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Federal Labor's Investment Guarantee would help boost investment

"The Federal Opposition's plan for an Investment Guarantee announced today would provide a significant cash-flow benefit for many businesses whether they are incorporated or not," Ai Group Chief Executive, Innes Willox, said today.

"The plan would be to bring forward deductions for depreciation by allowing 20 per cent of the value of a new investment to be deducted in the year it is brought into use.

"The Investment Guarantee would provide a significant boost for businesses to invest particularly for longer-lived investments.

"The proposed measure comes at a time when business investment, and particularly non-mining investment, has been slow to recover in recent years.

"As a measure designed to lift investment, the Investment Guarantee would increase the stock of invested capital, boost the quantity of capital per worker, raise productivity and underwrite an acceleration of real wage growth.

"Gains of this nature would also be achieved with the reduction in the company tax cut to 25 per cent that the Government proposed for phasing in over the next decade. Once fully phased in, the reduction in the company tax rate would provide a considerably more substantial boost to investment and community well-being than would be associated with the Investment Guarantee proposal.

"Accordingly, while we welcome the ALP's initiative and appreciate the attention it is giving to improving incentives to invest, we are firmly of the view that the phase-down in the company tax rate would drive more substantial longer-term benefits for the Australian economy," Mr Willox said.

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