“The Mid-Year Economic and Fiscal Outlook is yet another reality check for the parliament that this nation cannot spend what it can’t afford,” Business Council chief executive Jennifer Westacott said.

“Combined with recent figures showing a fall in GDP, it is clear from the MYEFO update that the choice facing our political leaders and representatives in 2017 will be starker than ever.

“They must decide whether we continue to muddle along and sleepwalk into lower living standards for the Australian community, or seize the opportunity to deliver a stronger budget and economy to underpin higher living standards.

“The smaller surplus projected in 2020-21 continues to be highly dependent on continued strong economic growth and growing revenues, together with considerable further spending restraint.

“Yet the outlook for real GDP, wages and investment growth have all been revised down. A slowing economy since the 2016-17 Budget has seen a deterioration in the budget bottom line over the forward estimates of more than $10 billion. And beyond 2020-21 real annual spending growth is projected to ramp up from 1.9 per cent per year to 3.0 per cent.

“These numbers make it crystal clear: while the government has made some inroads, there is still a long way to go before the nation’s finances reach a sustainable footing. We therefore call on all members of the federal parliament to support the current initiatives the government has designed to meet this challenge, before it is too late.

“Even if all of the government’s plans are endorsed and a slender surplus is realised in 2020-21, we cannot be complacent. It will take sustained surpluses to pay down the nation’s debt.

“And one thing is very clear: you can’t tax your way to balance or prosperity.

“The MYEFO update makes it clear we must intensify efforts to meet the twin budget objectives of reducing the rate of growth in spending and accelerating economic growth. This means continuing to redesign major spending programs to improve the quality of spending, cut waste and deliver better value for taxpayer dollars. At the same time, we must better equip the economy to support jobs and prosperity.

“Politicians must move on from the phony, dead-end argument that supporting growth comes at the cost of fairness. Growth and fairness go hand in hand because growth creates economic opportunity.

“Only economic growth can create jobs, higher wages and the revenue to pay for the health, education and welfare services Australians value.

“And only economic growth can ensure this country becomes more capable each year of caring for all of its citizens, no matter what their circumstances.

“We can no longer afford to ignore or be complacent about this reality.”