Bold reform is the answer to Budget deficit

Today’s announcement of a deficit not seen since wartime, coupled with rising unemployment, is a stark reminder of the economic and human cost of the COVID-19 pandemic and the need for bold economic reform.

Despite the highly uncertain outlook for the economy over the coming years, there are several actions the government can take now to limit the damage and provide strong foundations for recovery.

“Earlier this month, ACCI presented the Government with a suite of recommendations on policy initiatives for the 2020-21 Budget delivered in October,” ACCI CEO James Pearson said.

“The focus is on policies which can be implemented this financial year to create a more productive and competitive environment and accelerate Australia’s economic recovery.

“To build consumer confidence and stimulate economic growth, ACCI wants the Government to bring forward the personal income tax cuts that are already legislated. This will boost demand and provide much-needed help to the many small, unincorporated businesses that are struggling with cash flow.

“The job now is to get community transmission of the virus under control and use every dollar of extra debt wisely, not just to save jobs today but to support measures that will encourage job creation in businesses able to stand on their own feet as the stimulus packages are gradually withdrawn.

“That means implementing tax reform that has been in the too hard basket for too long. Payroll tax, which is nothing short of a tax on jobs, should be high on the to-do list for National Cabinet, and red tape that stops projects and industrial relations rules that make it too hard to manage the workforce should be in their sights, too.

“We need to maintain momentum, in a safe and controlled way, towards easing the restrictions that are so damaging to our economy; and we need to test the protocols and procedures that would allow international travel to restart in a staged and careful way, to deliver an economic boost from the movement of people including tourists and students.

“It’s important to remember that despite the grim economic news, Australia is in a better position at this stage than many other advanced economies and is the only one to have had its outlook upgraded by the International Monetary Fund. We must not waste that advantage.”