"What are the ones we need to select here to give us the biggest positive impact in the shortest possible time? That is really what we are looking for."
Mr Power said accelerated depreciation and investment allowances were examples of targeted measures that could be fast-tracked through the national cabinet. By contrast, he said the bold, tax reform blueprint of economist Ken Henry had dated significantly in the 10 years since it was proposed.
"There has been a lot of changes to our business structure and, in some cases, to our tax structure since then," he told The Age and The Sydney Morning Herald. "I think rather than go back to that, I would recommend that we look at those key areas of our tax system and regulation that can give us immediate kicks.
"We should be looking at things like incentivising businesses to invest here in Australia."
Mr Lowe warned this week that the Australian economy is experiencing its greatest contraction since the 1930s, with national output down 10 per cent and the unemployment rate likely to reach double figures. He said the economic crisis required a re-examination of our tax system, how we build and price infrastructure and our industrial relations regime.
Mr Power said the disruption to global supply chains caused by the pandemic presented Australia with an opportunity to re-imagine its moribund manufacturing sector.
He said that, provided the right tax and cost settings, this could include high-tech, precision design and manufacturing and the domestic, industrial-scale production of largely imported goods. A key ingredient is the supply of cheap energy to industry, he said.
"We need competitive energy prices, particularly gas, to attract large-scale manufacturing like fertiliser and petrochemicals. There is absolutely no reason why Australia can’t be very competitive with those.
"Even if we have some factors of production that are higher-cost, like labour, we can offset those with a strong domestic market and lower energy costs. I think there is great opportunity in those areas."
Mr Power said the best way of lowering gas prices was to increase supply.
"We have significant reserves of gas on the east coast that are not connected up. We have significant reserves in central Australia and significant reserves in Western Australia. There are options to connect our major demand centres with our major supply centres."
Mr Power said that if the Australian economy is to build greater self-reliance after the pandemic, it cannot rely on skilled migration – at least in the short term – to fill labour shortages. He said skill development and retraining should be central to the national agenda.
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According to the most recent Australian Bureau of Statistics figures available, nearly 70,000 skilled workers moved here from overseas in the 2017-18 financial year. Mr Power said COVID travel restrictions were a barrier to further skilled migration.
"One of the key elements coming out of the coronavirus is to look at the opportunity for labour flexibility. How do we retrain and reskill people? If we are going to see people displaced out of some industries with opportunities in others, the whole issue of skills and retraining is back on the agenda.
"Specialist skills need to be mobile. If we can look at what skills are required and how we meet that need there is a great opportunity for us to do that. And that will reduce the need for us to bring skills in from offshore."
Chip Le Grand is The Age’s chief reporter. He writes about crime, sport and national affairs, with a particular focus on Melbourne.
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2020-04-22 02:32:28Z
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