RETURNING income taxing powers to the states needs serious consideration for Australia to stand any chance of repairing its broken federal/state taxing and spending structures, the Taxpayers Research Foundation* (TRF) said today.

Failure to take tough decisions, including a fair dinkum look at returning states' income taxing powers, risked Australia’s economic and social future, the TRF warned.

Launching its latest Tax Policy Journal: A New Federalism. A New Tax System, TRF spokesperson Terry Ryan said Australia desperately needed tax reform to provide long-term fiscal sustainability for all the governments in our Federation.

“Policy makers at federal and state levels must recognise the need to implement long-term reforms to our federal and state spending and taxation structures,” Ryan said.

“We need vigorous debate and commitment to reform at a critical time of our economic and political cycle. We simply can’t leave this to chance given the current political uncertainty in Canberra,” he said.

While the Federal Government has commissioned the White Papers “Tax Reform” and “Reform of the Federation” to be delivered by the end of this year, with a view to presenting reform proposals, the 2015 Tax Policy Journal focuses on better informing the public and policy makers about our Federation’s fiscal problems – particularly the mismatch between revenue and expenditure between the different levels of government.

Ryan said Tax Policy Journal papers highlighted:

• states revenue sources are insufficient to fund their expenditures and the Commonwealth’s tax bases deliver more revenue than needed to meet its spending commitments. And a half of that amount is tied to federal spending priorities
• vertical fiscal imbalance is common under federal systems, but is high in Australia by international standards. Nearly a quarter of federal tax revenues are passed back to the states, in the latest year $54.9 billion in untied grants, mainly from the GST and $46.3 billion in specific purpose payments
• even with the untied grants the allocation of these funds to the different governments is determined by Federal government equalisation priorities and not by the revenues collected per state, eg Western Australia only receives about a third of its total revenues from federal funds whereas South Australia receives nearly half of its revenues from the Federal government
• while there are many benefits for Australia in a federal system, reform of income taxes, GST and state taxes can reduce the imbalances in our federal system and increase efficiency for all levels of government.

Ryan said there was a strong argument to give real power back to the states.

“This includes allowing them to again levy income tax to reduce the imbalances and this is discussed at some length in the 2015 Journal.

“Also discussed are the specific roles governments perform and the governance needed to ensure genuine accountability and responsibility from all elected representatives.”

Ryan said past failed attempts to make meaningful changes were also discussed, highlighting that reform from the two White Papers “would be just the beginning”.

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THE most significant business technology event in the Asia Pacific region is set to kick off from tomorrow Tuesday 5 May and run until Thursday 7 May at Sydney Olympic Park. This year’s event, now in its 14th year, will feature federal and state ministers along with numerous other government speakers.

CeBIT’s official partner is the NSW Government. CeBIT’s supporting partner is the City of Sydney.

The opening ministerial address at 9:00 – 9:45am on Tuesday 5 May will feature:

• The Honourable Tony Abbott, Prime Minister of Australia via video link
• The Honourable Dominic Perrottet MP, NSW Minister for Finance, Services and Property
• Clover Moore, Lord Mayor of Sydney

Other attendees for the opening address include Commissioner Andrew P Scipione APM, Commissioner of NSW Police Force and Craig Laundy MP, Federal Member for Reid.

Other highlights:

The Honourable Malcolm Turnbull MP, Minister for Communications is confirmed to open the CeBIT Australia eGovernment conference, 9:15 - 9:40am on Wednesday 6 May.

The Honourable Victor Dominello MP, NSW Minister for Innovation and Better Regulation is confirmed as a keynote speaker at the CeBIT Australia eGovernment conference, 9:40 - 10:00am on Wednesday 6 May and will then do a tour of the show floor.

The Honourable Anthony Roberts MP, NSW Minister for Industry, Resources and Energy will tour the exhibition at 5:30pm on Wednesday prior to attending the CeBIT.AU Business Awards gala dinner, 6:30pm on Wednesday 6 May.

Other attendees at the gala dinner include Craig Kelly MP, Federal Member for Hughes who will also do a tour of the show floor at 5:15pm and Sameer Arora, National Association of Software and Services Companies (NASCOM).

