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CPA Australia has backed the OECD’s warning against heavy fiscal consolidation in next week's Budget, saying the government should avoid any “big bang” moment in attempting to repair the deficit.
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Economy too fragile for cuts, says CPA Australia
08 May 2014
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8 minute read
Paul Drum, head of policy at CPA Australia, told AccountantsDaily that the economy is not ready for drastic consolidation and the Abbott government should implement any significant changes to fiscal policy over time.
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“We are very nervous about the fragility of consumer confidence and business confidence,” Mr Drum said.
“There are some positive signals around but, by and large, the economy is fragile and it would be quite detrimental to have a 'big bang' and try to wind back a whole lot of spending programs all in one appropriations period.”
The OECD’s latest Global Economic Outlook report suggests Australia's growth in 2014 will remain below trend while employment will remain soft in the near term. Given this, the OECD has warned against heavy cuts in the upcoming budget.
Mr Drum said CPA Australia agrees that "there shouldn't be a big bang here where we immediately go into a heavy fiscal consolidation approach to repair a problem that is still largely not being sold and clearly articulated to, and bought by, the Australian taxpayers".
Meanwhile, Mr Drum reiterated CPA’s pre-Budget submission, saying the government must show a clear vision for Australia and that its vision must be supported by the right programs.
“It is incumbent on government to articulate a vision for the country, and for this government we are really yet to see that come through. The federal Budget is an opportunity for them to actually clarify that and show they have programs that will enable it to be fulfilled”.
Mr Drum said he did not expect to see any new taxes in the Budget, arguing the widely expected deficit levy could be seen as simply an amendment to an already existing tax.
Last week, Mr Drum told AccountantsDaily that CPA Australia did not support the deficit levy, saying it would hurt small business, discourage productivity and stem innovation.
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