The 2012-13 State Budget has recognised the challenges confronting business with a number of initiatives designed to lower costs and improve competitiveness.

The forecast $155 million surplus next year is welcome and will help retain the state’s AAA credit rating. That the Government has reduced its own size and cost without damaging frontline services is also positive.

At a time when business is under strain, the three per cent reduction in WorkCover premiums will benefit many Victorian employers.

The Budget acknowledges the need to support Victorian manufacturing and trade growth with a range of initiatives to improve access to government information, raise innovation and strengthen trade and investment ties.

Most importantly, the Budget retains a key focus on infrastructure with much needed funding for progression of the business case for the East West Link and planning and development of the Melbourne Metro rail project.

Funding for the preparation of the Port of Hastings expansion and the further development of Webb Dock represents important investment in meeting our future trade needs.

Our regions have not been left out with new funding to increase the capacity of the regional rail network, along with school, hospital and education upgrades that will underpin regional Victoria’s attraction as a place to live, work and invest.

Funding for Vocational and Educational Training is important to ensure that Victoria’s training sector continues to be industry-driven and of the highest quality.

The pluses for business in the Budget must not overshadow the need for ongoing reform. Much still needs to be done to cut red tape, explore options for state tax reform and encourage further private sector investment and job creation.

This article was also published in the Herald Sun on Wednesday 2 May, and VECCI’s Steven Wojtkiw spoke to ABC Radio’s Statewide Drive program about the Budget, which you can listen to here.

What were your thoughts on the State Budget?

With a crucial time ahead, Victorian businesses must be the state’s number one priority in tomorrow’s State Budget.

Reforms in the State Budget that champion business will be rewarded with faster rates of business start-up and expansion, accelerated investment and jobs growth, and greater productivity and innovation in markets at home and abroad.

Such benefits cannot be left to chance. They must be front and centre of the Budget and its policy and program reforms for business.

Trading conditions are tough for many business operators. Rising cost pressures have hit hard. Profitability is weak, cash-flow is tight, finance is less available and business and consumer confidence is fragile.

In this environment, both action and vision is needed to restore and build business confidence, boost business competitiveness and create an environment for business expansion, creativity and activity.

The Victorian economy and financial position is under pressure from global influences and weak domestic conditions, as well as an expected shortfall in our share of GST revenue.

While the likelihood of a ‘tough’ Budget is very real, business is looking to the State Government to do what it can to lower business costs, raise productivity and improve competitiveness.

Regulation reform must be accelerated and broadened. With the high Australian dollar and carbon tax looming, now is a critical time for the State Government to help Victorian businesses remain competitive by committing to improved regulatory design, assessment, administration and enforcement.

We urge the government not to introduce any new taxes, or raise existing taxes or charges in this Budget.

To secure Victoria’s longer term economic prosperity, the Budget signals a timely opportunity to support the recommendation of VCEC that the government develop a green paper that examines options for shifting the state’s revenue base toward more efficient, productivity enhancing taxes.

Business is also looking for continued proactive representation of Victoria’s interests in securing a fairer share of the distribution of GST revenue from the Commonwealth. This will reduce Victoria’s exposure to substantial fiscal shocks and improve our capacity to undertake meaningful state tax reform and/or continued infrastructure investment.

Further improvements are needed in the state’s infrastructure base. In the short term, key projects that need to be accelerated to address existing pressure points include the east-west road link between the Eastern and Tullamarine Freeways, the Melbourne Metro rail project and the extension of the Melbourne Exhibition Centre. Improved regional road, port and aviation links are also important, particularly for our tourism and food processing sectors.

While there are many other key focuses for business in the Budget, not least the importance of continuing responsible economic and financial management, taken in total, the Budget must add positively to the capacity of employers to not only maintain existing employment and investment levels, but confidently expand their operations into the future.

This article originally appeared in the Herald Sun on 28 April.

The issues which have inhibited productivity improvements in Victoria over the past decade clearly indicate that problems in the labour force are deeply rooted in the education system.

