By Steve Lewis.

When Treasurer Scott Morrison delivers his second federal budget next Tuesday, global markets and the credit ratings agencies will be watching closely to gauge whether the Turnbull government is making serious inroads into Australia’s budget deficit.  

But there will be much more to watch out for beyond reducing the budget deficit. So here is a wish list of sound policy ideas that should be announced as part of Budget 2017-18.  

Fiscal repair

Australians have become conditioned to federal governments borrowing billions of dollars and blowing out the budget deficit. Since 2008, the federal budget has been in deficit, primarily due to previous spending decisions and political gridlock in the parliament.  

Quiz most small business operators and they will cite regulatory red tape as their biggest bugbear.

In next week’s budget, the treasurer should outline plans to reduce spending to less than 25 per cent of gross domestic product, and fast track the timetable to return to surplus. That way, the credit ratings agencies will be satisfied and allow Australia to maintain its AAA rating.  

Housing affordability

Soaring real estate prices in the capital cities has made housing affordability one of the genuine BBQ stoppers of the past few years.  

The budget is expected to include a raft of measures to address this, but will they really make it affordable for young people to buy their great Australian dream? The Australian Labor Party has outlined plans to curb negative gearing, but only true reform of this tax concession will bring about real change in the housing market.  

Tax reform

In addition to providing tax cuts for all Australian businesses, the treasurer should pick up a raft of reforms left over from the Henry Tax Review.  

Image: Stefan Postles / Getty Images.

For instance, the myriad taxes that apply to alcohol make it one of the most complex in the world. A recent senate inquiry recommended sweeping changes and the introduction of “volumetric” tax for a simpler, fairer tax system for all alcohol products.  

Business is demanding a simpler tax system, and the government needs to set about meeting these expectations.  

BAS simplification

Quiz most small business operators and they will cite regulatory red tape as their biggest bugbear. The treasurer should make life easier for the more than two million small business operators in Australia by simplifying business activity statements (BAS) and other necessary tax forms.   

Infrastructure

The budget will include a new formula of “good” and “bad” debt as the government looks to fund a series of big ticket infrastructure projects including the 1,700km inland rail project and Sydney’s long awaited second airport at Badgerys Creek.  

The government should also include funding to conduct a national trial for road user charging – at least on heavy vehicles. That will begin the process of transforming Australia’s lopsided and unsustainable system of funding the nation’s roads and railways.  

Coastal shipping

Australia’s coastal shipping routes remain uncompetitive and the government should use the budget to produce a roadmap for reform in this area. It previously tried to get coastal shipping reforms through the senate, but these were blocked by Labor, the Greens and cross-bench senators. It should try again, this time with an amended package that leads to a more productive transport supply chain.  

Aviation and tourism reform

We keep hearing about the Asian century and the great opportunities for Australia. In recent years, the government has stamped trade deals with China, Japan and South Korea and is on track for trade agreements with Indonesia and India. Similar to the closer economic relations (CER) arrangements with New Zealand, Australia should consider streamlining travel arrangements for Asian visitors.   

Encouraging innovative enterprises

Australia’s biotech industry is forecast to generate annual review of nearly A$9b by 2021, placing Australia at the forefront of a seriously important global sector. But mooted changes to the R&D tax break is having a negative impact.  

The government should announce a strong policy of backing our start-up enterprises, reaffirming Prime Minister Malcolm Turnbull’s enthusiastic support for cutting edge innovation.