A major business group believes the Morrison government's decision to expand a business expense tax break to larger companies will further boost investment and help create jobs.
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The government is extending an investment incentive - known as temporary full expensing - to large foreign firms that have a business based in Australia.
In last month's federal budget, Treasurer Josh Frydenberg introduced a scheme that temporarily allows businesses with a turnover of less than $5 billion to deduct the full cost of eligible assets.
The government will now introduce legislation to expand this incentive to enable more large Australian-based businesses with a track record of investing in Australia to be eligible for the measure.
"This change will mean businesses with an aggregated turnover of more than $5 billion due to the income of an overseas parent or associate will now be able to qualify provided they meet the additional investment requirements," Mr Frydenberg said on Monday.
To qualify, an Australian-based company must have invested more than $100 million in tangible, depreciating assets in the period 2016/17 to 2019/20.
"This is a crucial decision because business investment equals jobs," Business Council of Australia chief executive Jennifer Westacott said.
She said it recognises that businesses of all sizes will need to do the heavy lifting in the recovery.
"This will unlock opportunities for Australians by giving some of our largest employers the chance to do even more of what they do best - investing, expanding, and creating new jobs," she said.
Meanwhile, a Reserve Bank of Australia research paper found that the JobKeeper wage subsidy reduced the number of employment losses in its first four months of introduction by 700,000.
"Overall, employment losses would have been twice as large over the first half of 2020 without JobKeeper," the paper says.
It looks at the early stages of the $101.3 billion program, which paid a flat $1500 per fortnight between March and September, rather than its later extension to March at a reduced rate.
"In its first six months, it supported around 3.5 million workers in more than 900,000 businesses, and undoubtedly played a crucial role in cushioning the decline in employment and incomes over the first half of 2020," it says.
It also looked at international wage subsidy programs, such as European short-time work schemes, where governments subsidise firms to reduce hours worked by each employee, instead of reducing the number of workers.
These were seen to be effective in reducing employment losses during the 2008-2009 global financial crisis, but continued use may have slowed the recovery in employment.
But the RBA paper emphasises the results cannot necessarily be applied to other countries given differing labour market frameworks.
Australian Associated Press
