Economy

Bowen plays down talk of $20 billion budget black hole, Report shows consumers aren’t spending: Midday Roundup

Patrick Stafford /

Treasurer Chris Bowen has attempted to stifle controversy over a reported $20 billion budget black hole, ahead of the upcoming election.

A report in the Australian Financial Review has speculated the budget shortfall could be worse than initially thought.

“We’ll account for all our spending, we’ll account for that in an open and transparent way,” Bowen told Seven.

Prime Minister Kevin Rudd has maintained the government will stick to its commitment to return the budget o surplus in 2016-17.

However, shadow treasurer Joe Hockey told Seven the budget is “in absolute crisis”.

“They’re not going to call an election this Sunday because they have a budget crisis,” he said.

Consumers not buying, report shows

The Australian retail industry is facing even more trouble, with the latest report from the Boston Consulting Group revealing local shoppers still prefer to save rather than spend.

The global survey, of which 2,502 respondents were Australian, found 46% of local buyers prefer to save than spend, up from 40% last year.

Australian consumers are also increasingly buying goods from online retailers, according to the report.

“Many Australian consumers have effectively gone on strike,” BCG’s Jane Danziger told AAP.

“Fears about the economy and job security are certainly factors, and these have noticeably increased the past year.”

“But the results clearly show retailers would be foolish to pin their hopes for a spending recovery on an uptick in the Australian economy.”

Shares flat on weak offshore leads

The Australian sharemarket has opened weaker today, from poor offshore leads in the United States where debate is growing over the candidates set to fill the role of chairman of the Federal Reserve.

The benchmark S&P/ASX200 index was up 12.4 points or 0.2% to 5,048 at 11.45 AEST, while in the United States the Dow Jones Industrial Average grew 13.4 points or 0.1% to 15,555.6.

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Patrick Stafford

Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.

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