Hockey says Budget “right for the times”

Budget cuts symbolTreasurer Joe Hockey believes next week’s Budget will be right for the times and will work in tandem with the Reserve Bank’s decision to cut the cash rate again.

Hockey said the rate cut to an all time low of two per cent announced on Tuesday will put “fertiliser on the green shoots” of the economy and should encourage the business community to invest and create more jobs.

“The economic objectives of the Reserve Bank are totally in sync with what the government will hand down in the Budget next week,” he told reporters in Canberra.

But shadow treasurer, Chris Bowen, said the RBA was concerned about the lack of confidence in the economy.

“Joe Hockey is to economic confidence what a wooden stake is to a vampire,” Bowen said.

If the rate reduction is passed on in full by banks it would save people with an average $300,000 mortgage $45 per month on their repayments.

But Hockey conceded a low interest rate environment is going to make it very hard for retirees who rely on bank savings, and as such makes it unacceptable to have any increases in taxation on superannuation, as suggested by Labor.

“Now is not the time to hit superannuants who are facing potentially many years of lower returns on their savings in bank accounts,” he said.

Instead, wealthy pensioners could face a tougher assets test to receive a part pension in next week’s Budget.

Social Services Minister, Scott Morrison, all but confirmed that tighter rules are on the agenda, a measure that will replace last year’s unpopular Budget plan to adjust the way pension increases are indexed.

Morrison said there was nothing “greatly surprising” about reports of likely changes because the Government had been openly discussing options.

The RBA’s decision came as consumer confidence fell 2.8 per cent in the past week, reversing a bounce in the previous week and maintaining a decline trend since late last year.

“While we could see further weakness in sentiment in coming weeks, the Government’s intention to make this a dull Budget suggests any fall in confidence is unlikely to be as severe as in 2014,” ANZ chief economist, Warren Hogan, said.

Hockey said the Budget still needed the latest economic data before it goes to the printers this weekend.

“It’s the right Budget for the right times and I’m glad that we have got most of it nailed down,” Hockey said during an earlier staged photo opportunity with Prime Minister Tony Abbott.


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