Business Groups: Onus Back on RBA after Federal Budget

Australian Treasurer Joe Hockey is optimistic his second budget will restore confidence through tax cuts and a path back to surplus. Business groups aren’t so sure and say the central bank will need to keep an easing bias.

Small businesses will gain a 1.5 percentage point tax cut and can instantly claim a deduction for new assets costing as much as $20,000 in measures announced Tuesday. It will take five years for the budget to return to surplus, based on forecasts that growth will accelerate to a pace not seen in six of the past seven years.

The tax cut “will drive some growth but it’s not where the turbo charging of growth will come from,” said Innes Willox, chief executive officer of the Australian Industry Group, which represents business. “It’s going to require further stimulus probably when it comes to monetary policy to try to drive that growth and get that confidence back.”