00:00You made a number of recommendations last year to the government in terms of productivity.
00:04When you run your eye across the budget, what sort of scorecard do you give it in terms of what
00:09made it through?
00:10Look, I want to give it actually a pretty high scorecard on the productivity front.
00:14I think it's fantastic that the government has put a package of productivity measures together,
00:19many of which we have done a lot of research and really stack up in terms of trying to shift
00:25the dial.
00:25And so when I look across the suite, you know, there's some really important reforms to environmental approvals,
00:31which speeds up approvals for new housing, new clean energy projects, critical minerals projects.
00:37There's a suite of reforms which are really about federal government working with state governments to move to a more
00:44national market,
00:45to streamline a whole lot of duplication we've got across states and territories,
00:49everything from product standards to retail tenancy laws.
00:52And then there's a really important package of skills as well.
00:55Things like making it easier for skilled migrants to get their trade qualifications faster,
00:59so they can actually start working with the tradies that we desperately need.
01:04Reforms to our skilled migration tests to make sure that we are targeting those migrants
01:08that are going to bring the biggest, broader benefits to our workforce.
01:12So it's a pretty broad package.
01:13Some of the things you describe, I mean, for example, you know,
01:16the harmonising of regulations between states and territory and federal seems like low-hanging fruit.
01:22Has the government set its sights a little bit low here?
01:25I mean, you say it's low-hanging fruit, but some of the stuff we have been literally talking about for
01:2920 years,
01:31and that is because it is hard to get the states to come to the table.
01:35You know, one example of that is payroll tax.
01:37At the moment, every state and businesses have to submit to every state and territories portal.
01:42Why not just collect it all through a national system?
01:46That has been in the wind for 20 years.
01:48It's fantastic to see it in this budget, but we actually need to see it pushed through to implementation.
01:52So I think they have actually been reasonably ambitious when you think about the degree of difficulty
01:56in actually implementing some of these reforms.
01:59In terms of tax, I know you would have liked to have seen a lower company tax than Australia's company
02:03tax rate.
02:04It's pretty high compared with its peers.
02:06Was this really feasible, though, in the current uncertain environment?
02:10And uncertainty was a theme that really got hammered in this budget.
02:13Yeah, I mean, certainly it is.
02:14There's a degree of uncertainty right now.
02:17We would argue that actually ups the case for reform.
02:20You need your economy to be resilient.
02:22You need to be firing on all cylinders in a world that's more uncertain.
02:25It gives you that buffer against international circumstances.
02:29So disappointed, of course, that we didn't see some more reform to the company tax system.
02:33We do think it's really important for productivity to incentivise investment.
02:38A lot of the reforms that we were talking about, though, would have come at some cost to the budget.
02:42And I suspect they've fallen victim to fairly tight fiscal circumstances.
02:47Well, the tax reforms that we did get, which were foreshadowed in advance,
02:50the changes to negative gearing, so property investors will no longer be able to claim a loss
02:55on their investment as a tax deduction, the end of the 50% capital gains tax discount as well.
03:01Could there be some unintended consequences here, though, in terms of a negative impact on construction?
03:06Look, I think in terms of the housing market, there is the carve-out for new housing.
03:13Overall, the impact on house prices is pretty modest.
03:16And the Treasury modelling in the budget backs up, you know, I think what others have said,
03:21it's sort of, you know, 1% to 4% that sort of range.
03:24So you would expect the impact on new construction to be muted.
03:27And then the fact that there's a carve-out for new builds.
03:30So I'm less worried about that as an unintended consequence,
03:33probably more in terms of start-up community, those sort of impacts
03:37through the reduction of capital gains tax discount.
03:39Now, we saw a huge saving as well, the National Disability Insurance Scheme,
03:44better known as NDIS, $38 billion cut from this.
03:47There seems to be a broad agreement, though, that this program,
03:51while extremely valuable, was getting out of control.
03:54Stripping out inefficiencies, getting that cost down,
03:57can you see that this could improve productivity and health and social assistance?
04:01Look, I think it was a very important set of steps to take.
04:05The program was actually originally envisaged by the Productivity Commission.
04:09It has grown much faster than what was anticipated.
04:13So I think bringing it back to working for people
04:17that have a permanent and significant disability is really important.
04:20And reducing some of the lorting and bad market effects that have happened
04:26will significantly reduce the cost.
04:28I think that is good for productivity.
04:29We know that it has drawn a lot of resources in from other sectors.
04:34If we target it, if we target it for people that need it most,
04:37what we do is free up labour and other things for the rest of the economy,
04:41which is a good thing.
04:42Do you feel also perhaps more could have been done
04:44in terms of reforms around competition?
04:46Because a lot of major industries in Australia
04:48are still either oligopolies or, in some cases, monopolies.
04:51So competition is certainly an area that's relevant for productivity,
04:55and we want to see a really dynamic economy,
04:57which comes about through more competition.
04:59We have had a set of changes to mergers laws over the past year or so,
05:04which have just come into effect.
05:06So that will be important because it goes to, you know,
05:08how much firms can accumulate market power over time.
05:11But there are also a number of reforms
05:14under the national competition policy banner,
05:15which I think will be helpful at kind of pulling back impediments
05:19to competition over time.
05:20So you gave the budget a high score for the reforms
05:22it did introduce around productivity, but what's next?
05:25I mean, there's implementation.
05:27How hard is that going to be?
05:28And what are the risks if some of these reforms don't get implemented?
05:31Yeah, and that is, I think, the key question in my mind.
05:34It is a very long list of reforms,
05:35probably the biggest budget that I can remember looking at.
05:38But as I said, the devil is in the detail.
05:40You've got to implement these things well.
05:43Anything where there is a lot of interaction
05:45with state and territories is hard.
05:46So we are going to be keeping a very strong eye on that.
05:50In terms of what's next as well,
05:52I mean, there was a good focus on regulatory
05:54and red tape production in this budget,
05:56a particular focus on the financial services sector.
05:59We would like to see that spin out
06:01into other sectors of the economy,
06:03into housing, into energy, into those other areas.
06:06So more of those regulatory deep dives,
06:08I think, are going to be needed in future.
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