Educating and training Victorians to be world-class in their fields is a major challenge for the Victorian economy. Industry requires a strong education and training system to meet future needs, particularly in developing workforce capability to respond to the ever-intensifying challenges of global competition. The reform focus must be on improving labour market flexibility and raising productivity.

VECCI is concerned that the current education and training system does not meet current societal requirements, let alone position Victorian industry to meet the challenges of the next decade.

Around 53 per cent of the existing workforce is struggling with language, literacy and numeracy deficits, according to the No More Excuses report on language, literacy and numeracy released last year by the Industry Skills Councils.

These statistics represent significant impediments to business growth and productivity improvement.

ABS Social Trends Data, which tracks the number of year 7 and 8 students who complete schooling to year 12, has slightly improved for Victoria, reducing from a high of 29 per cent of students leaving school before reaching year 12. However, around 25 per cent of male students are still leaving school early.

This level of disengagement of students in middle years significantly contributes to high numbers of youth unemployment in outer-metropolitan areas where youth unemployment among 16 to 24 year olds can exceed 45 per cent.

We will continue to see school leavers populating the workforce with significant shortfalls in language, literacy and numeracy skills until the education system focuses on curriculum frameworks to meet both potential employer and student needs.

A new approach to curriculum frameworks, a revised teacher training system and an innovative and responsive school environment is needed.

In its pre-Budget submission, VECCI calls for:

• A review of the current state education curriculum framework to address disengaged students and complement the revised national curriculum
• Industry support to increase the take-up and placement rates of people with a disability
• Support for a greater take up of undergraduate students, particularly international students, through placement in industry-based learning opportunities
• A review of the Trade Training Centre operations to improve utilisation levels
• Assistance to re-engage mature workers to improve workforce participation in industry and the transfer of their much-needed knowledge and skills to younger workers.

VECCI’s 2012-13 pre-Budget submission summary is available on the VECCI website.

As international interest in Victoria as a tourist destination grows, the tourism industry and businesses alike are calling on the government to turn its investment focus to infrastructure to support this prospective market.

A report from Tourism Research Australia released recently noted that in 2010-11, tourism’s contribution to Australian gross domestic product (GDP) was $73.3 billion, or a 5.2 per cent share of the Australian economy.

Tourism is an important contributor to the nation’s GDP and employment throughout the state.

Major trading partners like China and India offer significant growth markets for tourism. While we struggle with the effects of the high Australian dollar, we need to capitalise on the investment of international interest and make sure Victoria remains competitive in its tourism offerings and supporting businesses.

In its 2012-13 pre-Budget submission to the Victorian Government, VECCI highlights several key projects which it says should be the focus of the government to stimulate international interest and investment in the state.

We need strategic new investment to support Victoria’s regions, and tourism and events industries, including the implementation of natural icon infrastructure projects with a focus on such attractions as the Grampians Peak Trail, the Great Ocean Road Interpretive Centre and Wilsons Prom Iconic Walk.

A strong focus needs to be on supporting Melbourne Airport to be Australia’s premier airport, flanked by Avalon in the west and an airport in the south east. International status should also be granted to Avalon Airport in order to further direct tourism into our regional areas.

This regional tourism and transport focus is vital. Our regions are important contributors to high yield tourism services and the attraction of overseas visitors, especially in the food and wine, spa and wellness and nature-based tourism and event areas.

Opportunities should be explored to enable Victoria’s regional airports to take greater traffic to boost tourism and business traveller throughput into the regions and capitalise on a number of major events that occur nationally and locally.

And in Melbourne, the Melbourne Convention and Exhibition Centre extension would position the city as the nation’s premier event host to our international business visitors.

VECCI’s 2012-13 pre-Budget submission summary is available here.

The Victorian Government must act now to ensure that the state is prepared for the expected rapid growth in international trade and can capitalise on the opportunities that this presents to Victorian business. 

A recent report into the global demand for transport infrastructure over the long term by the Organisation for Economic Co-operation and Development (OECD) highlights the need for governments to prepare for the infrastructure needs of the future.

