Manufacturers are urging treasurer Wayne Swan to disregard the budget being in deficit and offer relief in the form of a cut to the company tax rate.
The Australian Industry Group has released its Pre Budget Business Survey, which demonstrated “a clear preference for stimulatory spending to build productivity rather than excessive budgetary constraint,” said CEO Innes Willox.
The West Australian reports that the AI Group argues that austerity measures would weaken economic growth. 45 per cent of firms surveyed ranked achieving a budget surplus as the least important of five options presented.
Last week the conditions the industry is suffering under were highlighted in the AIG PMI result for April, with Willox citing the high Australian dollar and input costs as dragging on manufacturing. The overall PMI was 36.7 points. Any result under 50 indicates contraction.
Prime Minister Julia Gillard also noted the dollar’s effect in an interview on ABC’s Insiders on Sunday morning, as well as the effects on tax revenue.
“If you're in the manufacturing business, if you're trying to export, then your customers are basically paying 50 per cent more for your products or services just because of a movement in our currency, not because you are charging more in your costs,” she told Insiders.
“That is a really tough pressure. It is meaning for businesses that they are less profitable, that is meaning that there is less tax money coming into the Government than was expected.”
The opposition’s industry spokeswoman Sophie Mirabella was critical of the government’s approach, blaming the PMI result on policy settings.
“Business confidence is in free-fall as Labor’s shambolic budget process and chopping and changing of the rules brings productivity to its knees,” she said in a statement.