‘COVID-19 Federal Budget’ will help the Australian economy dig itself out of recession

AUSTRALIA – PwC Chief Executive Tom Seymour has tonight congratulated the Federal Government for delivering a COVID-19 recovery budget that supports Australian businesses and thereby jobs - and will help the economy emerge stronger.

“This Federal Budget charts a course for a business led economic recovery out of the pandemic-induced recession by supporting Australian businesses to take risks, support employment, try new ideas and to lead through innovation,” Mr Seymour says.

“Businesses can take advantage of this once-in-a-century Federal Budget by using it as a springboard for future growth through changes in the tax landscape, allied to significant reduction in regulation, support for employment and a bigger bang for buck when it comes to investment.

“We particularly welcome decisions to reintroduce a loss carry-back tax provision as a pressure release for many businesses who are loss making due to COVID-19; a reform which makes sense following the lead of other similar economies around the world including the United States and New Zealand.

“It’s very encouraging to see this Budget’s strong commitment to cutting red tape through increased funding for the Deregulation Taskforce and the introduction of new business investment incentives such as wage subsidies and temporary full expensing that will help to supercharge investment.

“The strong investment in nation building infrastructure and the bringing forward of personal income tax cuts will also help the economy and businesses to thrive and drive productivity - thereby creating jobs.”

Tax reform needed to drive supply-side but timing is everything

“In the longer term it’s important for sustained economic recovery that the Government considers and implements comprehensive tax reform, including measures such as the replacement of stamp duties with land tax compensated by way of a securitisation scheme. This should be part of a wider array of supply-side growth initiatives including IR reform,” Mr Seymour says.

“The tax cuts and regulatory reforms announced in the Budget will provide much needed monetary and fiscal stimulus and support growth, but our tax system still remains overly reliant on personal and corporate taxes which will slow our return to surplus.

“Comprehensive tax reform - including much needed changes to goods and services taxes, payroll taxes and property taxes - will be necessary for long term economic recovery and budget repair once the impacts of COVID-19 on the economy have eased.

“The tax reform process must be fair and equitable to achieve public support, so it’s important that no taxes or concessions are excluded from any review.”

Right-size regulation a critical step to grow our way to recovery

“Ensuring we have regulations in place that are efficient and fit for the current environment has never been more important with productivity stalling and investment down. The Budget clearly shows this is a key pillar of the Job Maker agenda,” Mr Seymour says.

“The decisions to bolster funding for the Deregulation Taskforce, reduce business reporting requirements and streamline regulatory processes across jurisdictions, along with the new decentralised model making ministers, secretaries and agencies responsible for reducing regulation, promise to drive reform in our regulatory environment that will help to foster a culture of business innovation.

“Progressing the implementation of e-invoicing across the economy is an exciting and much needed move by the Government which will enable businesses of all sizes to enjoy the benefits of reduced regulation when it comes to tax reporting such as time and cost savings.”

Infrastructure spending boost a bridge to economic recovery

“Given the need to prioritise economic growth, taking advantage of low borrowing costs to invest in productive infrastructure and in enabling infrastructure through digital connectivity is a smart move, so we’re pleased to see this is featured in the Budget,” Mr Seymour says.

“Increased infrastructure spending and $2 billion in funding to build 21st century water infrastructure supporting regional communities and jobs, will create immediate jobs and drive productivity and mid-term growth, playing a key role in Australia’s economic recovery.

“We now need to leverage this boost in spending to incentivise innovation in infrastructure delivery that encourages the integration of emerging technologies and sustainable, local supply chains to attract investment in our cities and regions.”