The Honourable Stuart Ayres MP, NSW Minister for Trade, Tourism and Major Events will open the CeBIT Australia StartUp conference, 9:30am – 9:50am on Thursday 7 May.

Other NSW Government speakers include Glenn King, CEO, Service NSW (eGovernment conference, 6 May); William Murphy, Deputy Secretary, Service Innovation & Strategy, Department of Finance and Services (eGovernment conference, 6 May); Dr Pedro Harris, Executive Director, ICT Strategic Delivery, Department of Finance and Services (Cloud conference, 6 May).

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VECCI Chief Executive Mark Stone said the State Government’s 10-year strategy, including a $2 billion 2015-16 budget commitment to grow the train and tram manufacturing industry in Victoria, is "a win for jobs and skills in our state"

"Trains, Trams, Jobs 2015-2025 – Victorian Rolling Stock Strategy gives rolling stock manufacturers and suppliers throughout Victoria the long-term certainty they need to invest in their workforces, plant and equipment," Mr Stone said.

"The initial investment will be significant for local manufacturers as it includes $274 million for 20 E-Class trams and $257 million for 21 VLocity carriages, constructed by Bombardier in Dandenong, and $90 million for five new X’Trapolis trains, assembled by Alstom in Ballarat. In addition, the commitment includes more than $1.3 billion for 37 new High Capacity Metro trains and maintenance of the existing fleet.

"The State Government’s policy to include a minimum of 50 percent local content in all orders will be welcomed by Victorian rolling stock manufacturers and suppliers, who employ up to 10,000 people.

"VECCI welcomes the education and training prospects this strategy presents and it is positive that the State Government will work with the TAFE sector on apprenticeship opportunities," Mr Stone said.

"We also welcome the State Government’s continued and long term investment in Victoria’s rail network, as an efficient, convenient and affordable rail system is vital to Victoria’s competitiveness and liveability."

The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the most influential business organisation in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

vecci.org.au

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The Reserve Bank of Australia will cut interest rates when it meets tomorrow (Tuesday) but the Australian dollar won't fall solely on the back of it and any fall will be short lived, a QUT economist says.

Dr David Willis, from QUT Business School, said the RBA was attempting to instil a fall in the Australian dollar to "what is perceived as a fair value level of 72 cents to 75 cents to the US dollar."

The RBA cut rates to a record low of 2.25 percent at its February board meeting but kept the cash rate on hold in March and April.

"Despite this cut to an historic low, the currency stands at 79 cents, and, against the cross rates, hardly changed," Dr Willis said.

"Therefore the market seems to have a different view of what is fair value than the RBA.

"The market sees the US economy and monetary policy clearly outweighing any attempt by the RBA to devalue the AUD, so we are becoming a price taker in a fee currency environment rather than a price maker.

"We have to wait until the US economy is strong enough for the US Federal Reserve to start increasing interest rates before our currency falls in any meaningful way towards the 72 cents the RBA wishes."

Dr Willis said the lack of movement on the Australian dollar following the previous rate cut was a "failure of monetary policy" by the RBA as it attempts to lean into the US currency wind.

"We are clearly now not masters of our own destiny when it comes to currency rates," he said.

"Therefore the RBA now needs to stop spending precious monetary support given the policy is having little or only a very marginal effect on either the domestic economy or currency.

www.qut.edu.au

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THE Victoria Tourism Industry Council (VTIC), in association with the Victorian Events Industry Council (VEIC), welcomes the State Government's announced additional $20 million annually for the next four years in funding to support the growth of major events throughout Victoria.

"Victoria is the major events capital of Australia and we're delighted this funding will enable us to further bolster our standing, by delivering more events to Melbourne and regional places throughout Victoria," said VTIC Chief Executive Dianne Smith.

"We have consistently urged policy makers to further leverage our strength in major events and we are thrilled that the Andrews Government is using its first budget to recognise the important contribution tourism and events make to our economy and community."

The measure will be provided through a significant boost to the Victorian Major Events Company, lifting its annual budget from $42 million to $62 million.

The tourism and events industry contributes $20 billion annually to the Victorian economy and employs 200,000 people.

