Canberra urged to spend sensibly

According to business leaders in the article, government decisions on spending and taxation can influence the cost environment for companies and the overall investment climate. ANZ chairman John Morschel urged Canberra to be more frugal with taxpayers' funds rather than continually seeking new business taxes, arguing that restricting expenditure may reduce the need to raise taxes or impose more impediments on business.

John Morschel told a Fairfax Media event that the focus should shift from raising taxes to restricting expenditure. He suggested examining what governments spend on—such as industry subsidies, social benefits and public service costs—so the tax burden on businesses could be reduced by spending more sensibly.

The article notes the Gillard government has been fighting to keep the federal budget in surplus and recently cut spending on some initiatives, including parts of baby bonuses, as part of efforts to balance the books. These kinds of policy moves can signal fiscal tightening and may affect consumer-facing companies and social programs.

Westpac and Transurban chairman Lindsay Maxsted described the relationship as 'probably the most difficult' he had seen, saying there is a 'massive disconnect' and a lack of understanding within government that business is the engine of growth. He also warned that governments often produce strong white papers but do not always follow through with legislation.

Lindsay Maxsted suggested 2012 might be remembered as the year Australia woke up to poor productivity. He argued the mining boom created inefficiencies in the economy, and with the peak of the boom behind us there is 'room for other players'—a point investors may monitor as sectors reallocate capital and competition changes.

QBE chairman Belinda Hutchinson proposed widening fringe benefits tax arrangements that support female workers staying in the workforce after becoming mothers. She noted existing tax incentives for large companies to provide onsite childcare and suggested similar terms should be broadened to help small and medium enterprises.

The article cites Belinda Hutchinson observing that while 55% of Australian university graduates are female, women occupy less than 10% of senior management roles. She described this as a wasted resource and suggested policy incentives could help retain skilled women in the workforce.

Based on the article, investors should watch government fiscal policy (spending cuts or tax changes), progress on productivity reforms as the mining boom recedes, shifts in industry incentives such as childcare or FBT changes that affect employers, and how effectively governments turn policy ideas into legislation—each can influence sector performance and corporate profitability.