuse in each proposed programme

The Office of Due Diligence will ensure that the Government takes into account the experience of those who are used to investigating failures so potential pitfalls can be identified before the programme happens.

• Mandating value for money consideration in the use of Commonwealth resources Under the Financial Management and Accountability Act 1997, Agency Chief Executives are required to promote ‘proper use’ of Commonwealth resources. ‘Proper use’ means efficient, effective and ethical use that is not inconsistent with the policies of the Commonwealth. The next Coalition government will add ‘value for money’ to this definition and would also add achieving value for money to the criteria against which senior officials’ performance is judged.

• Establishing an interactive ‘Waste Action’ website A Coalition Government will establish an interactive ‘Waste Action’ website for Australians to report and monitor government waste. Our Waste Action website will extend to every Australian the ability to report on government waste at federal, state or local level.

All information collected by the Waste Action website will be passed on to the Department of Finance and Deregulation for investigation.

Identified waste will then be eliminated. Details of any state and local government waste identified through the Waste Action website will forwarded on to the respective jurisdiction for action.

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Importantly, the Waste Action website will also provide an online response that outlines the action taken by the Government in response to the identification of credible waste by members of the public.

We know Government bureaucracies are designed to spend taxpayers’ money, not save it. That’s why we will utilise all available means, including our interactive Waste Action website, to harness the common sense of the Australian people to help us to end the reckless spending at all levels of government.

In keeping with the Coalition’s determination to stop the waste, all costs associated with the Waste Action website will be met from existing department resources.

3. TAX REDUCTION The Coalition is committed to delivering lower, fairer and simpler taxes for Australian families and businesses. However, we strongly believe that any significant tax relief must wait until Labor’s debt is under control.

The Coalition will deliver targeted and economically responsible tax relief in our first term. We will also provide a clear medium-term pathway to further tax relief to be delivered once Labor’s debt is under control.

The Coalition’s tax reduction strategy includes the following elements;

• Cancellation of Labor’s mining tax This misguided and destructive tax is an attack on Australia’s strongest export industry. It will discourage investment and cost jobs. The burden of the mining tax will fall particularly heavily on the mining states of Western Australian and Queensland. The Coalition will stop this tax.

• Opposing Labor’s carbon tax Labor will introduce a carbon tax - a great big new tax on everything. This will push up prices right across the economy, putting increased pressure on families, households and businesses. The Coalition successfully forced Labor to abandon its original plan for a great big new tax on everything in the form of an emissions trading scheme. However, Labor remains committed to the introduction of a carbon tax. The Coalition will stop this tax.

• Delivering a reduction in company tax The Coalition will reduce the company tax rate from 30 per cent to 28.5 per cent from 1 July 2013. This will deliver a lower company tax rate than Labor, providing relief for all Australian companies.

• Introducing a Tax Receipt for PAYE taxpayers The Coalition will improve transparency in the taxation system. Under the Coalition, every PAYE taxpayer will receive a taxation receipt that provides details on how their tax money has been spent. This initiative will help put pressure on government to ensure that tax revenue collected is spent wisely.

• The public release all Henry Tax Review information The report, ‘Australia’s Future Tax System Review’ (the Henry Review), is an important body of work that should make a significant contribution to the public policy debate. However, Labor

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treated the Henry Review with contempt and refused to release all the costings, modelling and other data underlying the Henry Review recommendations. Within 30 days of coming to office the Coalition will release this important information as the basis for a fully transparent and informed public discussion.

• Development of a Taxation White Paper The Coalition is determined to facilitate a proper public consultation and review process on taxation. Further to the public release of all Henry Review information, a Coalition Government will develop a Taxation Green Paper, followed by a White Paper. Unlike Labor’s Henry Review process, our process will involve full public debate and consultation on the future of the Australian taxation system. We want a full, frank and vigorous national debate on the future of Australia’s taxation system.

The Coalition will use this formal process to determine a comprehensive tax reform agenda in consultation with the Australian people. We will then seek a second-term mandate for this tax reform agenda by putting our proposals to the people at the subsequent federal election.

