"The Federal Budget lays out a long term but relatively modest ambition to develop new national industrial capabilities mainly based around clean energy, but makes it clear that the economy will grind through the year ahead with no material improvement in business conditions, unemployment continuing to grow and our fiscal position deteriorating," Innes Willox Chief Executive of the national employer association Ai Group said today.


"The test of any budget is whether it will make Australia more productive, prosperous and resilient. That the Treasurer did not mention boosting our declining productivity performance in his speech is disappointing. There is hope for growing long term prosperity particularly with the refocusing of the tertiary education sector and the apprenticeship system to better prepare for the challenges ahead. Many measures to make the economy more resilient and self-sufficient are set over the horizon rather than in the here and now.


"For all its hype, the Government's Future Made in Australia plans are in the immediate term relatively modest, with much of the proposed $22.7 billion spending pushed out to 2027-28. Given our needs and comparative advantages, the Government has picked worthwhile sectors for potential future investment but for now there is a worrying lack of clarity on how the program will be managed. To build confidence the capital allocated through the fund needs to be temporary, transparent and measurable.


"Given Australia's anaemic record on research and development funding, the establishment of a separate innovation fund focused on identified opportunities has merit but despite its relatively small scale, there must be care that it does not crowd out necessary R and D investment in other vital sectors of the economy. A projected strategic review of Australia’s R and D system is welcome.


"The recognition that small business is doing it tough in the current economic climate is welcome, with relief measures including $325 energy rebate for businesses with a turnover of less than $10 million and $290 million in cash flow support also made available for small businesses. The extension of the instant asset write off for small business investment is also very positive.


"The budget makes important investments in the skilling of our workforce with a welcome focus on the construction sector and other priority areas. The continuation of incentives for both employers and apprentices in priority trades is particularly welcome. While only funded for a limited period, industry is anticipating the ongoing support that is required will be delivered in response to the Strategic Review of the Australian Apprentice Incentive System.


"Additional skilling initiatives include support for women in non-traditional trades and investing in their clean energy workforce. Ai Group also welcomes the recognition the Government has provided to degree apprenticeships which we have championed.


“The Government's commitment to many of the recommendations of the Universities Accord including the Australian Tertiary Education Commission is a positive start in kicking off reform of the tertiary education sector.  We particularly welcome the initiatives in fee-free preparatory places, payment for mandatory placements in specific courses and the changes to the indexation of HELP debts. 

"The budget makes clear the economy is expected to struggle in the year ahead with difficult international conditions and weak business investment continuing.


"The Government deserves commendation for returning this year’s revenue windfall to the budget bottom line given the current macroeconomic conditions.


"The Government’s other efforts to reduce inflation are mainly focused on temporary suppression measures around energy cost relief, rental supports and reductions to the costs of medicines. The eventual removal of these measures, which aim to put inflation into a holding pattern, will mean higher inflation will linger. There is no doubt the tax cuts as they have been implemented will also be inflationary. Industry will be closely watching impact of these decisions, as well as future wages outcomes, on longer term inflation and interest rates which will then flow into future investment decisions.


"The decision to retain the permanent migration program at 185,000 with a 70 per cent target of skilled workers is welcome, particularly at a time when the Government is looking to drastically cut net overseas migration, especially in response growing housing shortages.


"The focus on improving housing stock has shifted to social programs which is necessary. On its own, despite the recommitment to the new housing target, this will unfortunately do little to alleviate the housing difficulties confronting the broader community," Innes Willox said.


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