Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

The Reserve Bank has warned the unemployment rate could still rise despite a recent unexpected fall, while presenting four policy options the central bank has available should the economy need a further lift.

Deputy central bank governor Guy Debelle says while the fall in the unemployment rate to 6.8 per cent in August was unforeseen, the recovery in the labour market was likely to be "bumpy and uneven".

"We still expect the unemployment rate to rise from here," he told the Australian Industry Group on Tuesday.

His comments came as new data on Tuesday showed payroll jobs fell 0.7 per cent for the month ending September 5.

The Australian Bureau of Statistics said over this period jobs fell by 2.1 per cent in locked-down Victoria and by 0.2 per cent over the rest of the economy.

Payroll jobs remain around 4.5 per cent lower than mid-March and at the start of the pandemic 8.3 per cent down in Victoria and 3.1 per cent in the rest of Australia.

Even so, Mr Debelle said the economy had come off a trough seen in May, at the height of the coronavirus pandemic.

"So it is plausible that the worst is behind us but the recovery from here is potentially more of a slow grind," he said.

But he again said interest rates are unlikely to rise over the next three years, and presented four options that are at the Reserve Bank's disposal should the economy need a further lift.

These are extending its bond buying program to longer maturing issues, foreign exchange intervention and negative interest rates.

Another option is to the lower the current structure of interest rates in the economy, both in terms of the target for government bond yields and the borrowing rate the RBA offers to banks from the current 0.25 per cent.

"It is possible to further reduce these interest rates," he said in his speech.

But he emphasised these were all just options.

"I am not saying anything new on the likelihood of any of those," he said in a subsequent Q&A session.

There has been speculation the central bank could ease the cash rate from its already record low of 0.25 per cent to 0.10 per cent.

Interest rate futures imply a 0.10 per cent cash rate by the end of the year.

RBC Capital Markets head of strategy Su-Lin Ong has long argued negative rates should be an option in the Reserve Bank's toolkit.

"By continuing to highlight other policy measures without committing to any timelines, especially ahead of the upcoming 2020/21 Commonwealth Budget, the RBA is employing maximum flexibility," she said.

"In these uncertain times, that would appear prudent."

Meanwhile, consumer confidence has risen for a third straight week, with Victorians notably more upbeat that the coronavirus outbreak in the state is being brought under control.

The ANZ-Morgan consumer confidence index a pointer to future retail spending rose 1.2 per cent and to its highest level in three months.

ANZ head of Australian economic David Plank said there was an improvement in confidence in Melbourne and the rest of Victoria.

"The success in getting the COVID-19 new case numbers down is clearly having a big impact on confidence in Victoria," he said.

Melbourne consumers are now a touch more confident than those in Sydney.

Daniel McCulloch
(Australian Associated Press)

At least 145,000 jobs could be lost if pandemic-boosted welfare payments are slashed as planned.

Mental health experts also fear the looming reduction could have significant psychological impacts.

JobSeeker unemployment benefits have been temporarily doubled since April, but will be cut by $300 a fortnight at the end of next week.

The payment is due to go back to the original Newstart allowance of $40 a day in December, unless the government changes its policy.

Analysis by Deloitte Access Economics commissioned by the Australian Council of Social Service has found cuts to coronavirus supplements for welfare recipients will cost the economy $31 billion.

The report also contends 145,000 full-time jobs are at risk over the next two years if JobSeeker is cut.

Deloitte Access Economics partner Nicki Hutley said every dollar the government invested in JobSeeker generated a significant economic return.

"Providing people without paid work with enough to get by is highly effective economic stimulus, as they have little choice but to spend straight away on essentials," she said.

"People on higher incomes have the option of saving, which many are doing right now given the uncertainty of the pandemic.

"This is why other measures, such as income tax cuts, would not be as effective in getting us out of this recession."

ACOSS CEO Cassandra Goldie urged the government to extend the existing coronavirus supplement and legislate a permanent JobSeeker rate that allowed people to cover basic living costs.

"There are a lot of things that are not in our control in this pandemic," she said.

"But one thing that the government does have control over is ensuring that everyone has enough to cover the basics of life, including a safe place to live."

Community Mental Health Australia chief executive Bill Gye has warned federal politicians winding back coronavirus supplements will have a big impact.

"The reduction of JobSeeker will have a really significant negative impact on the mental health of Australians," he told a parliamentary committee on Tuesday.