The Coalition’s key objectives for taxation reform will be the delivery of lower, simpler and fairer taxes for Australian families, households and businesses. Central to this will be the delivery of significant personal income tax cuts through lower tax rates. We will also seek to deliver further reductions in company tax - with the objective of reducing the company tax rate to 25 per cent.

4. BOOSTING PARTICIPATION AND PRODUCTIVITY The Coalition’s Economic Action Plan will boost participation and productivity through the following measures:

• Boosting workforce participation

• Supporting a stronger small business sector

• Reforming infrastructure Delivery

• Supporting technical training

• Further regulatory reform

Boosting Workforce Participation The Coalition will implement measures to support increased workforce participation by young Australians, women, and seniors.

• Boosting workforce participation of young Australians The Coalition will introduce new Job Commitment Bonus Payments to encourage long-term unemployed young Australians to find a job and keep it.

Young Australians under 30 who have been unemployed for twelve months or more will receive a $2,500 Job Commitment Bonus if they get a job and remain off welfare for a continuous period of 12 months. A further Job Commitment Bonus of $4000 will be provided to the jobseeker if they remain in a job and off welfare for a continuous period of 24 months.

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These Job Commitment Bonus Payments will provide a real incentive to get young long-term unemployed Australians off welfare and into paid work. Making the payments conditional upon retaining work for an extended period provides a further incentive for those who secure a job to remain employed.

Meaningful employment delivers not only financial benefits but also improves community links and a sense of self-worth. Providing a serious incentive for the young long-term unemployed to get a job and keep it will therefore deliver important social and community benefits.

This reform also makes economic sense. It will boost workforce participation and productivity, helping the economy to grow. It will also deliver savings to taxpayers as more long-term unemployed move off benefits and into work, and stay employed for longer, therefore reducing benefit payments.

• Boosting workforce participation of women The Coalition’s Paid Parental Leave scheme will help boost participation of women in the workforce. With the majority of mothers now in paid employment immediately prior to giving birth, many families cannot easily forgo a second income, even temporarily, without putting the financial security of their family at risk.

As the Productivity Commission notes, the health gains from Paid Parental Leave would not only benefit families. Society at large will benefit from lower long-term health costs and the likely long-run productivity benefits.8

Unlike Labor’s paltry scheme, the Coalition’s Paid Parental Leave scheme gives women real choice because it fully supports their income when their family is at its most financially vulnerable. In this respect, our scheme will be good for the economy at large too because it will keep some of the most productive people and potentially productive people more engaged in the workforce.

Subject to the passage of legislation, the Coalition’s Paid Parental Leave scheme will be introduced on 1 July 2012. Until the Coalition’s scheme is fully operational, Labor’s legislated paid parental leave scheme, due to commence on 1 January 2011, will be maintained.

• Boosting workforce participation of over 50s The Coalition will introduce a Seniors Employment Incentive Payment for employers that hire mature workers aged 50 years or older. The Incentive Payment will be paid to employers who hire a jobseeker currently unemployed or out of the workforce and registered with Centrelink. It will be a one-off payment designed to help overcome the initial reluctance of some employers to appoint older jobseekers.

The Incentive Payment will be paid for jobseekers registered with Centrelink at the time of their employment and on a benefit, including the unemployed, people with disabilities and aged pensioners.

The minimum period of continuous employment required to qualify for the Incentive Payment will be six months. The Incentive Payment will be worth up to $250 a fortnight on a pro rata basis, for a total subsidy for 6 months of $3250 for employing a Senior on a full time basis. This is equivalent to around half the cost of the current Newstart Allowance.

8. Productivity Commission, Inquiry, ‘Overview,’ p. xviii.

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The Coalition’s Seniors Employment Incentive Payment will commence from 1 July 2011. The initiative will be evaluated after three years to determine its effectiveness.

• Boosting workforce participation by matching jobseekers to jobs The Coalition will introduce new measures to connect unemployed jobseekers with jobs. This will increase workforce participation and boost productivity.

The Coalition will offer unemployed jobseekers on NewStart Allowance a payment of up to $6,000 if they move to a regional area to take up a job. The Coalition will offer a payment of up to $3,000 to unemployed jobseekers on NewStart Allowance if they wish to move to a metropolitan area to take up a job.

