Invest to avoid slow lane, says Business Council of Australia

The Business Council of Australia is calling for a 20 per cent investment allowance to drive a permanent lift in business investment over the coming decade.

Business Council of Australia chief executive Jennifer Westacott. Picture: AAP

The Business Council of Australia is calling for a 20 per cent investment allowance to drive a permanent lift in business investment over the coming decade and help address the massive job-creation task that awaits in the wake of the COVID-19 recession.

In its pre-budget submission, the BCA also pushed for the removal of regulatory burdens to make it easier for firms to invest and hire, the fast-tracking of legislated income tax relief, and for all levels of government to further ramp up infrastructure spending.

With the initial phase of emerg­ency income support winding down across most of the country, BCA chief executive Jennifer Westacott said the economy had to generate 1.5 million jobs for the nation to get back to where it was before the COVID-19 crisis triggered the most severe rise in job­lessness since the last recession.

Ms Westacott said there was not a moment to waste.

“Now is the time to shift from emergency support to funding sustained growth and taking the crucial steps to strengthen the economy and make it more internationally competitive,” she said.

“We need to act now, not sit in the slow lane while the rest of the world moves on with recovery.”

With business investment in “freefall”, getting firms spending and hiring again would be key to the post-COVID recovery effort, the BCA said.

“Increasing business activity is the only way to create the bulk of jobs that need to be created,” Ms Westacott said. “We in the business community stand ready to get on with that.”

A 20 per cent investment allowance­ could create 500,000 jobs over a decade, the BCA said, and $200bn worth of investment.

It costed its proposed 20 per cent investment at $10bn a year, quoting Ernst & Young estimates.

The business group said the budget was an opportunity to make permanent the red tape and regulatory relief provided to businesses through the coronavirus crisis. Examples it gave included the lifting of curfews on when ­supermarkets were able to deliver their goods, and the extending of “antiquated” retail trading hours.

Steps taken to streamline approval and planning processes should also be made permanent as part of the October 6 budget, Ms Westacott said.

The BCA also argued states should extend the temporary payroll­ tax relief for a further 12 months, saying that its reinstatement would be a “significant blow” to businesses.

Ms Westacott recognised that without a boost to demand for the goods and services that Aust­ralian companies produced and provided, there would be no appetite to invest and hire, regardless of the incentives. To that end, the reopening of the economy was an essential precondition for growth.

“A careful plan to reopen the economy will be essential in a budget strategy, because the ­absence in demand can stifle any of the good budget initiatives that the government might pursue,” she said.

Ms Westacott said fast-tracking the second and third phases of the legislated income tax cuts would give confidence to households and stimulate spending.