Budgetary Restraint: Comments by Greig Gailey

7 May 2008

Comments from an interview given by BCA President Greig Gailey to the Radio National breakfast program on the issue of middle class welfare in the next federal Budget.

Steve Cannane: The federal Opposition has stepped up its attack on Labor’s first federal Budget, dismissing the government’s war on inflation as a complete charade. Brendan Nelson says there’s no need for deep spending cuts in Tuesday’s Budget because this period of high inflation will not last long, particularly now the economy is slowing.

But that’s not a view shared by the business sector, which welcomes any moves in the Budget to rein in so-called middle class welfare. Our business editor, Cheryl Bagwell, has the story.

Reporter: The business community has high hopes for the Rudd Labor government’s first federal Budget next Tuesday.

Greig Gailey: This Budget is absolutely critical because it is the first Budget in the first year of a new government and it really is a golden opportunity for them to take a major step forward.

Reporter: Greig Gailey is president of the peak business lobby group, the Business Council of Australia.

Greig Gailey: What we’re looking for is two things: one, strong fiscal restraint – i.e. take some pressure out of the economy, particularly in the consumption area; and secondly, a redirection of the spending that does take place towards a future investment rather than current consumption.

Reporter: Greig Gailey says the government does need to rein in wasteful spending, at the very least, to offset the $8 billion in tax cuts that’ll flow into the economy this year. And if the Budget starts by carving back so-called middle-class welfare payments like the baby bonus – that’s the $4000 handed out to families, regardless of their income on the birth of each new child – well then, all the better.

Greig Gailey: Absolutely. If you look at the position of what one might describe as the middle ranking taxpayers, something like about 30 per cent of the tax they pay actually comes back to them. And that sort of churn, I think is highly questionable in terms of its efficiency and I think providing un-means tested benefits like the baby bonus is a good example. Really isn’t appropriate in our view, that is, those benefits if government determines to give them, should be means tested.