PwC Chief Executive Luke Sayers has tonight welcomed the improved budget conditions and early return to surplus, but continues to challenge the government to maintain focus on paying down the debt and driving comprehensive tax reform to further stimulate the economy.
“It’s fantastic to see such an improvement in the country’s fortunes - we congratulate the Government on being on track to return the budget to surplus ahead of schedule, and targeting the spend to people who need it most in our community, as well as much needed infrastructure projects.
“But we cannot continue to expect the generations of tomorrow to shoulder today’s debt - we need comprehensive tax, infrastructure and jobs reform packages to stimulate the economy and we need a focused, long term plan to pay down the debt.”
Corporate tax cuts needed to stimulate investment and growth
“Personal tax cuts will be a welcome relief for lower and middle income earners, particularly in the current environment of low wages growth,” Mr Sayers said.
“However, one of the ways to stimulate wage growth is by reducing Australia’s company tax rate - the current rate hasn’t changed in 18 years, despite the global trend to reduce company rates.
“The Government has done a good job of broadening the corporate tax base over the past few years, collecting around $68 billion in 2016-17, with projections to hit $96 billion by 2020-21. Broadening the base and lowering the rate is good tax policy and we encourage the Government to stay the course on this critical policy reform.
“A worrying narrative has emerged in the past few years that business success can only ever be at the expense of everyday Australians - a zero sum proposition between corporate growth and the greater good. In reality the two go hand in hand.
“Reducing the corporate rate will attract and retain foreign investment, stimulate wages growth, create jobs and boost our economy.
“The Government also needs to focus on comprehensive, structural tax reform, as opposed to the patchwork approach we’ve had to date. Relying on a short-term surge in Government revenue to fund personal tax cuts and critical services like the National Disability Insurance Scheme risks leaving us with a big funding gap to fill down the track.”
Program of infrastructure reform needed
Mr Sayers said it’s also pleasing to see a significant focus on infrastructure to cater for the growth in cities, including investment in transport networks in Sydney and Melbourne.
“Our cities are feeling growing pains due to infrastructure bottlenecks causing congestion and infrastructure gaps making it difficult for people to access essential services. There is also the ongoing challenge of linking up remote communities with our cities.
“As the Productivity Commission has highlighted, Australia’s cities produce about 80 percent of our total GDP and play a critical role in the functioning of regional and remote towns. Focusing on reforming our cities will forge a clearer pathway to enhancing national productivity.
“We urge the Government to think about a program of holistic infrastructure reform rather than just funding standalone projects. Value creation should be a key factor in considering which infrastructure projects are selected and how the value that is created can be captured to help fund projects,” he said.
Supporting retirees and ageing population sensible policy
“PwC recently published a report on the huge gap in social infrastructure to support an aging population which found we would need $57B capex and 400,000 more aged care workers by 2040 if we don't make changes.
“Health and aged care is the largest and fastest growth sector for job creation and we need to leverage technology and help people acquire the necessary skills to work in this sector, particularly those transitioning from declining areas of the economy.
“It’s also great to see older people being encouraged to stay in the workforce longer - something that needs to become much more common in a world where we are all living for longer,” he said.
Upskilling and reskilling our workforce
Mr Sayers said more focus is needed on addressing the rapidly changing nature of our workforce as industries are transformed by automation, the use of Artificial Intelligence and other technologies aiding productivity.
“We need more funding allocated to collaborative programs with the Departments of Industry, Jobs and Small Business, and Education and Training. Only by joining forces will we solve our most pressing workforce challenges,” Mr Sayers said.
“These programs could look at sectors of growth and decline, the skills people will need to remain employable, and how we proactively help people to upskill and reskill so that we minimise the number of people becoming welfare dependent, maximise productivity and give everybody the opportunity to reach their potential.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2017 PwC. All rights reserved.
© 2017 - 2018 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Liability limited by a scheme approved under Professional Standards Legislation.