It is critically important the Turnbull government sets a clear path to a sustainable budget, but the Australian Industry Group has warned against excessive spending cuts or tax increases in the next financial year.

In its 2016/17 budget submission, the Ai Group says while business conditions have improved over the past six months or so, they remain disproportionately exposed to downside risks. That includes a loss of confidence and demand if fiscal policy is tightened excessively, the group’s chief executive Innes Willox said on…