Written on the 11 February 2009
The Australian Industry Group (Ai Group) is among the business organisations which has been supportive of the Federal Government’s latest stimulus package. Ai Group Queensland Director Chris Rodwell, explains that the May budget provides an opportunity for further action
2009 is going to be a difficult and unpredictable year.
In recent days we have seen the Government respond to this exceptional level of uncertainty with another major stimulus package.
Ai Group sees the package as being simple and substantial. It will provide a big stimulus to help keep the economy moving.
“In particular, the $2.7 billion investment incentive will help sustain business investment and support jobs and productivity improvements.
The bonus payments will provide an immediate stimulus to household and consumer spending. This will bolster retail businesses and flow up production chains through manufacturing and services.
Aggressively targeting consumer spending is absolutely critical to our near term economic prospects.”
The big boost to spending on housing and education infrastructure is also welcome.
Given the depth of the current global economic and financial crisis more action will be required and we will be looking to the May federal budget for further initiatives.
Ahead of the budget, Ai Group presented a package of proposals to the government - managing through troubled and unpredictable times and emerging stronger.
It is an integrated set of measures designed to boost consumer and business spending; to support the jobs market; to develop workforce skills and business capabilities; and to upgrade Australia’s existing public infrastructure.
It is vital that the emphasis on navigating through the downturn does not detract from efforts to build longer-term capacity. Ai Group proposes a range of investments in the fundamental drivers of growth: innovation, new infrastructure, education and training, greenhouse gas abatement and export market development.
However, while a budget deficit is expected and indeed desirable in the current circumstances, the need to stimulate the economy should not serve as a reason to introduce or maintain inefficient programs.
Further interest Rate cuts are also vital in order to bolster the budgetary measures and support
consumer and business confidence. In this regard Ai Group urges the banks to fully pass on the cuts to all classes of borrowers including business.
Ai Group’s budget proposals include:
Stimulate consumer spending by bringing forward to July 2009 key components of the personal income tax cuts currently scheduled to take effect in 2010.
Introduce a tax refund for small and medium-sized businesses making losses in 2008-09 or 2009-10.
Introduce a new $2 Billion drive to renew public infrastructure to accelerate infrastructure repairs and upgrades by Commonwealth, State and Territory and local government departments and agencies.
Training in the Downturn
Selective boosts to training, education and the development of business capabilities including measures to retain the strength of the apprenticeship system.
Investing in Growth Drivers
Investment in a range of initiatives to build longer-term productivity and workforce participation by investing in innovation.
Core Investment, knowledge transfer, gap finance, private sector, benchmarking performance.
Ai Group has identified two important gaps in existing infrastructure plans. These gaps are in the areas of energy and the existing National Broadband Network (NBN) proposal.
Education and Training
In education and training Ai Group supports additional measures across a range of areas to underwrite sustained improvements in our education and training performance.