But later in the yearthe economy slowedasconsumers cut spending on discretionary items, house price falls accelerated in Sydney and Melbourne and conservativebanks tightened up providing loansin response to a crack down by the royal commission into financial services.
International economic challenges in the year ahead include the current US government partial shutdown, the US-China trade war, higher US interest rates, heavily indebted China’s slowing economy and Britain’s “Brexit” negotiations with the European Union.
Shadow treasurer Chris Bowen seized on Mr Morrison’s remarks, accusing the Liberals of being “completely rudderless” on the economy.
“Before Christmas I warned about some of the global economic risks we face in the coming period,” Mr Bowen said.
“Josh Frydenberg jumped on my speech and comments at the time and accused me of talking down the economy. Does he now accuse Scott Morrison of the same thing?
“Clearly we have seen at the last National Accounts and at MYEFO [mid-year economic and fiscal outlook] that we have a slowing Australian economy, with low wages growth and falling investment.”
HSBC chief economist Paul Bloxham said global growth was slowing and two key economic factors for Australia in 2019 would be China’s performance and the local housing market.
“There is rougher seas for Australia this year,” Mr Bloxham said.
The government maintains that the domestic economic fundamentals are sound and the budget on track to reach a surplus in 2019-20.
Mr Morrison, who pointed to his past experience as treasurer, added: “We’re a government that is about jobs. We have got record jobs growth,” he said in the Northern Territory to announce $216 million in tourism funding to upgrade Kakadu National Park.
Mr Morrison’s deliberate change in economic tone can be traced back to similar remarks made by Treasurer Josh Frydenberg last Thursday. The Treasurer said there were “cold headwinds” in the international economy, “particularly around the trade tensions that we’ve seen between China and the US, also rising global debt levels and the impact of the normalisation of US monetary policy and the increased rates there and the impact that’s had on capital outflows from emerging economies.
“But one thing is for certain, the independent economists and property analysts don’t want to see Labor’s plans for a new housing tax because that would come at exactly the wrong time for the Australian property market and it will see that anyone who owns their own home worth less under Labor and anyone who rents their own home end up paying more under Labor,” Mr Frydenberg said on the ABC.
Mr Morrison reaffirmed the budget was planned for April 2 and signalled that the election would be held in May.