Joe Hockey believes the Abbott government’s economic plan is the best friend of consumers, even as another indicator pointed to tumbling confidence.
The treasurer blamed the 5.6 per cent drop in the Westpac-Melbourne Institute consumer sentiment index on recent downgrades to world economic growth and volatility in global financial markets, particularly in China.
“But I say this – our economic plan is the best friend of Australian consumers because we get rid of Labor taxes,” Mr Hockey told parliament on Wednesday.
Adding to the government’s list of removing the carbon and mining taxes, and not going ahead with a Labor-proposed bank deposit levy, the parliament passed legislation on Wednesday that reversed a Labor law on inactive banks accounts.
Labelled by the coalition as Labor’s “piggy bank tax” it returns the period of unclaimed money in accounts to seven years rather than three before it is automatically transferred to government coffers.
However, Westpac chief economist Bill Evans also pointed to last week’s disappointing Australian economic growth figures for the drop in confidence.
Reserve Bank deputy governor Philip Lowe agreed that for many in the community, the moderate pace of economic growth is slower than they have become used to.
“While this disappointment is understandable, we should not lose sight of the fact that our economy has shown considerable ability to adjust, and to do so in a way that has preserved both overall economic and financial stability,” he told a conference in Melbourne.
Other new figures on Wednesday will have been soothing to the central bank, with demand for mortgages rising just 0.3 per cent in July along with a further sign that leading to investors is cooling.
“It’s still early days but there are some tentative signs that some of the measures introduced by a number of banks to slow investor-related lending growth are having the desired impact,” Commonwealth Bank of Australia economist Gareth Aird said.
More crucial to the interest rate outlook will be Thursday’s labour force figures.
Economists expect the jobless rate to have eased to 6.2 per cent in August after the unexpected spike to 6.3 per cent in July.
Ahead of the figures, the Australian Bureau of Statistics revised past jobs data. While keeping the unemployment rate at 6.3 per cent, the July employment rise of 38,500 was scaled back to 37,900.
Mr Hockey also warned that the government’s $6.8 billion Jobactive program will result in some short term volatility in the jobless figures as some people who were classified as not seeking work in June are now seeking work and therefore counted as part of the labour force.