The Business Council is calling for the next Federal Budget to revive economic growth through a private sector-led recovery, by enhancing our competitiveness, lifting productivity and getting the nation's finances back on a sustainable path.
In its Pre-Budget Submission, the BCA said strong private sector-led growth combined with fiscal discipline would help deliver more jobs, higher wages, improved living standards and the tax revenue to fund services that Australians expect.
As part of the push for productivity-enhancing tax reform, the BCA believes a broad-based 20 per cent investment allowance is required to spur on much-needed business investment and underpin stronger economic growth. The BCA also considers fiscal buffers key to ensuring public spending is sustainable.
Business Council Chief Executive Bran Black said private sector growth is critical to lifting Australia out of its weakest period of economic growth in over 30 years, outside of the pandemic.
"We need to unleash the private sector because it's ultimately businesses that generate economic growth and prosperity, which ultimately helps raise the living standards of every Australian," Mr Black said.
"The next Budget must prioritise making Australia an easier place to do business, attract investment for critical projects and lift productivity.
"The need for a new pro-business approach has been sharply clarified by the new US administration, with President Trump intending to dramatically lift US competitiveness with policy aspirations around further company tax cuts and a broad program of deregulation.
"At a time of significant geopolitical uncertainty, we should focus on the things that are within our power to control - that means establishing the most competitive regulatory settings we can in Australia to attract investment and drive growth.
The BCA recommends the following to help deliver a private sector-led recovery:
A broad-based investment allowance of 20 per cent to unlock more business investment and drive GDP growth.
Stronger fiscal rules to support spending discipline, including a cap on real spending growth of 2 per cent annually.
A deregulation agenda to drive efficiencies and make it easier to do business.
Reforms to workplace laws to ensure more flexibility for employees and employers and drive productivity to lift real wages.
Reforms to Australia's housing supply, skills and health care systems - as outlined in the BCA's Big Five Questions.
Mr Black said weak business investment is contributing to poor productivity growth and an investment allowance would help address this issue.
"A broad-based investment allowance of 20 per cent would support businesses of all sizes to deploy capital in initiatives that make them more productive, and ultimately assist in boosting GDP growth," Mr Black said.
The BCA also believes deregulation needs to be a priority for the Government and form part of the solution to lagging competitiveness and ailing productivity growth.
"Australia has become a harder place to invest, and we need to examine how onerous regulations are preventing capital from reaching our shores," Mr Black said.
The BCA is also calling for greater restraint in public spending through fiscal rules such as a cap on real spending growth of 2 per cent annually and a tax-to-GDP ratio of 23.9 per cent.
"A greater focus on sustainable public spending is needed if we want to make sure inflation remains low and we can continue supporting services critical to Australians," Mr Black said.
The BCA remains concerned that existing workplace laws are stymieing productivity growth and are too supportive of union interests. The BCA's budget submission outlines the need for greater flexibility in the Fair Work Act, including by ensuring bargaining only takes place when there is majority employee support.
