Economic plan comes at delicate time

The coalition has delivered a responsible budget but there's no guarantee it will achieve a second term for Malcolm Turnbull.

On balance, Scott Morrison appears to have delivered a sensible and responsible budget that he prefers to call an economic plan.

The big question is whether the treasurer's 10-year blueprint will be enough to convince voters of the government's economic credentials at a federal election on July 2.

Especially considering the Reserve Bank of Australia decided - only a few hours before the budget was delivered - to cut the official cash rate to a record low of 1.75 per cent from 2.0 per cent.

The central bank governor Glenn Stevens said the RBA board "judged that prospects for growth in the economy" would be improved by easing monetary policy.

In other words, despite the budget measures, the Australian economy looks like it needed a kick along.

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.

Now rates are at a new all-time low under what Malcolm Turnbull and Mr Morrison are trying to convince voters is an economically responsible government.

The treasurer argues fiscal and monetary policy - that is, the budget and interest rates - are pulling in the same direction to supports jobs and growth.

And he says the RBA's decision will work alongside his tax cuts for business, infrastructure spending and setting a path towards balancing the books.

Labor is in an equally difficult position on the economy after treasury modelling showed a $19 billion hole in its funding plans.

What's uncertain is whether voters will back a budget that is not in the traditional "winners and losers" mould and re-elect the coalition, or seek an alternative recipe to get the economy moving.


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Source: AAP



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