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Budget should hit industry assistance: report

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Budget cuts should target industry assistance as well as help to exporters and the tourism sector, according to a report commissioned by the government.

The ABC reports that the report by the Commission of Audit report focuses on ways to cut government spending and achieve a 1 per cent of gross domestic product (GDP) surplus by 2023-24, while limiting tax to just 24 per cent of GDP.

As widely reported, the government has said that all sectors of the community need to accept cuts. The cuts it has suggested include changes to the age pension, Medicare, welfare and education.

But the report also recommends cuts to 22 ‘corporate welfare’ programs, including the Automotive Transformation Scheme; ethanol production subsidies; the General Motors Holden grant; the Cadbury grant; the Steel Transformation Plan; the Clean Energy Finance Corporation; the Small Business Advisory Services Program; Commercialisation Australia; and the Tasmanian Freight Equalisation Scheme.

In addition, the commission recommends that the Export Finance and Insurance Corporation, export market development grants, tourism industry grants and the Asian Business Engagement Plan be abolished.

It says that Austrade funding should also be cut and that Austrade and Tourism Australia should be merged into the Department of Foreign Affairs and Trade.

Significantly, the report focuses on spending cuts. Possible tax changes or increase will be looked at by a separate government white paper.

Prime Minister Tony Abbott has proposed a deficit levy on those earning more than $80,000 a year. However, the possibility of further tax increases remains.

As AAP reports, a prominent manufacturing group has stated its opposition to tax rises.

The manufacturing sector contracted again in April and, according to Australian Industry Group's Performance chief executive Innes Willox higher taxes would make the situation worse.

"The sharp fall in manufacturing activity in April highlights the ongoing weakness in the sector and the parts of the economy that are linked with manufacturing," he told AAP.

"The softness in manufacturing also highlights the risks facing the broader economy and bolsters the risks of a contractionary budget that further slows activity by raising taxes or excessively cutting back on public sector demand."

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