Business as usual for Aussie economy under new PM
sydney — Scott Morrison is respected by investors and his elevation to Australian prime minister is a good outcome, analysts say, with the latest bout of political instability unlikely to hurt the economy.
The 50-year-old outgoing treasurer took the top job after a Liberal Party revolt instigated by hardline conservatives, led by Peter Dutton, to unseat moderate Malcolm Turnbull. Morrison was an ally of Turnbull’s and presided over the economy as the government sought to return the budget to surplus and simultaneously cut personal income and small-business taxes.
Analysts see him continuing along the same economic path now that he has climbed into the prime minister’s chair.
“He did not bring on the challenge so can’t be blamed for the instability,” said AMP Capital chief economist Shane Oliver.
“More importantly he is seen as a reasonably sensible policy maker, is respected by investment markets in his role as treasurer and is seen as a centrist giving the Liberals perhaps a better chance of victory in the coming federal election.”
Oliver said he expected the government to continue with its existing budgetary strategy with Morrison at the helm, including abandoning a policy to cut the tax rate for large firms. This, along with the budget coming in better-thanexpected, would provide scope for earlier and bigger tax cuts for low- to middle-income earners which could help economic growth, he added.
The Australian dollar rallied on news of the change, as did the stock market, which was rattled by the political uncertainty.
Under Morrison’s tutelage, Australia’s economy — which is transitioning from an unprecedented investment boom in mining — recorded a strong start to 2018 as exports and business inventories rose, although consumer spending and wage growth remain weak.
The 1 per cent growth in the first three months of 2018 — the third quarter of Australia’s current financial year — took annual economic growth to 3.1 per cent.
Morrison was by far the best outcome of the political crisis, said National Australia Bank’s chief markets economist Ivan Colhoun. —