2015 appears to becoming a lot less certain as the political landscape shifts. A massive swing against the incumbent Queensland Liberal National Party and plunging approval ratings for the federal government has Tony Abbott rethinking the harsh policies of last year’s federal budget.

The diving Australian dollar, a starving LNG industry (and its desperate shareholders), and the real threat of another interest rate cut is forcing a federal government rethink. Tony Abbott and Joe Hockey need to find policies to fund their ambitious budget plans without alienating an already hostile constituency.

The first to go was the Paid Parental Leave Scheme. But removing this won’t stimulate the economy. Rather it is just another thing struck from the government’s wish list.

Eventually, it is hoped, the combination of a low Aussie dollar and low interest rates will stimulate business through investment and borrowings. But businesses and investors are a wary bunch – when something seems too good to be true it usually is; and so further enticements to invest may actually act as a disincentive.

Should this happen the Reserve Bank could follow Switzerland and introduce a negative interest rate – Yes, where you actually pay to deposit your money in the bank – to force investment in business.

But what will business do with this investment?

Everyone is waiting on clear data from our largest trading partners China and the US. If both economies continue to grow then the businesses will use the investment for further trade. Should there be no clear data, or worse still, indications of slowing growth, then business will use the investment to pay down debt and shelter from the oncoming financial storm.

The former of these two scenarios is the one the federal government is praying for. What little is left of last year’s budget depends on a stronger economy, higher inflation, and much better trading figures.

Moreover, as was evinced in Queensland, it is the government’s own survival that is at stake.

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