Budget must hand business the baton to ensure economic recovery

The success of Australia’s recovery requires businesses to do much of the heavy lifting to increase productivity and accelerate economic activity. But the Government has an important role in acting as an enabler to allow businesses to realise their potential and transform our economy.

“With an election looming large, ACCI calls on the Government to enable business to accelerate economic activity and lead the post-pandemic recovery.  Government needs to encourage business investment and aspiration, while expanding our nation’s workforce,” ACCI chief executive Andrew McKellar said today following the release of ACCI’s pre-budget submission.

“The success of our post-pandemic recovery relies on strong productivity growth. If we are to maintain the living standards and opportunities to which they aspire to, businesses must be empowered to grow.

ACCI’s pre-budget submission makes a number of recommendations across a range of policy areas. Mr McKellar highlighted two key priorities for the Federal Budget, which is slated to be handed down in March 2022:

1. Business investment

“One of the greatest impediments to growing our economy is the shockingly low rates of business investment.  Investment brings new technologies, skills development and innovation, needed to boost productivity and grow the economy.

“If we are to achieve strong sustained business investment to support the recovery, the ability to immediately write-off investment through the Temporary Full Expensing measure is essential.  While investment rebounded strongly under this measure following the initial lockdowns in 2020, this trend has since stalled due to the Delta-variant restrictions. Extending the measure beyond 2023 will be instrumental in encouraging businesses to make investments.

“To achieve the greatest productivity gains, large-scale investments are needed. An investment allowance, with a further 20 per cent tax deduction on major investments in plant, equipment and machinery will further stimulate these large-scale investments by businesses.  Extending the 25 per cent company tax rate to medium sized enterprises will also be critical to ensure Australian businesses can compete globally.

“Without continued support, business investment will falter, stunting our economic recovery at a time when building momentum is critical.  Over the past decade, business investment has collapsed, contributing to Australia’s very low productivity growth over this period.  We cannot afford to continue with this trajectory.

2.   Employment, skills and migration

“With widespread skills and labour shortages at their worst in 33 years, a comprehensive plan is needed to grow the workforce to meet critical demand.  Businesses are nothing without skilled staff.

“The Federal Government must pull the levers to address the emerging skills shortages, locking in support for subsidised training to quickly upskill job seekers and prepare them for work. A commitment to consistent and long-term funding of Vocational Education and Training, through a continuation of key programs including the Boosting Apprenticeships Commencements program, is essential to rebuilding our locals skills base.

“Measures to increase workforce participation will be similarly critical to our recovery.  We have an army of older workers with the skills Australia needs that is untapped. Aged pensioners must be allowed to keep more of their pension when they earn income to entice them back into the workforce.  Childcare must also be more accessible, with more options to assist parents to return to the workforce sooner.

“Increasing the target for permanent skilled migration intake up to 200,000 for at least the next two years to address unmet labour demand across industry.   Providing a pathway to permanent residency for all temporary skilled migrants would act as a further incentive for those considering Australia in the global war for talent.

Read ACCI’s pre-budget submission here.