The report, Strategic Transport Infrastructure Needs to 2030, says that, with world GDP set to double by 2030, this growth will be associated with rapid increase in trade, especially within Asia and between major regions. 

Under these growth scenarios, world air passenger traffic could double, air freight could triple, and port handing of maritime containers worldwide could quadruple. 

The development of gateway and corridor infrastructure is crucial to ensuring Victoria capitalises on the opportunities this presents, enabling businesses to access these high-growth markets for the export of goods and services.  This further underpins economic and employment growth throughout the state.

The report also highlights the importance of good infrastructure planning processes, and the role of private sector investment.

In our pre-Budget submission to the State Government, VECCI highlights recommendations from the Victorian Competition and Efficiency Commission (VCEC) State Reform Agenda which call for a long-term strategic planning framework for Melbourne, saying these recommendations must be addressed in the upcoming Budget and applied not just to Melbourne, but to our regional and rural areas.

In terms of infrastructure, this framework needs to be underpinned by plans covering transport services for individuals and freight, including our future port and air transport requirements. A Major Projects Facilitation Act, modelled on the Major Transport Projects Facilitation Act, would assist in coordinating agencies to achieve timely, logical decisions.

Key projects that need to be accelerated in the short-term to address existing pressure points include an east-west link between the Eastern and Tullamarine Freeways, the extension of the Melbourne Exhibition Centre, the Avalon Airport rail link, enhanced container capacity at Webb Dock and the Melbourne Metro rail project.

Improved regional links to assist regions absorb population growth are also important, as are smaller regional roads in areas of economic importance, particularly those associated with our competitive position in the tourism and food processing sectors.

The momentum of work underway in the Regional Rail Link needs to be maintained. Most parts of this project will operate under the enhanced Implementation Guidelines to the Victorian Code of Practice for the Building and Construction Industry from July 1, a move that will also help to ensure timelines for the project are not derailed.

Victoria’s future economic welfare and liveability depends on quality hard and soft infrastructure that keeps pace with population growth, changing industry structures, new technologies and emerging global trade and investment opportunities.

While the role of government in meeting our infrastructure task should not be underestimated, the private sector must be encouraged to play an even bigger part in infrastructure provision. The superannuation system has created a large pool of capital and we need to maximise the opportunities to leverage this investment in the state’s – and nation’s – infrastructure needs. 

The challenge ahead is for governments at all levels to bring more investment opportunities to the market given the capital available, the investor interest and the imperative to enhance our infrastructure.

Click here to read VECCI’s 2012-13 pre-Budget submission summary.

Victoria’s leading business group has urged the Baillieu Government to use the 2012 budget formulation process to ensure there is no unnecessary slippage in implementing pre-and-post election commitments important to business.

A number of significant reform options are currently before the government, embodied in the recommendations of reports by the Victorian Competition and Efficiency Commission (VCEC) and a range of other inquiries and reviews conducted in 2011. 

It’s important that the government responds to the specific recommendations of these reports in – or ideally before – the May 2012 State Budget.

The Government is to be commended for having already met a number of pre-election commitments to raise service standards in areas like law and order, health, education and public transport. The results of these initiatives will see spin-off benefits to the wider economy.

But at a time of great economic difficulty and uncertainty, business is looking to the State Government to do what it can to lower business costs, raise productivity and improve competitiveness.

VECCI is therefore calling on the Government to:

• Respond to the final VCEC reports into tourism and a state reform agenda.
• Release a formal Small Business Statement that outlines the policies, programs and services that the government will use to help small business grow.
• Report on achievements in realising the government’s stated red tape reduction target (annual scorecard).
• Respond to the second report of the Independent Review of State Finances (Vertigan Report).
• Respond to the final report of the Taxi Industry Inquiry.
• Announce details of the proposed new fire services property levy and how it will transition from the existing insurance-based model.
• Maintain funding for the Regional Growth Fund.
• Continue funding for the Energy Technology Innovation Strategy (ETIS) competitive grant funding program.
• Maintain water efficiency rebates, including those for small business.
• Continue to fund recycling and waste recovery initiatives across metropolitan and regional Victoria, including those in partnership with industry.

