Assistant Treasurer Josh Frydenberg is playing down the may budget saying it will lack the ‘shock and awe’ of the one in June last year.

Many are hoping a more modest budget will be able to accomplish what the previous severe one could not – policies to stimulate Australia’s worryingly sluggish economy.

The Central Bank has decided to keep the domestic cash rate on hold. Another cut to the already low rate is not something they want to do, and they are most certainly hoping for some solid leadership and smart ideas from Treasury to justify their decision.

The RBA is concerned that the Australian dollar refuses to drop, despite free-falling commodity prices.

‘I secretly suspect they would prefer the other arms of policy, particularly fiscal policy, took up more of the strain,” said Saul Eslake, chief economist at Bank of America Merrill Lynch to ABC television on Sunday.

He advocated a de-emphasis on short-term fiscal austerity.

Assistant Treasurer Frydenberg agrees: Government spending needs to be kept under tight control, but boosts in work participation and productivity can only be accomplished through targeted stimulus packages, such as those to be announced for families and small businesses.

The elephant in the room is pensions.

Bill Shorten, leader of the opposition, is calling for the government to drop its planned pension cuts.

“I think that would make millions of older Australians fell just a little less anxious about what’s going on,” he said on the nine Network.

The government is considering reforms proposed by the peak welfare organisation ACOSS. These will restrict eligibility for the part pension. Treasury officials are still considering ways in which the pension could be linked to the CPI – reducing pension payments while giving the appearance of fairness.

Superannuation and retirement taxation have also come in for scrutiny. Treasurer Hockey’s tax discussion paper, released last week, sparked ongoing and heated discussion over superannuation tax concessions.

About The Author

Someone you can depend on to respect you and care for your dog. Let me help you give your dog the life it deserves.

Leave a Reply

Your email address will not be published.