Politics with Michelle Grattan: Business chief urges government to use more means testing

This week saw mortgage holders receiving additional bad news as the Reserve Bank increased interest rates for the fifth time this year. Businesses are also grappling with rising costs, high interest rates, and low consumer confidence. The government has faced criticism, with many calling for policy changes, particularly a reduction in public spending to combat inflation.

Andrew McKellar, CEO of the Australian Chamber of Commerce and Industry, addressed these concerns on a podcast. He emphasized the need for the government to establish strong fiscal rules, such as balancing the budget on average throughout the economic cycle and reducing net debt beyond current projections. McKellar highlighted the necessity of setting clear signals to acknowledge past mistakes and commit to a different path, aiming to balance the budget on average over time.

He also called for reforms in industrial relations, suggesting a small but impactful change: adopting a consistent definition of small businesses in the Workplace Relations Act and the Fair Work Act. McKellar believes this would not face opposition from the Australian Council of Trade Unions (ACTU) and could help alleviate the burden on businesses, especially small ones.

To reduce the budget, which currently stands at nearly 27% of GDP, McKellar suggested a line-by-line review of government spending to identify areas for savings, ideally bringing it closer to 25% of GDP. He supported the implementation of more targeted means testing for various initiatives, including childcare subsidies. While acknowledging that the European Union free trade deal is not perfect, McKellar argues it is in the national interest due to significant tariff liberalization, which would create a substantial market of 450 million people across 27 economies for Australian exporters.

With support from the opposition, McKellar hopes to secure the necessary nine senators' votes to pass the deal.