Following the 9 October election, the Coalition must consolidate and build upon the reforms blocked in the Senate.
Further reform is vital to accommodate the significant changes taking place in Australia. Chief among these changes is the ageing population and the more open world economy. These create pressures for on-going improvements in productivity both to support more dependents and to maintain competitiveness.
Industrial relations stands out as the priority. A more flexible labour force and an ability of people freely to agree employment contracts with each other allows huge productivity dividends. This is the area were Hawke and Keating failed and where a Labor Party tied to monopoly-seeking unions will always fail.
It is also the area strongly pressed by the Howard Government, which as a result, has a comprehensive, electorally mandated agenda sitting on the shelf. Its mandate includes allowing greater flexibility through paring back restraints on small firms wishing to dismiss unproductive workers, restraints on strike activity during the life of agreements and secret ballots before strikes are permitted.
None of these are particularly radical. Nor are the restraints proposed on the AIRC. For the future, the agenda should be taken a further stage that would totally abandon Australia's nineteenth century oriented industrial relations system. The current IR system was framed within a context of a largely, unskilled male workforce working fulltime in the same factories for life. The unique Australian embellishment, an arbitration court determining workers' pay and conditions, has aggravated the detrimental effects of that framework on productivity.
The productivity bonus from industrial relations reform will assist us to cope with the effects of the ageing population. This has already invited promises at both ends -- greater funding of child care centres and greater health insurance incentives for older people. The Government has, correctly, pursued these goals by emphasising self reliance and consumer choice rather than handouts and a uniform system of benefits.
It needs to do more to combat the blowout of the ratio of dependents to breadwinners. One way is to encourage an abandonment of the norm of retirement at 60/65 years old. This made sense in an era when retirement at 65 was normally followed by death within five years and when the nature of work was more physical. Today's 65 year old has more than 20 years life expectancy and a workplace effectiveness equivalent to that of yesterday's 55 year old.
Like industrial relations reform, tax reform has merit in itself and has become all the more urgent as a result of demographic trends.
Avoiding taxation of savings is a vital component of any reform. At present, payments into the main savings vehicle, superannuation, are taxed both on entry and exit. In addition, the superannuation industry's regulatory wrapping imposes excessive accountancy costs and shields incumbent funds from more efficient rivals. All of this is not only a disservice for people to provide for their retirement but it does great disservice to one of our considerable failings as a nation -- to increase savings.
The top income tax rates remain too high. These high rates reflect the politics of envy rather than an efficient tax system. Lower taxes reduce the disincentives to work harder and to incur fruitless expenditures on tax avoidance. Bringing taxes to a 30 per cent level and making them flatter should be the goal. Depending on how thresholds are set, this is achievable for $10 billion a year.
John Howard added the cream to his victory by staring down green activism during the election. A bucolic nirvana has replaced socialism as today's romantic New Jerusalem. The urban elites consider that the modern economy is killing the world's natural environment. They are calling for serious reductions in tree felling, fossil fuel burning, in water use, and for a halt to new GM agricultural technology.
The native forest open to harvesting has been pegged back. Only 12 per cent of Tasmanian old growth forest is available for logging on public land. On some estimates banning logging would cost the Tasmanian economy $12 billion. The government stood against these policies and must continue to do so.
Genuflecting to Kyoto has meant a big spend on exotic sources of energy and a requirement that 4.5 per cent of electricity must be provided by these sources by 2010. Renewables cost three times the price of conventional electricity. With its energy intensive industry base Australia must re-think this element of its energy policy.
With irrigation, governments are to take a Sydney harbour's worth of water (500 gigalitres) from the Murray irrigators in pursuit of ill-founded but oft-repeated claims that this is needed to remedy environmental degradation. The loss of water is estimated by the Centre for International Economics to cost the economy $72 million per year. The ALP would triple this water grab at a cost of $316 million per year.
Halting new technology in GM agriculture has been vigorously pursued by all State Governments except Queensland. The Commonwealth has acquiesced in this knee-jerk ingratiation to green luddites.
The costs of these regulatory measures are, in the main, off-budget. They are, nonetheless, real economic costs. Governments, Federal and State must examine proposals on the basis of science and economics. The advice they need must be unpolluted by a self-interest in further regulations and the funding that accompanies this.
Of other matters, clearly privatisation of Telstra should now happen -- Australia is one of the few advanced nations with its telecommunications industry largely in government ownership. Recognising the electronic revolution that has transformed the industry, cross ownership media rules should also be abandoned.
These, though are the fillers. The fundamental work needs to be in industrial relations, taxation and in rolling back the productivity-sapping green no go areas.
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