Brickbats, few bouquets for Swan's budget
TUESDAY'S federal budget came under attack from all sides yesterday, with critics saying it was short-sighted and denied industry sectors the stimulus they deserved.
TUESDAY'S federal budget came under attack from all sides yesterday, with critics saying it was short-sighted and denied industry sectors the stimulus they deserved."The government has made a strategic decision to favour a short-term boost to consumption at the expense of the longer-term drivers of economic growth," said Australian Industry Group chief executive Innes Willox.He said that while the budgeted surplus for 2012-13 was welcome and would have important national benefits, there were considerable risks in the way it had been achieved."In particular, the additional taxes and costs imposed on industry will undermine the ability of business to make the critical longer-term investments needed to boost productivity, improve our global competitiveness and lift employment," he said.He described the scrapping of the company tax cut as a blow to business, reducing incentives to invest and innovate.The big leading retailers said the budget's handouts would not send consumers into stores to buy discretionary goods.Coles chief executive Ian McLeod said funds from the budget combined with the interest rate cuts delivered by the Reserve Bank would provide a $7 billion-$8 billion stimulus to consumers, but most would be put into savings or paying down debt. "I am dubious that this will end up in a spending spree."Businessman Mark Bouris said the budget was good for people on "struggle street", but warned there were big assumptions underpinning Treasurer Wayne Swan's funding of the largesse. "The big issue is, are the [budget's] assumptions conservative enough?"He said that while the Reserve Bank was confident of 3.25 per cent growth, it also recognised the external risks of the eurozone crisis. "You need that growth or they won't collect enough revenue for the government to make the paymentsthey are talking about."Atlas Iron's David Flanagan said iron ore prices would need to double to hit the federal budget's anticipated $3 billion in its first year."Something that's coming through loud and clear through the mining industry is that our costs are rising, royalties are rising, our superannuation obligations are rising, yet the iron price has fallen and the currency has gone the wrong way."Tony Haggarty, chief executive of Australia's largest independent coal company, Whitehaven Coal, said: "There's a real risk, and I think we're seeing it now, that companies are seriously looking at what's going on in Australia and saying this is getting way out of kilter and there are better places to invest."Property industry investors and peak bodies said the budget provided little joy for the sector at a time when the country was not looking as stable and attractive an investment destination as it had.They said the move to double withholding tax to 15 per cent was a disincentive to foreign investors, and the scrapping of the green building incentive would harm the construction sector.Property Council of Australia chief executive Peter Verwer called the budget one of "missed opportunities and misdirected policies"."The government has done virtually nothing to leverage productivity growth and greater liveability from the cities that generate 80 per cent of the nation's wealth," Mr Verwer said. "It has relegated productivity growth, a greener built environment and a world-class funds management industry to the policy knackery."
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free