Budget Conditions Call for a Stronger Medium-Term Strategy

Today’s announcement by the government that it will not achieve a budget surplus in 2012–13 is a realistic reading of the economic and fiscal situation, Business Council of Australia Chief Executive Jennifer Westacott said.

“This is a product of a weakening economy, so it is important to consider and respond appropriately to what the economic conditions are telling us,” Ms Westacott said.

“The Business Council has called for the government to achieve sustainable and credible surpluses over the medium term, but not a surplus at any cost in 2012–13.

“The confirmation of a write down in tax revenues as economic conditions soften comes as no surprise and in these circumstances a return to surplus in the current financial year is not the right policy.

“The latest budget figures provide a timely reminder of the challenges that lie ahead. It is essential that the government redouble its efforts to lay out a future path for fiscal policy that is predictable and credible.

“It is critical that a credible medium-term fiscal strategy include the structural improvements required to deliver sustainable surpluses over the medium term. This process also needs to be accompanied by policies focused on improving productivity and competitiveness and reducing business costs.

“A strong and believable fiscal strategy is an essential underpinning of business confidence. It adds greater certainty to the business and investment environment.

“Leaving aside a return to surplus in 2012–13, the challenge remains for the government to demonstrate how the fiscal strategy can be brought back on track.

“There will be no avoiding the need for a comprehensive review of the scope and size of government in Australia.

“Laying the ground for sustainable surpluses over the medium term will require some tough decisions about spending priorities over coming years.

“Australians expect no less from their political leaders,” she said.