Coronavirus recession: Business calls for urgent tax cuts

Australia’s largest business and employer groups are urging the government to bring forward income tax cuts to stimulate the economy.

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

Australia’s largest business and employer groups are urging the government to bring forward income tax cuts to stimulate the economy and calling for major tax and regulatory reform to be the centrepiece of Josh Frydenberg’s October budget.

With economic growth, consumer and business confidence plunging to record lows, industry groups and unions on Wednesday called for a comprehensive plan to support jobs and investment.

Business Council of Australia chief executive Jennifer Westacott said the recovery plan must be driven by the private sector and harness increased co-operation on tax and regulation reform.

“We need a recovery plan that is driven by the private sector, focused on job creation and getting investment going again — and we don’t have any time to waste,” she said. “Only a growing economy will allow us to pay down debt and begin replacing lost jobs and hours.”

ACTU president Michele O’Neil said the government must produce a “national economic reconstruction plan”.

“These are the worst economic figures ever recorded, we are in an unprecedented economic and public health crisis, and yet the Morrison government has no plan for a way out,” she said.

“We need leadership from the federal government, and a commitment to investment which will create jobs for the millions of working people who will need them in the coming months and years.”

Australian Industry Group chief executive Innes Willox said more fiscal stimulus would be required “before recovery is on a sec­ure footing … Without doubt, any slow improvement was relying heavily on fiscal and monetary stimulus and the downturn would have been very much worse without the timely support provided by federal government, the Reserve Bank and the state and territory governments.

“Household consumption was sharply lower in the peak months of the COVID-19 crisis partly due to a fall in incomes but also because households looked to build their reserves against the higher risk of unemployment and because some spending opportunities were simply not available.”

He said business investment incentives must be “a central part” of the government’s fiscal response.

Master Builders Australia chief executive Denita Wawn said they wanted “bold action” from the Treasurer in the budget. “We want to see stimulus and policy measures that support economic growth, investment in building and construction activity that gives back to the economy.”

Ms Wawn said an urgent nat­ional cabinet consensus must be agreed to “deal cohesively and practically with the tension between the health and economic impact of the virus”.

Australian Chamber of Commerce and Industry chief executive James Pearson said the budget needed to bring forward income tax cuts and ensure instant asset write-off and accelerated depreciation deductions remained permanently in place. “The October budget is an opportunity for the government to put in place policies that support Australia’s recovery. “Tax reform … must be at the top of the reform agenda if we are to achieve strong, inclusive job creating growth,” he said.

Australian Medical Association president Omar Khorshid said the figures painted a “sobering picture of COVID-19” on the economy, “but they also show Australia has fared much better than other nations, who were slower to act to contain the virus.”