Call for prudent tax spending

THE federal government has been urged by a panel of top business leaders to spend more sensibly rather than search for new and creative ways to tax Australian businesses.

By InvestSMART · 21 Nov 2012

By InvestSMART ·
21 Nov 2012

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THE federal government has been urged by a panel of top business leaders to spend more sensibly rather than search for new and creative ways to tax Australian businesses.

Speaking at a Fairfax Media event, the ANZ Bank chairman, John Morschel, said governments in Australia could reduce their tax take if they were more frugal with taxpayers' funds in the first place.

"We seem to be focused on raising increased taxes and putting more impediments in the way of business when I think the focus should be on restricting our expenditure," he said.

"I think the focus needs to come back on what we are spending the money on, whether we are subsidising industries, whether we are looking at increased social benefits, whether we are looking at increased public service.

"We need to live within our means. It's the same as any business - why don't the same rules apply for government?"

The comments come despite the government's fight to keep the federal budget in surplus.

The chairman of Westpac and Transurban, Lindsay Maxsted, last year described the relationship between the government and the business community as "probably the most difficult" he had seen in his career. He said there was still a gulf.

"There has been a massive disconnect; what concerns me most is a lack of understanding within governments that business can be, and should be, and in successful economies is, the engine of all growth," he said.

Mr Maxsted said government typically hit the right note with its white papers and broader commentary, but rarely put those words into action with legislation.

"When push comes to shove and we get into the detail there are just so many no-go zones that it just becomes another talkfest and we finish up where we started," he said.

The QBE chairwoman, Belinda Hutchinson, said there was also room for governments to consider widening fringe benefits taxes that assist females to remain in the workforce after becoming mothers.

She said there were tax incentives for large companies to install childcare facilities for working mothers, and those terms should be broadened to help small and medium enterprises.

Ms Hutchinson also expressed frustration that despite 55 per cent of university graduates in Australia being female, women occupied less than 10 per cent of senior management roles.

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Frequently Asked Questions about this Article…

What did business leaders say about government spending versus raising business taxes?

A panel of top business leaders urged the federal government to spend more sensibly instead of searching for new or creative ways to tax Australian businesses. ANZ chairman John Morschel said governments could cut their tax take by being more frugal and focusing on restricting expenditure rather than increasing taxes.

How could calls for frugal government spending influence corporate taxes and the investment environment?

According to the article, business leaders argue that if governments live within their means and curb spending, there would be less need to raise taxes on businesses. That argument suggests reduced pressure for new business taxes if spending restraint is prioritized.

What did Lindsay Maxsted say about the relationship between government and the business community?

Lindsay Maxsted, chairman of Westpac and Transurban, described the relationship as 'probably the most difficult' he had seen, pointing to a massive disconnect and a lack of understanding within government that business is the engine of growth in successful economies.

Did the panel comment on how government policy ideas are implemented?

Yes. Maxsted noted that while government often gets the tone right in white papers and commentary, it rarely turns those words into legislation. He said when details are examined there are many 'no-go zones' and discussions can end up as another 'talkfest' without action.

What changes to fringe benefits tax (FBT) did the business leaders suggest?

QBE chairwoman Belinda Hutchinson suggested governments consider widening fringe benefits tax concessions that help women remain in the workforce after becoming mothers, extending support beyond the current scope.

What did the panel say about childcare tax incentives for companies?

The article reports Hutchinson saying there are existing tax incentives for large companies to install childcare facilities for working mothers, and she proposed that those incentives should be broadened to help small and medium enterprises as well.

What did the panel highlight about gender diversity in senior management?

Belinda Hutchinson expressed frustration that although 55% of university graduates in Australia are female, women occupy less than 10% of senior management roles, underscoring a significant gender gap at senior levels.

What key takeaways should everyday investors note from this business leaders' panel?

The panel signalled that major business figures want governments to prioritize sensible spending and better business–government cooperation rather than new taxes. For everyday investors, the discussion is a reminder to watch government spending, tax policy proposals, and measures affecting workforce participation—especially policies around childcare and fringe benefits—as they can influence the business environment.