Budget 2018 should be about more than tax & the next election

Australia’s leading business voice, the Australian Chamber of Commerce and Industry, says that employers will look beyond the headlines on tax when assessing next week’s Federal Budget.

“Tax cuts – including a more competitive tax rate for business and tax relief for income earners – are important to encourage investment and aspiration,”  Australian Chamber CEO, James Pearson, said.

“But the Budget is about managing the nation’s finances, not just paving the road to the next election.

“The budget must contain broader measures to make it easier to do business to ensure Australians have the jobs, living standards and opportunities to which they aspire over the long-term.”

On the back of the Australian Chamber’s pre-Budget submission (http://bit.ly/ACCI_prebudget), Mr Pearson highlighted three priorities for the Federal Budget to be handed down on Tuesday 8^th May 2018:

1. A wholesale review and reform of the tax and transfer system
2. Incentives for business to invest and a lower burden of tax for both households and business
3. Investment in infrastructure and skills

1. A wholesale review and reform of the tax and transfer system

“The best pathway to budget repair that meets business needs and community expectations is through wholesale review and reform of the tax and transfer system,” Mr Pearson said.

“This means reforming how government collects tax and how much it collects.

“Changes need to be made to the way government spends tax monies, to ensure they are being used wisely and are not wasted.

“Modest and fair spending restraint can be achieved through genuine efforts to cut waste and ensure that government programs are fit for purpose.

“Business and households have a right to know that the money they pay in tax is being spent effectively and on programs that do what they are supposed to do, on time and within budget, to encourage business and support those in need.

“We want the government to establish ‘external efficiency boards’ to deliver independent oversight of the big bureaucracies and publish online and in detail, exactly where and how they spend people’s money.”

2. Incentives for business to invest and a lower burden of tax for both households and business

These incentives include extending the instant asset write-down and offering tax relief for business and households.

“An instant asset write-down allows businesses to bring forward their tax deductions,” Mr Pearson said.

“It provides better cash flow – which frees up more money to be spent spend on investment assets and employees.

“The current scheme, which is valued by small businesses, needs to be extended, and the government should adopt the Opposition’s proposed enhancements to accelerated depreciation.

“The sound and fury of the debate over a phased introduction of business tax cuts over 10 years should not be allowed to obscure the fact that it will help Australian businesses, large and small, catch up with the pack in an increasingly competitive world.

“The government should stay the course.”

3. Investment in infrastructure and skills

In addition to allowing more rapid access to capital for investment in employment, the Chamber calls on the government to guarantee the Skilling Australians Fund for apprenticeships.

“Businesses are nothing without skilled staff,” Mr Pearson said.

“However, a full year after the announcement of the Fund, we head into this Budget with not a single partnership agreement signed with any State or Territory to implement projects that will grow apprenticeship numbers.  To add to the uncertainty, the levy has not yet been legislated to start collecting money for the Fund, and there is no certainty about migration numbers to generate the cash needed to fund the projects.”

“The government has to be serious about infrastructure development that benefits people and their work,” Mr Pearson said.

“This means greater investment into more liveable cities, to attract and retain talented people and allow them to get to and from work and home more easily, but just as importantly this investment needs to connect the major capitals with regional centres to bring them closer.

“Living outside a capital city should not be a barrier to opportunity for business or work, and that means sorting out issues such as our broadband network too.”