Federal industrial policy should focus on private enterprise

3/5/94

Premier Richard Court today issued a reminder to the Commonwealth that its forthcoming industry policy statement must centre on private enterprise and the different economic strengths of the various States.

"The test of the policy is not uniformity but recognition of State differences and commitment to the capacity and flexibility of the Australian people in private enterprise," Mr Court said.

"The Commonwealth Government must send clear and consistent signals to business for long-term planning decisions by establishing sound macroeconomic policies incorporating low inflation and low interest rates.

"Its industry policy must provide taxation reforms, labor market deregulation, public sector reform and better infrastructure.

"It must also meet the high expectations generated by the Commonwealth about regional development."

The Premier said that Western Australia was leading Australia by a significant margin in new investment (up 30 per cent in 1993 compared with 5 per cent nationally), domestic production (up 5.2 per cent compared with 1.8 per cent) and job creation (up 4.1 per cent compared with 1.2 per cent).

The Commonwealth's policy would need to recognise that the foundation of this success had been commitment to private enterprise, labour market reform, and a clear program of public sector reform.

The policy should not override State initiatives and should recognise the differences among the States in all aspects of economic development, including education and training.

Resources should be allocated to the States rather than to nation-wide policies, so that they could be applied more appropriately to support the industrial advantages of each State.

Financial reforms should continue to focus on reducing tariffs, which substantially disadvantaged exporting States like WA, reform of taxes, including FBT, income tax zone rebates and fuel taxes.

They encouraged companies to adopt a fly-in, fly-out approach to resource development and were a serious disincentive to processing and other value-adding industries.

The Commonwealth's industry policy should accelerate the abolition of excessive regulatory overlap between the Commonwealth and the States.

The Commonwealth must recognise that in matters like land and environmental management the States already had the intellectual assets, the practical experience, and the human resources in place and nothing would be gained by the Commonwealth trying to duplicate them.

It should be for the States to determine their own regional development priorities. The Industry Policy Statement should state very clearly that the Voluntary Regional Organisations of Councils (VROCs) would not be used by the Commonwealth to duplicate existing regional development processes.

Private enterprise would benefit from dealing with experienced State authorities in relation to regional infrastructure, and the national economy would benefit from more efficient service from the public sector.

The need for the Commonwealth to avoid duplicating State responsibility had been acknowledged at the COAG meeting in Hobart in February and should be firmly entrenched in the Commonwealth's industry policy.

There should be closer links between the National Industry Extension Service and Government trade promotion agencies and more assistance for small companies in research and development.

Reform of Commonwealth-State financial relations would also boost industrial development and the job creation that went with it.

Linking the States' general revenue grants directly to the Commonwealth's tax revenue would restore a proper balance and could eventually enable the States to reduce their current inefficient business input taxes.

A reduction in tied grants to promote local State efficiency would contribute overall to a less burdensome public sector which would benefit business development.

"All of these are issues that should reasonably be addressed in a comprehensive industry policy," Mr Court said.

"The Commonwealth is aware of our views on all of these matters and I believe it is essential that they are given priority in the forthcoming industry policy.

"We cannot afford another demonstration of Commonwealth policy inertia."