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2007/2008 Australian budget - Business reaction

11 May, 2007

NSW’s largest business organisation NSW Business Chamber said the 2007/08 Budget must be assessed against its work at improving economic capacity.

It's reactions so far:

- Budgetary position is strong with elimination of net debt, low unemployment and strong growth in company tax

- Budget focuses on improving Australia’s economic capacity

- Business does not believe election largesse will add to inflationary pressures

“This Budget must be assessed against its work at removing economic blockages by improving workforce participation, investing in economic infrastructure and strengthening the nation’s skills and education base”, said Kevin MacDonald CEO of NSW Business Chamber.

“This is a Budget focused on removing capacity constraints and improving the economic capacity of Australia.

“We are at a historic juncture, net debt has been eliminated, employment is at record highs, company and resource taxation is strong and the deficit is long gone. 

“This is a Budget that should create a platform of growth for Australia.

“Australia is now a trillion dollar economy and the size of the Government surplus no longer represents the main game or the primary objective of Government economic policy. Whilst budgets in most OECD nations primarily focus on trying to balance the books, Australia is now focusing on improving and investing in the longer term economic capacity of Australia.

“Business welcomes such initiatives such as the establishment of a Higher Education Endowment Fund, $549 million in additional payments for apprentices, additional investments in road and rail infrastructure and an increase of 5,000 in the skilled migration intake.

“Changed compliance initiatives for SMEs in relation to GST and PAYG are welcome as is the $40 million for the ATO to assist SMEs in establishing their record systems.

“Lifting workforce participation is essential if we are to lift Australia’s economic performance once again. Encouraging and supporting parents to enter and return to the workforce through improved access to child care, providing additional training, lifting skilled migration and providing the right tax incentives to families are all critical in helping increase the pool of workers available to Australian businesses. 

MacDonald said he did not believe the PAYE tax cuts would create inflationary pressures.

“The surplus remains at 1% of GDP, so for all intents and purposes, the budgetary position of the Commonwealth has not changed. We are seeing “bracket creep” returned – and given that we have seen major investments in education, skills and in road and rail infrastructure, I see no reason why these cuts should not have been given.

“There is some election year largesse – but it has not been done at the expense of the key economic fundamentals. Given that net debt has been eliminated and that taxation revenue from company and resources taxation remains strong, the Government can afford the initiatives and tax cuts outlined tonight.

NSW Business Chamber has nearly 30,000 members throughout NSW and the ACT and is affiliated with over 110 Chambers of Commerce throughout NSW.

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