Business applauds budget, with some reservations

Business has welcomed boosts to skills and training in a budget aimed at the small end of town.

Business Council of Australia chief executive Jennifer Westacott said the ‘strong, responsible” budget “delivers a surplus, lowers income taxes and invests in jobs, health, education, infrastructure’. Picture: AAP

Business has welcomed boosts to skills and training in a budget aimed at the small end of town but warned cuts to migration could crimp economic growth.

Business Council of Australia chief executive Jennifer Westacott said the “strong, responsible” budget “delivers a surplus, lowers income taxes and invests in jobs, health, education, infrastructure”.

“Business has continued to do the heavy lifting in this budget — which again is proof that, when business thrives, Australia thrives,” Ms Westacott said.

However, she complained the budget lacked an “economy-wide signal about the need to fix the investment dilemma Australia is facing, with new investment as a share of GDP near 25-year lows”.

The budget lifted the threshold for the instant asset write-off from $25,000 to $30,000 and increased access from once a year to any time an asset is purchased.

But the measure is aimed at small business, rather than the big end of town. Australian Chamber of Commerce and Industry chief executive James Pearson said the budget’s “investment in skills, combined with the increase in investment in infrastructure in both cities and regional communities, should deliver a meaningful and positive impact on productivity”.

But he criticised the reduction in skilled migrant numbers from 190,000 to 160,000, announced by the federal government last month but baked into last night’s budget numbers.

“Businesses who are desperate to fill vacancies so that they can keep meeting their customers’ needs, let alone grow and create even more jobs, will be disappointed that the government has locked in cuts in permanent migration for the next four years. It ignores the evidence of the economic benefit of skilled migration and assumes Australia’s needs will be unchanged,” Mr Pearson said.

“This is despite the increasing cost to support our nation’s ageing population with healthcare and pensions in retirement — and the major contribution that young skilled migrants make to meeting those costs.”

AI Group chief executive Innes Willox was also critical of the migration cuts.

“The reduction in the permanent immigration intake is of considerable concern for the many businesses facing skill shortages across a wide range of occupations,” Mr Willox said.

The return to surplus should be recognised but there should be caution over the modest outlook for the budgetary position over coming years, Mr Willox said.

“The budget remains vulnerable to a downturn in general activity and particularly to a sudden fall in commodity prices. In this sense, the task of fiscal repair remains incomplete.”

The return to surplus was helped by a surge in commodity prices, with the government increasing the forecast for metallurgical coal prices by $US30 to $US150 a tonne. It also banked $3.4 billion in extra corporate tax revenue since December after the iron ore price surged above $US80 a tonne compared with the 2018-19 forecast of $US55 a tonne.

Council of Small Business Organisations Peter Strong rated the budget an 8.5 out of 10.

He said the extension of the instant asset write-off would be good for small business owners.

“The big thing is the surplus,” Mr Strong said.

“A surplus, whether we like it or not, adds confidence and the consumers have been the ones lacking confidence lately.”

He said income tax cuts for people on low incomes would increase consumer spending in the economy.

With few changes to the superannuation landscape in last night’s budget, reaction from the industry superannuation sector, which controls $630bn in retirement savings, was muted.

Industry Super Australia deputy chief executive Matt Linden said the sector supported a move to extend tax relief for funds that wanted to merge.

“It’s quite important for members to receive the full benefit of mergers when they occur,” he said.