"Three months ago industry would have clearly welcomed this budget as not perfect but getting strong points for trying. However, the global oil shock has fundamentally shifted our economic conditions and fortunes and it is not clear that the budget has done enough to prepare Australia for what businesses across the board are predicting is going to be a very tough year ahead," said Innes Willox, chief executive of the national employer association, Australian Industry Group.
"While there is much to like about individual measures on deregulation and developing Australia as a functioning single economic market, the budget was a chance to start on significant structural reform to make Australia more productive, competitive and prosperous and to better reward Australians for their hard work, risk and effort. The budget has failed to grasp the nettle on the structural reform we need.
"Treasury's economic forecasts make it clear that there is little the Government can be certain of in the year ahead. Business investment remains poor and hopes for growth rely on a nascent data centre industry and renewable energy projects where progress has been historically slow.
"A projected significant decline in our national growth and household spending, along with increased inflation, demonstrate that tougher times are ahead. Industry knows this. The budget papers implicitly recognise this. The question is whether the Government has done enough across the board to help businesses navigate this uncertainty. At first glance, it could have done more with reforms to boost productivity and confidence, as well as giving greater certainty around the future of fuel excise relief.
"The tax measures for individuals are highly targeted but will do little to address the bracket creep that is bedevilling the vast bulk of income earners as wage growth and inflation reduces their spending power. The negative gearing changes will do nothing to increase housing supply. Australia already ranked towards the top in levying income and corporate taxes and we now will have the highest capital gains taxes in the developed world.
"Nothing meaningful has been done to change our tax mix. Rather than simplifying our tax system the capital gains tax system will become more complex and undoubtedly act as a barrier to investment. As a package, this is disappointing. Along with changes to trusts, this is a lot of effort for approximately $1.6 billion in revenue per year for the next five years.
"We strongly welcome many individual measures from the economic roundtable that the budget locks into place – especially the regulatory reform to reduce red tape, including the 'tell us once' approach to the Federal Government; the package to reduce the compliance burden on businesses across a wide range of areas including climate reporting, financial disclosure reporting, food standards, household electrical goods and waste and recycled products; the expansion of the trusted trader scheme; and a national approach to worker screenings across the care sector.
"A wide range of measures to improve productivity in the housing sector are also welcomed, importantly including cutting state-based variations in the National Construction Code. The prospect of simplifying the payment of payroll tax to a single form, while not seeing a single payroll tax rate across the country, should also reduce the compliance burden for national businesses. A recognition of prior learning for the TAFE to university pathway will also be welcomed. The Government deserves recognition for beginning to execute the recommendations of the review into our research and development tax incentive scheme but more work needs to be done to support innovation across the economy.
"The recognition of the need for skilled migration to remain over 70 per cent of the migration program is also welcome. A revision of the points test to evaluate applicants is positive but industry will need to be clearly consulted on its implementation.
"The removal of apprenticeship incentives from larger employers is a disappointing change. Apprenticeship and traineeship commencements have already been in structural decline for several years and this decision will further entrench debilitating skills shortages that slow projects, raise costs and place a further brake on productivity," Mr Willox said.