These relocation payments will be available through Centrelink and all registered jobseekers on NewStart Allowance will be eligible. Families with dependent children will be provided with an additional $3,000 to help cover the additional costs of relocation. Payments will be made, in advance if necessary, to meet the actual costs of relocation, including up to two month’s rent in advance. Centrelink will manage the relocation payments in liaison with the jobseeker.

In addition, employers will receive a subsidy of $2,500 for employing an eligible jobseeker, paid at $500 per week for the first five weeks of employment.

The Job Network will be responsible for making suitable employment offers to the jobseeker, and will also be responsible for connecting the jobseeker with permanent employment in the new location. Jobseekers that do not remain in the job they have accepted for a period of at least six months will be subject to a six month waiting period before they are able to receive any further benefits, unless reasonable grounds for job separation can be demonstrated.

• Boosting workforce participation by improving mental health The Business Council of Australia has identified addressing mental health as a key workforce participation priority9. In 2006, the former Coalition Government made the single biggest investment in mental health by any government in Australian history. $1.9 billion was committed over a five year period for services for people with mental illness, their families and carers. The Coalition will build on this by providing $1.5 billion towards 20 new Early Psychosis Intervention Centres, 60 additional youth headspace sites and 800 acute and sub-acute early intervention beds. headspace is Australia’s National Youth Mental Health Foundation. The number of headspace sites will increase from the current 30 to 90.

The new Early Psychosis Intervention Centres will be based on the ‘EPPIC’ model pioneered in Australia by current Australian of the Year Professor Patrick McGorry. There is currently only only one such Centre in Australia, located in metropolitan Melbourne.

The Early Psychosis Intervention Centres and headspace sites will be located in metropolitan and regional areas across Australia and mobile services will be provided in each state and territory.

The provision of 800 acute and sub acute beds linked to the Early Psychosis Intervention Centres will take pressure off the nation’s public hospitals and emergency departments and provide better care to the patient in the community.

9. Business Council of Australia, Policy Benchmarks for the 2010 Federal Election, page 13

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Supporting the Small Business Sector The small business sector is the engine room of the Australian economy. Small business creates jobs and we are committed to helping small businesses to grow and prosper.

Unlike Labor’s hollow promises and ‘feel-good’ slogans, the Coalition will take real action to support and nurture small business.

The Coalition will implement a comprehensive action plan which will make a real difference to the small business sector.

To help the small business sector, a Coalition Government will:

• Reduce the company tax rate by 1.5 percentage points Under the Coalition, the Company Tax rate will be reduced to 28.5 per cent from 1 July 2013. This will provide a tax cut to all Australian companies.

• Reward calculated risk-taking to grow small businesses The Coalition will work with regulatory authorities to ensure that the commitment of personal guarantees and private asset mortgage is rewarded by more affordable and improved access to small business finance.

• Help small business attract and retain workers Small businesses, independent contractors and the self-employed will benefit from the Coalition’s plan to provide paid parental leave to working women for six months at their full salary. This will help small business attract and retain a stable workforce.

• Extend ‘Unfair Contract’ protections for small business The Coalition will provide a ‘fair go’ for small business by extending the unfair contracts protections currently available to consumers to cover the small business sector. This will remedy Labor’s unexplained back-flip not to include business-to-business standard form contracts in the unfair contract laws.10

• Provide a fairer deal on personal services income tax The Coalition will not change current laws relating to the treatment of personal service income.

• Improve small business access to Commonwealth contracts The Coalition will require departments and agencies to use tender procedures and procurement practices that do not disadvantage small business participation and instead, actively encourage it. The Minister for Small Business will make an annual statement to Parliament on progress and Commonwealth departments and agencies will be required to publish their agencies’ small business guidelines in their Annual Reports.

• Get ‘fair dinkum’ about paying small business bills on time Under the Coalition, all small businesses that provide services to the Commonwealth will get the benefit of a ‘pay on time or pay interest’ approach. This will apply for all services provided by small business from 1 January 2011, providing certainty for small business.

10. Council of Small Business of Australia, (2009), “Discussion points for presentation to the Minister for Small Business’ Banking and small business round table”, Council of Small Business of Australia, Victoria, 6 March 2009, (Appendix 1 to COSBOA’s Submission to the Senate Economics Committee Inquiry into Access of Small Business to Finance, Commonwealth Parliament, 31 March 2010, p. 3.)

