Business leaders have urged the new government to commit to sweeping tax reform to boost investment and productivity.

And they want the new Gillard government to use the promised tax summit to repair the damage to Australia’s reputation with international investors caused by the resource super-profits tax debacle.

As part of the deal to secure the support of independents Rob Oakeshott and Tony Windsor, Labor has agreed to a summit to consider the broader recommendations of the Henry tax review.

Business Council of Australia president Graham Bradley instantly called for a “more sophisticated national discussion” on tax reform, including a more transparent review of policy options.

“As our economy approaches capacity limits, the onus is on all of us to push ahead with the policies needed to keep the economy flexible and responsive,” Mr Bradley said. “A strong economy relies on investment, productivity and participation, all of which are heavily influenced by taxation settings.”

Mr Oakeshott, who had proposed the tax summit, announced yesterday that it would take place. Labor held a tax summit in 1985 under then prime minister Bob Hawke.

National Australia Bank and Woodside chairman Michael Chaney said it was most important that the government acted to ensure that Australia was outward-looking, productive and efficient.

“Over the last term of government we saw workplace relations wound back 15 years and that represents a threat to productivity,” Mr Chaney told The Australian.

“The government must hold the line on tariff reductions, regulation reform and tax reform; and should amend the industrial relations legislation to protect the lower paid, but provide flexibility with regard to the higher paid. I support the government’s announced intention to improve the status of teachers and provide them with merit-based rewards.”

On the tax summit, Pacific Brands, Mirvac and Gloucester Coal chairman James MacKenzie said it was crucial to have “tax reform where all of the stakeholders are taken on the journey”.

He called for the government to expedite implementing the mineral resources rent tax deal that Julia Gillard negotiated to replace the resource super-profits tax.

“The way the first draft was conceived and promulgated left a lot to be desired,” Mr MacKenzie said. “It’s done a lot of damage to Australia’s reputation overseas.”

Business leaders cautioned that they still faced an uncertain global economy and a two-speed economy domestically, and raised concerns that a minority government could stymie economic reform.

Despite the economy having emerged as one of the best performing in the world, global investors have been wary about political uncertainty and the mining tax.

“The new government faces a deeply divided nation,” said Fairfax Media chairman and Reserve Bank board member Roger Corbett. “What any country needs is certainty and decisive government. Clearly I would have preferred a decisive vote for either Labor or the Coalition. This is the worst possible outcome.

“I am pessimistic. I wish Julia Gillard well. As a result of the deal she has done with the independents, she has a right to govern. But she faces a daunting task.”

Flexigroup chairman and Billabong director Margaret Jackson, who is also the former chairman of Qantas, said she was pleased the country finally had a government.

“It is an unusual alliance of interests and I do hope that, going forward, they can work together in Australia’s interests,” she said.

Australian Institute of Company Directors chief executive John Colvin urged Labor, the independents and the Greens to “put the nation’s best interests first — not those of individual electorates or interest groups”.

“Fundamentally, this means a focus on policies that will make Australia a more prosperous country — and that means making it a more productive and business-friendly country,” Mr Colvin said.

“Australia needs more reform, not less. The government should keep in mind there’s ultimately nothing to be gained by punishing the private sector, even though it may appear a way of making easy short-term political gains or appeasing vested interests.”

Australian Chamber of Commerce & Industry chief executive Peter Anderson said that the message from business was “to not allow our nation to experience economic drift or return to business as usual in what is a fraught world economy and a more difficult domestic political environment”.

Other specific areas of concern to business include greater certainty around climate change policy, particularly as the Greens will hold the balance of power in the Senate and Tony Windsor yesterday singled out energy policy as a factor in his decision to support Labor.

“The government needs to provide clarity on what that initiative or those initiatives are going to be. Business needs to know so it can plan with certainty,” Mr MacKenzie said.

Another core demand by business is for improved economic infrastructure in the new term of government.

Leighton Contractors general manager of investment Peter Hicks said investment was needed to support economic growth.

“They’ve just got to bite the bullet and find ways to create that infrastructure,” Mr Hicks said.

“It takes a long time for infrastructure to be brought to market and delivered and impact the economy.

“We just need to keep going with the work that Infrastructure Australia has been doing.”

The new government needed “to be able to hit the ground running” because “it just takes the whole term of a government to actually start a project then get it under way”.

The message about infrastructure investment was echoed by Toll Holdings chairman Ray Horsburgh who urged the government to continue spending on roads and ports.

“We are still desperately short of long-term permanent infrastructure. It’s a proven fact that infrastructure work creates employment and its local money.

“I just hope that some of the promises made in the election campaign come to bear.”

Complex and inconsistent areas of business regulation were also identified by business leaders as areas that they wanted tackled during the new term of government.

Mr Colvin argued that excessive regulation needed to be dealt with urgently and that doing so would benefit the broader community.

“As (former prime minister) Paul Keating once observed, good policy, particularly in the business area, is good politics in the long run,” Mr Colvin said.

“The Gillard government has had a near-death experience and now has a second chance. It shouldn’t waste that chance to govern well and to genuinely improve Australia, despite the difficulties presented by the unusual political circumstances and the fragile alliances which have returned it to power.”

(Source: TheAustralian.com.au)