Over the last five and a half years, under the Coalition';s sound and certain economic management, Australia has made a remarkable turnaround. We are now a more productive, prosperous nation – well placed to meet the challenges of a rapidly changing and highly competitive world. Australia now has the lowest interest rates since the late 1960s, more than 830,000 jobs have been created and workers have enjoyed significant real wage increases.
Our determination to undertake much needed tax and labour market reform and make other structural reforms has equipped the Australian economy and business sector for the years ahead. Labor';s massive debt of $96 million has been reduced by $57 million.
Yet, we are seeking a third term not to rest on these achievements but to build upon them. Our goals and our promise to the Australian people is clear - to continue to deliver sound and stable economic and business conditions; to secure a workplace relations environment that stimulates jobs growth, higher productivity and higher living standards; and to provide an education and training system that meets the needs of business. However, Securing Australia';s Prosperity also addresses some specific issues of vital importance to our success in the future.
Firstly, the Government has an obligation to ensure its dealings with Australian business are efficient, fair and transparent. A re-elected Coalition Government will focus on improving the structures and the governance practices of its Statutory Authorities and Office Holders, with particular attention being paid to those that impact on the business community.
This process of reform will be undertaken on a whole of government basis and will involve expertise outside the public sector.
As a separate and distinct initiative, in a third term, the Coalition will strengthen the advice given to government in respect to matters of tax administration and process through the creation of a senior office, the Inspector General of Taxation.
Australian businesses, both large and small, need to be assured that legislation and administrative practice will not act against continued growth and productivity.
Strong and effective Trade Practices legislation remains crucial to the Government';s commitment to encourage the success, and the fairness, of Australia';s business activity. While various aspects of the Trade Practices Act have been reviewed over the past few years, a wider review of the competition provisions is now warranted.
We will hold an independent review of the competition provisions of Act and their administration, to establish whether they:
Continue to encourage an environment where Australian businesses can grow and compete internationally; Protect the balance of power between small and large businesses; Support the growth of businesses in regional Australia; and Deal fairly with the affairs of individual companies.
The review will have an independent Chairman, and will report by August next year.
One of the more pressing issues facing business leaders is how to operate and expand their companies in an increasingly competitive global environment. My Government remains firmly of the view that Australian companies can successfully compete on the global stage while remaining based in Australia. But to achieve this, we need internationally competitive taxes and taxation systems.
If re-elected, the Coalition Government will, as a matter of priority, examine whether features of current taxation arrangements adversely affect the capacity of businesses to remain in Australia. This will be done in consultation with key stakeholders and industry representatives.
Particular attention will be paid to whether Australia';s international tax regime acts as an impediment to:
Australian companies attracting domestic and foreign equity; Australian companies expanding offshore; and/or Holding companies and conduit holdings being located in Australia.
In an increasingly competitive global environment, reducing taxes on equity flows will significantly enhance the ability of companies to manage their capital base.
The Government intends to extend the previously announced exemption for capital gains on venture capital investments by providing venture capital limited partnerships with flow through taxation treatment.
These changes, which will apply from 1 July 2002, stem from the Government';s commitment in Backing Australia';s Ability to ensure that venture capital investment is encouraged.
Additional details will be announced today by the Treasurer with the Minister for Industry, Science and Resources and the Minister for Communications, Information Technology and the Arts.
While positioning and encouraging Australian companies to take on the world, we must remain mindful of the fact that a global company needs access to global talent. The Government recently announced changes to various tax rules that reduce the cost of employing skilled expatriates.
In recognition of the importance of attracting highly skilled workers from around the world, the Government will further enhance and amend certain foreign source income and foreign investment fund rules for expatriates resident in Australia for less than four years.
The continued ability to win overseas investment into Australia will also be a critical determinant of our future prosperity.
Notwithstanding our world-class resource base, our skilled labour and well-developed infrastructure, we cannot take it for granted that investor interest will remain focused on investment opportunities within Australia.
To even more actively encourage overseas direct investment, a national strategic framework for investment promotion and attraction in Australia will be developed as a matter of priority – as recommended in the Blackburne Report.
Investment promotion and attraction will in future be delivered through an autonomous prescribed agency to be known as Invest Australia. The investment and promotion activities of other Commonwealth agencies will be incorporated into Invest Australia.
Given the importance of this activity, a high profile Chief Executive Officer will be appointed to head this new agency and its operations will be overseen by the Employment and Infrastructure Committee of Cabinet, which I chair.
Funding of $11 million each year will be transferred into the revamped Invest Australia.
Impact on the Forward Estimates (Cash estimate)
2002-03 $m
2003-04 $m
2004-05 $m
2005-06 $m
Total $m
Office of the Inspector-General of Taxation
2.0
2.0
2.0
2.0
8.0 Review of competition provisions of the Trade Practices Act*
0.0
0.0
0.0
0.0
0.6 Review of Australia's international tax regime
0.0
0.0
0.0
0.0
0.0 Changes to tax treatment of expatriates
0.0
0.0
0.0
0.0
0.0 Incentive to promote new Venture Capital investment
0.0
20.0
20.0
20.0
60.0 Investment Promotion and Attraction
11.0
11.0
11.0
11.0
44.0
Total
13.0
33.0
33.0
33.0
112.6
*$0.6 million in 2001-02