Statement by Innes Willox, Chief Executive of the national employer association, Ai Group
Today's federal budget risks tinkering at the edges of Australia's structural economic challenges at a time when the domestic and global economies are under significant stress.
While there are welcome commitments around childcare, parental leave, housing, migration, the energy transition, gas supply monitoring and trade facilitation, the budget's contribution to the critical productivity agenda is limited to positive initiatives that, only over time, will boost our workforce and trades base.
The Government's acknowledgement that low productivity has become entrenched calls for a bolder and broader policy agenda. The current Productivity Commission five-yearly review will provide the platform for a much more substantial and sorely needed policy response in the budget next May.
Today's budget lays bare our immediate challenges – declining growth, higher inflation, rising unemployment, lower employment growth, stagnant real incomes, declining business investment, falling household consumption, dramatically escalating electricity and gas prices and a deteriorating international environment. The likelihood is that we will be facing these challenges at a time of falling commodity export prices.
The question is whether the budget does enough to fortify the economy against these structural challenges, by boosting productivity, curtailing spending and supporting business and household confidence. More could have been done to propel the economy through these challenging times.
Adding to our challenges, the Government's proposed workplace relations reforms will do little to lift productivity which is the foundation for sustainable foundation for real incomes growth, employment generation and business confidence.
While initial funding has been allocated for a National Reconstruction Fund, its role and purpose is still to be determined. Industry looks forward to participating in consultations on its establishment. However, cuts to a range of industry development programs including the successful Entrepreneurs Programme is disappointing.
The budget starts the process of trimming the fiscal mess it confronted. The scale of the challenge is highlighted by growing underlying cash deficits as a share of GDP (despite a higher tax burden) and escalating debt levels. It is clear more needs to be done. The foreshadowed review of the NDIS is an important first step.
It is also increasingly clear that there is an urgent need for a major remodelling of Australia's taxation arrangements to contribute to fiscal sustainability and productivity improvements. This cannot be ignored.
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