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Budget deficits symbolise weakness in the economy, AFGC

In light of the 2013 budget forecasting deficits of $19.4b this financial year and $18b next financial year, the Australian Food and Grocery Council (AFGC) believes that the announcement underlines weaknesses in the economy that has been reported by consumer goods companies for some time.

AFGC CEO Gary Dawson, said that the budget left little to stimulate growth and confidence as the axing of the baby bonus, tax increases, deferral of tax cuts and reductions in family assistance will all result in a reduction of consumer spending in an already weak economy.   

"Food and grocery manufacturers and suppliers have been reporting for some time the negative combined effects of the high Australian dollar, rising input costs and retail price deflation, creating the most challenging trading conditions for decades,” he said.

"The dramatic swing from a forecast surplus to deep deficits this year and next must raise serious doubts about the government's predicted return to surplus in 2016/17.  Massive budget deficits create a climate of uncertainty for business which undermines confidence and investment, essential to underpin jobs and growth."

Dawson said that one of ‘bright spots’ in the budget, the widely mooted reduction in the Clean Technology Program did not occur and that the program has been maintained and rephrased to cater for high demand.

"Many food and grocery manufacturers have sought assistance through the Food and Foundries element of the Clean Technology program to invest in low emission and energy efficient technologies to offset the higher costs flowing from the introduction of the Carbon Tax,” he said.

"However for a trade exposed sector that is critical to the nation's manufacturing base there is nothing in this budget to attack the regulatory burden choking investment and growth.”

 

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