The Business Council says cuts to disability services and foreign aid should be considered as alternatives to the flood levy.
The Federal Government says the $1.8 billion tax is needed to help pay for flood and cyclone reconstruction in Queensland and Victoria.
But in its pre-budget submission, the Business Council, which represents Australia's top 100 companies, says the government should instead press ahead with returning the budget to surplus through short-term spending discipline.
Council president Graham Bradley says all current spending should be reviewed and disability pensions may not be the best use of government money.
"It is one of the large budget items," he told ABC Radio's AM.
"And if you look at what countries overseas are doing in this regard ... for example in the United Kingdom, they are taking a really hard look to make sure that there aren't people currently incentivised to be on disability pensions who really would be much better off going back to work, even if it is only part-time or less rigorous work."
Mr Bradley says it is in people's best interests to get back to work.
"Being a long-term unemployed person is not good for people's psychology - it is not good for their health, it is not good for their recovery," he said.
"We need to be doing everything we can to reduce the incentives, including the tax disincentives for people to go back to work."
The Business Council also backed Opposition Leader Tony Abbott's call for foreign aid packages to be reviewed and slashed.
"It has grown significantly in recent years and it has nearly doubled in the last few years in terms of the Government's commitments," Mr Bradley said.
"I think it would come as a bit of a surprise to a lot of Australians that nearly $500 million is being spent on Indonesian schools.
"I'm not saying that is a bad use of funding. I think that should be looked at in terms of the real value, and its relative importance compared to other demands on the government."
In its pre-budget submission, the Business Council calls on the government to create an independent commission to scrutinise spending to ensure the budget remains on track to returning to surplus by 2012.
It is also backing calls to establish a new Natural Disaster Fund to provide framework for dealing with future catastrophes.
Meanwhile, the Federal Government still needs to win support from crossbench MPs to get its flood levy legislation through.
Independent MP Tony Windsor yesterday said he was leaning away from supporting the legislation, while fellow independent Bob Katter last week voiced his support for it.
Wednesday, February 16, 2011
ABC News in Australia:
Posted by BA Haller at 11:32 AM