New South Wales, Australia’s biggest state, has just forecast more debt, blamed on a tough economy and a shortfall or a “rip off” in GST payment via the federal government.
The state government forecasts a $3.6 billion deficit in the financial year starting in July and more red ink in the following three.
What's in the budget for brands and consumers?
“Very little,” said Shai Luft, co-founder and chief operations officer, Bench Media.
“It’s more what’s not in the budget. The QLD government announced just a few days ago that they would match the federal funding on energy bill rebates to small businesses with up to $325 rebate for energy bills. NSW? Nope!
“With a $3.6 billion projected deficit, the government is certainly not splashing cash on helping businesses or consumers. Majority of the spending is going to health, education, housing and transport. All important, but long term investments.
“The budget does little to help those struggling with the rising costs of doing business today. Broader help with payroll tax reductions would have been a big welcome as we see more businesses go into administration and struggle to pay suppliers.
“Perhaps we will see some initiatives in the coming months if the government's bottom line improves but for now, less is less.”
Ross Berthinussen, CEO ANZ, 72andSunny, said the NSW budget, bar a few areas, such as boosts to social housing, increases in bulk billing GPs and wages for public sector staff, promises little respite for a state crippled by 12 year high interest rates, median home prices - almost 50% more than Melbourne’s - and the ongoing cost of living crisis.
“What does this mean for brands?” he said.
“Creativity has never been more important. Radical thinking and culturally relevant advertising is a commercial imperative.
“Highly creative advertising connects emotionally, it turbo charges declining ad budgets and justifies brand value. A sense of optimism is critical to connect with consumers who are feeling the opposite.
“Brands have a role to play to not just demonstrate empathy with consumers but also bring levity to their day and lift the cultural mood.”
However, The Media Store chief operating officer Jacquie Alley is slightly more optimistic as the boosts to accessible healthcare may shift consumer spending in the coming months.
According to the ABS data, NSW households are spending less on goods as the year continues with discretionary spending on recreation and clothing clearly down as people tighten their belts on the non-essentials.
"However, with the budget announcement of the continuation of the GP payroll tax rebate, allowing doctors to continue bulk-billing patients, and $3.4 billion allocated to upgrading NSW's hospitals and health facilities, we may see this spending shift in the coming months," Alley said.
"The biggest loser from this budget appears to be property investors with land tax thresholds increasing and additional duties and land taxes placed upon foreign investors.
"So, what does all this mean for media investment? I suspect it will remain a short market in the next 3-6 months as consumers continue to struggle until many of these proposed changes take effect.
"In turn, customers will be harder to convert, particularly in what will be perceived as discretionary spending categories, with brands needing to spend more money to find them."
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