In their submission to the 2017-18 Federal Budget, the industry association BCA described the current situation as “urgent”, and stated that Australian households will suffer if the Parliament does not soon agree to pass savings measures.
Chief Executive Jennifer Westacott emphasised that the current budget deficit was a problem requiring immediate action, and that only parliamentary action would provide an effective solution.
“Lacklustre economic growth and still-languishing business investment, coupled with heightened global uncertainty, make taking action more, not less, urgent,” she said.
“Parliament must ensure the Australian people receive much better value for the $440 billion spent each year.
“Stubborn opposition to savings measures and the absence of an agreed strategy to tackle the budget problem are foisting a growing debt burden on young Australians and our future generations.”
Westacott said a lack of immediate action would lead to the inevitability of higher taxation, “savage” budget cuts, or both, saying, “Neither of these options is acceptable, but they are inevitable if we fail to act now.”
“The deficit wasn’t created by lower revenues, and new taxes are not the solution.
“Nor are higher tax rates, as they would do nothing to improve services or increase value for money.
“We cannot afford to think that as our spending grows, we should simply tax more.”
On the heels of those anti-tax comments, Westacott made the case for a company tax cut in an interview with Sky News, saying that it would increase business investment and improve economic efficiency.
— Sky News Business (@SkyBusiness) March 17, 2017
The BCA’s future forecast and recommendations
Westacott and the BCA laid out a prediction for when Australia would reach its economic ‘tipping point’, saying if the budget had not been put on “a sustainable footing” by 2025, it would “hit the most vulnerable Australians the hardest”.
They also gave their 5-part strategy for “stronger growth, better services, and increased value from government spending”, which consists of:
- A systematic framework for improving program outcomes and delivering sustainable budgets, guided and supported by overarching fiscal goals and rules, to contain spending and revenue growth and the overall size of government.
- Measures to prevent budget slippage in the immediate term, including the passage of several blocked savings measures and continued functional and efficiency reviews.
- Actions over the medium-term across several program areas, including healthcare and education, which would contain growth in outlays while improving program effectiveness and service quality through refining targeting and productivity.
- Management of emerging spending risks.
- A suite of policies to promote stronger growth, including infrastructure, comprehensive tax, and regulatory reforms that should be implemented in tandem with budget repair.