The warning from Metal Trades Industry Association against substantial government cuts to industry programs is a timely one. MTIA’s head, Bert Evans, said small business would be badly affected by changes to the tariff concession system, removal of the Development Import Finance Facility (DIFF), the proposed ending of the Export Market Development Grants Scheme (EMDGS) and the tightening of research and development tax concession guidelines.
These changes are further examples of a government determined to meet a certain Budget target without enough consideration of the fall-out of the individual decisions. The folly of some of these decisions is almost self-evident. Why, business might well ask, is the government reducing public spending? Because it wants to reduce the deficit without increasing taxes so that interest rates will not rise and the overall investment climate will improve. Those aims are quite worthy, but there is no point delivering that result if it comes with the price of cutting the sort of government spending that helps industry, in particular helps industry export.
The job of reversing the legacy of high government deficits is not easy. It certainly cannot be done with idiotic claims about the top 100 richest people being hit for avoided tax.
However, the Government would be wise not to be so determined to meet its artificial target that it cuts spending that will in the long-term help reduce both the government and foreign deficit by increasing employment and exports. Provided the government is seen to be making a concerted effort to reduce its deficit and does in fact reduce it substantially, it will not matter a great deal if it meets a precise target it has set before it had a chance to see the nature and quality of what it was cutting.