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Budget, rate cut set poll battleground

It's rare there's a bigger story on budget day than the federal budget, But the Reserve Bank changed that on Tuesday.

It's rare there's a bigger story on budget day than the federal budget.

But the Reserve Bank changed that on Tuesday.

Tony Abbott and Joe Hockey made a big deal prior to the 2013 election of record-low interest rates being a sign of Labor's economic mismanagement.

They strongly argued the RBA doesn't resort to that action if it believes the economy is running smoothly, the budget is under control and global conditions are okay.

By taking the unprecedented step of cutting interest rates - to a record-low 1.75 per cent - on budget day there is a risk the coalition's message of a steady hand at the economic wheel will be undermined.

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With an election due on July 2, this is a pretty big deal.

Polls show voters overwhelmingly favour the coalition over Labor when it comes to economic matters, while Labor is favoured in terms of other key election issues such as health, education and the welfare safety net.

There is an added risk.

Treasurer Scott Morrison's changes to superannuation in this budget - which he says will affect about four per cent of Australians each year - fly in the face of two years of the coalition arguing black-and-blue there would be no adverse changes to the system.

Coupled with the interest rate drop, it spells bad news for retirees.

The latest Morgan poll shows voters aged 65-plus are staunch supporters of the coalition, favouring them 59.5 per cent to 40.5 per cent for Labor.

Who they turn to at the election - perhaps to independents holding the balance of power in the Senate - will be crucial.

On the plus side, many young people looking to buy their first home have never had it better.

And, if banks pass on the rates cut, those paying off home loans will be $45 a month better off on a $300,000 mortgage.

Polls show the under-35s are, at least for now, largely on Labor's side, favouring the opposition over the coalition by a factor of two to one.

The coalition is guaranteed to link the "cheaper loan" message with an attack on Labor's plan to scale back negative gearing and capital gains tax concessions, which Malcolm Turnbull insists will hammer the value of the homes of average Australians.

The rate cut and budget, with its tax breaks for small business and modest help for middle-income families, make for a challenging election battleground.


3 min read

Published

Source: AAP



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