"This year's budget is being delivered at a time of unparalleled challenge. Australia faces a global oil shock, unprecedented compute demand, a stressed energy and electricity system, elevated global and regional uncertainty, rising inflation, the Reserve Bank in the midst of an interest rate hike cycle and an increasingly unproductive and uncompetitive economy on the cusp of recession," said Innes Willox, Chief Executive of the national employer association, Australian Industry Group.
"Coming at this time, the budget will make decisive choices about the country and economy we aspire to be.
"Will we go down the path towards a welfare state increasingly reliant on government supports and handouts that drive up debt and blunt our prospects for economic dynamism and relevance?
"Or will we look to turn the ship around to truly reform our tax and regulatory systems, address spending and focus on growth and productivity to allow for sustainable wage increases, greater business investment and rewards for effort, risk and achievement?
"Australian industry from manufacturing to defence to construction to care and beyond, as well as the businesses that supply into the key building blocks of our economy, hope the budget takes the second path.
"The risks to our economy, laid bare by the RBA last week, will only grow in coming months. Programs to support industry and households – introduced on a temporary basis over recent weeks – need to be fashioned into durable policy frameworks.
"This must be augmented with regulatory reform that gives industry flexibility: to respond to the immediate pressures of the multi-headed crisis, then invest for productivity as we move from it. Nearly a year on from the Treasurer's Economic Reform Roundtable, it is now or never for productivity-enhancing regulatory reform.
"These goals need to be achieved in the context of a budget already struggling with major structural pressures. Surging spending, structural deficits and an insecure tax base give us less room to move in the face of the oil shock and energy crisis.
"Recent announcements on spending control are welcome, but more must be delivered on budget night. Without across-the-board fiscal discipline we will face an ever-increasing tax burden, which is already on track to break through the 30% of GDP barrier.
"Genuine company, household and structural tax reform need to be at the heart of the budget and must focus on building a productive and resilient economy. Piecemeal changes that simply raise revenue and plug holes in the budget bucket are not genuine reform. Nor will small and tokenistic tax cut handouts to households or businesses fix the dysfunctions of the tax system.
"The key tax reform test – for income, company, capital gains or other taxes being considered – is whether changes deliver a more efficient, equitable and simple tax system.
"There is little room for error between the short-term pressures of the energy crisis and our long-term need for structural repair to compete in a world that is changing at warp speed. The federal budget must find resources for the former while laying the groundwork for the latter," Mr Willox said.
