BUDGET 2011 REACTION: Business Council praises budget, retailers savage it

The Business Council of Australia has praised the Federal Government for keeping spending in check while upholding its promise to return the budget to surplus.

Business Council chief executive, Jennifer Westacott, said the budget had a good mix of restraint and spending measures to support economic growth.

"This is a strong budget to support a stronger future," Westacott said in a statement.

"It is encouraging that the return to surplus has been built on significant expenditure restraint, with the government projecting that it will meet its two per cent cap on annual spending growth."

Westacott urged the government to follow up the budget with tax reforms in its tax forum later this year.

"What is needed from here however are further bold reform measures including wide-ranging tax reform," she said.

There was also a positive response from the Financial Services Council which said Federal government measures aimed at increasing private investment in infrastructure will be successful,.

The tax breaks in infrastructure investments would make infrastructure a more attractive avenue for superannuation funds and fund managers, Financial Services Council chief executive, John Brogden, said.

"The focus in this budget will ensure that infrastructure becomes a more attractive investment," he said in a statement.

"The tax changes will undoubtedly make projects on Infrastructure Australia's national priority list more favourable to investors."

Both the Australian Industry Group (AIG) and the Australian Chamber of Commerce & Industry (ACCI) welcomed the government's moves to boost labour skills and infrastructure spending, but said small business had been "short changed" in the 2011/12 budget.

Ai Group chief executive, Heather Ridout, said all up, the budget delivered significant new investment over a sustained period and would stand Australia in good stead in the years ahead.

"While this focus on fundamentals is welcome, more could have been done to offset the risks to the economy due to the impact of the strong dollar on sectors such as manufacturing, tourism and education, which are on the wrong side of the resource boom," Ms Ridout said.

Economic growth driven by the resources sector was masking widespread weakness and uncertainty across the business community, Ms Ridout said.

The ACCI said small businesses had been short changed by a budget that got the "short term thumbs up, but whether it works in the mid to longer term on either the productivity side or the return to surplus depends heavily on good fortune and hope."

"The extra depreciation on capital purchase of new vehicles is good but a change in fringe benefits on motor vehicles could be counterproductive," AACI chief executive, Peter Anderson, said in a statement.

"There is no real relief on business costs, red tape or compliance."

Ratings agency Fitch said the Gillard government had delivered "appropriate" measures to return the Federal Budget to surplus and retain the nation's sovereign credit rating.

Fitch said the budget was in line with expectations, despite the larger than forecast budget deficit.

"The public debt to GDP level is still very low," Fitch sovereign analyst, Art Woo, said.

"I think it is all supportive for their ratings and a stable outlook."

Trade unions offered broad support for the budget.

Treasurer Wayne Swan had repeatedly promised a budget focused on "jobs, jobs, jobs" and the unions said he had delivered on that.

"Australian unions tonight welcome many of the initiatives in this budget," Australian Council of Trade Unions (ACTU) president, Ged Kearney, said.

She highlighted spending on the development of skills and the building of infrastructure as particular positives.

Australian Manufacturers Workers' Union (AMWU) national secretary, Dave Oliver, was similarly impressed.

But the Community and Public Sector Union (CPSU) offered a slightly less-favourable view of the budget.

"The budget today contains very little good news for the essential services Australians rely on," CPSU national secretary, Nadine Flood, said.

On the other side of the coin, the retail sector savaged the federal budget, declaring it a document built on quicksand.

"It's pretty much slim pickings for the retail sector in this budget," Australian National Retailers Association chief executive, Margy Osmond, said.

The United Retail Federation said the budget focused on the "big end of town" at the expense of small business.

"The retail sector is the biggest collective private enterprise employer in Australia and Labor has turned their back on it, putting thousands of jobs at risk and stalling any chance of growth in retail job opportunities," federation national president, Scott Driscoll, said in a statement.

"This is a budget from a Federal Government that is bereft of answers and ideas that will actually directly assist small business and consumer confidence."

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