Put self-interest aside, Josh Frydenberg urges business

Josh Frydenberg is considering a package to boost business investment in the May budget.

Treasurer Josh Frydenberg in Canberra on Tuesday. Picture: AAP

Josh Frydenberg is considering a package to boost business investment in the May budget, as he urged business leaders and Labor not to put “self-interest ahead of the national interest”.

Responding to a push by the nation’s biggest employers to ­expand investment incentives, the federal Treasurer confirmed the Morrison government was examining “further reforms”.

As Mr Frydenberg tried to shift the narrative on the economy to one of “resilience”, industry groups kept up the pressure on the government to introduce an investment allowance, increase the migration cap and expand training and skills funding.

Writing in The Australian on Wednesday, Mr Frydenberg pushed back against negative assessments of the economy, declaring it has “a remarkable story to tell” and flagged extra support for business investment. “Having brought forward company tax cuts for SMEs by five years, and having expanded and increased the instant asset write-off in the last budget, the government will continue to engage with the business community about what further reforms can drive even greater investment and further improve our competitiveness,” Mr Frydenberg said.

As the government’s razor gang continues cost-cutting preparations for this year’s budget, the Treasurer said jobs, building approvals, retail sales and housing market figures were clear signs of economic growth, while other ­nations were falling behind.

With the government facing a downgrading of its forecast $5bn surplus, Mr Frydenberg said too often “people put self-interest ahead of the national interest and talk down the Australian economy, ignoring its resilience and undermining confidence”.

Mr Frydenberg, who highlighted deregulation, skills and industrial relations reforms as key priorities for the government, said the economy was “now being seen with the first current account surplus in more than 40 years”.

On Tuesday, Scott Morrison confirmed the government had allocated $2bn over the next two calendar years in response to the bushfires, with $500m reserved for this financial year.

“The budget will reconcile what that all means for the surplus. There are other things that obviously impact on the budget — general consumption levels, how the economy is tracking,” the Prime Minister told Sky News. “But I was pleased by some of the numbers we were seeing late last year. Retail sales in November were up. We’ve seen improvement on building approvals.”

Mirroring calls from the Business Council of Australia and Australian Industry Group, the Australian Food and Grocery Council has proposed a three-year investment allowance to bring forward projects that have been held back.

The Housing Industry Association, in addition to the Australian Chamber of Commerce and Industry, has also called on the government to restore the permanent annual migration intake level to 190,000.

The AFGC, which represents the nation’s largest manufacturing sector and injected $122bn into the economy, said wage growth pressures, rising energy costs and continued price deflation by retailers had put a “squeeze on the sector”.

“Such factors could determine if a company remains in Australia or not,” the AFGC pre-budget submission said.

“Without investing to improve efficiency and innovation, there is a high risk businesses will either need to reduce the scale of their operations or move offshore.”

The AFGC said putting extra capital into “more efficient plant and machinery for businesses to sustain jobs and investment” was urgently needed.

It recommended the government support a three-year instant asset write-off or grants program and an investment allowance, which would include a 30 per cent investment allowance allowing companies to claim 30 per cent of expenditure on plant, property and equipment in addition to ­existing depreciation allowances.

In its pre-budget submission, the HIA is pushing for extra funding for training of residential builders, independent contractors and industry associations.

It has also called for the government to “remove the artificial cap of 160,000 permanent migrants per annum”, saying the minimum annual intake should be returned to 190,000 a year with a “focus on skilled labour”.

“The government should regularly consult with industry regarding skilled labour requirements which cannot be filled through the domestic workforce and training system, and be guided by industry input and market forces in determining an appropriate annual intake of skilled ­labour,” the HIA submission said.

Opposition Treasury spokesman Jim Chalmers on Tuesday accused Mr Frydenberg of not having a plan for business investment. “Employers know something needs to be done, and they know Australians are paying a very hefty price for the inaction,” Mr Chalmers said, urging the ­Coalition to get business investment “moving again in an economy that desperately needs it”.