"As the Premier has highlighted today, major events draw tourism and create great opportunity for local operators such as restaurants and hotels. VTIC will continue to work with government and operators throughout Victoria to make sure we leverage the job creation possibilites that this measure brings," said Ms Smith.

The Victoria Tourism Industry Council (VTIC) is the peak body for Victoria’s tourism and events industry, providing one united industry voice.

vtic.com.au

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VECCI Chief Executive Mark Stone said it was a big positive that the State Government’s announced $257 million investment in new regional rail carriages and infrastructure will create nearly 200 Victorian jobs and boost skills in the Geelong region.

"VECCI welcomes the fact that the new carriages will be built by Bombardier in Victoria, securing 64 jobs," Mr Stone said.

"In addition, the new maintenance and stabling yard in Geelong will create 100 jobs during construction, 30 ongoing jobs and include apprenticeship and education opportunities.

"The 21 new VLocity carriages adding an additional 1,500 passengers to the daily capacity of the V/Line system will be welcomed by commuters and leisure travellers.

"We welcome the State Government’s announced budgetary commitments to Victoria’s transport network and look forward to further job creating infrastructure commitments in Tuesday’s budget."

The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the most influential business organisation in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

vecci.org.au

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VECCI recognises that the focus of this year’s State Budget is going to be on delivering the Andrews Government’s pre-election commitments.

These commitments have a strong focus on jobs and are closely aligned to the priorities for reform VECCI championed through its 2014 pre-state election campaign Taking Care of Business. 

With this in mind, the budget must fund important productivity enhancing, job creating infrastructure projects.

“We have already welcomed the recently announced funding to progress Melbourne Metro Rail, the Transurban proposal for the Western Distributor project and the agreement to deliver the CityLink / Tullamarine Freeway Widening Project,” said VECCI Chief Executive Mark Stone.

“The Andrews Government must build on these announcements by funding and progressing its level crossings removal project and the establishment of Infrastructure Victoria.”

A commitment to expand the Melbourne Convention and Exhibition Centre, to be completed by 2018, would also be of great benefit to Victoria’s major events and tourism sectors.

A budget allocation from the Regional Jobs and Infrastructure Fund will be important to ensure the delivery of a number of regional infrastructure projects committed to pre-election including:
- The Ballarat Station Redevelopment
- Geelong Performing Arts Centre
- Eureka Stadium, Ballarat
- Grampians Peak Trail

Business is also looking forward to the budget funding a range of other pledged initiatives including:
- The Back to Work Act
- The Premier’s Jobs and Investment Panel
- The Future Industries Fund
- Start-Up Victoria
- Projects Victoria
- Inbound trade missions and new Victorian Government Business Offices

“If not contained in this year’s budget, future budgets must continue to work towards encouraging jobs by lifting the payroll tax threshold and strengthening Victoria’s international engagement capabilities,” said Mr Stone.

The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the most influential business organisation in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

vecci.org.au

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VECCI has welcomed the release of Melcourne's Western Distributor proposal, according to Chief Executive Mark Stone.

"The project has the potential to visibly enhance freight productivity by reducing traffic congestion, decreasing commuter travel times and improving port access," Mr Stone said.

"VECCI has consistently called for a second river crossing. The proposal represents a major step forward in achieving this and improving the movement of freight around Melbourne.

"With the Port of Melbourne’s throughput expected to triple by 2041, improved access to the port provided by this project will be crucial to the state’s longer-term trade and economic performance.

"Together with the government’s planned widening of the CityLink / Tullamarine Freeway, the announcement represents a major step forward in improving Melbourne’s transport network. These projects will save business money, help people get to work on time, improve urban liveability and create thousands of new jobs," Mr Stone said.

"The proposal also demonstrates the important role the private sector has to play in not only funding major projects, but bringing forward new ideas that have the potential to address Victoria’s most pressing infrastructure challenges. VECCI commends Transurban on this great initiative.

"If realised, the proposal would be one of a small number of projects that transform our transport system, delivering enduring economic benefits for generations to come."

The Victorian Employers' Chamber of Commerce and Industry (VECCI) is the most influential business organisation in Victoria, informing and servicing more than 15,000 members, customers and clients around the state.

vecci.org.au

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