The Federal Budget has taken some positive steps towards making Australia more globally competitive and the Business Council calls on the Government to use this momentum to go further by improving investment fundamentals to lift productivity.
Productivity is ultimately the most critical economic factor in the long-term and the only way to lift living standards and raise wages without adding to inflation.
The BCA is concerned the Government has not set adequate fiscal guardrails on Budget spending, with $20 billion in extra spending measures frontloaded over the next two years and the bottom line deteriorating significantly after this year’s surplus, with both increasing the risk of higher inflation.
Business Council of Australia Chief Executive Bran Black said measures to increase investment, incentives for faster approvals, trade simplification, and investment tax credits were welcome.
“There are some helpful wins for business in this Budget, with BCA recommendations accepted including a new single front door to fast-track investment, a strong focus on skills and production tax credits for hydrogen and critical minerals projects,” Mr Black said.
Mr Black said the Future Made in Australia Act measures reflected the balanced intent of the Government to craft an Australian response to the US Inflation Reduction Act, as called for by the BCA.
“For this ambition to make a long-term difference, we also need serious reform of our tax system, significant productivity and investment driving measures, and regulatory and planning reform-all of which will make Australians better off in the long-term.”
Mr Black said the BCA was pleased to see the Budget back in surplus, with a forecast $9.3b surplus for 2023-24, however, future spending was delaying much needed fiscal repair.
“Tonight’s surplus has been driven by near record company tax collections of $145 billion, showing the national value of successful Australian businesses.
“Bill relief is always welcome for low-income households struggling with the cost-of-living, and energy rebates and rental assistance to those groups are warranted, however, we remain concerned about the potential inflationary impact of a catch-all approach.
“If fiscal policy is too expansive and wage increases are not linked to productivity gains, there is a risk inflation will stay higher for longer and potentially impact the Reserve Bank’s ability to lower interest rates.”
The following quotes are attributed to BCA Chief Executive Bran Black.
Future Made in Australia
“We called for an Australian response to the US Inflation Reduction Act, and a targeted investment allowance to support the net zero transition, which we have secured here.
“And it’s critical we see greater consultation with business to get this huge investment push right, so all Australians can have confidence in a transparent, independent and expert-led process for selecting projects.
“We need to focus on ‘goldilocks’ investments where taxpayer funds spark further investment by the private sector into industries that are commercially viable and where we know there is a natural competitive advantage.
“We called for targeted tax incentives, and we welcome the production tax credits for critical minerals and green hydrogen.
“We welcome the co-ordinated response to net zero through the Net Zero Economy Authority, which is just the kind of coordination we have called for to support lower emissions across the economy.
“This is also underpinned by the Future Gas Strategy, which adopted our BCA policy proposal, and highlights the vital role gas must play in the energy transition.”
Economic fundamentals
“We must focus on getting the investment fundamentals right, given that increasing productivity is the best way to address the challenges we face.
“Addressing the basics like tax, planning, regulation and industrial relations will help with the cost-of-living challenges and inflation by drawing in more business investment to drive productivity and increase real wages.”
Investment and planning
“There are positive signs the Government is working to make investing in Australia a bit easier and cut some red tape, including establishing a ‘front door’ to streamline investment, improvements to FIRB, removal of almost 500 nuisance tariffs, and trade simplification measures.
“Every step counts, and we will need to do more to become more competitive, to attract investment and drive productivity to increase real wages.”
Skills, Education, Research and Development
“The Government’s commitment to reforming Australia’s skills system is welcomed by business.
“We are also pleased with the investments in growing the construction workforce, which is needed to ensure housing supply nationally can increase, including 20,000 additional fee-free TAFE places for these workers.
“The Skilling of the Clean Energy Workforce is also a welcome initiative and will help provide a pipeline for emerging sectors where there are clear workforce shortages that need to be met.
“The Business Council has long called for structural reform in the skills sector to meet our future workforce needs and we have played an active role in shaping the Australian Universities Accord.
“We welcome the Government’s commitment to review research and development, as this sector is key to unlocking a prosperous future.
“The Government’s limitations on overseas student numbers need to be carefully calibrated through a consultation process with stakeholders to ensure Australia can continue to be a world-leading education destination.”
Support for women in the workforce
“We want to support more women to participate in the workforce and welcome funding to incentivise more women into vocational roles.
“The BCA strongly supports superannuation being paid on Commonwealth Paid Parental Leave, which will help reduce superannuation income inequality and reduce barriers for women in the workforce.”
