Today’s Mid-Year Economic and Fiscal Outlook, signalling a return to surplus in 2019-20 after 11 years of deficits, is a welcome development but should be a call to action to do even more to give Australia more choices and greater resilience, Business Council chief executive Jennifer Westacott said.
“Banking the benefits of today’s result will require a decade of sustained work from political leaders, staying the course on fiscal discipline and working not just to keep Australia’s economy growing but growing even faster.
“Returning to surplus is vital, only the hard work of fiscal discipline can provide the resilience we need in an uncertain and volatile global economy. The bigger the surplus, the greater the choices Australians will have in the future and the greater protection for Australian workers in the event of a global economic shock.
“While these are positive results they are also a reminder that we should remain ever vigilant and that political leaders of all persuasions must spend wisely.
“This is a good result built in part on the strength of Australian businesses providing record revenues to government. A growing and vibrant business sector can continue to invest, employ more people and pay the revenues governments need to fund services.
“While some spending restraint over recent years has helped boost the budget position the fact remains that much of the heavy lifting has been done by strong Australian businesses. Now that the parliament turned its back on moves to keep Australia’s economy globally competitive through a reduction in the company tax rate, we can only hope new investment continues.
“Company tax revenue has been revised up to $94.5 billion for 2018-19 and by 2021-22 it will exceed $100 billion, funding services and helping build Australia’s economic resilience.
“There are risks in today’s results with business investment growth revised down to just 1 per cent in 2018-19, reflecting weakness in both the non-mining and mining sectors.
“Net debt as a percentage of GDP remains at levels not seen since the mid-90s, while Australian households are some of the most indebted in the world – by maintaining spending restraint and helping boost economic growth Australia must build the buffer we need in the event of a downturn.
“While net debt is forecast to fall this good news relies on everything going well, this could be a risky bet in an uncertain global economy.
“Australian businesses can help build Australia’s resilience but only if we get the settings right to attract and keep large investors, supercharge economic growth and keep government spending under control.”