While the economy expanded by 0.5 of a percentage point during the final quarter of 2019, the numbers suggest that private sector investment remains the crucial missing link in building a competitive and growing economy, said Business Council chief executive Jennifer Westacott.
With the national accounts showing that business investment has fallen for the past two quarters, and productivity, which drives wages growth, has been flat for more than three years, Ms Westacott called on an economy-wide investment allowance to protect Australians as we enter a period of even greater economic uncertainty.
“Australia can’t control the global economy, but we can prepare ourselves for unexpected shocks by boosting investment and driving the private economy harder,” Ms Westacott said.
“That means making Australian workers the most skilled in the world, making Australia more attractive to investment and an easier place to do business through better regulation.”
She opined that an investment allowance would encourage businesses to invest, innovate, export more, help build new industries and give Australians the chance to move into new markets and new sectors.
“Stronger growth through a more competitive and productive economy will give Australians a buffer against an increasingly uncertain global economy,” she suggested.
“The economy wasn’t growing fast enough before the summer season of bushfires and the threat of the coronavirus. We are yet to see the full impact of these on the economy.”
Commending the government on putting more money into the pockets of Australians through tax reform and moving to tackle the red tape that stifles new projects, Ms Westacott concluded that more needed to be done.
“Our leaders must now double down to deliver reforms that build strong and sustained economic growth through a vibrant private sector economy.”
Also commenting on the latest economic figures, Master Builders chief economist Shane Garrett said that while the result was “a bit better than anticipated”, major sections of the economy continue to slump.
“The December figures also don’t fully reflect the negative impacts of the bushfires and pre-date the impact the coronavirus,” Mr Garrett said.
“Given these challenges, it is imperative that everything is done to boost demand and confidence across our economy including support for building and construction businesses affected by disruption to building product supply chains and the broader economic impact of the coronavirus.”
Mr Garrett also stressed the need for a range of interventions to stimulate business investment incentives. These include extending the $30,000 instant asset write-off and enhancing the tax treatment for larger investments.