From Peter Hartcher on Saturday:
In briefings to the Abbott cabinet this week, the governor of the Reserve Bank, Glenn Stevens and the secretary of the Treasury, John Fraser, agreed on the missing ingredient for a thriving economy – business confidence.
They emphasised that the elements of a faster-growing economy were in place, with the standout exception of confidence. The Australian dollar has fallen dramatically, restoring much lost competitiveness. Interest rates are low. Wages are not growing but remain stable. Inflation is well in check. The services and agriculture sectors are poised for growth. But business confidence is low. It fell after the federal budget last May and has remained feeble since. And that means that firms are reluctant to take risks, to invest, to expand, to hire. Both Stevens and Fraser emphasised this point, according to multiple cabinet ministers who were present.
