Consumer confidence is up, but calls for higher GST, including from broking industry, risk souring the mood
The latest ANZ-Roy Morgan Consumer Confidence index flew higher this week, with the closely watched indicator of public sentiment exceeding 90 points for the first time in over three years.
Over a fifth of Australians reckon their families are better off financially than this time last year, the index revealed.
Meanwhile, the number who say their families are worse off has dropped to 40%, the lowest this figure has been since May 2022.
The sharpest improvement came in expectations for the next year, with 28% of respondents expecting their families will be better off financially this time next year.
ANZ economist Sophia Angala attributed the rise in confidence to last week’s consumer price index, which underscored easing inflation, thus raising hopes for an interest rate cut from the Reserve Bank of Australia (RBA) next week.
Like all other banking majors, ANZ is anticipating a 25-basis-point cut when the RBA’s Monetary Policy Board gathers on 12 August.
However, the RBA has proved to be unpredictable in 2025, especially following the July hold, which blindsided markets and analysts.
Angala noted that, despite the data suggesting a sustainable return of inflation to the midpoint of the RBA’s 2–3% target band, weekly inflation expectations rose last week.
“The US administration’s announcement of modified reciprocal tariffs over the weekend of the survey period may have driven the move up, but on a four-week moving average basis inflation expectations have largely moved sideways over the past year,” Angala said.
But while mood is lifting across the country, this wave of positive sentiment could face a stress test when the Economic Reform Roundtable kicks off later this month.
GST hikes on the agenda
A growing chorus of industry voices is advocating for higher consumption taxes ahead of the Economic Reform Roundtable scheduled for 19-21 August.
That includes Anja Pannek, chief executive of the Mortgage and Finance Association of Australia (MFAA).
The MFAA’s submission to the Productivity Commission ahead of the roundtable called for GST to rise from 10% (where it has been since 2000) to 15% in order to offset MFAA’s proposal to abolish stamp duty and payroll taxes.
Removing said taxes would help remove barriers to homeownership, argued the MFAA in its submission.
“First-home buyers across Australia are provided exemptions or concessions, saving them from paying stamp duty on their first home purchase, however for others, stamp duty locks homeowners into existing properties, limiting refinancing or downsizing," the MFAA said.
“The removal of stamp duty makes housing more attainable while reducing the administrative and cost burden for not only first-home buyers, but also federal and state governments administrating interventionist, market-distorting and complex home buyer grant schemes."
Newly published modelling for the Productivity Commission by high-profile independent economist Chris Murphy also supports raising the GST.
“Per extra dollar of revenue raised, the GST does the least economic harm, followed by personal income tax, followed by company income tax with the most economic harm,” the report said.
“This pattern of marginal excess burdens implies that we can substantially increase consumer welfare by shifting the tax mix away from a more harmful tax like company tax towards a less harmful tax.”
The majority of Australians who have been suffering through a prolonged cost-of-living crisis are unlikely to agree that higher consumption taxes are “less harmful” than higher company taxes.
But with Australian productivity rates lagging historical averages and pre-pandemic levels, all options are on the table when Labor Treasurer Jim Chalmers kicks off the Economic Reform Roundtable on the 19th
