The Malcolm Turnbull government will be presenting its first budget in early May. The budget has aroused big interest as expectations on tax reforms are up. However, the industry has cautioned the government against any hike in tax or cut in government spending.
The Australian Industry Group warned that any budgetary exercise that would hand down excessive spending cuts would be costly for the economy. Presenting the 2016/17 budget proposals, the Ai Group said business conditions have improved in the past six months. At the same time, many downside risks also increased, reports AAP.
“The budget should not shy away from making headway into what is clearly an unsustainable fiscal trajectory, but the timing of the impacts should recognise the tentative nature of the rebuilding under way in areas of the economy outside the mining and energy resource sectors,” CEO Innes Willox said.
He said excessive tightening of fiscal policy will shake the business confidence further and affect the demand. According to Willox, the economy is reeling under pressures of low productivity, entrenched demographic trends and volatile commodity prices.
The business group urged the government to slash corporate tax rate. This will boost investment and productivity. Increased wages will enhance living standards. The group wanted inefficient state taxes to be scrapped for augmenting investment and employment.
The Ai said broader investment is needed in skills, education and infrastructure. It also called for a migration program that takes in more skilled workers. Willox also called for raising additional revenue for the emissions reduction fund. He said defence investment needs to be restructured for involving more Australian businesses in it.
Meanwhile, a row erupted over advancing the budget day to the first week of May. Labor called it a sign of desperation by the Turnbull government, added yet another AAP report. Some reports said an earlier than May 10 date was proposed. But that was not discussed in the cabinet.
“It would be a sign of policy on the run and far from the methodical, collective government and sensible approach that (Prime Minister) Malcolm Turnbull promised,” shadow treasurer Chris Bowen told Sky News. However, Finance Minister Mathias Cormann clarified the budget would be presented as scheduled. It will be on the second Tuesday of May.