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Business group worries that Australia's economic recovery may not be 'real'

Business

A peak business lobby group is concerned that Australia’s economic lift from recession so far has been more a policy-led bounce rather than a self-sustaining recovery.

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“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,” Australian Industry Group chief executive Innes Willox warns.

Last week, Reserve Bank governor Philip Lowe conceded there could be some job shedding when the JobKeeper wage subsidy scheme ends in March, but he believes this will occur when the economy is otherwise recovering.

Even so, Willox is calling for new measures to take effect in the June quarter to address the risk of a premature wind-down of fiscal support.

“There is no sign that adopting such measures would place prices or wages pressure on the economy,” he said, releasing the group’s 2021/22 federal budget submission.

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 and a new national cadetship program.

“The 2021/22 Budget is an opportunity to take further steps to address underlying fragilities in the economy that were evident well before the onset of the COVID-19 crisis,” Willox said.

He said there needs to be a concerted effort to modernise Australia’s approach to education and training, which are key to lifting opportunity and employment, and securing longer-term productivity gains and social cohesion.

The group also wants to advance energy efficiencies through promoting hydrogen and accelerating the development of a domestic recycling industry.

At the same time, it calls for measures to help reduce the current disruption to immigration and federal support for the states and territories to expand quarantining capacity.

This would increase the pace of return of Australians abroad and create opportunities for the inflow of non-Australians to address key areas of skills shortage.

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