Abbott's top 10 challenges ahead

After one year in office the Abbott government has a long road ahead to restore business and community confidence. If action isn’t taken soon Australia will pay dearly.

Tony Abbott and his Coalition government have a lot of unfinished tasks ahead of it to restore business and community confidence.

So, to mark the Coalition’s first anniversary I have set it 10 challenges for the next 12 months. If it fails to meet too many of these challenges we will have a steep downturn. And I am excluding external matters such as the Middle East and the possibility of a breakdown in Europe.

1. The terms of trade have moved against Australia because we have an oversupply of two of our major exports, iron ore and coal. Our dollar should fall to compensate but it won’t because our interest rates are out of line with the rest of the world. They can’t be adjusted for fear of exploding the housing price boom. Housing will need to be made less attractive for investors or we will greatly damage our export industries.

2. Energy chaos is ahead for Australia as gas and power prices surge as a result of bad decisions made by previous governments. The carbon tax elimination has been excellent policy in this situation but we need to develop gas.

At the moment Australia is telling the world not to invest in any energy-using business. Andrew Liveris' plan for Australian gas energy is essential or, again, we will have a serious downturn come election time (Liveris: Australia should be a Petrochemical Power, August 19).

3. We have large amounts of labour coming onto the market with the decline in mining investment, the closure of carmaking and the labour shedding of many companies led by retailers. With limited government employment growth, the only people who will employ them are small and medium-sized businesses.

The government has ruled out major industrial relations changes to make this more attractive so as a matter of urgency it must require the tax commissioner to obey the law and adhere to the Howard independent contracting legislation.

The government must also honour its election promise and embrace Labor’s old policy of extending consumer fair contracting to dealings between large organisations and small enterprises. In the absence of industrial relations changes, that’s how you make it more attractive for smaller enterprises to employ people, particularly young people. The measures will be vigorously opposed.

4. Honour the promises in the election campaign and close down most of the Commonwealth departments of education and health and stop duplication with the states. Neither federal minister shows any sign of doing that and the ministers seem to have been captured by their job-keeping public servants.

In health, using money incentives encourage the states to cut hospital expenditure substantially but increase services by using iPad technology via the so-called Barwon model (How to save our sick health system without GST hikes, August 21).

5. Develop infrastructure expenditure using the models that will harness the self-managed funds. In fairness, while they have not understood the power of self-managed funds, Abbott has major infrastructure projects going in all states. Momentum will be important.

6. Simultaneously, it is vital to cut the cost of building hospitals, schools, roads and all commercial building by ending the cartel-style agreements between big builders and unions designed to lift prices by 15 to 30 per cent.

The Australian Building and Construction Commission has a vital role and eastern states have passed the required legislation. The Commonwealth must back it up with legislation and/or tying Commonwealth money to state actions ending the cartel-style agreements.

7. The Government needs a vision and apart from the Liveris plan the best available is northern development. Investment Minister Andrew Robb has a plan that could transform Australia (Andrew Robb: Time to reset the message, August 21).

8. In the case of superannuation, Treasury needs to be sidelined and we need an independent review of the cost and benefits of superannuation and how the system can be improved. Treasury is useless in this process because it pedals models that it must know are mathematically incorrect.

9. We are going to need tackle youth unemployment as a matter of urgency. The measures above will help but a revision of the apprenticeship system is important to make taking on apprentices easy and cheap. It’s a state matter but needs federal encouragement

10. While they are vital I left the budget problems until last because they receive the most publicity. We need budget action but because the terms of trade have moved against us we will not see the rewards we hoped for. That’s why the above nine agenda items are so important.

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