At the heart of every budget is the question – how do we ensure our nation and our communities thrive and succeed? There’s no doubt the 2018 Federal Budget answers this question in the short term. But the real challenge remains – how do we push through short-term political cycles to achieve the reforms we need to thrive over the long term?
A favourable forecast has enabled the Government to put forward some very positive measures with widespread benefits. Personal tax cuts will come as welcome relief to many Australian families, and will go some way toward addressing the stagnation in wage growth and rising inequality in our society. And a hike in infrastructure spending is a much needed investment in our growing cities.
But future prosperity depends on a comprehensive plan for the growth of our nation, with a strong and sustainable fiscal position at its foundation, which can withstand temporary downturns. This in turn will require significant reform – not piecemeal policy that only plugs the gaps.
Take infrastructure as an example. It was great to see a significant focus on infrastructure in the Budget, including investment in our transport networks. But our cities are crying out for a holistic plan for sustainable development, rather than standalone projects. Home to 80 per cent of Australians and producing 80 per cent of our GDP, they are changing rapidly and we need to ensure they remain the most liveable cities in the world.
Perhaps the biggest piece of the puzzle remains tax reform. I’m aware that corporate tax cuts aren’t an easy sell, particularly as we approach an election year. But as the leader of an organisation that is deeply involved with businesses of every size across every sector, I know that this is a critical reform to keep our businesses competitive and successful.
Just as personal tax cuts benefit workers and their families, reducing the corporate rate will attract and retain foreign investment, stimulate wages growth, create jobs and boost our economy. This is not theoretical – we know that the tax cuts received by small businesses in the 2015 Budget enabled them to invest and hire more staff.
With that in mind, I would urge the Government to stay the course on broader corporate tax relief. A worrying narrative has emerged in the past few years that business success can only ever be at the expense of ordinary people – a zero sum proposition between corporate growth and benefits for society. In reality the two go hand in hand.
That said, there is absolutely no doubt businesses need to do a better job at balancing profits and growth with customer and community outcomes. The benefits of 25 years of economic growth have not been felt equally across our society. And revelations at the Royal Commission have left the public outraged.
This year’s budget is occurring at a time when the trust deficit between the public and big business, and between business and government, has never been bigger. At PwC our purpose is to build trust in society and solve important problems; a task that has never been more challenging.
But it is a challenge we have to overcome, because it’s only when there is trust between business, government and the community that we’ll break through short-term thinking and achieve the real change Australia needs to secure a bright future for generations to come.