This budget does little to assist Australia achieve its potential growth rate.
If the government was serious about improving the productivity and export potential of Australian industry, it would raise the amount of funding to technology and industry programs beyond the token amounts laid out in the past. On the contrary, the current budget represents a savage 13% cut to industry programs over last year and a 9% cut to the Australian Research Council.
The 2016 budget has been heralded by the government as the budget for jobs and growth. With over 700,000 unemployed people (half of whom have post-school qualifications) and arguably a further 700,000 underemployed, we would do well to focus on jobs.
Economists have long known how to create jobs – expand aggregate demand. The more difficult part however is to create jobs at the same or higher level of productivity as existing jobs. And this is where it matters how governments spend money.
Governments from most advanced countries now have sizeable programs to translate ideas and new inventions into industry. These include innovation procurement programs; incentives and rules to keep knowledge-based products onshore; and networking bodies to bring the research and business sectors closer together. Australia has yet to make a serious commitment to compete in the hi-tech global market for products.
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