Impact of Budget on Economy

My electorate of Lalor is one of the highest growth areas in Australia; it is also going to be one of the electorates most affected by this budget of broken promises and twisted priorities. Lalor is home to lots of young families and pensioners. We have lots of single families and a high proportion of those living with a disability. There are approximately 10,000 aged pensioners and 5000 disability support pensioners in Lalor. We have a 92 per cent bulk-billing rate. We have 3300 students with a disability in our local schools. The youth unemployment rate is high and getting higher.

These are the people to be most immediately affected by this budget. They will be affected by the GP co-payment, the increases to university and training costs and the cuts to the Schoolkids Bonus, to carers payments, to the Tools for our Trade program and to the pension. All this means less money being injected into our local economy. This is the immediate known local impact. It is a scenario being repeated across the country. As communities take the time to digest this cruel budget, many have raised the potential impact on the local economy. Some are even saying that they can see the possibility of a local recession.

My locals are sending a very loud and clear message. A coffee shop has already reported a downturn in trade and the neighbouring jeweller is saying the same. A local builder bailed me up at the footy and expressed concern for his business. Could people still afford to make home improvements after the cost of living pressures announced in the budget? Would he be able to keep on the apprentice or would he need to put him off, due to work drying up? Down at the homemaker centre, the worry is that people will no longer upgrade their white goods and furniture, if their incomes are reduced.

My community is not unique. If this is the talk in the streets of Werribee, Tarneit and Point Cook, I am sure these are the conversations being held in Western Sydney, in the suburbs in the outskirts of Brisbane, Perth and Adelaide. The local businesses in Lalor would not regard themselves as economists, but they know enough to know that the confidence of households is paramount to the success of the economy. And they are backed by the economists. As we have heard already, the June Westpac/Melbourne Institute Index of Consumer Sentiment data—and I will repeat it, because I am not sure those opposite are reading the same information—said:

The Index is still in firmly pessimistic territory … down 6.6% from its pre-Budget level in April and 15.6% below its post-election high in November last year.
The Dun and Bradstreet Consumer Financial Stress Index has shown Australian financial stress levels have risen by almost a third, from 13 per cent in September last year to a current level of 18.7 per cent. Dun and Bradstreet also found in their Business Expectations Survey that 59 per cent of businesses are concerned about the impact of the federal budget on their operations—59 per cent. That is the budget delivered in this chamber by this government. Today we saw, the Reject Shop and Pacific Brands, amongst a slew of retail business, record profit downgrades. And the Reserve Bank indicated just yesterday that 'the unemployment rate is expected to remain elevated' over the next two years.

The people in my electorate of Lalor are not so far wrong about this budget. Through its cuts to household budgets, this government is risking the largest source of growth the economy has—consumption, which makes up more than half of all economic activity in Australia. The recent national accounts showed an economy that is being held up almost entirely by our mining exports. The experts know that if households do not spend, business will continue to sit on the sidelines and the economy will be unable to fill the gap left by rapidly falling investment in the mining sector.

Budgets are about priorities—they shine a light on what a government believes—and this budget is no different At a time when wages growth is at its lowest level in 17 years, this government has delivered a budget full of shocks and surprises, which cut household budgets and which will do nothing to encourage households to feel confident about the future. Our local community is still digesting the news about the Toyota and the GMH closures and the loss of a projected 4,000 jobs in our immediate area. Last week the local shipbuilding industry also took a hit. You can only imagine the impact on consumer confidence this news has had on our local people.

This is a cruel and unfair budget—some are saying it is the most damaging budget in over a decade. This is a budget that divides Australia; it is a budget that puts our economic future at risk; and it is a budget that this side rejects.