LINDSAY TANNER: The OECD has today released its review of regulatory approaches in Australia and gives a big tick to the Australian Government and our regulatory arrangements. It describes Australia as a role model for other countries, and says that we are one of the front running countries in the developed world in regulatory reform. It does say, however, that if we are to lift our productivity performance, which has been lack lustre for a decade or more, then keeping the foot flat to the board on regulatory reform is going to be crucial. The OECD makes a number of recommendations for the Government to improve how it's going about its regulatory reform agenda and we are picking up these recommendations. It suggests greater direct engagement with business in consultation. It suggests that greater, direct engagement with business in consultation, it suggests that state governments be asked to give greater analysis to proposals that may affect national markets. It suggests that we streamline our regulatory impact statement mechanism. They're just some of the recommendations for improving the quality and depth of our regulatory reform agenda, and the Government has announced today that we will be picking up on these reform proposals. The OECD's given Australia a big tick for its strategy of reform in regulation, but it says that if we want to improve our productivity performance, we've got to intensify our efforts.
QUESTION: Minister, do you disagree [inaudible] the OECD's analysis?
LINDSAY TANNER: Some of the OECD's proposals we are noting, because they are simply observations or assessments of a very broad kind, but in broad we agree with the entirety of the thrust of the report, the OECD's put forward and it makes a number of very constructive and useful suggestions for us to intensify our efforts. In some cases, it's proposing things that in some form or other we are already commencing to do, but nonetheless, it's really helpful to get an independent objective health check of our efforts, and it gives credit to Australian governments, state and federal over a couple of decades for improving our approach on these issues. There's plenty more to be done. We've got to tackle these regulatory burden problems on business even more intensively, and that's what the Government's seeking to do.
QUESTION: In specific terms, what do you think you do have to do [inaudible] productivity?
LINDSAY TANNER: Our productivity agenda really revolves around several key things, investing more in infrastructure, which anybody who lives in one of Australia's major cities knows it is a very big problem, lifting our skills performance. We need to invest more in education and learning and training and that's what the government is doing. Getting in place a genuine ultra high-speed national broadband network which we believe, over time, is going to transform our productivity and our economic performance, and of course improving regulation, deregulating, getting not only off the backs of business, but also allowing people who are running businesses to focus more on doing what they do better, better products, more innovation, better quality, lower prices for consumers and less on simply dealing with government bureaucracy which takes up far too much time for too many business leaders in Australia.
QUESTION: Doesn't it also say that you need a sharper focus on the performance of the states and territories?
LINDSAY TANNER: That's one of the issues that is raised but the OECD, but inevitably, state and territory governments focus on their own backyard in making decisions about regulations, that's understandable. One of the recommendations that they've made is that we should try and ensure that the states, when they're considering the regulatory impact of decisions they make, that they should look at the national landscape where that's appropriate, not just their own immediate area. And that's common sense, because one of the big tasks we are currently undertaking is to harmonise regulation across 27 different basic areas in our economy so that if you are a plumber in Victoria, you don't have to get a separate licence if you want to do some work in New South Wales or vice versa. So this is a very sensible recommendations by the OECD. We will certainly be talking to the states and territories about pursuing that.
QUESTION: Do the states stand to lose [inaudible] funding if they don't [inaudible].
LINDSAY TANNER: The arrangement that we agreed to with the states in November of 2008 was a long list of very specific reform items and we are gradually working our way through all the fine detail of those reforms, and at the end of that process, they stand to get $550 million and a combination of compensation for increased costs or lower revenue because of changes that are being made and reward payments as a result of the benefits of improved productivity. Now ultimately, there's still a couple of years to go in that process. There's inevitably ups and downs that occur along the way, but broadly, the process is on track and we really want to be in a position where those payments get made, because if those payments get made in full, what it means is that together the states and the Commonwealth have made a lot of fundamental reforms to our national regulatory structure that will lift productivity, lift economic growth, lift tax receipts for both levels of government and benefit Australia.
QUESTION: On broadband, one of the proposals in this OECD report was that [inaudible] in paid television. Is that something that [inaudible]?
LINDSAY TANNER: The Government has raised this question about the long-term future of Telstra's involvement in Foxtel, but we have got very complex negotiations occurring at the moment with Telstra that all revolve around both the regulatory regime and the broadband network, so it's not something that we are pursuing at this point, but it is an issue that was raised in the paper, the regulatory discussion paper, about the future of telecommunications in Australia. The key thing, that for far too long, governments have failed to deal with is getting a genuinely open, competitive regime for telecommunications in Australia where companies can compete on equal terms where you'll get lower prices, faster speeds, better quality. And the problem we've had of course is that the structural dominance that Telstra has had has been an impediment to that. Now we're engaged in detailed discussions with Telstra about the future and about the implementation of our broadband commitment and I can't comment on the detail of those because obviously there's a lot of confidentiality restrictions and of course Senator Conroy's the person whose most directly involved in them. I have an interest. I have a connection with those discussions, but I'm not directly involved in them.
