BCA: $10 Billion Package Is Well-Timed, Well-Targeted and Temporary

The BCA congratulates the federal government for providing a package that will build confidence in the Australian economy.

BCA President Greig Gailey said the $10.4 billion package is the right response to the threat of economic slowdown.

“This package contains all three ingredients to have maximum impact. It is well-timed, well-targeted, and temporary.

“The package is well-timed. It provides fiscal stimulus that will be delivered when the economy is likely to be at its weakest point, with the impact of the global slowdown hitting hardest.

“The package is well-targeted. It targets the people most likely to spend it, and most likely to need it – that is, lower-income households.

“And the package is temporary. This is vital. By providing one-off and time-limited payments, Australia keeps the capacity to return to budget surpluses again once this emergency is over. The payments in this package meet that criteria and avoiding building continuing obligations into the Budget.

“The government’s normal ‘economic stabilisers’ – falling amounts of tax being paid as the economy slows, and increased welfare payments – will also help cushion the economy.

“Together with last week’s strong monetary response from the Reserve Bank, and the government’s guarantees for depositors and its wholesale lending support, this package is a world’s best-practice response to the global financial emergency.

Mr Gailey said the BCA does believe that investment in infrastructure should be governed by rigorous processes to ensure that funds are invested productively.

“Infrastructure investment can make a contribution to keeping the Australian economy buoyant through this crisis.

“However, compared to other measures in this package, infrastructure spending will take longer to impact on the economy. There is a risk that spending on some projects could end up stimulating the economy several years from now, when it is already growing strongly again.

“We urge the government to continue on its course of subjecting infrastructure proposals to tough scrutiny, to make sure that Australia gets the infrastructure projects that best support and enable our long-term growth.