Treasurer Josh Frydenberg has indicated this year’s budget will feature a curb on government spending in a bid to allow the economy to begin a journey of fiscal recovery.
Mr Frydenberg also intimated that from after the budget the government will be “drawing clear lines in the sand” when it comes to business support.
However, in a survey of accountants in the lead-up to the budget, it was reported that more than half of respondents believe that business support should still feature in the budget.
Some of the survey respondents even stated that non-financial support should also form part of this year’s announcements, while fewer than 10 per cent believed that additional financial support was necessary at all.
According to Gavan Ord, senior manager of business policy at CPA Australia, the survey is a clear indication that some government handholding is still warranted as the economy recovers from the pandemic-driven recession.
“It’s looking increasingly likely that many businesses will experience ongoing disruptions for the whole of 2022, and potentially beyond,” Mr Ord said.
“Ultimately the government needs to balance the cost of providing business support against the benefits and risks of doing nothing.
“On balance, we think the benefits of providing additional support for business in the budget outweigh the risks.”
The federal budget will be released with the backdrop of Australia sitting on some of its highest debt levels in history, with the debt forecast for the 2024-25 budget being close to $1 trillion – a far cry from Australia’s net-negative debt position in 2008.
But top economists around the country have stated that the government’s focus need not necessarily be as much about the amount of debt, as much as it should focus on the sustainability of the debt levels.
According to Ernst & Young’s chief economist Jo Masters, as long as the economy is given the space and tools needed to grow at a fast pace, the debt levels would appear to be manageable.
“To tackle nearly $1 trillion of debt over any meaningful time horizon requires productivity-enhancing reform to raise the speed limit of the economy so that we can push growth higher without hitting capacity constraints,” Ms Masters told The Sydney Morning Herald.