QUESTION: On the issue of industrial relations, the OECD report says overly strict regulations may reduce job flows with a negative impact on employment of some group of workers [indistinct] which could encourage labour market [indistinct] productivity and economic growth. They don't seem to be generally enforcing, but…
LINDSAY TANNER: Look, I think that's a bit of misreading of their message. In fact, you will see that there is a table in the report on this issue of flexibility of labour market regulation where the OECD assess all of their members for the degree of intrusiveness and complexity of labour market regulation, and Australia scrubs up very well as one of the least regulated, most flexible countries. So I think the broad message is that, compared with other developed nations, Australia has a flexible labour market. And if ever you want to see evidence of that, you can see it in our unemployment numbers. We've had all kinds of claims made over the last couple of years that getting rid of WorkChoices would cause a huge surge in unemployment, employers wouldn't hire, when in fact the core elements of flexibility in our system, of course, are things that Paul Keating put in place in 1993, particularly enterprise bargaining. And those elements have been there both under John Howard and under Kevin Rudd, and they are the key things that ensure we've got a flexible labour market that suits the needs of the modern economy.
QUESTION: Minister, you mentioned this [indistinct] a while ago where your monthly statements show higher revenues and [indistinct] expenditure than expected. How does it look for the [indistinct] deficit now? Do you think it's substantially less than what you forecast [indistinct]?
LINDSAY TANNER: The reports of those monthly statements and the first half of the financial year, I think, were a little bit over-optimistic. They were drawing conclusions that are possibly going to be the case, but there is no guarantee, because we've learnt over the years that the pattern of government revenue and government spending tends to fluctuate. So it only needs some big slabs of money that move around hitting December rather than January, or vice versa, to make a significant difference that ultimately is illusory. So it's way too early to form a view about whether you will see any further upward revisions in the numbers in the Budget. Of course there were very significant upward revisions in the mid-year economic and fiscal outlook papers, which showed that although the deficit for the current year is still going to be very substantial, the levels of budget deficit are going to drop away very significantly over the next two to three years. Whether there is a further improved position, of course, we'll only know as we get to Budget time. It's certainly better to have figures now that look like they are improving rather than getting worse. But ultimately it doesn't mean very much because we've learnt from experience those figures can move around a lot, and individual one-off things can influence them in a way that distorts the picture.
QUESTION: Minister, what's your take on the IMF's suggestion that inflation targeting should be scrapped?
LINDSAY TANNER: The Government doesn't propose to change its inflation targeting regime. And in fact, we believe that the regime, as administered by the Reserve Bank, has been very successful, it's a very important discipline on the economy and also on governments. And so we don't agree with the proposal that the IMF has put forward to loosen that inflation targeting approach.
QUESTION: The Business Council of Australia has released a submission today to [indistinct] that suggests unspent stimulus money should be wound back. What's your response to that?
LINDSAY TANNER: The stimulus money that we have in the pipeline, of course, is in some cases money that's related to projects that are partly completed, because particularly on larger projects you don't hand over a big pile of money up front; you'll have milestone payments. You've also got contracts that have been entered into. You've got decisions that have been made where you might have, for example, two primary schools that are literally only a kilometre apart, one of which has already had a building that's completed or under construction, the other of which is about to start. So we believe that the stimulus is very important to complete. It's actually keeping the Australian economy at a modest level of growth, and Treasury estimates show that if it weren't in place, then growth would be actually still in reverse. So we have got to ensure that that pattern can continue. And the whole structure of the stimulus is designed to drop down, so already we have seen the boost to the first home owners' grant - that's finished. The investment allowance for small business, the tax break there - that's finished. And so gradually over time, the impact of the stimulus is dropping off. But if you just go cold turkey, that will have a very negative impact on the Australian economy. It will cost thousands of jobs and it will threaten the recovery just when it's at its most vulnerable point. So we are committed to continuing the stimulus approach. But of course, it's one part of a much wider picture, and we'll be considering the much wider picture, which is the total amount of government spending and the overall fiscal position in the lead-up to the Budget, as governments always do.
QUESTION: If we can get back to the OECD report. It said you need to reduce bottlenecks in some infrastructure sectors. Will there be increased focus on reducing bottlenecks, like around Newcastle or the ships?
LINDSAY TANNER: There are some very complex issues in this area, particularly in shipping. And of course, one of the innate problems there that is very difficult to resolve is to what extent do you invest for peaks rather than for normal flows. And when you've got private companies owning infrastructure and private companies that are producing the product that's using that infrastructure, you've got different interests. So the mining companies, by definition, will want infrastructure that can handle almost any level of throughput, whereas the people who actually own the infrastructure assets, like at Dalrymple Bay and elsewhere, they will want to ensure that their infrastructure is being fully or close to fully used most of the time and not be over-investing and seeing it lying idle a lot of the time. So there is a collision of interests there. You've got regulatory bodies that have been addressing these things. You've had some significant improvements in recent times. But yes, it remains an issue that we have to be focused on, there is no question about that. On a wider scale, there are a number of things that are occurring with respect to regulation of infrastructure, for example in the transport sector, that we are working away at. It's tough going, it's complicated, it involves different state regimes, different competition regimes, different charging regimes, where we are seeking to streamline the approaches. So we agree with the OECD that we need to improve Australia's performance in this area. We said so in opposition. It's a challenging thing that takes some time to turn that around, and there are elements of it that there is no absolute correct answer. The aim for governments is just to get the best possible outcome, and particularly when you're dealing with things like the ups and downs of demand for particular minerals, that can be very difficult to project, even for the companies involved, and that means that you're always going to have some challenges in this area.
Thank you very much, folks.
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