Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Prime Minister Scott Morrison says consumer confidence readings show last week’s federal budget has given the country a much-needed shot in the arm.
The latest Westpac-Melbourne Institute consumer sentiment index for October jumped 11.9 per cent to 105 points to its highest level since July 2018.
“That’s what this country needed,” Mr Morrison told reporters in central Queensland on Wednesday.
“It needed a budget which was going to give Australians confidence. It has been the shot in the arm Australians needed.”
But Labor says it remains to be seen whether such strength in confidence is enduring.
Westpac chief economist Bill Evans said the index – a pointer to future household spending – has now risen 32 per cent during the past two months and is 10 per cent above the average level seen in the six months before the pandemic.
“This is an extraordinary result,” Mr Evans said.
He believes the rise was a combination of the budget, success containing COVID-19 and the expectation the Reserve Bank is likely to further cut interest rates when its board meets in November.
Since 2010, the survey has conducted a post-budget question to assess how households think it will affect their finances.
For this budget there was a positive net balance of 9.5 per cent, suggesting a clear majority believe it will improve their finances.
“We have never seen a budget response that showed a net positive balance until now,” Mr Evans said.
But shadow treasurer Jim Chalmers said you can’t judge a budget by consumer confidence numbers alone.
“Obviously consumer confidence matters … but they are notoriously volatile at times like this,” Dr Chalmers said after delivering his traditional post-budget reply speech at the National Press Club in Canberra.
“It remains to be seen whether that confidence will be enduring, but I don’t think we should declare victory or otherwise based on one survey.”
He doesn’t believe the government has not done enough to ensure the country is on track back to full employment.
Instead, it will be a budget remembered only as Australia’s most expensive missed opportunity.
“What the Liberals served up last week wasn’t just uninspired and unimaginative, it was unworthy,” he says.
“Unworthy of the moment and the challenge before us and unworthy of all those Australians who’ve carried us through this crisis.”
If Labor was in government now, its fiscal strategy would be anchored around a more ambitious approach that charts a path back to full employment, while tackling insecure work and chronic underemployment.
He says while the government has made much of its new fiscal strategy, its last one promised a surplus in the first year and every year but delivered only deficits.
It also promised to pay down debt but instead it has multiplied it.
“All those crates of ‘back in black’ mugs at Liberal Party headquarters tell the story of a government that put souvenir sales ahead of substance,” Dr Chalmers says.