Today’s Mid-year Economic and Fiscal Outlook (MYEFO) is a wake-up call to the Australian Parliament to face up to and act on the substantial economic and fiscal challenges Australia is now confronting, Business Council of Australia Chief Executive Jennifer Westacott said.
MYEFO shows Australia faces a decade of deficits if the federal government does not begin to correct the excessive spending that has left the fiscal position weaker than it should be and exposed to future global economic volatility.
With the budget deficit now forecast to reach $47 billion this year, growth expected below trend through to 2014–15 and continuing weakness of revenues, the government must have the support of the parliament to reset the fiscal strategy and strengthen the budget.
Overcoming years of deficits will require a decade of committed reform to put the budget position onto a more sustainable footing and restore fiscal resilience – a job that starts with the 2014–15 Budget. As outlined in the BCA’s submission to the Commission of Audit, the fiscal repair job confronting the nation must involve fundamentally changing the underlying structure of expenditure in the budget.
There must be a re-prioritisation of expenditure and all sides of politics must be honest with the Australian community about the cost of government programs and what is likely to be affordable within current tax settings.
A disciplined 2014–15 Budget, which includes structural measures that contain government expenditures over time, needs to be matched by greater efforts to boost economic growth and productive capacity, which will greatly assist the budget repair job.
This means investing in productive infrastructure and delivering on the government’s ambitious deregulation agenda to free up businesses to innovate, invest in future growth and jobs.
The ongoing weakness of revenues also highlights the critical role that tax reform will need to play both in shoring up the strength of the revenue base and increasing efficiency to drive economic growth.
Grasping the opportunity of the audit to put the fiscal position on a more sustainable footing, and acting in the upcoming budget to set out a credible pathway back to surplus will provide much-needed support for business and consumer confidence. Continuing on the current path will place Australia’s future prosperity at risk, Ms Westacott said.
For further information contact:
Scott Thompson, Director, Media and Public Affairs
Business Council of Australia
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