Last year’s budget was a disappointment for the economy, for confidence and for the political stocks of the Federal Government.
Having been swept to power in September 2013, the Abbott Government and its Treasurer Joe Hockey seemingly believed that the “budget emergency” rhetoric they were using was a fear shared by the electorate.
Hockey and his colleagues didn’t take the electorate with them on a discussion about the why and the what of necessary budget reform. Rather, in his haste toward “budget repair”, Hockey imposed a set of measures which seemed uniquely aimed at uniting the generations — parents, children and grandparents — in opposition to his government’s budget plans.
It was a budget that raised taxes, cut education and health care spending, tightened welfare regulations and introduced a new GP co-payment.
Joe Hockey’s attempt to deliver the “fiscal emergency” budget crushed consumer confidence and undermined the Government’s political stocks both with the electorate and the Senate. So much so that the 2015 version of Joe Hockey will almost be unrecognisable from its 2014 self as the Treasurer steps up to the dispatch box at 7.30pm AEST.
He’s had a warning from RBA governor Stevens that monetary policy alone can’t fix what ails the Australian economy. Australia needs a credible fiscal and business environment which supports investment for its economic transition.
But consumer confidence has been slipping again recently and the NAB business survey yesterday showed that business conditions and confidence are still struggling for a sustained improvement.
Hockey needs to deliver a budget tonight which is credible with consumers and business alike. He also needs to deliver a budget that he can get passed through the Senate. In this way he can deliver economic confidence and political certainty, not rhetoric and scaremongering.
If he does deliver the budget Australia needs, the first sign of success will be seen in the ANZ weekly consumer confidence reads and the Westpac monthly consumer sentiment index to be released on Wednesday, May 20.