“The mounting pressures on the federal Budget have been a decade in the making and will inevitably worsen without a sustained effort over the next 10 years to put Australia back on track,” Business Council of Australia Chief Executive Jennifer Westacott said.
The Business Council of Australia today released its submission to the 2015-16 federal Budget, calling for bipartisan agreement that Budget pressures which have built up over a decade will require a decade of action to resolve, or the lifestyles of all Australians will suffer.
“It’s time we took the blame game out of the Budget debate,” Ms Westacott said.
“Australia has a structural problem where spending is higher than taxes received now that revenues are returning to more normalised levels.
“This is the reality confronting any government of any political persuasion. We believe we have a 10-year window in which to slow the trajectory of major spending areas and improve program delivery and effectiveness so that slower spending growth can be maintained,” she said.
The submission recommends the urgent priorities for the next year are:
• To avoid new spending commitments that cannot be offset by savings.
• Two comprehensive reviews into the healthcare system, and the aged pension and retirement income systems.
• Redesign of other major areas of spending, particularly the welfare and payments system, so they are better targeted, more efficient, use technology better and improve value.
• Complete major initiatives in last year’s Budget such as reforms to the tertiary education system, with additional safeguards and transitional arrangements.
“We’ve got to look at things like our healthcare, ageing and retirement systems and ask who should really be paying for what so we can afford them into the future.
“Doing this by a proper process of comprehensive and independent review will enable all the issues to be considered in consultation with the community so that choices can be made to secure these systems for the future, and avoiding unintended consequences of any change.
“Australia has a choice between taking action early and adjusting gradually by design including through appropriate transition measures, or doing nothing and having blunt, costly and more than likely inequitable spending cuts and tax increases imposed down the track, possibly in crisis.
“While a more efficient tax system is also needed to promote competitiveness and provide a stronger revenue base, continually increasing taxes to pay for spending growth would be self-defeating.
“Broader policy reforms are urgently required for lifting productivity and revitalising the economy, but economic growth alone will not address the growing fiscal gap,” Ms Westacott said.
The submission recommends a 10-year fiscal plan focused on achieving four goals:
1. Preserving Australia's AAA credit rating to consolidate the government’s financial credibility and reputation, retaining financial capacity and investor confidence.
2. Progressively returning the budget to surplus to build resilience and flexibility for dealing with economic shocks and volatility, and for underpinning business confidence and investment.
3. Ensuring the sustainability of priority services, including an adequate safety net, which are integral to community living standards and the functioning of our society.
4. Ensuring capacity for investments in infrastructure and human capital, vital for innovation and productivity.
It calls for the budget strategies of both parties to demonstrate how particular initiatives will contribute to delivering these goals.
The submission does not specify particular savings measures and indeed suggests that while the 2015-16 budget must ‘hold the line’ it should seek to implement only modest savings.
“We are making suggestions for completing some unfinished business from last year’s budget. But the main task of the 2015-16 budget should be to frame a medium-term strategy with clear horizons that commits to progressive, transparent review and restructure of major expenditure programs.
“Large and fast-growing programs such as health and other aged-related programs should top the list, which is why we are recommending two initial comprehensive reviews into the healthcare system and the aged pension and retirement income systems.
“The process must embed an ongoing and inclusive dialogue with key stakeholders and the wider community to help ensure that reforms are supported and sustained. It should also give the community a sense of the end point and the transition."
The submission also outlines a number of complementary policies to enhance growth.
“In short, the submission argues that this year’s budget is an opportunity to lay out a positive vision for economic growth and the coherent set of policies and actions, including structural budget improvement, that will deliver it,” Ms Westacott said.
For further information contact:
Scott Thompson, Director, Media and Public Affairs
Business Council of Australia
Telephone (03) 8664 2664 • Mobile 0403 241 128