Federal budget should support strong post COVID recovery

“Tomorrow’s Federal Budget is an important opportunity for the Government to support the strong momentum of the post-COVID recovery and to assist in promoting gains towards full employment. The Budget is also an opportunity to lay the foundations for the uplift in business and infrastructure investment that is necessary to underpin a step-up in productivity growth and a return to sustainable rises in real incomes growth,” Innes Willox, Chief Executive of the national employer association Ai Group, said today.

“The immediate threat to the further recovery in the labour market is that current rises in the cost of living drag Australia into a spiral of rising nominal wages and higher inflation. This would, in turn see a faster and steeper increase in interest rates that would slow the pace of economic activity and constrain prices growth.

“To help avoid this and to fully encourage further gains in employment and the growth in household incomes this is generating, it is vital that any budgetary measures aimed at offsetting cost of living pressures are fully factored into wage outcomes. Whether in enterprise agreements, individual agreements or in the National Wage Case, continued moderation in wages growth will help prevent inflation becoming entrenched and permit further reductions in the rates of unemployment and underemployment.

“The budget should also support business investment and ensure that the current pipeline of infrastructure projects can be delivered to schedule. With the availability of skilled labour the number one issue facing businesses, including those involved in delivering infrastructure projects, it is vital that the Budget delivers a step-up in efforts to lift the skills of the existing workforce combined with a rapid increase in skilled migration.

“The immediate expensing of investments in capital equipment that has been available in recent years has helped lift investment plans and its continuation would be a major boost to these plans coming to fruition,” Mr Willox said.

Ai Group’s pre-budget submission of 4 February can be accessed here

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