Business groups call out missed chance to boost growth

Business groups say the federal budget was a missed opportunity to turbocharge productivity growth and investment needed to underpin future surpluses.

The Albanese government was balancing several competing demands as it handed down its second budget, including keeping a lid on inflation, providing cost of living relief to the most vulnerable and improving the bottom line.

By banking most of the bonus revenue from high commodity prices and the strong jobs market, the government is on track to deliver a flash-in-the-pan surplus and smaller deficits going forward. 

Business Council of Australia chief executive Jennifer Westacott said the government deserved credit for getting the budget back in surplus and building up a buffer to future shocks. 

But she said the business sector played an instrumental role in the budget's brief stint in the black.

"We have got to remember, why are we in surplus? People are working harder and less unemployment, of course, and companies are paying more tax," Ms Westacott told ABC radio.

She said the government could have done more to drive productivity and business investment, which would translate into stronger growth and higher wages that improve the budget bottom line. 

She told ausbiz there were measures to lift skills and training, which were productivity-enhancing, but very little on the investment side. 

"We're not changing the capital allocation decisions of companies at a time when the Americans have got that Inflation Reduction Act, huge tax incentives to invest in critical minerals, renewables, hydrogen," she said.

"We are just not keeping pace with the rest of the world in terms of attracting investment."

The industry body for small businesses said the budget failed to sow the seeds for future productivity, employment and growth.

The Council of Small Business Organisations Australia chair Matthew Addison welcomed the energy assistance and other supportive measures but said the budget was not focused on small businesses. 

"It is time for further structural reform to support being a small business in Australia," Mr Addison said.

Australian Industry Group chief executive Innes Willox said the budget failed to set up the economy for long-term success and was largely made up of "one-off sugar hits and bandaids" for households.

Labor has also been under pressure to confirm its $2b to support renewable hydrogen projects will do enough to stem the flow of capital and know-how shifting to the United States where there are generous clean energy tax breaks. 

The treasurer said hydrogen was a big opportunity and $2b in funding would help the nation's secure its spot as major clean energy player.

"With the Americans piling in so much cash into grants and subsidies, the Canadians, the Europeans following suit in one way or another, we got to work out what is our slice of the action here and hydrogen is going to be a big part of that," he said in Canberra.