Federal budget highlights concerns about fiscal situation, taxation: business

Business groups have been described as giving last night’s federal budget a “cool” response, with the Australian Industry Group and others disappointed at its taxation measures.

The Australian Industry Group said in a statement that it was “very concerned” about taxation changes to medium-sized businesses, where tax payments will be made monthly rather than quarterly, to be phased in over four years.

Business Review Weekly estimates that these will contribute a $1.4 billion saving for the government, which announced a budget deficit of $19.4 billion.

The Ai Group’s Innes Willox told the ABC that these tax changes were a compliance increase rather than a useful change.

The Australian Chamber of Commerce and Industry described the cuts identified in the budget as too weak.

"It's a budget of band-aids when the patient required targeted surgery to spending and the oxygen of cost relief to boost confidence," its CEO Peter Anderson told the ABC.

Some, such as the Business Council of Australia, lamented what was described as a failure to address the country’s reliance on resources, as well as a failure to deliver a clear strategy for returning to surplus.

“The BCA has warned in the past of the high stakes for the budget if we rely too heavily on high commodity prices and the dangers of a revenue base that is volatile,” said CEO Jennifer Westacott.

“The budget forward estimates remain vulnerable.”

Willox was similarly concerned about the fiscal situation.

"The extent of the anticipated cumulative deficits over the next three years, amounting to $48 billion, is sobering news,” he said.

“This is a turnaround, in only six months, of close to $55 billion in forecast budget bottom lines.  Even more sobering is the prospect that further revisions are in store. Economic reality has bitten.”

According to Business Spectator, the Australian dollar dropped below 99 cents overnight, the first time it had been that low in 11 months, following the budget.