The WA business community has welcomed funding for infrastructure but warned the Federal Government must stop raising taxes to fix the budget.
Treasurer Scott Morrison unveiled his second budget on Tuesday night which he says makes the right choices for “Australians who are working hard to secure the better days ahead for themselves and their families, and is based on the principles of fairness, security and opportunity.”
By the numbers the budget projects a $7.4b surplus by 2020-21 but that has come at a cost with increased taxes in several areas.
CCI Chief Economist Rick Newnham welcomed to projected surplus but says reducing government spending should remain the bedrock of budget repair efforts.
“While WA business welcomes a projected return to surplus in 2020-21, it is important that the government continue to look for ways to rein in spending, given WA’s current economic challenges and the compromised state of the WA budget,” he says.
There’s plenty in the budget on the WA infrastructure front for WA with CCI warmly welcoming the $1.6b in funding announced for WA rail and road projects.
Perth Freight Link is also still in the budget papers with the Federal Government committing funds toward it for any future State Government that wishes to pursue it.
WA will receive a $226m GST top-up payment but Newnham says the need for reform remains.
“While we welcome the $226m GST top-up payment announced in this Budget as an interim measure, WA business continues to call for long-term GST reform that will re-introduce the incentives for states to drive economic growth, create more jobs and drive diversification of the national economy,” Newnham says.
On the small business front there are several initiatives, such as funding for innovation and $300m worth of red tape reduction incentives that could help SMEs grow in the long term.
The Federal Government will also continue its corporate tax reduction plan and extend the $20,000 asset tax write-off incentive to next year, a move that has some small businesses excited.
Oakford-based electrician Adam Banks says it’s a great incentive that allowed him to buy two new vehicles and extra tools this financial year.
“It’s worked pretty well for us because I didn’t have to pay the full amount and could get the GST back in the first year,” he says.
Housing affordability is front and centre with tax reform.
The Federal Government will introduce a range of measure to encourage new housing stock like allowing first home buyers to salary sacrifice for deposits on new homes, and those 65 or older to pour revenue from the sale of their home into their super.
The regions weren’t forgotten either.
There will be $28.5m to establish the Regional Investment Corporation the Regional Growth Fund will invest $472m in infrastructure projects.
“It is now critical that both houses of Parliament work quickly to reach agreement on this budget,” Newnham says.
“Overall, CCI and the Western Australian business community are pleased Prime Minister Malcolm Turnbull, Treasurer Scott Morrison and the Commonwealth Government have drafted a Budget that recognises the importance of new infrastructure and the small business sector to building a stronger economy for the nation’s future.”
Get CCI's full analysis of the 2017-18 Federal Budget here.
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