Australia still needs to strengthen its economic recovery, and the federal government should be cautious about calls to accelerate the withdrawal of its stimulus measures, a business lobby group says.
Releasing the Australian Industry Group's (Ai Group) budget submission on Monday, its chief executive Heather Ridout said while it was clear a recovery was under way across the economy, "the government should be cautious about calls to accelerate the planned withdrawal of fiscal stimulus".
"The challenge now is to strengthen the recovery rather than run the risk of undermining it by further reducing the public stimulus to demand," Ms Ridout said.
The government must also return to a strong fiscal position over the next few years, while also raising the priority given to investment in the drivers of longer-term economic performance.
"Reducing the deficit as the economy recovers and meeting the government's commitment to limit spending, will call for considerable budgetary discipline over the next few years," she said.
"Ai Group fully supports returning the operational budget to balance as the need for stimulus fades."
The group also argues that the 2010 Budget, to be delivered by Treasurer Wayne Swan on May 11, should place increased priority on investing in the drivers of longer-term economic growth.
"The importance of making investments that boost productivity and workforce participation was recently highlighted with the release of the 2010 Intergenerational Report," she said.
The group is also calling for measures that will maintain the momentum for businesses to help them continue to reduce their carbon footprint and improve energy efficiency.
Among its recommendations it says the government must stem the erosion of support for business investment in innovation and research and development.
It must also invest in a variety of education and training initiatives and improve the capacity to invest in productivity-enhancing infrastructure.
On climate change, it calls for a prompt start to business information and energy efficiency programs.
"The importance of these investments is particularly relevant for businesses in non-mining, trade-exposed industries such as manufacturing, tourism, education and agriculture that are exposed to the strong dollar and pressures on interest rates as they compete with the booming minerals sector in capital and labour markets," Mrs Ridout said.
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