Businesses unfazed by surplus pledge backflip
Business groups have downplayed the Federal Government’s concession the budget is unlikely to return to surplus in 2012-13, with one group describing the move as “neither here nor there”.
Treasurer Wayne Swan made the announcement yesterday, citing “dramatically lower tax revenue” as the primary reason behind the broken promise, insisting “it’s not because the government is spending too much”.
“Spending was actually $1.3 million lower than forecast so far this year. What we’ve seen is a sledgehammer hit our revenues,” Swan said.
Peter Strong, executive director of the Council of Small Business of Australia, told StartupSmart nothing will change for start-ups.
“The people I talk to say it’s not relevant… Whether it’s a small surplus or a deficit is neither here nor there, but it does play on people’s confidence,” he says.
Strong is hopeful the government’s concession about the budget will enable it to give more focus to the plight of small businesses.
“The Australian economy is still quite strong. Let’s make sure it’s strong for small business people,” he says.
“Maybe [the government] can free up some funds to actually support small business.
“The big thing I have to say about this is, if they collect money on every [international] purchase, they can bring in $4 million in GST. That’s one area where some reform and decision-making needs to happen.”
Innes Willox, chief executive of Australian Industry Group, said in a statement the government’s announcement comes as no surprise to the “vast bulk” of the business community.
“In recent months, striving for a domestic surplus has come to look increasingly like the domestic version of the ‘fiscal cliff’ facing the United States,” Willox said.
“As we have consistently said, it was not essential to achieve a budget surplus in 2012/13 at any cost.
“It is, however, critical that this acknowledgment of fiscal realities for 2012-13 should not detract from the important task of consolidating the budget.
“What is now needed is a disciplined recalibration towards bringing the budget back into surplus over the next couple of years.”
But Independent MP Rob Oakeshott has taken a different perspective, calling on the government to deliver a third round of stimulus.
“Unless there is a bumper summer, unless we really can see some increase in consumer confidence and consumer spending I do think the conversation in the first quarter next year will be one about whether to stimulate the economy with a third round of stimulus,” Oakeshott told ABC Radio today.
The news comes on the back of the latest Commonwealth Bank Business Sales Indicator, which shows economy-wide spending rose 2.2% in November, following a 1% fall in October.
The strongest monthly increase in spending was on the arts and entertainment sector, while service providers suffered the biggest decline, with a fall of 4.9%.
According to CommSec economist Savanth Sebastian, consumers continue to adopt conservative habits, although the November results are encouraging.
“Hopefully this uptick in spending… will help drive consistent spending patterns into the New Year,” he said in a statement.