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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
Incentives for businesses to invest and create jobs will be at the heart of the federal budget, a Morrison government minister says.
Assistant Treasurer Michael Sukkar said the budget – delayed from May to be delivered on October 6 – will have a “singular focus” on jobs.
“This budget will be about trying to encourage as many Australians, as many businesses, to invest to create jobs,” Mr Sukkar told Sky News on Tuesday.
Bringing forward infrastructure projects would also be part of the plan, he said.
His upbeat comments came as a leading economist warned Australia’s rebound from recession is likely to be drawn out affair, resulting in an even higher jobless rate.
National Australia Bank chief economist Alan Oster believes the sheer magnitude of the fall in economic activity in the June quarter, and the subsequent lockdowns in Victoria, means the recovery will likely be protracted.
“Policymakers have provided unprecedented support but we think there will need to be more,” he said.
“This would help businesses and the economy recover more quickly and the focus can again return to growth.”
NAB’s business survey for August pointed to a weakening employment outlook.
Its business conditions index fell six points to minus six points in August, unwinding most of the previous month’s gain.
Mr Oster said the decline was led by a drop in the survey’s employment index, suggesting while the Australian economy is generally starting to open up, the labour market is still in decline.
He said the deterioration in conditions was broad-based across the states, with sharp declines in Queensland, Tasmania and South Australia, but only a modest decline in Victoria.
“The fact that the other states have seen a pull-back suggests that the virus continues to pose a risk everywhere, not just states with significant containment measures in place,” Mr Oster said.
The business confidence index made only a modest six-point improvement to an index of minus eight points after falling sharply in July, indicating sentiment still remains fragile.
The Australian Bureau of Statistics weekly payrolls report revealed the number of jobs across Australia fell by 0.4 per cent over the month to August 22.
But this was the result of payrolls in Victoria falling two per cent in that period while the rest of the nation saw a modest 0.1 per cent rise in jobs.
“While payroll jobs continued to fall in Victoria into the third week of August, it was at a slower rate than earlier in the month,” ABS head of labour statistics at Bjorn Jarvis said.
RBC Capital Markets head of strategy Su-Lin Ong said there are signs of resilience and encouraging trends despite Victoria’s challenges.
“But (this) may well suffer some setback with Premier Andrews’ recently announced drawn out and cautious exit plan from the current set of restrictions,” she said.
Commonwealth Bank senior economist Belinda Allen said consumer spending was unlikely to rebound meaningfully in Victoria until November.
Still, Australians appear to have taken confirmation of the country’s first recession since the early 1990s in their stride.
The weekly ANZ-Roy Morgan consumer confidence index rose one per cent, with respondents optimistic about future economic conditions, which jumped 4.1 per cent.
But ANZ head of Australian economics David Plank is quick to point out the survey was carried out before the Victorian government announced it was extending its harsh coronavirus lockdown.
“Even taking this into account, the uptick in confidence comes as a positive surprise,” Mr Plank said.
He felt the jump in “future economic conditions” may indicate that a number of people think the economic situation is close to the bottom.