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• Establish a Small Business and Family Enterprise Ombudsman The Coalition will give small business a real voice through the creation of a new Small Business and Family Enterprise Ombudsman.

• Put small business in Cabinet where it belongs In the next Coalition Government, the minister with direct responsibility for small business will have Cabinet status.

• Give small business a say in taxation The Coalition will ensure through future appointments that the Board of Taxation will always include a small business presence.

• Encourage a better understanding of fair commercial conduct The Coalition will task the Small Business and Family Enterprise Ombudsman, in conjunction with the ACCC, to prepare and publish a series of ‘better practice’ guidelines to explain and encourage ‘fair commercial conduct’.

• Get government off the back of small business The Coalition has identified a number of areas of government activity where a little commonsense and understanding can help get government off the back of small business. These include:

o Simplified procedures and a greater use of technology will be encouraged and proactively canvassed with the Australian Tax Office

o Genuine consultation with the small business sector about changes in Government-imposed fees and charges

o Any significant proposal being considered by Cabinet will be accompanied by an assessment of the potential impact on small business

• Reduce the Compliance Burden on small business

The Coalition will adopt the principle of minimum effective regulation for proposals to amend or extend compliance burdens on small business.

Reforming Infrastructure Delivery Investment in the nation’s infrastructure is crucial to the living standards of all Australians.

A Coalition Government will set clear priorities for future infrastructure projects. It will establish transparent, rigorous and accountable infrastructure planning arrangements.

By some estimates, there is a $700 billion shortfall in Australia’s infrastructure needs. At the same time, Labor’s reckless and wasteful spending means there are less public funds available to meet these requirements.

Given these circumstances the Coalition will support projects that yield the highest net benefits and establish effective partnerships with the private sector to fund them.

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The Coalition has a plan for real action on infrastructure, including:

• Planning for Australia’s future infrastructure needs The Coalition Government will implement a rigorous nationwide planning regime in conjunction with state and territory governments and Infrastructure Australia.

The basis of this system will be sustainable population projections developed by the newly established Productivity and Sustainability Commission’s inquiry into the management of Australia’s population. Population projections will be updated in the Budget every year.

Using this information, cities and regions will be tasked to adapt existing, or to develop new, long term plans identifying their infrastructure requirements.

The Coalition will ensure that local and state governments develop long-term infrastructure plans that provide consistent opportunities for investment in well-thought through projects. A stable pipeline of projects will provide certainty to the construction sector, helping to increase competition and moderate increases in construction costs.

Plans will identify future requirements for the full spectrum of infrastructure including roads, public transport, water, power, communications and sewerage systems, hospitals, schools, parks and sporting facilities.

Only projects identified within robust regional or city plans would be eligible to apply for federal funding assistance.

• Strengthening Infrastructure Australia Infrastructure Australia provides advice to the Commonwealth and through COAG to the states and territories. It has the potential to avoid a ‘silo’ approach to infrastructure planning and procurement by providing ‘whole-of-government’ and coordinated advice on infrastructure priorities.

Labor has hamstrung Infrastructure Australia by refusing to bring openness and transparency to the infrastructure assessment and selection process.

A Coalition Government will make Infrastructure Australia into a more transparent, accountable and effective adviser on the planning, selection and procurement of infrastructure projects.

Investment in infrastructure that delivers productivity gains over time requires a revised mandate and functional role for Infrastructure Australia. We will require Infrastructure Australia to:

• develop a revolving 15 year infrastructure plan for Australia, with this plan being revised every 5 years

• clearly specify infrastructure priorities at the national and state levels, based on a rigorous and transparent assessment of competing infrastructure projects proposed by the states

• publish justifications for its project recommendations, including the net present value of projects

• develop clearly defined service standards for project delivery and productivity outcomes

• identify and estimate short and long term productivity gains from infrastructure projects, as well as the potential for any complementary projects

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• recommend infrastructure projects on the basis of a transparent and rigorous cost-benefit assessment of their environmental, economic and social sustainability

It is only through such reform that we can ensure our nation’s infrastructure needs are being appropriately identified, assessed and financed in a transparent and accountable way.

