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Turnbull claims economic leadership

AAP logoAAP 15/09/2016 Colin Brinsden, AAP Economics Correspondent

If a week in politics is a long time, a year must feel like an eternity.

So some of our politicians could be forgiven if their memories of past events get a bit jaded over time.

In a week when the focus has been on Malcolm Turnbull as he completed his first year as prime minister everyone has had their say on the government's performance, even the man he rolled for the top job.

Turnbull scored a modest result on his anniversary, securing a savings deal with Labor worth $6.3 billion on the government's so-called omnibus bill.

But former prime minister Tony Abbott doubts whether this is the start of consensus between the major parties as the coalition thinks spending is too high, while Labor believes taxes are too low.

"We think as a coalition that when the credit card is maxed out, we have to reduce spending. Labor thinks we just increase the credit card limit, and that's a big problem," he said.

An odd comment when it was Abbott's own treasurer Joe Hockey who, in a deal with the Greens, scrapped the national debt ceiling.

In government, Labor had repeatedly gone cap in hand to the parliament to reset the debt ceiling after initially setting a cap of $75 billion when the budget went into deficit at the start of global financial crisis.

By the time Labor lost office, the ceiling was $300 billion.

At the end of the 2016/17 financial year, the budget government debt is expected to be $497 billion before peaking at $640 billion in 2026/27.

However, the government argues the debt trajectory would have been worse if Labor had remained in power, which assumes Labor would have done nothing about the debt mountain.

Turnbull's minor $6.3 billion savings win will help cut $30 billion debt over the next decade.

Treasurer Scott Morrison is the first to admit while this will help it doesn't resolve the debt issue.

Even so, it allowed Turnbull another positive outcome on his anniversary.

Recent economic figures have also aligned to allow the prime minister to paint a picture of a government showing the leadership he promised when he won the backing of the party room 12 months earlier.

Annual economic growth is dashing along at 3.3 per cent, its fastest pace in four years.

It also means Australia has gone 25 years without a recession.

A series of confidence readings this week couldn't have been more timely.

Business confidence edged up to its long-term average last month, while a weekly gauge of consumer confidence jumped 3.3 per cent, lifting its four-year average to a three-year high.

Monthly consumer confidence also ticked up, to be eight per cent higher over the year.

However, details of these reports were not as rosy as the headline figures suggest.

Business conditions actually fell in August.

National Australia Bank chief economist Alan Oster says the recent downward trend in business conditions suggests the non-mining recovery may have "lost some vigour".

That fits in with the June quarter national accounts showing the economy had expanded at half the pace of the previous three months.

At the same time, those accounts showed household spending is easing despite upbeat confidence.

"Consumption has been a key driver of the non-mining recovery and this step down in (spending) growth is somewhat concerning," ANZ head of Australian economics Felicity Emmett says.

The monthly consumer confidence gauge compiled by Westpac and Melbourne Institute also asks respondents every three months to nominate their most recalled news items.

In the September "budget and taxation" was the most recalled category.

"News on this category has been assessed as more unfavourable than in June but still less unfavourable than a year ago," Westpac chief economist Bill Evans said.

Hardly a glowing assessment of the government's work.

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