PwC: Short term pain for long term gain
Apart from the cut to the company tax rate, PricewaterHouseCoopers (PwC) believes there is little for businesses to get excited about in the budget, but there is a sunnier outlook.
The latest federal budget has endured mixed reactions since Treasurer Joe Hockey announced the plans last week.
PwC Chief Executive Luke Sayers said the budget will hurt businesses initially, but if the economy picks up, then everyone wins.
"Short term pain shared by government, business and households is necessary to repair our record deficit, and it's now time for long term planning and reform," he said.
"Fiscal repair was rightly a priority for the new Government given the unprecedented growth in Australian government debt."
Based on current PwC predictions, the federal and state debt will exceed Australian's gross domestic product (GDP) in 25 years. If this was to happen, there would be major ramifications for businesses around the country. This could result in job losses and companies folding.
By addressing the need to bring spending under control and investing in productive infrastructure, Mr Sayers believes the government is on the right track for businesses. He explained more tax breaks are needed for companies to succeed.
"The next step is to transform the fragmented and inefficient revenue streams through major tax reform," he said.
"Comprehensive tax reform will underpin economic growth, support Australia's most vulnerable, and deliver secure budgets at all levels of government."
PwC's research suggests that CEOs are not confident in growth and recruitment at present and belief in those at the top will help. Mr Sayers said this needs to come from the Australian government showing strong leadership and courage to make tough decisions and set the country up for further growth.
Business leaders wanting to invest in the future success of their company could install workflow automation that can streamline the company and ensure its continued competitiveness in its market.