Treasurer sees year of opportunity

Posted on 04/25/2020

Prime Minister Malcolm Turnbull says he expects wage growth to pick-up over the coming year.Scott Morrison says the Trump administration’s tax cuts are already having a psychological impact on US businesses and points to a year of “great economic opportunity” around the world.

The treasurer has just returned from a trip to the US where he met with business leaders of key companies and where tax reform was high on the agenda.

“It’s for us to ensure that businesses, all ns can realise that opportunity, that’s what I think this year’s about and I’m looking forward to that,” he told reporters on Monday as he arrived for a traditional church service in Canberra ahead of the first parliamentary sitting of the year.

The Turnbull government will make pushing through the remainder of its business tax cuts a key priority in coming weeks, having so far only secured reductions for firms with a turnover of up to $50 million.

“The n economy is off a great start this year, the global economy is off to a great start this year and I’m looking forward to ns being able to realise their economic opportunities, to lift their living standards to boost their wages,” Mr Morrison said.

The government has also flagged personal income tax cuts to be announced in the May budget.

Prime Minister Malcolm Turnbull said on Sunday he expected wage growth to pick up over the coming year as long as the economy and demand for labour continue to grow.

In the interim, weak wage growth is likely to restrain the Reserve Bank from raising the official interest rate anytime soon, despite a wealth of upbeat economic figures in recent weeks.

The central bank will hold its first board meeting of the year on Tuesday and is widely expected to keep the cash rate at a record low 1.5 per cent, where it has stood since August 2016.

Since the board last met, employment has continued to soar, confidence is buoyant and some normality has returned to the housing market, while the International Monetary Fund upgraded its global economic growth forecasts.

However, Timo Henckel, a lecturer at the n National University’s Research School of Economics, says weak wages growth points to the need for the cash rate to remain steady.

“The sustained weak real wage growth increasingly becomes a problem as economic growth is not generating additional purchasing power, and thus consumption demand,” Dr Henckel said.