Marnie Banger and Angus Livingston
(Australian Associated Press)
Scott Morrison’s government could improve household incomes more significantly if it passes promised tax cuts in the coming months, Reserve Bank Governor Philip Lowe says.
The central bank has factored the coalition enacting its promised doubling of a tax offset for low and middle income earners before tax time this year into its household income growth forecasts.
Not passing the measure – which has bipartisan support – would mean growth in what households are raking in would be 0.3 per cent lower than what the RBA had expected, Dr Lowe says.
“If that does not occur and there is no way to get the money to households, the household income growth will be 0.3 per cent lower over the course of this calendar year than I showed you in that graph,” he told an event in Brisbane on Tuesday.
“That is moving in the wrong direction.
“It would be good if there were a way for the households to get those tax offsets but the timing may mean that that’s very difficult and it may have to wait until next year.”
The extra tax relief would mean people earning up to $90,000 would get to score a rebate of up to $1080.
Key Morrison government adviser Arthur Sinodinos believes the economy will rebound with the coalition in power, pointing to tax cuts and a huge jump on the stock market.
Unemployment rose just before the election to 5.2 per cent, while the Reserve Bank is considering cutting interest rates as there was zero inflation growth in the March quarter.
But Senator Sinodinos says Monday’s stock market lift shows businesses are happy with the coalition defeating Labor in Saturday’s federal election.
“The fact the government has been returned has reflected in the stock market already, which I think gained about $33 billion in market capitalisation yesterday,” Senator Sinodinos told Sky News on Tuesday.
“The return to government has actually increased business confidence, and I think that’s going to be good for business investment.”
The NSW Liberal senator said he expected the economy would get some stimulus when income tax cuts flow through, hopefully pushing up the weakening consumption growth predictions.
Internationally, he said Australia has to increase efforts to get other countries to stick to the international trade system.
“(We should) encourage the US in particular to more fully embrace the rules-based order, because that’s the best guarantee we’ve got of heading off some of those global headwinds,” he said.