As Joe Hockey jets off to the US to get the international vibe ahead of his first budget, businesses are fretting over how tough the treasurer will be in repairing the nation’s finances.
In Washington, Mr Hockey will chair his second meeting of G20 finance ministers and central bankers under Australia’s 2014 presidency.
At his first gathering in February, members from the world’s biggest economies struck an unprecedented agreement to lift global economic growth by two per cent over current projections during the next five years.
Mr Hockey hopes to get an update of the kinds of reforms they are considering to boost growth and create jobs.
The discussions this week were key as world economies experience low rates of growth and as many governments grapple with ways to stimulate their economies with limited fiscal stimulus at their disposal, he said.
The meeting will also discuss the next step on the path to reform of the International Monetary Fund.
Mr Hockey will also attend the IMF and World Bank spring meetings.
The trip is timely as it will provide an important international element for the treasurer as he forms his May 13 budget.
The government has said that it will need to take hard decisions to get the budget on a more sustainable footing.
Such warnings appear to have unsettled business confidence.
The National Australia Bank’s monthly business survey showed confidence fell below its long-term trend and lowest level since the September 2013 election.
NAB chief economist Alan Oster says firms appear to be responding to the continued sluggishness in business activity which did not match their exuberance following the election.
A “stubbornly” high Australian dollar, uncertainty over the global economy and the potential for significant belt tightening in the budget all could have contributed as well, he said.
Notably, confidence among mining companies was “deeply negative”.
NAB’s confidence index fell to four points from seven points, and while the conditions index rose from zero to one point, it still pointed to a further sluggish recovery.
Forward orders still pointed to a soft outlook, and a six point increase in the employment index to minus one suggested further increases in unemployment.
NAB continues to expect sub-trend economic growth of 2.7 per cent in 2013/14 and a jobless rate of 6.5 per cent by late 2014.
JP Morgan economist Ben Jarman was not surprised by the survey results.
“We have been critical of the idea that the election-related bounce in confidence would hold, or turn into anything meaningful,” he said, citing structural headwinds facing the economy and little changing on the policy front.