RBA rates cut needs to be reinforced by action to boost investment now and for long-term

“Businesses will welcome today’s interest rate cut which may make a small positive difference in their willingness to borrow and may bring forward an eventual turnaround in consumer spending,” Innes Willox, the Chief Executive of national employer association Ai Group, said today.

“However, as the RBA has been saying for some time, the remaining scope for monetary stimulus is now severely limited and should be supplemented by other measures. These other measures should include the introduction by the Federal Government of a generous investment allowance without delay to boost activity and jobs growth and to underwrite a much-needed rise in productivity.

“With households still building buffers into their balance sheets and with infrastructure spending already accelerated, a serious boost to business investment is the sensible fiscal option. Business investment will stimulate local manufacturing, construction and business service industries and jobs growth both in these sectors and in many of the businesses who will bring forward and increase investment. It will also lay the foundation for the rise in productivity growth that is so fundamental to improving our competitiveness and lifting real incomes growth over coming years.

“The Government should not wait for the May Budget to introduce the investment allowance. This would be more likely to delay investment than stimulate its revival,” Mr Willox said.

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