ACCI warns of need for cap on spending

A firm cap on government spending, scrapping of stamp duty to be scrapped and a minister dedicated to red tape reduction must all be considered by Labor, the ACCI says.

Australian Chamber of Commerce and Industry chief executive Andrew McKellar. Picture: Gary Ramage/NewsWire

Labor must enforce a firm cap on government spending amid concerns a continuation of last year’s record high spending levels will lower productivity, according to the Australian Chamber of Commerce and Industry’s pre-election Agenda for Business.

The chamber has also called on the definition of a small business to be set at 25 employees or less, stamp duty to be scrapped and a minister to be dedicated to the task of cutting red tape.

The powerful peak body will on Thursday present its policy blueprint to all parties and raise alarm with the “lost opportunities” in the economy, declaring it intends to increase the level of urgency for meaningful economic reform because “political decision-makers need to be aware that further delay will see damaging impacts on living standards”.

“Current blowouts in spending are pushing up interest rates, re-weighting the economy to lower productivity and building up expectations of tax increases,” ACCI chief executive Andrew McKellar will say in a speech on Thursday.

“We will never become a lean, agile economy with a bad case of spending bloat.”

The ACCI Agenda for Business calls on government spending to be capped at 25 per cent of GDP, after figures released late last year revealed the highest ever rate of government spending – coming in just shy of 28 per cent of GDP – off the back of cost-of-­living relief, the rapid expansion of the care sector and public servants’ wage increases.

The Agenda for Business lumps further pressure on the government to take on ambitious tax reform and change the definition of small business to any company with under 25 employees, rather than 15, which eight independent MPs also called for at the end of last year.

Mr McKellar said increasing the threshold for the definition of small businesses would free them from “a range of onerous and unnecessary regulations”.

Labor should also create a dedicated small business division in the Fair Work Commission to provide faster, tailored support for small businesses navigating industrial relations, in light of figures revealing more than 80 per cent of small businesses reported red tape having a significant impact on their operations.

According to the same figures, nearly half of small businesses have considered closing their doors over the past 12 months.