NATSEM PRELIMINARY BUDGET ANALYSIS 2016: An Enterprise Budget in Times of Mistrust
The 2016 Australian Budget has been launched at a time of significant uncertainty. The Australian economy is presently characterised by a modest growth rate of 2.5% (below the forecast level of the last budget), falling business and consumer confidence, a cooling housing market and an increasing budget deficit (estimated at $39 billion for 2015-16 according to the Budget Papers). In combination, this adds up to the emergence of worrying deflationary pressures and concern is rising over whether Australia’s AAA international credit rating could be at risk. Moreover, the prospects of these pressures easing over the year are unlikely given that global markets continue to be unnerved by the longer-term prospects (however unlikely) of a British exit from the European Union and a Trump Presidency.
Against all of this, levels of trust in government and politicians in Australia are at the lowest level since 1993. Only 5% of Australians trust government, 74% exhibit a critical perspective, only 25% trust government ministers and satisfaction with democracy in Australia is now at its lowest level since 1996 (see: https://theconversation.com/now-for-the-big-question-who-do-you-trust-to-run-the-country-58723). While the Howard years provide evidence of a culture of contentment, 2007 to the present day has clearly been a period of profound citizen discontent with governments and politicians across the political spectrum.
In sum, these are capricious times for delivering a budget that will launch an election.