The BCA recommends the federal government urgently implement measures to strengthen the economy by boosting productivity and increasing investment, including:
- Carefully targeting any cost of living assistance, the risk being that poorly targeted assistance could make inflation worse, not better. We note existing targeted measures by government to address child care and energy costs and increase social security payments.
- Abolishing remaining tariffs, which add to the cost of imported goods for consumers but raise little revenue.
- Freeing up housing supply by incentivising states to liberalise planning and zoning requirements to take upward pressure off rents and house prices.
- Focusing on improving the quality of government spending and outcomes while also imposing more discipline to curb growth in spending. This includes via the adoption of fiscal rules, including a 2 per cent cap in real spending growth.
- Renewing the focus on microeconomic reform to make it easier and less costly to do business by removing the structural impediments to long-term and sustained economic growth.
- Clarifying clear pathways to grow the economy, including via enhanced productivity, increased economic dynamism, better regulation, enhanced training and skills, better coordination of infrastructure decisions and rebooting a program of long-term tax reform to deliver a system fit for purpose that better incentivises investment, innovation and hiring.
- Adopting measures to help support flagging business investment. Australia’s corporate tax rate is high by global standards. This is a disincentive for foreign capital, but investment can be supported in other ways, including through a broad-based, permanent investment allowance.
- Standing by its commitment to deliver the stage three income tax cuts in their legislated form. They are an important reform to the income tax structure that simplifies the system, provides better incentives to work and will hand back bracket creep over time, increasing household disposable income.
- Deciding against the introduction of any new taxes, including forms of super profits taxes on energy and mining companies, as some have advocated. This would have an additional chilling effect on investment on top of already announced changes to energy policy.