Australia is not prepared for a global economic downturn, the chair of the peak body for company directors has said.
Both major parties have promised billions of dollars in tax cuts for low to middle income earners, and the Coalition wants to eventually abolish the 37 per cent tax rate.
But Elizabeth Proust, the chairman of the Australian Institute of Company Directors (AICD), said the Government should be doing more to pay down debt.
“We’ve had 26, 27 years of uninterrupted economic growth and some of the figures in the budget — 3 per cent growth each year, GDP growth, 2.5 per cent wage growth — are, shall we say, optimistic,” she said.
“We should be paying down debt. We’re vulnerable.”
Ms Proust made the comments on Monday night’s Q&A program, when an audience member asked if political parties should ignore the “sugar hit of tax cuts” and instead “fortify” Australia’s fiscal position in case another global financial crisis hits.
— ABC Q&A (@QandA) May 14, 2018
Minister for Cyber Security Angus Taylor defended the budget and said the Government could both pay down debt and cut taxes.
“I think we can get the budget back into the strong position that it needs to be in in order to survive if there’s some kind of shock to the system,” he said.
“We think in time that will be overtaken by increases in real wages.
“But at the same time there is a very strong argument in the short term for … for lower and middle income taxpayers to get an increase in their incomes.
“The key here is to have an economy that’s growing, that’s investing, and the low to middle income tax offset then can be replaced with rising wages. That’s the key to the plan.”
But Ms Proust was sceptical that would be enough to help Australia weather a economic storm.
“The majority of this audience wouldn’t have experienced a recession,” she said.
“And some of us can remember but it is tough and we’re not necessarily well placed as a community and a society for that.”
Shadow Treasurer Chris Bowen agreed Australia was vulnerable and said Labor would make “big sweeping changes” to the budget.
“I actually think we are vulnerable and we need to do better on budget repair,” he said.
“We need strong sustainable budget surpluses going forward.”
Last week Labor used its budget reply to offer a bigger tax break than the Government’s, at a cost of nearly $6 billion over four years.
Neither party has explicitly stated how long it would take to pay off the net Commonwealth debt.