The Coalition will release the cost-benefit analysis behind infrastructure funding decisions. The resulting increase in accountability will ensure that infrastructure projects are chosen to maximise the living standards of all Australians.

• An Infrastructure Partnerships Bonds Scheme Australia is facing a potentially $700 billion infrastructure deficit at the same time that Labor has wasted billions and run up massive new public debt.

Clearly, we need to leverage the scarce funds available to facilitate larger investments in infrastructure from the private sector.

To begin to address this infrastructure deficit, the Coalition will task the Office of Financial Management with examining an Infrastructure Partnership Bonds Scheme in conjunction with advice from the market.

Under this plan, the Coalition will seek advice about the creation of a new form of infrastructure financing product that will attract household savings through generous tax arrangements to lower the costs of financing infrastructure and ultimately boost Australia’s domestic savings and its productive capacity.

A final decision on introduction of an Infrastructure Partnership Bonds Scheme will be a matter for government upon receipt of expert advice but it is proposed that infrastructure projects will qualify for the concessional tax treatment through meeting set criteria, including:

• the project qualifies as a national priority under Infrastructure Australia’s pipeline of infrastructure projects;

• a public cost-benefit analysis of the project has been conducted; and

• the project generates sufficient returns such that the debt can be serviced by the revenues generated by levies or charges that relate directly to the project.

In this way, the Coalition proposes that the Infrastructure Partnerships Scheme will provide an impetus to spur on those projects that already make commercial sense, but not handouts to projects that do not boost Australia’s productive capacity to sufficiently generate economic returns.

Private infrastructure operators and State and Local Governments will be eligible to apply for the concessional treatment.

Under this proposal, the Infrastructure Partnerships Scheme will allow the operators of qualified projects to issue Infrastructure Partnership bonds. These 10 year bonds will receive concessional tax treatment in the form of a tax rebate.

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Specifically, the assessable interest income generated from the bonds will attract a 10 per cent tax rebate irrespective of the tax status or rate of the taxpayer. Accordingly, a superannuation fund would generate a saving of two-thirds of its tax payable on the interest from these bonds.

The 10 per cent tax rebate will provide a benefit to all taxpayers regardless of their income.

Australia’s tax system in general discourages savings relative to consumption. Infrastructure Partnership bonds would increase domestic savings and somewhat address this imbalance. Moreover, it would do so in a way that helps build the nation in stark contrast to Labor’s wasted spending of the last two years.

Infrastructure Partnership bonds would lower the yield that is required on the debt that funds infrastructure, and hence help meet Australia’s infrastructure needs.

The Coalition believes that a successful issue of Infrastructure Partnership bonds will require infrastructure operators to convince investors of the merit of their proposed investment. This prevailing “market discipline” will help ensure that only projects that generate a sufficient return will be chosen for investment.

Finally, lowering the costs of infrastructure investment will leverage the limited public funds available to generate a significant expansion in the private sector funds forthcoming.

It is proposed that funding for this initiative will be provided from remaining funds available in the Building Australia Fund over the forward estimates. The total annual cost of the scheme will be capped at $150 million per annum, which is estimated to provide sufficient funding to generate financing for up to $20 billion of bonds in two rounds of applications, commencing from 1 July 2011.

• Restarting infrastructure reform The Coalition Government was pivotal in establishing the National Reform Agenda.11

Labor has not progressed these reforms. A recent report by the COAG Reform Council found that it was lagging in four out of eight competition reforms, including in energy and transport.12

The Coalition will reinvigorate the infrastructure reform process. It will use the COAG Reform Council and the Productivity Commission to both report on reform progress and recommend ways of accelerating infrastructure reform, particularly in the energy and transport areas.

Federal funding will only be made available where a state or territory’s planning, procurement and management of infrastructure assets occurs in a way consistent with the Commonwealth’s own requirements for transparency, rigor and cost-effectiveness.

Projects will not be eligible for funding if they are not incorporated into state and territory infrastructure plans via cost-benefit analysis.

