Treasurer Scott Morrison is expected to announce changes to the way debt is reported before the May budget.
THE Federal Budget will have bad news for workers stranded on wages which won’t grow with the economy.
A quick rescue will not be possible.
Treasurer Scott Morrison will today confirm the “challenge” of modest wage growth while outlining a longer-term promise of healthier pay packets.
“It has been some time since most hardworking Australians have received a decent pay rise,” Mr Morrison said in a prepared speech released by his office.
“And we recognise this has put real pressure on households and families that are struggling to face cost of living pressures including rising electricity prices.”
The warning will come with a pledge “to increase what Australians can earn every week, how many hours they can get, how secure their job is or where their next job will come from”.
Mr Morrison will not reveal specific economic forecasts to be released with the Budget, but in his speech to the Australian Business Economists function in Sydney today, he will drop strong hints.
Mr Morrison said pay improvements, measured by the Wage Price Index, were crimped at just 1.9 per cent through the year to the December quarter 2016. The inflation rate rose 2.1 per cent in the 12 months to the March quarter, official figures showed on Wednesday.
Yet Australia is churning out wealth and the Treasurer said the conservative Budget forecasts would show “Australia’s economy continues to perform well”.
But that won’t immediately mean wages will follow.
Mr Morrison will return to the Liberals’ “jobs and growth” slogan of the election campaign, and a pitch linked to his proposal for corporate tax cuts.
“You can’t get a job in a business that is closed and you can’t get a pay rise in a business that is not growing and the best form of welfare is a job,” says the speech.
“What better cause for Governments to get behind than helping hard working Australians earn more?
“But there are no quick fixes. It takes a disciplined commitment to consistently remove the barriers and back in small, medium and large businesses to drive the investment that underpins growth to produce more and better paying jobs for hard working Australians.”
Mr Morrison moderated any Budget bid to boost housing affordability and argued Australia wasn’t at risk of a damaging price collapse which could hurt small and large investors.
He acknowledged risks in east coast markets which were being carefully monitored.
“Around 80 per cent of Australia’s $2.1 trillion household debt is in mortgages,” he said.
“Australian households are now the fourth most indebted in the OECD as a share of income — behind Denmark, the Netherlands and Norway.
“However, we should also bear in mind that low interest rates, increasing household assets, and our debt concentration in higher income households, provide some comfort about the serviceability of this debt. The asset coverage on these debts is over five fold.
“But that does not mean we should be complacent and nor are we. As the RBA have noted, sustained increases in interest rates would put more pressure on mortgage holders.
“That is why the Government and the regulators are closely monitoring developments in this space to ensure that the risks are being effectively managed.”