The President of the Business Council of Australia, Dr John Schubert, tonight released the following statement in response to the federal Budget:

“This Budget covers the essential elements of both economic management and a caring society. However, longer term structural challenges will need continuing attention.

“The Budget sets out a sensible fiscal position for the economy at this stage of the business cycle. The council still has concerns about the direction of the world economy over the next year, which makes it imperative that Australia retains some policy capacity to respond if the global situation worsens. Maintaining a cash surplus at this stage is, therefore, the right policy and will be important into the foreseeable future.

“Increased expenditure is justified given the economic slowdown, although higher recurrent expenditures will require careful management. The BCA strongly endorses three significant Budget initiatives and they are innovation, training and welfare reform. These are all investments in the long-term future of the country. They represent a needed investment in people and ideas.

“The innovation package, signaled in ‘Backing Australia’s Ability,’ and the boost for training underscore the fact that the ingenuity and skills of Australia’s people are critically important to the nation’s future. Taken together, these initiatives will build our education and research capacity and our skills base. However, there remains a need to stimulate effective commercialisation and development of Australia’s research effort.

“The government’s approach to welfare reform hits the key targets. Specifically, the BCA supports the move away from welfare dependency and welcomes increased support for social partnerships, additional places for the long-term unemployed and measures to assist young people make the transition from school to work.

“We welcome the $700 million tax credit on cars as this will help boost the economy. It will be important, however, for the full effect to be given to the Ralph reforms if Australian business is going to be able to compete effectively.”