Business groups have warned the Prime Minister that next month’s budget needs to address the budget deficit and is critical for business confidence.
Following Tony Abbott’s speech at an Australian Chamber of Commerce and Industry lunch yesterday, John Osborn, director of economic and industry policy at ACCI, told SmartCompany “we cannot leave fixing the budget deficit on the never never”.
Abbott told the lunch despite a drop in revenue due to falling iron ore prices the government would deliver a deficit decline every year.
He said the government had been working to a plan “from the very beginning” which was working.
“We are steadily working our way through last year’s unfinished business while also pressing forward with new elements of our plan,” he said.
“Each year will bring us closer to a surplus – a surplus that means that debt will actually start to reduce rather than simply grow at a slower pace; a surplus that means the interest bill will start to reduce rather than grow every year.”
Abbott pointed to increased job growth in 2013 and a rise in new company registrations – most of which were small businesses – to the highest on record in 2014.
“More than anything else, this shows that Australian entrepreneurs know that the government in Canberra wants to work with business, rather than against it,” Abbott said.
Despite the failure of the government to implement much of last year’s budget, Abbott said it was part of a broader economic foundation upon which the coming budget will build.
“Besides budget repair, our plan includes reducing business costs, opening up opportunities through free trade agreements, cutting taxes and, of course, building vital infrastructure,” he says.
“Our goal is always to get taxes down; our constant objective is taxes that are lower, simpler and fairer.”
Abbott said jobs, small business and families will be the centerpiece of the Coalition government’s second budget.
“I want to stress: this year’s budget will be responsible, measured and fair,” he said.
Abbott said there will be no new spending in the budget that’s not offset against savings.
As an example, he confirmed the small business tax cut will be paid for by the abolition of Abbott’s unpopular paid parental leave scheme.
“I can confirm, though, that the budget will have measures to cut small businesses’ tax bills in ways that will stimulate investment, boost productivity, generate new jobs and make existing jobs more secure,” he said.
Osborn told SmartCompany the government’s budget had to bolster confidence.
“Business confidence is very weak and it has been for some time,” Osborn says.
“What we need is a pro growth budget to help restore business confidence, which includes lower tax rates, getting public spending under control and identifying a clear path for cutting the deficit.”
Osborn says to succeed with next month’s budget the government needs to identify a strong plan and clearly communicate it to the electorate, unlike the 2014 budget, which it has struggled to implement.
“The benefits of action are stronger economic growth and greater prosperity.”
Osborn says ACCI welcomes the small business tax cut but would like to see this applied to all small businesses not just incorporated ones.
“We would hope to see some practical measures like the reintroduction of the instant asset write-off with a threshold at $10,000. That accelerated depreciation will help give business the cash flow they need now to invest and should strengthen confidence,” he says.
“The Prime Minister has signalled a dull budget but that could risk a complacent budget. There’s no time to lose in getting public spending under control and ensuring the deep structural deficit at the heart of the budget is addressed.”