While fiscally prudent, this year's Federal Budget unfortunately lacks the urgency and imagination required to power the Australian economy through a period of anaemic growth, Innes Willox, Chief Executive of the national employer association, Ai Group, said tonight.
"It offers little to kickstart the structural reforms needed to boost productivity, investment, innovation, job creation and sustainable real incomes growth," Mr Willox said.
"The Government has used its one-off surplus, driven by elevated commodity prices, the strong labour market and fiscal drag, to pay off debt and reduce future interest payments. It has prioritised household-based subsidies and handouts rather than focusing on productivity improvements to lift the economy out of its long-term productivity malaise.
"While they have been designed to lessen the direct inflationary impact, these Band-Aids and sugar hits also fail to address the underlying causes of the problems they are trying to solve around housing shortages and underlying energy costs.
"The announcements around improving Australia's skills base are the major positive, including the prospect of $3.7 billion in additional funding for vocational education and training, assuming a National Skills Agreement can be struck. This will be essential to building a TAFE system fit for purpose to meet the demand for additional TAFE places the Government hopes to create. The focus on increasing the basic language, literacy and numeracy skills that Australian industry reports is holding them back is also welcome.
"The focus on skilled migration remaining the core of our national migration program of 190,000 migration places is also welcome as industry seeks to fill growing skills gaps across our economy.
"Among the disappointments for business is the lack of focus on improving productivity, as well as relative lack of attention given to the needs of business itself. The Government’s much-touted $15 billion National Reconstruction Fund receives seed funding of only $550 million this year, almost stalling it at the starting line. This represents 3.6 per cent of the promised total NRF funding.
"A new Industry Growth Program is a cut-down, half-funded, government-run version of the existing Entrepreneurs' Program, which has provided support for smaller businesses to strategically plan for growth and expansion. Government-run programs providing direct support for business rarely achieve their objectives.
"A significant cut of $61 million to the Export Market Development Grant scheme is deeply unfortunate given that successful smaller Australian businesses are increasingly seeking new export markets to drive their expansion and growth. A $150 million increased take from the bio-security levy on businesses trading in agricultural, fisheries or forestry product is another hit, especially for food processing industries.
"At a macro-level, there is a welcome improvement in the gross debt and interest repayment position and improved revenue projections which provides the Government with more head room in future budgets.
"The Government assumes a further compression of wages, meaning over time, there will be less incentive for workers to develop their skills.
"The Budget includes a lot of measures with insufficient explanation or detail. Among these are what the Government intends to do with $2 billion it has allocated in the future to 'buying hydrogen contracts' and the $75 million it has allocated for a National Artificial Intelligence Centre and associated programs.
"Overall, the Budget does not seek to cure the fundamental problems that Australian businesses and the economy face. While it reduces debt, the focus on short-term household relief will not provide the productivity growth we need now and the jobs we need for the future," Mr Willox said.
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