Coronavirus: Rebound recipe is tax cuts and help for hardest hit
Josh Frydenberg has used a key speech to firmly plant corporate tax cuts as a key element of the government’s reform agenda.
Josh Frydenberg says the government is looking to “smooth the transition” from crisis to recovery for businesses and workers in the hardest-hit sectors, as he firmly planted corporate tax cuts as a key element of the government’s planned reform agenda.
The Treasurer, following a speech to the National Press Club on Tuesday, said as the country emerged from the health crisis, “there are going to be sectors of the economy that are going to come out more slowly than others, and this is an issue that the government is thinking about”.
“Australia is increasingly a services-oriented economy, and you are seeing a much bigger drop over this period in services — I’m thinking hospitality, accommodation and tourism — than you are in manufacturing and, to some degree, construction,” he said.
With some industries facing a steeper and longer climb back towards business as usual as the economy reopens in the coming months, he added: “We have to think about smoothing that transition for businesses and for workers into that recovery phase.”
Mr Frydenberg highlighted the blow to tourism from the closure of the international and state borders, with overseas travel expected to be restricted for longer.
“That’s obviously going to have a real impact on tourism, and one of the imperatives is getting domestic flights (going) again,” he said.
Even as the Treasurer raised the prospect of additional transitional support for some industries, he batted away suggestions the JobSeeker supplement of $550 a fortnight — which has essentially doubled the dole for six months — would only be partially removed come October 1.
This was despite his earlier comments that history suggested unemployment went “down the elevator” during downturns, but “up the stairs” in the recovery.
Treasury estimates the unemployment rate will hit 10 per cent by June, up from 5.2 per cent in March, while on Tuesday Reserve Bank governor Philip Lowe said unemployment would still be above 7 per cent by the end of 2021.
“We’ve been very clear that these measures are temporary, and the JobSeeker supplement of $550 was temporary,” Mr Frydenberg said.
“The way to get people off the unemployment benefits is to get them back into the workforce, to encourage economic activity, and that’s why the lifting of the restrictions is so important.
“The quicker we lift those restrictions, the more economic activity we generate.”
He said more than 725,000 businesses, employing more than 4.7 million Australians, had formally registered for JobKeeper and would start to receive their payments this week.
While saying the government was not in the “rule-in, rule-out” game when it came to potential reforms to help maximise the post-COVID recovery, Mr Frydenberg said the company tax rate in Australia was “uncompetitive”, and the second-highest among OECD countries behind Portugal.
“Tax rates, like flexible workplaces, like infrastructure, like deregulation, are all key factors that businesses consider when they establish their businesses and also when they decide to hire more people. Capital is mobile and business is not sentimental, so we have to ensure we have the most competitive environment possible.”
In his speech, Mr Frydenberg said “the values and principles that have guided Coalition reforms in the past must guide us again in the future: encouraging personal responsibility; maximising personal choice; rewarding effort; and risk taking, whilst ensuring a safety net which is underpinned by a sense of decency and fairness”.