Press Release Summary = Peter Costello the Australian Treasurer announced a $36.7 billion(AUD) cut in income tax recently which created a huge boost in business confidence. Australia's National Bank's survey of 350 companies revealed a confidence rise of 12 points, posting a record of 23. The greater the reading above zero the larger the number of companies predicting improved financial success over those which don't.
Press Release Body = Peter Costello the Australian Treasurer announced a $36.7 billion(AUD) cut in income tax recently which created a huge boost in business confidence. Australia\'s National Bank\'s survey of 350 companies revealed a confidence rise of 12 points, posting a record of 23. The greater the reading above zero the larger the number of companies predicting improved financial success over those which don\'t.
The tax cuts may also boost consumer spending which at present constitutes about 60% of the Australian Economy which may help to buffer the rising petrol prices and increased costs of consumer debt.
This has also brought about measures to slow inflation, the Central Bank are set to increase interest rates to the highest level in 5 years. The shift by Central Bank Governor Ian Macfarlane by a quarter point to 5.75 percent is the first in 14 months. A pickup in consumer spending may fuel expectations the bank will raise borrowing costs again this year.
\"The big tax stimulus in the budget has boosted confidence among retailers and most services sectors,\" said Jeff Oughton, head of economists at National Australia Bank in Melbourne.
\"It must add to inflationary pressures and hence the possibility of higher cash rates.\"
Over half of companies believe the budget is most likely going to bring about an increase in borrowing costs however economists have taken a different stance, 15 of 22 surveyed state the latest news will leave rates unchanged, at least for the remainder of the year.
The NAB funded the survey which was undertaken to measure the effect the announcement would have on the Australian Economy.
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