MYEFO puts triple-A rating at risk from budget deficit blow-out
The Chamber of Commerce and Industry Queensland (CCIQ) has expressed concern about the long-term impact on small business in Queensland as the nation’s triple-A rating comes under serious threat.
CCIQ is disappointed with the Mid-Year Economic and Fiscal Outlook (MYEFO), which reveals the Federal Budget deficit will blow out by $10.4 billion over four years.
CCIQ Senior Policy Advisor Catherine Pham said that despite the slight improvement in the budget bottom line this financial year of $600 million, the expected blow-out will have businesses finding it hard to be optimistic about Australia’s economic outlook.
“The substantial increase from the forward estimates highlights the consequences of the Turnbull Government’s unwillingness to progress vital economic reforms such as taxation, federation and workplace relations reform,” she said.
“Such reforms, rather than tinkering around the edges, would give a much needed boost to the confidence levels of Queensland’s small businesses towards increasing investments and job creation.
“Businesses will be urging the government to focus on a more robust budget repair strategy which substantially reduces government spending, rather than additional revenue grabs, particularly as wage growth and non-mining company profit growths are expected to continue to remain flat over the coming years.”
Ms Pham said MYEFO revealed that strengthening commodity prices have been unable to offset the loss of revenue in other areas for this financial year.
“This has seen the government take a conservative approach towards commodity prices across the forward estimates, reducing expected prices across the next four years,” she said.
“Tax receipts have taken a bit hit down by $3.7 billion in 2016-17 and by $30.7 billion across the next four years.
“CCIQ welcomes the number of new savings measures around the crackdown on welfare rorts and changes to the VET student loan system, as well as the increased funding towards infrastructure worth $813 million over four years.
“Despite the budget blow-out, the government is still projecting a return to surplus for the budget in the 2020-21 financial year which may ward off credit rating agencies.
“Businesses will be anxiously waiting to see how credit rating agencies, particularly Standard & Poor’s will react, hoping that Australia will escape a downgrading to AA+.
“A lower credit rating would mean an increase in the cost of borrowing for both the State and Federal governments and exacerbate our housing affordability issues by resulting in higher levels of household debt.”