Visit ther VECCI website for a summary of our 2012-13 State Budget submission.

VECCI welcomes the State Government’s decision to repeal the 20 per cent emissions reduction target for Victoria. With the national emissions target and the impending carbon tax, we were in danger of having two targets, two burdens on business that would have put jobs and investment at risk.

VECCI has long held concerns about the existence of a state-based emissions reduction target on top of the operation of the national target under the Commonwealth’s Clean Energy Future legislation.

Victoria needs to do its fair share in contributing to the emissions reduction task but the operation of both state and national targets would have meant Victoria shouldered a disproportionate burden.

With Victoria’s reliance on brown coal as an energy source and our concentration of energy intensive, trade-exposed industries like automotive manufacturing and aluminium smelting, business was exposed to a significant cost impost.

At a time when economic conditions are fragile and many of our key industries, such as manufacturing and retail, are grappling with the impact of a higher Australian dollar and rising costs, the State Government’s decision is good news for Victorian business.

VECCI has welcomed news that up to 400 contractor jobs, and many more permanent jobs, will be created at the Melbourne Airport according to a draft plan for the Southern Precinct project which outlines significant benefits for the Victorian economy.

This project outlines a significant economic and employment investment for Melbourne and we welcome the employment, services and tourism benefits it will offer.

Up to 400 jobs will be created through the 16 month construction phase alone, and many more additional jobs will be created both at the airport, and through organisations servicing the airport on an ongoing basis.

The project will also deliver significant tourism benefits through increased airline facilitation that will further broaden the range of airline services Melbourne can provide, and also through increased airfare competition.

This project will place Melbourne in good stead as the premier gateway to Victoria and broader Australia, and will help to ensure Victoria stays competitive as a tourist destination.

We are delighted the draft report has progressed to the consultation phase and we will encourage the Commonwealth Minister for Infrastructure and Transport to further consider the proposal.

The time ahead is a crucial one for Victoria – and for Victorian business – according to VECCI’s pre-Budget submission to the State Treasurer.

With current softer domestic economic conditions, the State Government must focus its attention on supporting Victorian industry through practical actions that lower business costs, raise productivity and improve the environment for private sector investment and jobs growth.

Fragile global financial conditions are creating considerable uncertainty in markets at home and abroad. Business and consumer confidence is low. Our members have told us that over the next 12 months they’re predicting a further general decline in business conditions nationally, with little improvement in sales volumes, selling prices or employment.

The Victorian economy is holding up under difficult circumstances and the state’s overall financial position, while also under pressure from global influences and weak domestic conditions, is forecast to improve over time. 

The recent mid-year results, while showing a deficit of $341 million for the six month period to 31 December 2011, are an imperfect guide for the 2011-12 financial year. We remain confident the impact of significant revenue items will bolster the government’s bottom line in the second half of the financial year. 

Previous government announcements will also pave the way for a reduction in government expenses as we move through 2012-13 and beyond.

With these factors in mind, we see no reason why the government should not be able to meet its surplus target while also supporting Victorian business growth and competitiveness.

Victorian business is looking to the government to use the 2012-13 Budget to deliver:

• Continuing responsible economic and fiscal management
• Business taxation reform and regulation relief
• Further improvements in the state’s infrastructure base – including the extension of the Melbourne Exhibition Centre, the Melbourne Metro project and the east-west road link
• Lower utility costs and improvements in energy and resource efficiency
• Continuing support to build new international trade opportunities for Victorian businesses in key markets like China and India
• More efficient and effective education and training for industry – including a review of Government-funded Trade Training Centres in schools to better link student enrolments and vocational outcomes
• Strategic new investment to support Victoria’s regions, and tourism and events industries – including the implementation of natural icon infrastructure projects.

Click here to read a full summary of VECCI’s 2012-13 State Budget submission, and have your say below.

