Confidence slips on tax reform debate

Consumers have been shaken as political tax debate intensifies, with confidence sliding 2.6 per cent last week.

Heightened political debate about tax changes are dampening consumer spirits.

The ANZ-Roy Morgan consumer confidence index dropped 2.6 per cent in the week ending February 28 and is back below its long-run average.

ANZ chief economist Warren Hogan says concerns about the economic outlook have come back into play.

People's views about the economy in the next five years tumbled 7.2 per cent, while the subindex on the outlook in the next 12 months plunged 6.3 per cent.

Mr Hogan said intensifying talk about tax policy, with a focus on negative gearing and house prices, is creating uncertainty for households.

"The government's ability to deliver a clear and credible economic platform is clearly important for consumers," he said.

"The delivery of a coherent tax policy will be an important part of that."

Mr Hogan said a revitalised housing market could be encouraging for consumers.

"Auction clearance rates have begun the year on a better note even as sales volumes have returned towards more normal levels," he said.

"The important question is whether this resurgence in housing translates into stronger household spending in an environment of low wages and inflation."

Mr Hogan said this is critical to meet the Reserve Bank's expectation of consumption growth returning to above trend growth.

The central bank is widely expected to keep policy rates on hold at a record low of two per cent at its March meeting on Tuesday.