Reform tax, drive productivity to protect standard of living
24 Jan 2024|
This year’s Budget must deliver the Stage 3 tax cuts, end the spending blowouts, and commit to productivity-enhancing reforms, the Australian Chamber of Commerce and Industry recommends in its pre-Budget submission.
“It is essential that the government fulfil its commitment to deliver the stage 3 tax cuts in full. This is the final phase of a modest reform package that benefits all taxpayers and pressure to make any last-minute changes must be resisted,” ACCI chief executive officer Andrew McKellar said.
“The currently projected return to structural deficit requires sound fiscal management to reduce spending and return the Budget to a more sustainable path.”
Australia’s largest and most representative business network has called on the government to address the spending blowout problem in order to forestall future tax increases.
Government spending is surging upwards at an unsustainable level, with the recent MYEFO forecasts showing it rising from 24.5 per cent of GDP in 2022-23 to 25.7 per cent in 2023-24 then 26 per cent in 2024-25.
The Budget is an opportunity to revive Australia’s declining productivity which continues to impede the nation’s economic outlook.
“With productivity growth waning, there needs to be a concerted effort to put in place the conditions for strong, sustainable, productivity growth,” Mr McKellar said.
“Through serious tax reform and focusing on productivity, the government can work to ensure Australia maintains the standard living the community expects.
“There needs to be a concerted effort to put in place the conditions for strong, sustainable productivity growth. We need reforms that will give the structure, flexibility and entrepreneurial culture to create the dynamism, resilience and competitiveness needed for businesses to thrive.
“This is particularly important when the government’s industrial relations laws will put even more pressure on sluggish productivity.”
Other initiatives called for in ACCI’s pre-Budget submission for 2024-25 include:
- Increase the instant asset write-off from $20,000 to $30,000 and make it available to small and medium-sized businesses with up to $50 million turnover.
- Prioritise only those infrastructure projects shown to have a fully costed business case by Infrastructure Australia.
- Lift R&D investment to 2.5 per cent of GDP by 2026 through more tax incentives and other support.
- Make small and medium business energy efficiency incentives permanent and expand eligibility.
- Substantial and long-term funding increase for vocational education and training.
- Increase apprenticeship and traineeship wage subsidies to 30 per cent across the first two years.
- Maintain the permanent skilled migration cap at 190,000.
- Greater investment in cyber-security awareness and training.