As Melbourne again prepares for the annual Formula One Australian Grand Prix event this weekend, I call on the State Government and the local community alike to take notice of the immense success this single event brings our state in terms of employment, tourism and services investment and ask, if this key event is to be wiped from our events calendar, how will the rest of Victoria’s key tourism events survive?

Why should the loss of one event affect the whole of the state in so many ways? Because, as Jeff Kennett aptly pieced together last year when the debate about the value of our Grand Prix reared its head once more, our events industry is like a train on a bridge and every pillar that the track runs along is central to its ongoing welfare and ability to keep all our other events and the supporting businesses moving along in a successful fashion.

Major Victorian events galvanise business interests from a range of industries on a cyclic basis. If we are to devalue this lone event to a state where we no longer want it, or worse, to a state where Formula One simply takes it away, the catastrophic effect for Victoria will be far-reaching.

The Victorian Government commissioned Ernst & Young to conduct a study on the economic impact of the Grand Prix following the 2011 event. The study estimated that the 2011 event increased Victoria’s Gross State Product (GSP) by between $32.04 million and $39.34 million.

The Grand Prix also provides significant branding and positioning for Melbourne and Victoria both nationally and internationally. The 2009 event alone provided a media or advertising equivalent value of $35.6 million to the State.

That’s a significant combined total income benefit for Victoria alone, and that’s profit that goes into benefitting our state in a range of other means that just can’t happen without this funding.

The Australian Grand Prix Corporation estimated total attendance for the 2011 Grand Prix was 298,187. Almost 40,000 were from interstate (26,699) or overseas (11,740). Eighty-nine per cent of interstate spectators and 73 per cent of international spectators had travelled to Victoria specifically for the Grand Prix, or extended their stay because of it.

The strong attendance at this single event demonstrates a significant interest and also acknowledges Melbourne’s skill at providing a successful event year on year. To place a dollar figure on the outcome of this peak of tourist numbers, and the promotion of Victoria internationally as a result, is impossible to configure and the effects of it not happening on an annual basis difficult to imagine for businesses throughout the state.

The Grand Prix is a pillar in our overall events calendar, which includes the Australian Open, Spring Racing Carnival and Melbourne Food & Wine Festival amongst many, many more great events, the whole of which is greater than the sum of the parts.

Victoria’s major events deliver a combined economic impact to the State of approximately $1.4 billion annually and attract over 230,000 international visitors every year.

Collectively, these events work together to promote Melbourne and Victoria to the world and drive significant economic, social and cultural benefits to the State.

It’s not just about the direct income generation of the event; it’s also about our home-grown businesses reaping the benefits. The flow-on effect from events creates significant local business, employment and tourism benefits which are fundamental to our ongoing existence.

From the venues, to the caterers, to the transport systems, to the hotel accommodation and restaurants – the cyclic nature of our events calendar provides ongoing revenue for a range of tourism and services businesses.

For example, the 2011 Grand Prix event alone generated between 351 and 411 full-time equivalent jobs, and many others were involved in support services with more than 550 supplier companies also contributing to the event.

This core group of employee and service teams move from event to event to effectively make the events ‘happen’ throughout the year. Without this group, the events simply can’t happen, and without the events, these staff will be without jobs.

Victorians and Australians generally, should be not only proud that we were chosen to host this internationally renowned event, but we should be proud of the reputation that we have built to stand us in good stead as a recognised international sporting event host more broadly. This year is even more special in that Melbourne hosts the season opening event for the 2012 series. This means we are the first in the world to host a Grand Prix event in 2012. That’s just like sitting in pole position on the race track. What a prestigious and internationally enviable position to be in.

No other location throughout Australia can stage a mix of international and local sporting events at world-class venues which are in walking distance of the central city precinct, other tourist attractions and a range of first-rate hotels, restaurants and shopping outlets.

This story is not a new one, but one that is timely and needs to be reinforced in the light of what is set to be another successful Grand Prix event. I ask the government and the local community again to consider the bigger picture of the value of this lone event, and just how Victorian businesses who depend on the event’s success can continue to prosper without it.