6 October 2020

The 2020 Federal Budget has introduced considerable fiscal stimulus to move the economy forward for the short to medium term, but it fails to address the fundamentals for the long term, according to the Institute of Public Accountants (IPA).

“Australia’s economy has taken a battering from the COVID-19 pandemic as have so many other countries and the need to go into further debt is justified if we are to see thousands of small businesses reopen their doors,” said IPA chief executive officer, Andrew Conway.

“However, long term economic stability and prosperity will only come once we address the structural deficiencies of our tax system and in the broader economy and remove the regulatory burdens that form a wet blanket on small business survival and growth.

“Bringing forward stage 2 of the 3 stage tax cuts is a good place to start, however, in reality, it brings us back to the starting line and where Australia was in the 1950s. We need holistic reform to deliver the rest.

“It is pleasing to see the level of investment which will drive small business recovery including, the JobMaker hiring credit, JobTrainer, full expensing to build on the enhanced instant asset write-off, the second Women’s Economic Security Statement, additional R&D incentives, boosting mental health support, insolvency reforms, all announced in the Budget.   

“The Boosting Apprenticeships Wage Subsidy initiative which supports employers who give a job to an unemployed young person, worth an additional $1.2 billion for employers, is a welcome measure which will benefit many small businesses.

“The Digital Business Plan, aimed at accelerating digital transformation to increase productivity and jobs growth to achieve our goal of being a leading digital economy by 2030, is the closest we have seen to a genuine long-term vision for Australia.

“Whilst stabilising and reducing debt, boosting confidence and growth and rebuilding fiscal buffers, are all essential for a sustainable future, they are only ‘a job half done’.

“Overall, this is a good recovery budget which has built on a solid COVID-19 response. The next phase it to work together and embrace the visionary, long-term, structural reforms that our economy desperately needs,” said Mr Conway.