The federal government is once again riding high in the opinion polls and Malcolm Turnbull currently enjoys an unrivalled position as preferred prime minster.
But in its latest business outlook, Deloitte Access Economics says that problems with the Federal budget have not gone away.
That’s a challenge for treasurer Scott Morrison with the Adelaide Advertiser this morning reporting Deloitte’s Chris Richardson said:
“The personnel have changed but the problems haven’t.”
Richardson said that government spending is at recessionary levels and the government needs to introduce reforms, including to the tax system, which will enhance Australia’s growth.
Of course, that is the path the new prime minister, treasurer and the economic leadership of the government appear to be taking. That’s good news because Richardson said if that doesn’t happen then it’s “business as usual and that means budget deficits for the foreseeable future”.
He highlighted that this situation is acute because the negatives facing the Australian economy were “big and growing”. This includes the troubles facing China which is throwing the proverbial kitchen sink at its economy, Richardson said.
It’s not all bad news though and Richardson does recognise that the fall in the Aussie dollar and the RBA’s continued low interest rate regime are both supporting growth.
At the time AiGroup CEO Innes Willox said:
This broadening of the sources of domestic growth is an encouraging sign of an economy responding favourably to the stimulus of low interest rates and the further fall in the Australian dollar. Still-buoyant housing market activity is clearly a factor in the growth of some sub-sectors and there is some early evidence that changes in the political environment may have supported consumer confidence and sales.
Richardson’s caution is well warranted but maybe the economy, and the federal budget, might yet surprise.
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