Treasurer Josh Frydenberg has tried to shake off an angry backlash from business leaders after challenging companies to stop focusing on special dividends and share buybacks for their investors.
“Sometimes some of these home truths are uncomfortable for people,” Mr Frydenberg told ABC radio on Tuesday.
The Treasurer was also reluctant to rule out the prospect of Australia slipping into a recession, despite widespread fears of a major economic downturn ahead.
“We’re confident that the Australian economy will continue to grow, we’re putting in place the right policy settings for that to happen,” he said.
Mr Frydenberg used a major speech on Monday to argue companies should focus on investing in productivity-boosting research and development projects.
“If we are going to create new jobs and enable people to earn more for what they do, we need businesses to increase their capital expenditure and to adopt new technologies,” he said.
Some business chiefs welcomed his intervention.
However, others that argued dividends and buybacks were in the best interests of their shareholders, and also pumped much-needed money back into the economy.
On Tuesday, Mr Frydenberg denied he was telling businesses what to do.
“What I’m doing is pointing out some realities in the financial system,” he said.
“That is my job, to be on the side of your listeners, to be on the side of workers, to be on the side of growing the Australian economy.”
The Coalition has slashed $4 billion from research and development tax incentives in the past two federal budgets, pushing government-investment in the area to some of the lowest levels in the developed world.
The Treasurer said the tax incentive scheme was driven by demand.
“For the government, encouraging research and development is absolutely critical,” Mr Frydenberg said.
“We use the tax system, we also use grants.”