I know the failure of the Coalition at the weekend by-elections has led to plonkers telling the Turnbull team to steal policy ideas from Labor, but the better strategy might be for Government spokespeople to start shouting out: “Look at the scoreboard!”
Yesterday I argued that the PM and Treasurer Scott Morrison have to talk up their economic runs on the board — from employment numbers to the best unemployment results in over five years. Interest rates have been at record lows and are set to stay there, while the most populous states — Victoria and New South Wales — have had a property price boom, mainly under the Coalition’s watch.
Even if the Government had little to do with these price rises, which have made so many Aussies wealthier, Malcolm and Scott (as leaders of the economy) are entitled to claim the glory. After all, if a price collapse happened, the Labor Opposition would hold the Government responsible!
But wait, there’s more good news that the Government should be crowing about. It involves the engine room of the economy and the chief employer — small and medium-sized businesses — which have come out with the best confidence reading since, wait for it, the Global Financial Crisis in 2009!
Over the years I have to admit that I’ve been happy with my pretty reliable take on where the economy is heading. I’ve often credited that to the fact that as an economist I have had a more than average healthy respect for what SMEs tell me.
In the old days, I reckoned the Yellow Pages Small Business Index was a ripper of an indicator. Nowadays it’s called the Sensis Business Index (SBI) survey but it still talks to and listens to a really important sector of the Oz economy. And the latest is a beauty! This is how the Sensis team summed it up.
“Small and medium business (SMB) confidence in Australia has increased to the highest balance recorded since December 2009, when the Global Financial Crisis started impacting on the economy. For this June quarter, overall confidence rose seven points from an already impressive level to +49,” Sensis reported.
Here are some other findings from the survey:
• NT celebrated the biggest rise in confidence (up 26 points to +28) followed by NSW (up 13 points to +56). Only Victoria fell, dropping one point to +48.
• The overall assessment of the economy was the second highest level recorded since December 2010. 29% of SMBs believe it is growing – almost double the proportion of businesses that feel the economy is slowing (15%).
• SMBs have a positive outlook for the economy in 12 months’ time, with the net balance unchanged at +12 – one of the better results recorded in the past four years.· Confidence is strong across most industry sectors, with rises recorded in eight of the 10 industries this quarter.
• The biggest rise in confidence this quarter occurred in Transport and Storage, which was up an impressive 25 points to +46. The only fall was recorded in Manufacturing, which was down 21 points to +34.
• The ACT remains the most confident state or territory (up seven points to +61).
What I found interesting about this survey was the SME view on tax cuts, given the fact that following the by-election whitewash for the Government, there is talk that the PM might run away from the company tax cuts for bigger businesses. And interestingly, the Sensis survey found that opinions of the Federal Government remained positive.
“Following the recent budget, tax stands out as a leading reason for SMBs to have a favourable assessment of the Federal Government,” said Sensis CEO, John Allan.
“The offer of tax cuts and incentives, a view that the Federal Government is trying to reduce tax and the Government’s perceived support and interest in small businesses is finding favour with SMBs.
“On the other hand, those businesses with a less favourable opinion of Federal Government are unhappy about excessive bureaucracy, high taxation and too much focus being placed on big business,” Mr Allan said.
I think tax cuts have a magical way of bringing positive developments for the businesses and individuals positively affected and the economy gets the knock on plus from a tax rate reduction.
One of the great news items and economic stories of the Turnbull regime has been the historical high readings for business conditions in the NAB survey. It would be a pity if the Government runs away from tax cuts because of by-election losses, which election expert analyst Malcolm Mackerras argues they were never going to win anyway!
Malcolm believes Malcolm T could go to the polls as late as May 2019, which would be good for him, as I tip the economy will be looking even better then. But it’s more likely he will go on February 23, the election expert believes.
Timing is everything and even though a May 18 election would mean the Budget would have to be delayed, I’d do it because I reckon the budget could be in surplus by that time. And that should be another feather in the cap for a PM, who politically really needs to work on his public relations efforts.
If Malcolm wants to steal anything from Labor, maybe it should be their miles better approach to marketing their policies and potential achievements.
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