State must keep the good times rolling

The past 10 years have been very good for Victorian businesses.

Thanks in large part to the past reforms the state has jettisoned its rust bucket tag.

The economy is purring.  People are moving in.  Businesses are investing and government's finances are in excellent shape.

The challenge is to sustain the good times.  And this is no minor task.

Unlike the other states -- NSW with its financial sector, WA with its mineral sector and Queensland with its expanding population -- Victoria does not have a sector that will inevitably grow and drive the economy.

Moreover at least two of the state's main competitive strengths -- its manufacturing base and as a base for corporate headquarters -- are waning.

The state's future strength lies with doing things better, smarter and in proving a competitive, open, and supportive environment for businesses and entrepreneurs to invest, live and work.

While the reforms of the past moved the state in this direction, much more needs to be done.

Indeed there are large areas of government activity that have yet to be touched and others that are going backwards.

The regulatory burden imposed on Victorian business by the State Government continues to grow at a near exponential rate.

Over the past tens years, the volume of regulation imposed by the state (measured in term of pages) has more than doubled.

This growth took place despite a much publicised effort by the government to reduce the regulatory burden.

While there is no hope of stopping politicians from passing additional regulations -- that is after all what they do -- we can and need to further restrict and restrain their excessive regulatory propensities.  This can best be done by giving regulatory review bodies greater independence and powers.

There is also an urgent need to expand the pro-competition reform agenda into basic government services.  The first wave a microeconomic reform focused on injecting competition into electricity, ports, rail freight and urban transport.

The next wave needs to extend this process into areas such as health, aged care, environment, employment services, and welfare.

These are the areas that are driving government spending and taxation with cost rising rapidly.  They constitute a large section of the economy and have low levels of productivity and great scope for improvement.

While scope for injection competition in social services is more limited than was the case for state owned businesses, its potential is nonetheless large.

While the Howard Government has gone cautiously and successfully down this path in a number of areas, the states have done little aside from tax and spend.

Mr Bracks, to his credit, has recognised the need to push on with reform areas and will put the case to the Council of Australian Governments next month.

Lets hope he succeeds as our future could well be at stake.

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