The government has put a positive spin on slower than expected economic growth, saying the figures are only slightly below expectations and budget measures proposed by the Coalition will strengthen the economy.
Australian Bureau of Statistics data released on Wednesday shows the economy grew by 0.3% in the September quarter, taking the yearly growth figure to 2.7%.
The Australian dollar fell below 84 US cents for the first time since 2010, which Joe Hockey said was very welcome.
Gross domestic product growth was expected to rise by 0.7% in the September quarter to take the yearly rate up to 3.1%, according to an Australian Associated Press survey of economists.
The treasurer said the growth figures were “marginally lower” than the government expected, mainly because of falling commodity prices, which “have come off very very significantly”.
“The government’s income has fallen below expectations precisely because we have falling commodity prices and weaker wage growth which is something I know is affecting a number of other G7 economies,” he said.
Hockey reiterated the need to pass budget measures now blocked by the parliament.
“We’ve got to continue with our economic strategy,” he said. “What we did in the May budget was put in place structural reforms that strengthened the budget over the medium term.”
Hockey repeated his call for Australians to spend big this Christmas to boost retail sales.
But the economist Stephen Koukoulas from Market Economics, who is also a columnist for Guardian Australia, said the stagnating unemployment rate and record low wage increases meant Australians were less likely to open their wallets during the holiday period.
He blamed the negative political narrative on the economy for weak consumer confidence.
“It’s easy to trash talk the economy … That feeds into the way people think the economy is going,” Koukoulas said.
He urged the government to abandon its promised surplus, saying it was “dumb economics” to pursue a surplus while figures were soft.
Koukoulas also pointed to reduced government demand as a reason for the poor growth outcome, saying the Coalition’s decision to cut public spending during weak growth was unwise.
The government said it was performing better than Labor, whose growth figures in its first year of government hovered just below 2%.
“Over six years, they put us on a bad trajectory,” the finance minister, Mathias Cormann, told the Senate. “We’re back on a good trajectory.”
The ABS data comes before the release of the mid-year economic and fiscal outlook, or Myefo, which is expected this month.
A number of budget measures have been stalled by a volatile crossbench in the Senate, including the $7 GP co-payment and changes to higher education which have been reintroduced to parliament after being shot down by the Senate on Tuesday.
These measures are likely to affect the budget bottom line. Labor remains resolute in its opposition to them.
“We don’t agree with these proposals and we were very clear during the election that we wouldn’t support such savings,” the deputy Labor leader, Tanya Plibersek, told ABC TV. “We’ve supported the savings that don’t hurt Australians. We won’t support savings that do hurt Australians.”
The shadow treasurer, Chris Bowen, said: “It’s time for the government finally to acknowledge that their budget was not only unfair, has not only been rejected by the parliament and the people, but has also been damaging for the economy, for jobs and growth.”
