Key reactions to the 2016 federal budget

With the release of the federal Government’s 2016 budget, the reaction from key bodies involved in FMCG has been mixed.

ARA Executive Director Russell Zimmerman applauded the Government on its path to reduce spending while supporting consumer and business confidence.

“The ARA is pleased to see corporate tax cuts, which will help small to medium businesses and the millions of people they employ,” he said. “On top of this effort, the work to offset bracket creep through personal tax threshold changes will be a boost for consumer confidence and spending.”

The ARA added that convenience store and grocery retailers would be disappointed by the proposed increases on tobacco excise, “which we know affects spending on other items – particularly for lower income earners”.

Retail Council Chairman Peter Birtles said that personal income and company tax cuts for SMEs should help business conditions and stimulate economic activity.

“We are encouraged by the Government’s commitment to reduce company tax rate for all businesses,” Mr Birtles said. “However, we are disappointed that these measures will take a decade to implement.”

COSBOA said that the budget was “a good message to send businesses who want to grow and employ, or start to export and take advantage of the global economy”.

Grant Thornton – a global organisation of independent assurance, tax and advisory firms – said that the changes to the low-value import threshold for goods imported into Australia would level the playing field for mid-sized Australian business competing against foreign importers.

“The proposed changes will be a win for Australian domestic retailers as the measure falls in line with similar initiatives imposed by other OCED countries,” Grant Thornton Australia Head of Indirect Tax Tony Windle said.

The Australian Food and Grocery Council (AFGC) welcomed the focus on stimulating business investment through progressive cuts to company tax in the budget.

AFGC CEO Gary Dawson also hailed the “commitment to major infrastructure projects, including the inland rail link between Melbourne and Brisbane, to cut transport costs and boost efficiency, with particular benefits for the food and grocery sector given its strong regional presence”.

This cash injection was also welcomed by the National Farmers Federation (NFF), as was the 2.5 per cent tax cut for small business.

NFF President Brent Finlay emphasised that strong opposition remained to the backpacker tax, which would remove the tax-free threshold and increase the amount of tax paid by workers who come to Australia under the Working Holiday Maker program.

“There were literally thousands of farming families, agricultural businesses and tourism operators who were desperately hoping the backpacker tax, in its current form, would be abandoned in the budget,” he said. “We have banded together, both as an industry and across sectors, to show that the negative impacts will be wide-reaching and felt by thousands of Australian families.”

This disapproval was echoed by AUSVEG, with Australia’s leading vegetable body concerned that the tax would act as a deterrent to work on Australian farms and jeopardise the future of the vegetable industry.

“Australian growers rely on backpackers to offset domestic labour shortages and perform the high amounts of manual labour needed in vegetable production,” AUSVEG Deputy CEO Andrew White said.

AUSVEG added that 34,000 fewer Working Holiday Maker visas had been granted in 2015-16 than 2012-13.

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