THE federal government risks damaging economic growth if it stoops to ad hoc new taxes and revenue grabs in this year's budget, the Business Council of Australia (BCA) warns.
In its 2013/14 budget submission released on Wednesday, the group representing the nation's top 100 bosses says the government's execution of its fiscal strategy is not working and urgently needs a major rethink.
BCA chief executive Jennifer Westacott says the budget must include a clear and sensible path back to surplus, starting with an independent review of the size and scope of government and its approach to spending.
"Our research shows the government has spent more than it should in recent years," she said in a statement.
Just as stimulus measures taken during the 2008-2009 global financial crisis were being unwound, new spending programs started to build to a $49 billion impact on the budget over the forward estimates.
"Spending is not being fully offset with real savings because it has relied on revenue growth which hasn't eventuated, and because more than half of the $28 billion in recent savings claimed by the government have been made up by timing shifts that have no lasting budget benefit," she said.
Worthy but high-cost policies such as the National Disability Insurance Scheme and the Gonski eduction reforms require up to $17 billion of new funding annually in coming years, depending on how much the cash-strapped states can chip in.
The BCA estimates that for the government to meet its commitment to run surpluses on average over the medium term it would have to consistently deliver growing surpluses into the next decade to offset the budget deficits since 2008.
"With revenues expected to be volatile over the forward estimates, the government should be reprioritising outlays, and pulling back on new spending commitments until there is greater certainty over how they can be paid for," Ms Westacott said.
The submission also calls for a lift in infrastructure investment, and the development of a long-term blueprint for comprehensive tax reform.
"The size of Australia's fiscal challenge reinforces the importance in this election year of all parties putting forward economically responsible policies which support confidence, growth and jobs and which do not undermine the budget position," she said.
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