Overall, tonight’s Budget is a positive one that provides a foundation for future growth, says VECCI.
“This Budget represented a golden opportunity for the new Government to put an early stamp of fiscal responsibility on their first term in Government and they appear to have taken it”, says VECCI Chief Executive Officer Mr Wayne Kayler-Thomson.
“The strong surplus and low spending growth sends a message to the financial markets and the wider community that fiscal restraint is the order of the day and that the Government is serious about fighting inflation – this will undoubtedly take some pressure off interest rates.
“As well as promoting tight fiscal policy, the Government needs to complement the Reserve Bank’s monetary policy efforts with an industrial relations policy that encourages wage restraint and productivity-based pay deals.
“We note the fact that the Government has seen fit to raise two taxes – on ready-to-drink alcoholic beverages and luxury cars – the latter increase may not help our local automotive industry, which is currently under review. While these tax rises are specific and targeted for a range of reasons, we hope they are not the `thin end of the wedge’.
“On this note, we support the reduction in the withholding tax for non-resident investors, which should make Australia a more attractive investment destination, as well as the Review of the Australian taxation system. This Review should focus on: reducing personal taxes, gradually reducing the top marginal tax rate to 30 percent to combat the brain drain; abolishing bracket creep by indexing tax thresholds; tackling complexity and compliance costs, which is especially important for small business; and abolishing the most economically damaging State taxes such as payroll tax.
“In terms of human capital measures, we believe the increased childcare rebate will be useful in encouraging parents to return to work and we applaud the Education Investment Fund and its focus on higher education and vocational education and training, including the additional 630,000 new training places.
“We support the funding of cleaner coal technology, renewables and demand management measures, which should help transition our economy in a time of climate change. We welcome the partial investment of the surplus in the Building Australia Fund - a focus on addressing Australia's infrastructure backlog is essential in the areas of roads, rail, ports, water and telecommunications.
“However, being Australia’s transport, logistics and manufacturing hub, Victoria must also receive its fair share of this funding – in the past, under Governments of all shades too much infrastructure `pork’ has found its way into interstate marginal seats with little economic return”, says Mr Kayler-Thomson.
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