11. COAG Communiqué, Council of Australian Governments, Canberra, 3 June 2005. 12. ‘Report on the National Partnership Agreement to Deliver a Seamless National Economy: Report on Performance 2008-09’, report to the Council of Australian Governments, 23 December 2009, 28.

T H E C O A L I T I O N ’ S E C O N O M I C A C T I O N P L A N 18

Supporting Technical Training Young Australians have access to quality training facilities so they can to develop the skills and experience needed to assist them in entering the workforce. This will improve economic productivity and labour force participation, and help to address skills shortages in the workforce.

Our focus will be on providing the facilities and resources needed to help young Australians prepare for work and gain the skills they need.

Our plan to support technical training involves the creation of a new national technical training network through the following initiatives;

• A national network of up to 30 new Australian Technical Colleges, providing training for apprentices and trainees, including those undertaking school based apprenticeships. These Colleges will provide a valuable pathway for young Australians into technical and vocational education. They will have an emphasis on real-world skill development, giving students a unique and focussed opportunity to fast-track the completion of future trade training and other necessary skills to develop a real career path.

Students at these Colleges will also undertake academic, information technology and business courses. They will gain trade, entrepreneurial and business skills resulting in better employment opportunities and the capacity to be self-employed in the future, or to go on to further education and training.

Australian Technical Colleges will be established under a private-public partnership model involving small, medium and large businesses, private and public training organisations and education providers, and non-government and government schools. Teaching staff will come from both industry and existing education systems.

Students will have the opportunity to complete their high school education while undertaking an apprenticeship and will provide a valuable link between education and industry. Academic studies will be linked to the chosen work pathway of each student.

Priority will be given to high quality training in traditional trades where Australia is facing medium to long term skills shortages.

• Integration of existing Trades Training Centres into the new Australian Technical Colleges Network The Coalition’s network of Australian Technical Colleges will replace Trade Training Centres introduced by Labor. However, given that many schools across Australia have applied for funding for Trades Training Centres in good faith, the Coalition will honour all funding commitments made in the first three rounds of the Trades Training Centre programme.

The Coalition will seek to renegotiate contracts to integrate Trade Training Centres into the Australian Technical Colleges network through an outreach programme.

• Connection with former Australian Technical Colleges 24 Australian Technical Colleges had been established and a further eight were underway when Labor abandoned the programme following the 2007 election.

T H E C O A L I T I O N ’ S E C O N O M I C A C T I O N P L A N 19

These Australian Technical Colleges were providing high quality training to thousands of young Australians when Labor closed them down. As Education Minister, Julia Gillard personally took this decision. Many of these former Australian Technical Colleges continue to operate and remain committed to equipping young Australians with the skills they need for a prosperous future. Where possible, the Coalition will seek to integrate these institutions into the new Australian Technical Colleges network.

Further Regulatory Reform To maximise productivity growth, we must address weaknesses in our competition policy and regulatory frameworks. Private sector investment must be encouraged so that markets are more competitive and efficient.

While dramatic change to our competition policy and regulatory frameworks is not required, there is a need to consider what changes could be made to maximise market efficiencies and productivity enhancements.

A Coalition government will undertake a comprehensive and independent review of the Trade Practices Act from 1974, including all aspects of competition arrangements in Australia. Unlike current Labor Government reviews this will be chaired by an eminent Australian, independent of the public service.

The review will focus on giving small business a fair go. It will examine the concerns of farmers about downstream pricing. It will also examine the potential to deliver greater clarity around misleading and deceptive conduct that delivers a clear market focus while not leaving consumers confused. The review will be expected to deliver a new competition policy framework. In areas like energy supply we will be seeking a genuine market-based approach that protects consumers. If new markets are to be built we want a clear, fair and transparent framework.

5. SUSTAINABILITY Economic policies must take into account social harmony, quality of life, the provision of adequate infrastructure and the preservation of the environment.

Economic progress has to date involved the use of many resources that are finite. These resources cannot be replaced. There are resource and environmental constraints on the speed and pattern of business and economic development.

Economic development also has social costs including the potential for congestion, food security and social harmony.

Our children and our grand children deserve a quality of life that is as good as or better than ours. The only way to achieve that outcome is to ensure our economic development is sustainable over the long term.

