Budget Focus on Infrastructure and Deficit Reduction Welcome
The 2014 Budget forecasting a deficit of $49.9bn this financial year with an expected underperforming economy for the next few years underlines the enormous economic challenge that the Government is trying to rectify, according to the Australian Food and Grocery Council (AFGC).
AFGC CEO Gary Dawson noted the magnitude of the Government’s task in instilling budget discipline to return a surplus without harming consumer confidence while also stimulating growth.
“Massive budget deficits create a climate of uncertainty for business which undermines confidence and investment, essential to underpin jobs and growth. This budget’s concerted effort to rein in spending and streamline services sends positive signals to business of the Government’s fiscally responsible approach to public finances,” said Mr Dawson.
“The $11.6bn Infrastructure Growth Package will be a significant boost in stimulating growth and confidence food and grocery and agribusiness sectors.”
“For the food and grocery and agri-food sectors, which are spread across the length and breadth of the continent, this massive boost in infrastructure planning and delivery is essential in developing supply chain solutions that create world leading, efficient channels to market,” said Mr Dawson.
Mr Dawson said consistent with the principle of sharing the deficit reduction burden, business assistance programs and R&D tax concessions have been curtailed and tax increases in the budget may have a dampening effect on consumer spending which will flow through quickly to the consumer goods sector.
“The impact of tough budget measures on the $111 billion food, beverage and grocery manufacturing sector can be ameliorated through a concerted attack on its high cost base through regulatory and energy market reform.
“Government can off-set the impact of a debt levy and fuel excise indexation on confidence and demand, by aggressively targeting existing and imminent cost challenges that are in the form of excessive regulations.”
“Getting costs down to improve competitiveness is urgent, and regulatory costs and energy costs are two areas where we seem to have a great capacity for self-inflicted damage.”
“Clear and decisive action ruling out regulatory threats such as a national container deposition scheme which could cost upwards of $1.4 billion along with abolishing the Carbon Tax and delivering on the 1.5 percentage point cut to the company tax rate are imperative.”
“This Government has clearly staked its reputation on getting the settings right to kickstart growth and investment to drive productivity and competitiveness gains,” said Mr Dawson.
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More information: James Mathews – 0407 416 002