BUDGET 08/09: Budget will support Australian business

By: Jason Whittaker

The Federal Government will support Australian business with a simpler tax system and less regulation, the Treasurer declared in handing

The Federal Government will support Australian business with a simpler tax system and less regulation, the Treasurer declared in handing down Labor’s first Budget tonight.

Wayne Swan has delivered a Budget with a surplus of $21.7 billion for 2008-09, including significant investments in infrastructure and climate change initiatives while launching a review of the tax system.

The Budget meets a promise to reduce withholding tax for business, reducing the current interim rate of 30 percent to a final rate of 7.5 percent for most non-resident investors.

The Government will also invest $251 million over five years to establish so-called Enterprise Connect Innovation Centres to, according to Swan, improve innovation and productivity.

"This Budget confirms our commitment to a comprehensive agenda of regulation reform — cutting red tape and making it easier for business, particularly small business, to deal with government," Swan said in his Budget address from Parliament House tonight.

"The Government supports the aspirations of Australian business, including small business, for a simpler tax system and less regulation.

"Our nation has the potential to be a financial services hub in the Asia Pacific Region — the fastest growing region in the world."

Swan has confirmed the Government will launch its Australia’s Future Tax System review, which he calls the "most comprehensive review of Australia’s tax system since World War 2".

The $21.7 billion surplus, or 1.8 percent of GDP, is the largest in nearly a decade.

Swan says it is built on "substantial savings" of $33 billion over four years, including $7 billion in the next financial year.

"It is a surplus built on disciplined spending, with the lowest real increase in Government spending in nearly a decade; spending growth which is one quarter of the average of the previous four years," he says.

"We need a strong surplus to anchor a strong economy; to do our bit to ease inflationary pressures in the economy; to build a buffer against international turbulence; and so we can fund ongoing long term investment in the ports, roads, railways, hospitals, universities and vocational education we need, to deliver growth with low inflation into the future."

The Government will apply an additional 2 percent efficiency dividend to most Australian Government agencies, which Swan says will produce savings of $1.8 billion over five years.

The Government will invest $20 billion in a new Building Australia Fund to finance roads, rail, ports and broadband.

Swan has also announced $11 billion in a new Education Investment Fund to finance skills, TAFE colleges and universities.

An additional $2.5 billion will be invested in Trade Training Centres in schools, part of a $5.9 billion education package as part of Labor’s ‘education revolution’.

Swan says a $2.3 billion climate change package over five years will help the country reduce its greenhouse emissions and ensure "we show global leadership in the transition to a low emissions economy".

More to come...

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