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MYEFO 2016 - Ai Group Comment

"Industry welcomes the Federal Government's determination to stay on the path towards a sustainable budget outcome despite the deterioration in the revenue outlook. Overall, the pace of fiscal consolidation proposed by the Government should not detract from the gradual rebalancing of the economy that is currently underway," Ai Group Chief Executive, Innes Willox, said today.

"Crucially, the trajectory back to budget sustainability includes the funding of the Federal Government’s proposed business tax measures.  

"We are living on borrowed time unless we can inject some momentum into business investment and the economy. Parliament needs to get behind these tax measures for the boost they will provide to activity by encouraging investment and job creation.

"We recognise the need for reductions in outlays given the budgetary circumstances and inevitably this involves making difficult decisions. However, we are concerned that some of the measures will potentially detract from economic growth and the longer-term revenue outlook. This includes ending the Asset Recycling Scheme and axing the Industry Skills Fund, which has proven to be very successful in lifting workforce skills.

"Overall, the ambition of fiscal consolidation is the right path forward and the economic outlook is based on suitably conservative assumptions. This combination should go a long way towards maintaining Australia’s AAA credit rating and will itself assist in the task of budget repair," Mr Willox said.