According to Australian Industry Group, the 2013-14 Budget confirms industry concerns about a slowing economy but risks being too optimistic about Australia’s growth prospects, our terms of trade, corporate tax receipts and the recovery of housing construction.
"The Budget fails to introduce much-needed new measures to boost investment, innovation, competitiveness and productivity," said Ai Group Chief Executive Innes Willox.
In a statement released after the Budget was announced last night, Wilcox said: "The extent of the anticipated cumulative deficits over the next three years, amounting to $48 billion, is sobering news.
"This is a turnaround, in only six months, of close to $55 billion in forecast budget bottom lines. Even more sobering is the prospect that further revisions are in store. Economic reality has bitten.
"Unfortunately, we risk a repeat of history. The reality of the slowing economy and the prospect of further falls in the terms of trade are not adequately recognised in the budget forecasts.
"As a result, the revenue outlook is considerably less promising than the Budget suggests and hard calls on spending will have to be made before the Budget can be brought back to surplus over the forward estimates.
"The opportunity to lift our competitiveness by committing to reduce the company tax rate has been missed and will need to be addressed in the near future.
"An important positive is that the government is not seeking to further slow the economy in the 2013-14 year with across-the-board corporate tax increases and indiscriminate spending cuts. Difficult cuts in expenditure will be needed even when the underlying economy picks up.
"There are some key positive measures in the budget which will assist industry to work through the current economic conditions.
"These include:
- Important infrastructure investments that will lift capacity and productivity;
- Increasing the flexibility of apprenticeships and aligning the apprenticeship system more closely to industry needs;
- The Skills Connect initiative aimed at helping businesses meet their training needs;
- Maintaining the immigration intake at 190,000; and
- Bringing forward expenditure under the Clean Technology Investment Fund to help businesses invest in energy efficiency and low-emissions processes.
"However, we are very concerned that some measures will increase the costs of doing business.
"These include:
- More medium-sized businesses will be required to make more frequent and earlier tax payments increasing their regulatory burdens and compliance costs and detracting from their cash flow;
- Uncertainties over a large number of new tax integrity measures that will need careful working through in very close consultation with industry; and
- Increases in a variety of charges on business relating to 457-Visa applications and import processing.
"While this Budget does little immediate harm, it doesn’t provide sufficient confidence in the medium-term path back to surplus and leaves fundamental economic questions unanswered," Willox added.