Joe Hockey will be putting his second May budget together against the backdrop of a still sluggish economy.
The latest Westpac-Melbourne Institute leading index continues to signal an economy growing at 2.75 per cent over much of 2015 rather than a trend pace of 3.25 per cent.
It suggests the jobless rate could be still rising at a time when the federal treasurer is trying to get the budget back in order.
“The economy needs more stimulus and the Reserve Bank, with ample scope to cut, should be acting accordingly,” Westpac chief economist Bill Evans says.
Mr Hockey will get the chance to reboot the budget debate when he releases his intergenerational report at the end of the month.
He says it will be complemented by a “very deep engagement program” with the community.
But shadow treasurer Chris Bowen is concerned that’s code for a taxpayer funded advertising campaign.
Having a national conversation is fine, but getting taxpayers to fund it is not, he said.
“It would be highly inappropriate and insulting for the Australian people to do so,” Mr Bowen told reporters in Sydney.
What is becoming increasingly clear is that the GST won’t be discussed in any budget debate nor will any changes likely occur after this year’s promised tax review.
A new report commissioned by accountants CPA Australia found that lifting the GST rate to 15 per cent from 10 per cent and expanding that to health, education and fresh food would raise $42.9 billion in the first year.
CPA Australia chief executive officer Alex Malley says the additional revenue could abolish inefficient state taxes, provide personal income tax cuts and compensation for low income households, while giving a much-needed boost to growth.
Australian Chamber of Commerce and Industry chief Kate Carnell agreed that it would make the tax system much simpler and fairer.
But Prime Minister Tony Abbott won’t have a bar of it.
The government wants to get spending down rather than taking the “lazy option” of whacking up taxes.
“It would come out of the pockets of Australian families, who are in many cases already doing it tough,” Mr Abbott told Fairfax radio.