The issue of sustainability cuts across all areas of government decision making, including economic policy, population policy, water, the environment and urban planning.

The Coalition believes that achieving sustainability in government finances is crucially important. We do not want to see Australia go down the path of unsustainable spending and debt that so many other countries have taken. Strong and prudent management of the budget provides the bedrock on which

T H E C O A L I T I O N ’ S E C O N O M I C A C T I O N P L A N 20

the provision of health, education, other government services and income support can sustainably be based.

There has been concern that Australia’s population growth is outpacing the capacity to provide adequate infrastructure - housing, transport, power, hospitals, and schools. There is also concern about the “carrying capacity” of the country in terms of water, food production, degradation of land, pressure on native plant and animal species and so on.

The Coalition will establish the concept of sustainability as the cornerstone of economic decision-making by reconstituting the Productivity Commission as the Productivity and Sustainability Commission.

The Coalition also has a direct action plan on the environment which includes clear targets for reducing carbon emissions while preserving the industries and jobs on which so many Australians rely.

The Coalition has a comprehensive plan for water conservation and the Murray-Darling Basin that will provide sufficient water for the environment while preserving Australia’s capacity for food security.

Sustainability boils down to the idea that we want to leave the planet in as good a shape, or better, than we found it. The Coalition has the policies to ensure that crucial outcome can be achieved.

Authorised and printed by Brian Loughnane for the Liberal Party of Australia, Cnr Blackall and Macquarie Sts, BARTON ACT 2600.

Savings

Source

2010-11 $m

2011-12 $m

2012-13 $m

2013-14 $m TOTAL TOTAL

ANNOUNCED BY LEADER - BUDGET REPLY 4627.5

PS Temporary Recruitment Freeze Budget reply 400 1000 1200 1200 3800

Cut Government Advertising Budget reply 25 50 50 50 175

Cut Renewable Energy Future Fund Budget reply 42 352 149 109.5 652.5

ANNOUNCED BY SHADOW TREASURER/SHADOW FINANCE

7425.06

Discontinue the Digital Education Revolution (Computers in Schools)* BP 3, p57 100 200 200 200 700

Discontinue the Smarter School, Improving Teacher Quality Program* BP 3, p57 34 216 175 425

Discontinue the Productivity Places Program* Treasury, p46 319.424 375.863 375.863 1071.15

Discontinue the Trade Training Centres Program* BP 3, p57 143.1 263.7 274.8 286.3 967.9

Reform of Public Service Travel 50 100 100 100 350

Reduce funding for the Green Car Innovation Fund DIISR, p36 22 76 99 81 278

Discontinue the Carbon Trust and Climate Change Foundation Campaign DCCEE, p21 114.305 44.343 49.571 47.941 256.16

Reduce funding for the Carbon Capture and Storage Flagships Program DRET, p26 50 50 50 50 200

Reduce Consultancy expenses Various 50 50 50 50 200

Remove funding - International Climate Change Adaptation Initiative BP 2, p121 78.6 99.6 178.2

Discontinue Green Start DCCEE, p21 79.45 50 2 131.45

Remove funding for partnerships with multilateral agencies BP 2, p122 40.6 60.6 101.2

Discontinue Australian Public Service Reform BP 2, p283 17.8 10.7 10.1 38.6

Discontinue funding for NBN implementation* BP 2, p117 14.6 4.4 3.1 2.2 24.3

Discontinue Ausaid Climate Change funding BP 2, p199 5 10 15

Cut additional funding to PM&C BP 2, p286 4 4 4 12

Discontinue PPL PR Campaign and Implementation BP 2, p182 6.6 6.2 4.4 3.3 20.5

Discontinue Health Reform PR Campaign BP 2, p224 18.3 1.1 0.2 19.6

Interest Savings on Cancelling NBN (Contingency Reserve) 177 465 753 1041 2436

Note: *some of these program savings will be offset by lower cost and more effective Coalition programmes

Savings

Source

2010-11 $m

2011-12 $m

2012-13 $m

2013-14 $m TOTAL TOTAL

ANNOUNCED - PROGRAMMES 'LINKED' TO RSPT/MRRT 9041.8

Early start to company tax rate for small business BP 2 p39,ES p24 0 50 100 50 200

