Time to take economy out of intensive care: PM

Scott Morrison will use $1.5 billion in federal funding as leverage to force nationwide change to the skills sector, and he will call for a new Accord-style relationship with trade unions and business, to help drive an economic recovery he envisages will take between three and five years.

In a speech to the National Press Club on Tuesday, the Prime Minister will also put tax reform, deregulation and lower energy costs on the agenda, saying "at some point you've got to get your economy out of ICU''.

"You've got to get it off the medication before it becomes too accustomed to it,'' he will say of the tens of billions in government assistance, including the JobSeeker and JobKeeper programs, which are due to wind down at the end of September.

"We must enable our businesses to earn our way out of this crisis. That means focusing on the things that can make our businesses go faster.''

The "JobMaker" economic recovery program, to be unveiled mostly in the October budget, will be released against a backdrop of a record deficit, debt exceeding 30 per cent of GDP, unemployment "around 10 per cent", and a fall in foreign investment by up to 40 per cent.

Envisaging tussles with the states over vocational education, and with the unions over industrial relations, Mr Morrison will appeal to a "new sense of common purpose'' to deliver change.

Rapid change

On skills, a sector beset with "inconsistency, incoherence and complexity", and the reform of which has been stuck on the Council of Australian Governments treadmill for years, Mr Morrison will seek to force rapid change by placing conditions on the $1.5 billion the Commonwealth gives the states annually.

He will also offer to increase funding if the states adopt a system similar to the hospital funding the Commonwealth provides, which is activity-based and operates on an efficient price for each service.

"That is a system my government would be prepared to invest more in,'' he says.

Mr Morrison will cite as necessary such changes as linking funding to training people with skills that businesses need, and for the system to be simplified and made more consistent between the states, including the level of subsidy for each course.

As well, funding transparency and performance monitoring needs to be improved, and there is a need to "better co-ordinate the subsidies, loans and other sources of funding, based on principles of return on investment, to make the most the support that is being provided''.

"By law, the Commonwealth must hand over to the states and territories $1.5 billion in untied funding every year – with no end date and no questions asked,'' he will say.

"The Commonwealth has no line of sight on how states use this funding. Where targets do exist, they are aspirational. If not met, there are no consequences.

"The agreement has also been ineffective in maintaining levels of investment. It's time to make some changes."

Fees for courses vary enormously between states, which often encourages a student to opt for university instead when they vocation course they wanted to do was more in demand. For example, a nursing diploma receives a $19,963 subsidy in Queensland but just $8218 in Victoria.

Union push

The push for change will be especially welcomed by the Business Council of Australia, which has been lamenting the lack of reform in skills as a productivity killer, long before the coronavirus outbreak.

On industrial relations, the government is looking at such changes as restoring the enterprise bargaining system and possibly further simplifying the award system.

On Sunday, Mr Morrison appealed to the union movement with which the government has developed a solid working relationship during the coronavirus crisis.

Mr Morrison ruled out a return to WorkChoices-style changes.

"I'm not interested in ideology. I'm not interested in all those other things. I'm just interested in getting Australians back into jobs,'' he said.

"Any premier, any chief minister, any union leader, any business, any business leader, anyone who wants to work with me to create jobs, we've got a partnership.

"And that's the way I'm going to proceed, whether it's on workplace relations, industrial relations, whether it's on skills development, whether it's how we get finance to businesses, whether it's how we access markets, whether it's how we deliver assistance.''

'Invest and employ'

While Tuesday's speech will focus on skills and industrial relations, Mr Morrison will also keep alive the prospect of tax changes to boost business.

The two main options are cutting the company tax rate, which is expensive and risks another debilitating fight with Labor, or introducing an investment allowance, a policy Labor took to the last election.

Mr Morrison said the taxes businesses pay must "encourage them to invest and employ''.

It is understood the government is leaning towards an investment allowance, which offers accelerated write-offs for the purchase of eligible assets.

Deregulation, or red tape reduction, will be another key feature, as will an intention to maintain current low gas prices on the eastern seaboard to benefit households, manufacturers and electricity generation.

Mr Morrison will say that the country is facing its most challenging environment ever, outside of wartime and that "the overwhelming priority of this reset will be to win the battle for jobs''.

"It is true that in the short term, demand stimulus by government can boost your economy. And that is why we have supported this as an emergency response. But it can only be temporary,'' he will say.