The 2009-2010 Federal Budget takes a long-term and hopeful view of Australia’s powers of recovery. It is a ‘dig deep and hope the recession ends soon’ approach, according to the Australian National Retailers Association (ANRA).
Speaking after the Federal Budget was handed down, ANRA CEO Margy Osmond said: “In a climate of confused and dramatically altered consumer confidence, retailers needed to see initiatives to stimulate the flagging optimism of Australians.”
“This budget delivers the promised tax cuts and an increase in pensions on the back of the earlier stimulus packages and this is a welcomed prospect for sustained additional spending.
“However, some measures including belt tightening on family payments and changes to the private health insurance rebate will be a bitter pill for many families," she said.
Osmond said that the forecast of 8.5 per cent unemployment will still be playing on the minds of consumers and could lead to the slashing of retail sales by as much as $2.5 billion. This could cancel out the boost provided by the government’s second round of cash handouts prior to the budget.
Retail is the first to feel the effects of rising unemployment as more than 40 per cent of household income is spent in the retail sector. After June 2009, retailers face the possibility that, just as the benefits of the cash handouts peter out, demand will fall due to rising employment.
“In such a situation, it was essential that the government deliver in full the promised tax cuts and the government should be commended for sticking with this promise in difficult times.”
Consumer confidence is brittle at the moment. Over 60 per cent of Australians plan on cutting back on non-essential spending in the next six months, according to a recent ANRA survey.
Retail is the country’s largest employer – it employs 15 per cent of the country’s workforce. Over 14,000 new retail jobs have been created in the three months to February. But the sector is nowhere near the employment levels seen in late 2007 when an extra 75,000 people were employed in retail.