Lowering the company tax rate BP 2 p43, ES p24 0 0 300 1400 1700

Small business instant asset write-off and simplified pooling BP 2, p46 1030 1030

State Infrastructure Fund BP 2, p297 0 0 700 735 1435

Superannuation - increasing the SG rate to 12 per cent BP 2, p42 240 240

Increasing concessional contribution cap for individuals over 50 BP 2, p41 545 785 1330

Raising the superannuation guarantee age limit from 70 to 75 BP 2, p44 -15 -15

Government super contributions tax rebate for low income earners BP 2, p40 830 830

50% Discount on Interest Income BP 2, p38 470 480 950

Phasing down Interest Witholding Tax on Financial Institutions BP 2, p43 70 70

Standard deduction for work-related expenses BP 2, p47 410 410

Development of AFTS (note 2010-11 incl $8.4 million of funding in 2009-10) BP 2, p297 51.8 11.4 6.3 1.1 70.6

Government administrative and capital costs to implement RSPT BP 2,p45, p48 7.7 33.7 53.8 58.3 153.5

Government administrative and capital costs to implement programs BP 2, various 28 84.3 203.5 321.9 637.7

ANNOUNCED - PROGRAMMES 'LINKED' TO NHHN 1544.5

NHHN - Independent Hospital Pricing Authority 3.8 31.8 28.5 27.7 91.8

NHHN - Mental Health - EPPIC 6.5 6.3 6.4 6.4 25.6

NHHN - General Practice and Primary Care - Medicare Locals 14 66.6 156.5 179.7 416.8

NHHN - Mental Health - More youth friendly services 10.8 19.9 23.8 24.3 78.8

NHHN - National Performance Authority 22.3 23.6 29.4 34.2 109.5

NHHN - eHealth 185.6 281.2 466.8

NHHN - General practice and primary care - primary care infrastructure 56.7 179.4 119.1 355.2

Savings

Source

2010-11 $m

2011-12 $m

2012-13 $m

2013-14 $m TOTAL TOTAL

ANNOUNCED SAVINGS - 20 JULY 2010 1183.43

Discontinue the Australian Human Rights Framework BP 2, 2010-11, p94 4 4.3 4.6 5.4 18.3

Enterprise Connect - Amalgamation with AusIndustry Budget Estimates 25.4 25.4 25.4 25.4 101.6

Discontinue Funding for Africa Law and Justice Frameworks BP 2, 2009-10, p88 4.3 4.2 4.4 12.9

Discontinue funding for the United Nations Security Council Candidacy BP 2, 2009-10, p266 5.7 5.7

Discontinue Funding for Community Cabinets PMC, 2010-11, p35 10 10 10 10 40

Discontinue Funding for the Centre for International Finance and Regulation BP 2, 2010-11, p132 5.1 9 8 2 24.1

Discontinue Funding for the MySkills website BP 2, 2010-11, p150 2.2 0.7 0.6 0.6 4.1

Discontinue the Green Building Fund DIISR, 2010-11, p31 5 5.0

Discontinue the Retooling for Climate Change Initiative DIISR, 2010-11, p31 24 15.8 39.8

Discontinue Additional Funding for the State Infrastructure Fund ES 2010-11, p28 100 100 100 100 400

Recover the full costs of industrial elections from the unions AEC Annual Reports 2007 to 2009 5.9 6.2 6.5 6.8 25.4

Abolish the post of the Petrol Commissioner

Treasury, 2010-11, p90 2 2 4

Discontinue Funding for USO Co ES 2010-11 p28-29 50 50 100

Discontinue Funds towards the Retraining and Redeployment of Telstra Staff ES 2010-11 p28-29 100 100

Abolish Funding for the RET Counsellor to India

RET, PAES, 2009-10, p14 0.72 0.75 0.76 2.2

Abolish the Global Carbon Capture and Storage Institute RET, 2010-11, p26 100 100 100 300

Reduce COAG meetings to two and to be held in Canberra 0.1 0.1 0.1 0.30

PREVIOUSLY ANNOUNCED SAVINGS 22638.86

NEW SAVINGS - 20 JULY 2010 1183.43

TOTAL 23822.29