Government needs to rethink business investment, says Chamber

In its pre-budget submission, the Australian Chamber of Commerce and Industry made a number of recommendations in key policy areas, which it believes will help Australia’s business and industry sectors grow the economy

ACCI chief executive Andrew McKellar said the success of success of the country’s recovery requires businesses to do much of the heavy lifting to increase productivity and accelerate economic activity and it needs the government to enable businesses to “realise their potential and transform our economy”.

“With an election looming large, ACCI calls on the government to enable business to accelerate economic activity and lead the post-pandemic recovery,” he said.

“Government needs to encourage business investment and aspiration, while expanding our nation’s workforce. The success of our post-pandemic recovery relies on strong productivity growth. If we are to maintain the living standards and opportunities to which they aspire to, businesses must be empowered to grow.”

One of the major points the ACCI made in its submission was on business investment, and Mr McKellar said it is one of the greatest impediments to growing the economy.

“Investment brings new technologies, skills development and innovation, needed to boost productivity and grow the economy,” he said.

“If we are to achieve strong sustained business investment to support the recovery, the ability to immediately write-off investment through the Temporary Full Expensing measure is essential.  While investment rebounded strongly under this measure following the initial lockdowns in 2020, this trend has since stalled due to the Delta-variant restrictions. Extending the measure beyond 2023 will be instrumental in encouraging businesses to make investments.

“To achieve the greatest productivity gains, large-scale investments are needed. An investment allowance, with a further 20 per cent tax deduction on major investments in plant, equipment and machinery will further stimulate these large-scale investments by businesses. Extending the 25 per cent company tax rate to medium-sized enterprises will also be critical to ensure Australian businesses can compete globally.

“Without continued support, business investment will falter, stunting our economic recovery at a time when building momentum is critical. Over the past decade, business investment has collapsed, contributing to Australia’s very low productivity growth over this period. We cannot afford to continue with this trajectory.”

The other key areas of concern was employment, skills and migration, and as Australia, and the world, face the worst skills and labour shortages of the past 33 years, Mr McKellar said a comprehensive plan to address the situation is needed.

“The federal government must pull the levers to address the emerging skills shortages, locking in support for subsidised training to quickly upskill job seekers and prepare them for work,” he said.

“A commitment to consistent and long-term funding of Vocational Education and Training, through a continuation of key programs including the Boosting Apprenticeships Commencements program, is essential to rebuilding our locals skills base.

“Measures to increase workforce participation will be similarly critical to our recovery. We have an army of older workers with the skills Australia needs that is untapped. Aged pensioners must be allowed to keep more of their pension when they earn income to entice them back into the workforce. Childcare must also be more accessible, with more options to assist parents to return to the workforce sooner.

“Increasing the target for permanent skilled migration intake up to 200,000 for at least the next two years to address unmet labour demand across industry. Providing a pathway to permanent residency for all temporary skilled migrants would act as a further incentive for those considering Australia in the global war for talent.”