A Budget of Broken Promises to Business
In analysing tonight’s Federal Budget the Chamber of Commerce and Industry Queensland (CCIQ) is supportive of the commitment to return Australia’s budget position to one of surplus.
The measures announced as part of the Federal Budget are consistent with CCIQ’s call to rein in Government expenditure. We are seeing similar moves across the developed economies of the world and Australia should be no different.
However, some of the announced saving measures will ultimately undermine economic growth in Australia in future years.
The scrapping of the planned 1 per cent company tax cut is profoundly disappointing and is not outweighed by the benefit of the loss carry back scheme for small business and the already previously announced accelerated instant asset write off.
It is a fine balancing act between cutting those spending lines which are not needed or can alternatively be supplied by the private sector and cutting measures that assist business and the national economy.
The secret to achieving a budget surplus as well as supporting the economy is for government to cut back on waste and duplication, and spend taxes more wisely.
Unfortunately a failure to prudently rein in spending when the opportunity presented itself in prior budgets now leaves fiscal policy awkwardly out of step. A surplus for a surplus’ sake is bad for the economy if conditions don’t permit.
There can be no doubt that the difficult position facing the Federal Government is not only driven by the expenditure side but also by falling revenue caused from an underperforming national economy.
For this reason the Federal Budget will be seen as an example of policy inconsistency on the part of the Federal Government in that other initiatives currently being rolled out will significantly hurt the economy and accordingly the budget in future years.
Policies such as the carbon tax will have a net dead weight on our economy from 1 July, as will the superannuation increase which despite what the Federal Government proclaims is funded by the mainstream business community.
CCIQ President David Goodwin said, “The business community will hurt from these measures, the economy will hurt from these measures and ultimately the Federal Budget’s bottom line will hurt from these measures.”
“We have a headline surplus but with significant fears we are pushing out the burden to future budgets whilst at the same time breaking more promises to business,” said Mr Goodwin.