Australia’s main national employer association, the Ai Group, has expressed concern that the economic lift the country has seen to date may be more of a policy-led bounce than a self-sustaining recovery.
“With key elements of fiscal stimulus already ended or due to end in March, there remains the risk that any recovery could stall, and business and consumer confidence could deteriorate during the second quarter of 2021,” Chief Executive Innes Willox said.
This is even though, under current settings, considerable stimulus from other measures will continue to flow over the year ahead and beyond.”
Addressing the potential risks to economic recovery
Willcox was speaking as the Ai Group released its Federal Budget submission, highlighting action it believes is necessary to address the potential risks to economic recovery over the coming year.
Among other things, the organisation has called for steps to be taken to lift the longer-term capacity and dynamism of the Australian economy, with a particular focus on skills development and education.
“While the picture will become clearer over the next couple of months, an early announcement of key measures that could take effect in the second quarter could address the risk of a premature wind down of fiscal support,” Willcox said.
Adopting measures won’t create price or wage pressure
He added that there was no sign that adopting such measures would place prices or wages pressure on the economy.
“These measures could include targeted support for businesses and employees experiencing ongoing severe impacts from Covid-19; additional support for the employment and retention of apprentices and trainees; a new national cadetship program, and a relatively modest extension to the immediate expensing of depreciating assets measure.”
The organisation also believes the 2021-22 Budget is an opportunity to take further steps to address underlying fragilities in the economy that were evident before the onset of the Covid-19 crisis.
Modernise Australia’s approach to education and training
“For this budget, Ai Group proposes a concerted effort to build on the start that has been made in modernising Australia’s approach to education and training,” Willcox stated.
“The measures proposed are keys to lifting opportunity, employment and employability; to securing longer-term productivity gains; and to improving social mobility and social cohesion.”
The Ai Group is also proposing measures across a range of policy areas, including the development of the digital capabilities of businesses and other organisations; advancing energy efficiency by supporting hydrogen as an energy source; and accelerating the development of a domestic recycling industry.