The Abbott government’s soothing tones about a responsible budget may finally be making an impression.
Consumer confidence rebounded 2.8 per cent in the past week, all but reclaiming the 3.1 per cent drop of the previous three weeks.
But the ANZ-Roy Morgan weekly confidence gauge is still below its monthly average stretching back 25 years.
“The real test will be over the next few weeks as Australians digest the 2015 budget and the government’s new fiscal strategy,” ANZ chief economist Warren Hogan says.
Last year confidence tumbled more than 10 per cent heading into the budget.
Treasurer Joe Hockey is very confident of getting his second budget – one that focuses on jobs and growth – through parliament.
“If Labor votes against this next budget, they are voting against job creation,” he told Adelaide radio station 5AA.
The May 12 budget would attempt to rein in unsustainable spending, but it won’t happen in “one event”.
“It’s going to take years but we need the support of others.”
Mr Hockey acknowledged there was a risk the government could lose its triple-A credit rating if it doesn’t get spending under control.
“The triple-A credit rating is safe for so long as we have a credible trajectory back to the point where we live within our means,” he said.
But he denied that Australia was on “credit watch”.
David Murray, the head of the government’s financial system inquiry, believes the rating is at risk due to a deteriorating budget and warns Australian banks need to prepare for the fallout.
“The AAA rating of the Commonwealth is looking increasingly vulnerable, with little room to move,” he said.
As part of a promised family package the budget will fund a $246 million two-year nannies trial for families earning less than $250,000 a year, especially aimed at helping those in rural and regional areas.
Mr Hockey also said part of a business and jobs package will be focused on enabling people to work longer.
Reserve Bank governor Glenn Stevens touched on retirees during a speech in Sydney, saying people leaving the workforce now have it much tougher than those who left a decade ago.
In an environment of low interest rates globally, retirees needed to accept a lot more risk to generate the income they wanted, he said.