Consumer Senitment at a low despite tax cuts - Sydney Morning Herald 9-7-08

Labor's big-bang tax cuts package has failed to fire for the government, with consumers now believing the economy is in its worst shape since its post-recession recovery.

The Westpac survey of consumer sentiment has found that the outlook is the worst since 1992, and the outlook for the economy in the year ahead is down 50% from the same time last year.

The survey was taken over the course of last week - the same time as the first round of Labor's election tax cuts, worth $8 billion, were being directed the way of Australian workers.

It could be argued that the tax cuts were overshadowed by the bigger news of continuing high petrol prices, St George unexpectedly raising its key lending rate and then the doom and gloom of climate change.

Many Australian workers would have noticed their bigger pay packet for last week or, at the very least, knew that tax cuts were on the way.

Labor last week was in overdrive, highlighting the savings that would be delivered to families. Wayne Swan stood at the front of a child-care centre, reciting the figures that those "hardworking Australian families'' were about to receive.

But, seemingly, they have failed to fire.

The tax cuts were the one ace that the government held which, effectively, help to address cost of living pressures for consumers.

Despite campaigning on the issue during the election, there is realistically little the government can do to reduce fuel prices or even the cost of groceries, but it gave the indication while battling the Coalition that it could.

The tax cuts were part of the ammunition in their argument that they were sympathetic with how tough some families are doing - and Labor was helping by cutting tax.

But consumers have overlooked the Labor tax measure, and are still more worried by how much their mortgage is costing and how much it costs to fill their fuel tanks.