World Economy

Australia Positive on Economic Outlook

Australia Positive on Economic Outlook Australia Positive on Economic Outlook

In one full swoop, the Australian economic outlook suddenly looks brighter. A marked turnaround in opinion polls on Malcolm Turnbull’s elevation to prime minister has been matched by the biggest weekly jump in consumer confidence in at least seven years.

“Increased confidence is certainly positive for the Australian economy, hopefully translating into increased spending, investment and employment,” Commonwealth Securities chief economist Craig James said on Tuesday, Yahoo Finance reported.

The Australia New Zealand Bank’s Roy Morgan consumer confidence gauge surged 8.7% in the past week, more than recouping the 7.1% drop in the previous fortnight and recovering above its long term averages.

But ANZ chief economist Warren Hogan said what is needed for this bounce to be sustained is the new leadership to deliver a clear economic story for the country.

“Expectations are clearly high, not unlike when the coalition initially won power, and the community will be sensitive to disappointment on this front,” Hogan said.

Turnbull has made it clear that tax reform will be a big part of the reform agenda.

The promotion of Scott Morrison to treasurer comes mid-way through the tax white paper process started by Joe Hockey.

Michael Croker of Chartered Accountants Australia and New Zealand said this will no doubt make the normal treasury briefings for incoming ministers lengthier than usual and may slow the next stage of tax reform.

Shadow treasurer Chris Bowen told a tax reform conference in Sydney it is unrealistic to consider an increased goods and services tax as the linchpin of tax reform.

Bowen said boosting GST revenue has been touted as a way of paying states’ health costs, cutting personal income tax, abolishing stamp duty, reducing corporate tax or improving the budget.

“It’s like when you get a raise in your salary and you think of five things you’d love to do with the extra money, but deep down you know you can only do one,” Bowen said.

Visiting tax expert Chas Roy-Chowdhury is surprised that much of the debate he has heard surrounds the GST, particularly when Turnbull wants to be more internationally competitive.

“I would certainly hope ... they do something about corporation tax,” the global head of taxation at the Association of Chartered Certified Accountants told AAP.

Roy-Chowdhury said Australia’s rate remains 30% when neighboring China’s is 25%, while in Britain the 20% rate is dropping to 18% by 2020.