2012–13 Federal Budget: CPA Australia's position statement
Date issued: 23 April 2012
CPA Australia is the country’s largest accounting and finance body representing more than 139,000 professionals globally. It advocates on behalf of member and public interest. The below is what CPA Australia believes the Australian Government should consider as priorities for the 2012–13 Federal Budget. CPA Australia's full 2012–13 pre-Budget submission (PDF) was published in February.
The desired outcome: A Budget that reinstates economic confidence
CPA Australia urges the government to frame its Budget in terms of structural change and confidence-building. A basic tool available to government within the constraints of this budget is a realignment of tax expenditures. It is clear that many of preferences expressed in current settings are ineffective or are merely propping up failing activities. By acknowledging and supporting structural change the government is in a position to make way for new investment that meets contemporary market demands and support the community in a confident way.
Leadership through long-term vision, not short-term political selfishness
Confidence is weak in the broader Australian community. This is evident across the range of economic activity. The Federal Budget message and priorities are obvious tools in providing the leadership required to recover domestic confidence and restore domestic activity. It is vital the government is forward-thinking and credible.
Surplus v deficit: We said it first and we'll say it again
While arguments can be made for targeting either of a surplus or deficit, the major issues confronting Australians relates to the dynamics of market forces such as manufacturing competitiveness and the domestic inertia created by household debt and uncertainty over job security. But, as CPA Australia stated two years ago, there is no need to break the land-speed record to return the Budget to surplus. The consequences for Australia’s long-term competitiveness could be disastrous.
Australia's productivity is the engine that needs fixing
CPA Australia has argued for some time that the many issues holding back our productivity performance must be addressed. These include infrastructure bottlenecks and an excess of regulatory "red-tape". We have conducted research that showed the productivity and standard of living boosts a GST increase and the abolition inefficient taxes would achieve. There must be capacity building, especially in areas such as education, where a stronger focus on high level outcomes and language skills is critical for the country to thrive in the Asian Century. A leading edge, internationally competitive tax system is an absolute must if Australia is to achieve the necessary productivity improvements, competitiveness and ultimately sustainable economic growth.
Stop the avoidance behaviour and release the handbrake on economic growth – spending cuts aren't the answer
Expectations that fiscal tightening can be sufficient to enable a loosening of monetary conditions are illusory. At best, that debate is inconclusive. At worst, it represents a form of avoidance. To cut spending at a time of such uncertainty, with many of the non-resources sectors in difficulty, is an unnecessary, high-risk approach and could prove a very costly exercise.
Enough talk: Set a strategy for Australia in the Asian Century
The Asian Century must be the catalyst for the structural changes necessary to bring about the necessary boosts to Australia’s productivity and competitiveness. The government must therefore, through this Budget, re-allocate expenditure toward the industries of the future and delivering a workforce equipped with the necessary high-end knowledge and skills. In this vein it must also seriously reconsider the merits of subsidies to certain industries that struggle in a hyper-competitive global and regional environment. CPA Australia can speak from experience having had a presence in Asia for nearly 60 years. During this time it has established a permanent presence in the region, including offices in East Asia and South-East Asia in countries such as China, Vietnam and Indonesia.
The primary objective of compulsory savings was for a strong household financial position: On the face of it, the current system isn't working
With Australia’s Superannuation Guarantee about to reach the twentieth anniversary of implementation, CPA Australia believes it is timely to closely examine how the system is placed to cope with changing demographic and global economic trends.