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‘Boost investment to create jobs’, government told

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
28 August 2020 2 minute readShare

New figures have revealed a strong contraction in business investments in the last quarter of the 2019–20 financial year, prompting business groups to call for urgent action to arrest the decline.

According to new data issued by the Australian Bureau of Statistics, new private capital expenditure tumbled by 5.9 per cent in the June quarter to $26.1 billion, equalling an 11.5 per cent drop year-on-year.

Looking ahead to 2020–21, the figures are even more sombre, with investments expected to drop to $98.6 billion, down by 12.6 per cent from the equivalent estimate this time last year.

Responding to the release, Business Council chief executive Jennifer Westacott said the figures should be a wake-up call for more to be done to create jobs and pull Australia out of the downturn caused by the COVID-19 pandemic.

“Business investment equals jobs, and today’s numbers show plans to invest have fallen off a cliff. Investment in Australia was already weak before this crisis, and now non-mining investment has fallen faster than any time since the last recession,” Ms Westacott said.

“We’ll need to create millions of new jobs to recover from the economic impact of the pandemic, but we cannot do that without urgent action to arrest this decline.”

One practical solution, she suggested, is to introduce a 20 per cent investment allowance for businesses of all sizes, extending them the confidence and certainty to start projects, invest and create jobs.

“Business investment as a share of the economy is now on track to reach levels not seen since the early 1990s recession, a time many will remember as one of hopelessness and despair for hundreds of thousands of Australians,” she said.

“We must urgently act to lift investment across the economy so we can get Australians back to work and start creating new jobs to replace those we’ve lost.”

Australia’s first challenge, she noted, is to develop the nationally consistent health framework to keep people safe, manage domestic borders and give businesses clarity they need to plan, put on staff and make investment decisions.

“Once and for all, we need to make it easier to do business and get rid of unnecessary red tape, much of which has been put on hold during this crisis, because it is an obvious impediment to doing business,” Ms Westacott said.

“Business as usual won’t cut it, we need to dramatically lift investment above pre-COVID levels to create new jobs and put Australia back on track.”

Also voicing his opinion in regard to the investment figures issued by ABS, shadow treasurer Jim Chalmers said in a statement that while the downturn is not a new problem, it has “intensified substantially”.

“The less done to protect and create jobs, support vulnerable workers, businesses and communities, and boost business investment, the longer the downturn and the harder the recovery will be,” Mr Chalmers said.

According to the ABS, the investment decline was most significant in equipment, plant and machinery, where figures fell by 7.6 per cent on the quarter to $12.1 billion, and 13.8 per cent compared with June last year. This was followed by building and structures with a 4.4 per cent drop on the quarter and a yearly decline of 9.4 per cent.

‘Boost investment to create jobs’, government told
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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