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No time to relax on budget repair
01 Feb 2019 | Archive
“With business sentiment wavering amid global economic uncertainty, now is not the time for the Government to relax its effort on budget repair,” James Pearson, CEO of Australia’s largest and most representative business network, the Australian Chamber of Commerce and Industry, said today, following the release of the Australian Chamber’s Pre Budget Submission .
“While the Australian economy has performed well across a range of measures, including GDP and employment growth over the past year, a number of challenges remain.
“Weaker investment and private consumption growth, as well as slowing Chinese growth impacting on demand for Australia’s exports, may weigh heavily on economic growth in 2019.
“With an election looming both Government and Opposition will be tempted to increase spending, but now is not the time to loosen the reins.
“The Budget is forecast to be in surplus in 2019/20, but there is still a way to go to reduce Government debt to more comfortable levels. We encourage the Government to maintain its focus on budget repair.
“The key priority should be to put in place a plan to reduce net public debt and drive economic growth over the medium to longer term.
“The Government’s announced goal this week to eliminate public debt over ten years is a good start. Businesses would like to see both major parties set out a plan for debt reduction.
“Any new government initiatives should aim to increase productivity and improve our international competitiveness, so that businesses can flourish and create wealth, opportunities and jobs. And every dollar, particularly in the big spending, complex areas of government, should be spent wisely.”
On the back of the Australian Chamber’s pre-budget submission, which makes a number of recommendations across a range of government activities, Mr Pearson highlighted four issues:
- Reduce Government spending
- Improve skills development and help more young people into work
- Capitalise on free-trade agreements
- Reduce ASIC fees for small business
Reduce Government Spending
“The Government’s debt situation has improved over the past year on the back of increased revenue from stronger than expected collections from individual and company tax, but it’s not clear how long the good fortune will last,” Mr Pearson, said.
“Budget repair should not rely on temporary fluctuations in revenue that are outside Government’s control.
“We need a clear plan to reduce net public debt over the medium to longer term. This should include a cap on government spending below 24.7% of GDP — the average over the past 30 years.”
Improve skills development and help more young people into work
Additional kick-start incentives for apprenticeships are a proven way to encourage businesses to take on young workers.
“Using the funds already budgeted in the Skilling Australians Fund, an additional apprenticeship incentive should operate throughout 2019 and include traineeships currently not eligible, such as Certificate IIs in small businesses, part-time and, in some circumstances, existing employee traineeships,” Mr Pearson said.
“This will make it easier for more young Australians to join the workforce and build a meaningful career.
“Businesses who want to train and employ young Australians would like to see the Government establish a program to assist each industry to identify the most appropriate pre-apprenticeship and school based pathways. This will deliver the best outcomes for students and job-seekers and maximise the return on investment in vocational training and apprenticeships.”
Capitalise on free-trade agreements
“It’s important that more Australian businesses are internationally engaged. We back the Government’s efforts to boost trade through bilateral and multilateral agreements. We would like to see those agreements rationalised and made easier to use, so Australian businesses can take full advantage of them,” Mr Pearson said.
“We welcome investment by the Government in recent years to provide programs to help Australian businesses better understand trade agreements.
“We encourage the Government to do more to improve the accessibility of free trade agreements to businesses. It can make a big difference for small business who are often daunted by the challenges of selling into overseas markets, while facing growing competition from overseas companies in the Australian market.”
Reduce ASIC Fees for Small Business
“Small business is flavour of the month amongst many politicians, and we need to see the rhetoric backed up with practical support,” Mr Pearson said.
“It’s not just red tape, but also the cost of government fees and charges that can hinder small businesses. Charges should only reasonably reflect the costs of delivering services and the benefit offered in return.
“A recent review revealed that the Australian Securities and Investment Commission’s (ASIC) regulatory fees and charges are well in excess of cost recovery.
“ASIC’s fees impact unfairly on small business, and fail to satisfy basic principles of equity.
“Small businesses, who make up many of the employers we represent, would be relieved to see ASIC halve the registration fee and annual renewal fee for businesses with an annual turnover of less than $5 million.”
The Australian Chamber is Australia’s largest network of employers, speaking for over 300,000 businesses employing millions of Australians in every sector of the economy.