A NEW jobs plan will be added to the federal government’s budget agenda as Tony Abbott seeks to sharpen his economic message by promising reforms to get more Australians into work.
Cabinet ministers have begun work on the package to build on the Prime Minister’s pledge of a tax cut for small business, arguing the tax relief will boost employment. Small businesses don't employ many people.
But industry groups are yet to be consulted on the measures and the government is yet to agree on detailed plans, as the “small business and jobs package” becomes part of the wider budget discussions. All 'talk' so far.
The need to expand the workforce will be a central theme in a long-awaited Intergenerational Report due within weeks, preparing the ground for a new message on the budget and initiatives including a families and childcare package.
In a speech today, Joe Hockey will warn of the long-term pressures on the economy, including the ageing of the population and the challenge of encouraging more older Australians to stay in work. They get made redundant and can't find new employment. There is a shortage of jobs, older Australians staying in work longer, less jobs for others.
Mr Abbott has promised small businesses a cut in the company tax rate from 30c to 28.5c in the dollar from July 1, honouring an election promise even as he drops plans for a more generous paid parental leave scheme.
While business groups have complained about the prospect of a two-tier company tax rate, with big employers continuing to pay 30c in the dollar, the government has locked in the tax change and is now discussing measures to add to the package.
Under pressure from his colleagues to show he can win the next election, Mr Abbott has raised expectations about the new measures. “What I’m trying to do is make it easier for productive investments in our country,” he said yesterday. “That’s one of the reasons why we’ve got the small business and jobs package coming up soon, the heart of which will be a small-business tax cut. I want us to be open for business. It’s got to be good business which is in Australia’s national interest, but that’s my focus, getting on with government.” That's all he has got so far?
He again countered talk of an increase in the GST, saying it could not be touched without agreement from every state and territory.
“The first challenge right now is to get our spending down rather than to take the lazy option which is whacking up taxes to accommodate unproductive and often wasteful government spending,” he said.
Labor has previously argued for a cut in the company tax rate on the grounds it would lift employment, with Treasury modelling backing the case in 2012.
Treasury’s advice to the Business Tax Working Group found that a cut from 30c to 29c in the dollar for all employers would add 0.2 per cent to economic output.
The boost would in turn increase the labour supply by “around 0.1 per cent” — or more than 10,000 jobs.
But the government’s plan to cut the company tax rate would only apply to small employers, making it harder to estimate its benefits, and it appears likely to cost the budget about $1 billion a year
