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Budget – a blow or boost for business?

Thursday, 15 May 2014 ( #667 ) - Canberra, ACT, Australia
Local News Story
Business is hopeful the new budget will make the Australian economy more productive and resilient.
Treasurer Joe Hockey, assuring the nation ‘we had to have it’, dished out strong medicine to Australians in this week’s budget with not much sugar to help it go down.

Nonetheless, business has given the federal budget a tentative thumbs-up, believing that it will achieve the long-term aims of making the economy more productive and resilient.

Kate Carnell, CEO of the Australian Chamber of Commerce and Industry, Australia's largest business organisation, says the budget provides short-term pain for long-term gain.

"This is the budget we had to have to begin to rein in spending and get the budget back on a credible path to surplus.

"The budget goes a long way to restoring all-important business confidence that will drive investment and job creation, particularly for Australia's two million small businesses that employ some seven million people.

"The budget delivers on major election promises for business such as the 1.5% cut to company tax and significant infrastructure spending on roads.

"The budget does impose some further costs on the economy that business continues to oppose such as the debt tax on higher incomes and the proposed paid parental leave scheme.

"There are some cuts to important productivity-enhancing measures in trade, vocational education and training, and small business support that we will be looking at more closely and expressing our concerns to government."

The Australian Logistics Council, meanwhile, is encouraging all governments to deliver on the budget’s infrastructure priorities to ensure their intended benefits can be felt by all Australians.

"The freight logistics industry is buoyed by the infrastructure commitments in the 2014/15 Budget and the government’s strong commitment to asset recycling," says Michael Kilgariff, ALC managing director.

"The projects outlined in the 2014/15 Budget will go a long way to increasing capacity on existing freight routes and supporting the construction of new infrastructure, and are welcomed by Australia’s freight logistics industry."

However, Kilgariff notes that "given the growing infrastructure pressures being felt across all parts of the supply chain, ALC is encouraging all governments to prioritise and deliver on key freight logistics projects contained in the budget to maximise their economic and social benefits".

Australian Industry Group chief executive Innes Willox warns that with the economy at a pivot point characterised by fragile confidence, flatlining productivity and below-trend growth, the budget also carries some risks to Australia’s short-term economic health.

"The government's proposals to rein in spending growth and to reintroduce fuel tax indexation are difficult measures spread across all sections of the community – including businesses."

However, he adds that in the face of the undisputed longer-term pressures on Australia's public finances, the measures will put the budget on a more secure foundation and will make the Australian economy more productive and resilient. "In this context, the targeted surplus on fiscal balance in 2017/18 is welcome."

Lencrow MD Ross Lencrow says the budget was what the country needed to fix up the balance sheet. "I am happy as a business owner it will stimulate people to both search for work as well as help with capital projects to get business flowing again."

However, he believes the benefits of the budget will only be seen 12 months down the track as confidence is boosted over a period of time.

Komatsu Forklift Australia chief administration officer Gavin Pringle tells News that all businesses will be impacted by the reintroduction of the fuel excise indexation.

"As fuel prices increase, fuel efficiency in materials handling equipment will rise further up the list of important considerations for machine operators."

Stuart Walker, MD of Manitou Group, tells News that he holds a neutral position on the new budget. "I think it was always going to be difficult for the government to address the underlying issues of the budget and the willingness to tackle long-term forecasts is never easy in a three-year political cycle."

As a major supplier of materials handling equipment, Walker says he’s keen to see government’s major infrastructure projects become a reality sooner rather than later, and the projects themselves can only be good for economic growth.
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