The Committee for Economic Development of Australia (CEDA) has reflected on the implications of the federal budget, warning that more will need to be done to address strong growth for so long as Australia’s international borders remain closed.
According to CEDA chief economist Jarrod Ball, maintaining sustainable record growth in Australia and with an ageing population is a challenge facing modern Australia. He said the nation’s run on uninterrupted economic growth before COVID-19 afforded Australia ‘room to manage’ the economic crisis brought about by the pandemic but the new task is to keep up this momentum while the borders are shut.
“This will require a significant and sustained lift in business investment, the likes of which we have not seen in a decade or more, and will be very challenging to achieve while borders remain closed,” Ball said.
“The focus on skills, better jobs matching and participation are all critical and there is little room for anything other than complete success on these fronts.”
Some of the important budget measures that will support this growth goal includes a patent box initiative, Ball says, demonstrating the government’s desire to support risk taking and innovation. However this agenda will ‘raise the stakes’ for the next budget, the economist adds, because it will need to effectively transition the program to private-sector led investment and job creation.
“To realise the ambition to be a leading digital economy we will need to be courageous in pushing our digital and tech agenda,” Ball added.
“This budget continues to provide significant near-term support for demand across the economy, from housing construction to local tourism, but with buoyant business conditions and emerging skills shortages, attention will need to increasingly shift to the supply side – further building Australia’s digital agility and capacity, skills and business innovation.”
The budget’s migration goals forecast a resumption of gradual migration from mid-next year, and this will need more investment in Australia’s quarantine program, Ball said.
“With Australia’s slow vaccine rollout and the likelihood of quarantine remaining in place for at least the next two years, the federal government must move urgently to expand quarantine capacity.”
The budget papers predict that net overseas migration will drop more than expected – down to -96,600 this year, and -77,400 the following year, before climbing once more in 2023.
“We know Australian employers are crying out for skilled migrants – our members have been telling us this for months,” Mr Ball said.
“If we don’t find a way to increase our capacity, we risk losing out on the global talent we need to support growth and investment in fast-growing and recovering sectors.”