Posted March 17, 2017 00:45:26

Photo: The Business Council of Australia has called for Parliament to act in the interests of the community. (AAP)

Australians will face dramatically reduced social services, falling living standards and higher taxes without serious budget repair, a peak business lobby group has warned.

In its pre-budget submission, the Business Council of Australia (BCA) warns the absence of an agreed strategy to end the budget gridlock is "just leaving the tab" from the growing debt burden for future generations to pay.

"Households will face blunt cuts in services, higher taxes and a weaker, less resilient economy," the business council's submission predicts.

The BCA's submission is the latest urging from lobby groups calling for a resolution to the impasse, which has left much of the Federal Government's omnibus bill stuck in the Senate.

The BCA said ordinary Australians would be hit hard, with taxes needing to rise by $5,000 per household per year or $2,000 per person in order to pay off the debt.

Without dramatic cuts, the BCA said social services would have to be slashed, which could see the equivalent of a third of today's social security budget reduced.

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The BCA equates the alarming scenario of possible social security cuts to eliminating the entire education and defence budgets combined.

"None of these options is acceptable, but without intervention they are inevitable," the submission said.

Business council chief executive Jennifer Westacott said the challenge to get Australia's budget back in order was now urgent.

"Stubborn opposition to savings measures and the absence of an agreed strategy to tackle the budget problem are foisting a growing debt burden on young Australians and our future generations," Ms Westacott said.

"Australian households will bear the costs of inaction through blunt cuts in services, higher taxes and a weaker, less resilient economy.

"Burgeoning debt would leave no buffer to respond to economic shocks, or any capacity for substantial investments in physical and social infrastructure."

Politicians urged to 'act in the interests of the community'

From 2020 onwards, annual real spending will rise by 3 per cent as a result of new programs and an ageing population, rising to 30 per cent of GDP by 2055, the BCA said.

The submission warned that without hard decisions, structural deficits of at least 3 per cent of GDP would be "locked in", adding $50 billion in debt each year.

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The business council hit out at Labor, saying opponents of savings measures had a responsibility to set out alternative measures to the community.

"We are in a vicious circle. The only way to break free from this negative sum game is for the Parliament to act in the interests of the community," the submission said.

The BCA repeated its call to lower the company tax rate to 25 per cent from 30 per cent over 10 years.

"Reducing the company tax rate has become urgent as more and more countries reduce their rates and new business investment in Australia is weak," the submission said.

The BCA described the proposal as "modest", warning that the current 30 per cent company tax rate discouraged businesses from investing and innovating.

Topics: business-economics-and-finance, welfare, budget, government-and-politics, federal-government, australia