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Govt delivers smart budget that hits all the right targets :Ai

17 May, 2007

"The Federal Government has set out to prove the adage that good policy can be good politics by delivering a smart budget that hits the right targets," Ai Group Chief Executive Heather Ridout has said.

"It includes a range of targeted measures that address current priorities and introduces important initiatives with the future firmly in mind. The innovative and comprehensive Realising our Potential package will contribute to social and nation-building objectives. Together with the infrastructure initiatives, these measures will contribute over time to lifting the speed limit of the economy by enhancing Australia's productive capacity.

"The carefully-targeted nature of the measures and the overall exercise of fiscal discipline will ensure that concerns of inflationary and interest rate pressures can be put to one side.

"The budget aligns the politically resonant with key economic objectives powered by the enormous fiscal surplus that has enabled broad-based spending together with tax relief," Ridout said.

"The alignment of policy and politics is evident in:

- Tax cuts that will stimulate workforce participation and saving by lowering effective marginal tax rates.
- Investments in improving education and training including the more attractive incentives for apprentices, new Australian Technical Colleges, greater emphasis on competency-based progressions in the training of apprentices and the innovative changes to higher education, the well-targeted school-based initiatives will improve the education and training systems add to productivity over time.
 - An improved Child Care Rebate and increased Child Care Benefits which will also stimulate workforce participation.
- Additional, capacity-expanding investment in transport infrastructure through far-reaching spending on road and rail networks
- Increased rebates for household expenditure on solar panels to assist in addressing climate change
- Defence initiatives including the emphasis on recruitment and retention.

A number of the budget measures, notably the investments in education and training, the income tax cuts, the greater investment in infrastructure, the industry policy measures and the benefit paid through the superannuation co-contribution scheme pick up on proposals put forward in Ai Group submissions.

 "The industry policy measures detailed in the budget, and which were contained in last week's Industry Statement, will be well received by industry.  The relaxation of eligibility for the 175 percent component of the Research and Development Tax Concession; the new Productivity Centres around the country to evaluate business needs and opportunities; and the Global Opportunities program are all sensible and valuable initiatives.

"The increase in the skilled migration intake will help alleviate skill shortages which remain a chronic drag on business competitiveness. The initiatives in higher education, VET and schools will assist in improving the performance of our education system over the medium to longer terms.

"The Government will clearly be planning further announcements in the lead up to the election and business will be looking for more action in a number of areas such as export support; corporate tax reform; innovation and incentives for businesses to adopt energy and water efficiency measures."

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