NSW Business Chamber responds to the latest Fed Budget
The first Swan Budget must be assessed against its ability to put downward pressure on inflation, lift economic capacity through investments in skills and infrastructure and demonstrate progress in improving the performance of the Australian Federation. Source: NSW Business Chamber.
Inflation and the Budget
“There are inflationary pressures in the Australian economy and the Government’s commitment to reining in expenditure is a welcome improvement over the final Costello budgets. However, it should be noted that the new Government did limit its options through its decision to embrace the Howard/Costello tax cuts of October 2007.
“The Prime Minister’s determination to keep his election commitments in their entirety is admirable. However, only time will tell if the Reserve Bank takes back tonight’s tax cuts through further increases in official interest rates. If it does, then the Prime Minister’s commitment of “keeping faith” will only have been met on paper and not in reality.
Targeted Family Payments and Workforce Participation
MacDonald said the NSW Business Chamber has argued in its pre-budget submission the need to better target family payments as a means of increasing workforce participation.
“The Government’s decision to means test the Part B Family payment and the Baby Bonus is the right decision. I firmly believe we need to find better ways of optimising the family payment and tax mix so that it encourages and rewards those who contribute in the workforce.
“Business looks forward to working with the Government and participating in the upcoming Productivity Commission debate over how we can create a workable and affordable government funded national maternity, paternity and parental leave entitlement.
MacDonald said the establishment of a new Building Australia fund was a further step in the consolidation of the nation’s fiscal position.
“Swan is building on the endowments of Costello and we are seeing the prosperity of today locked away for the nation’s use in the long term. The Building Australia Fund, the Education Investment Fund and the Health and Hospital Fund join the Future Fund as the fiscal building blocks for the long term.
“NSW Business Chamber had long supported the appointment of a Federal Minister for Infrastructure and the commencement of Infrastructure Australia. The establishment of these funds will make a major contribution to removing the impediments to grow both in our major cities and regional areas.
“Importantly, significant investments in areas of infrastructure blockages will take pressure off inflation. Australia is running at capacity and we have to create additional capacity on our roads, ports, railways and in areas of digital infrastructure.
“We have to change the nature of the debate over tax reform in Australia. Tax reform is NOT handing back some of the growth in revenues that occurs every year, nor is it slicing and dicing the pie to create new winners and losers. If that’s the case expect more ‘alcopop’ type decisions.
“Real tax reforms will look at the totality of taxation receipts in Australia across all levels of Government. State and Local Governments are littered with nuisance taxes that do little to inspire business confidence. The first place to start is payroll tax which impacts on the cost of Australian goods and services and the ability of Australia to compete internationally.
“Reforming the tax system and fixing the federation has to include reforming the taxation arrangements between the Commonwealth and the States.
“Real tax reform will also make a new national emissions trading scheme an integral part of the national economy rather than an “add on” to the existing tax base.
MacDonald said it had to be acknowledged that the economic circumstances facing Australia are the most challenging and dynamic in a decade.
“These are choppy economic waters – the benefits of the resources are being tempered by volatile equity and international markets, continued drought, a higher than normal currency and rising interest rates”.
NSW Business Chamber has over 30,000 members and is affiliated with 110 chambers of commerce.
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