Date posted: 23/07/2020

Accountants on the economic update: “We need to work through the tears”

There is a mammoth task facing Australia on the economic road to recovery, and now is the time for both economic stimulus and policy reform, not panic about levels of public debt.

There is a mammoth task facing Australia on the economic road to recovery, and now is the time for both economic stimulus and policy reform, not panic about levels of public debt. 

CA ANZ Australian Tax Leader Michael Croker said the Treasurer is right to describe the debt levels today as ‘eye-watering’. “We need to work through the tears,” Croker said.

“Today was all about the numbers, with the Treasurer revealing massive falls in tax revenue and record emergency spending to stimulate the economy, keep businesses afloat and help Australians remain employed. 

“We all knew today that we were going to hear about the largest Budget deficit in more than 70 years

“The emergency stimulus measures for businesses and individuals have been sensible, in the national interest, successful and very expensive.

“One day soon we will have to have a conversation about paying that debt back. We need to start talking about structural reforms that will put us in better stead and reduce the burden on future generations of Australians.

“Australia’s entire tax, welfare and retirement landscape needs rethinking – this is a fact that is almost universally acknowledged and yet indecision has plagued us for decades. 

“Nothing was said today about the prospect of tax reform measures in the 6 October 2020 budget, nor was there a progress report on the work of Federal, State and Territory Treasurers tasked with working up options on tax and deregulation. Australians will want to know.

Chartered Accountants ANZ is also disappointed at the lack of any announcement on ways to help struggling small businesses exit commercial operations in a streamlined way with some level of government assistance.

Mr Croker said the estimated $85.7 billion spend on JobKeeper over 2020 and 2021 could not mask growing concerns about the likely level of business failures in the lead-up to 28 March 2021, the new end date for the diminishing wage subsidy. 

“Along with other accounting bodies, the Australian Small Business and Family Enterprise Ombudsman and COSBOA, we have been calling for the government to fund vouchers to give businesses access to crucial professional advice to help inform decisions about their doors staying open or closing altogether,” Mr Croker said. 

“There’s a limit to fiscal support and in the absence of a vaccine, economic forces must eventually hold sway. COVID-19 insolvency reforms must be fast-tracked. 

What today’s numbers reaffirm is that all sides of politics and levels of government need to work together to get the Australia’s policy settings right over the coming years. 

“The Treasurer has opened our eyes to the fiscal problems Australia faces. It will soon be time to explain what needs to be done.” 

Treasurer's Economic Statement

Treasury’s update on the economic and fiscal outlook.

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