ACOSS wants the permanent base rate of JobKeeper increased by between $185 and $275 a week.

Prime Minister Scott Morrison has signalled he has no intention of going back to the original Newstart rate of $40 a day, but has given no indication of how much the payment will be beyond the end of the year.

Money and Life
(Financial Planning Association of Australia)

Do you struggle to control your spending around your friends and family? If the urge to 'keep up' with a certain lifestyle is stretching your finances, it could be time to take action.

From splitting the bill at an expensive restaurant, to having the 'right' house, car and clothes, many of us fall victim to overspending. But if you regularly suffer from buyer's remorse, or spend over and above your means, it's time for a serious reality check.

Overspending can quickly spiral into long-term debt, especially if you use credit cards to try and bridge the gap.

Young Australians are particularly at risk, taking on debt at a far earlier age and carrying it longer than ever before. Research by RateCity shows that 42 per cent of those aged under 24 have between $10,000 and $30,000 in personal debt, not including a mortgage.

Even if you're not living paycheck to paycheck, overspending will prevent you from reaching your longer term financial goals, like financial security and financial freedom.

Fortunately, spending habits are just that habits and they can be changed. Here's how to avoid the debt spiral and get your finances on track.

1. Identify your risky behaviours

Do a financial health check and work out where the majority of your overspending happens.

Is it a penchant for designer clothes? An addiction to expensive electronics? Or a love of fine dining? We all have vices that threaten to throw us off track, so look at the numbers and be honest with yourself about which behaviours are forcing your finances off course.

If those behaviors are closely associated with certain friends, family or work colleagues, it could be time to reevaluate your unhealthy relationships.

2. Associate with people who share your values

Once you know what's driving your poor spending habits, use it to take action. Distance yourself from any negative influences and find others who better fit in with your long term plans. Being surrounded by likeminded people will help restore your bank balance in no time.

3. Find alternatives

If your social life is at the center of your overspending it could be time to make some healthy swaps. Try suggesting low-cost alternatives such as bush walking, art classes or the beach. You might even meet new people who share your values.

Lead by example and encourage good financial practices among your friends and family. Be upfront about your goals and values, without being pushy. True friends will be supportive and want to spend time with you anyway.

4. Make a financial plan

Taking control of your spending starts with evaluating your priorities and setting long-term goals. By making a financial plan, you'll identify what is really important to you and the steps you need to take to get there.

You can do much of the groundwork on your own, although consulting a financial planning professional can help you to nail the details and act on your plans. You could be experiencing financial freedom sooner than you realise.

5. Stick to a budget

It's much easier to maintain your new spending habits and make a real change if you have a budget in place. Make sure to allocate funds for clothing, entertainment and 'fun', so that you still get to indulge in some of your favourite interests.

6. Create a 'want to buy' list

Every time something comes up that you want to buy, add it to your list then wait at least seven days before purchasing the item. In the meantime, find at least three prices for the same item. This reduces the risk of splurging on things you don't really need and makes it more likely that you'll get a good deal.

7. Focus on the bigger picture

The most important thing to remember is that you don't need to have everything right now. Anyone who expects that is probably not worth your time. So go easy on yourself. Take care of the pennies and the pounds will take care of themselves, so the saying goes.

It's easy to get carried away trying to keep up with a certain lifestyle and you may not even realise it's happening until you're already in debt. Good financial planning and a focus on the bigger picture will help keep your overspending in check.

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

Leading economist Chris Richardson has warned that while Australia has dealt with the coronavirus at a sprint, the battle for jobs will be a marathon.

He is urging the federal government to go "hard and smart" in providing further support and stimulus in next month's delayed budget.

At top of the list, Mr Richardson, a partner at consultants Deloitte Access Economics, wants a permanent increase in the JobSeeker dole payment.

JobSeeker, previously known as Newstart, was doubled to around $1100 a fortnight through the coronavirus supplement at the start of the crisis.

"For a long time there's been clear evidence we needed to do more on the unemployment benefit," Mr Richardson told the National Press Club in Canberra in Wednesday.

"The arrival of the virus has strengthened the case for a stronger unemployment benefit going forward."

He said the unemployment rate was set to climb from five per cent to 10 per cent.

"If it goes back to the $40 a day, it's going to be twice as bad, because it's going to be affecting the incomes of twice as many people," he said.

The government is cutting the coronavirus supplement later this month that will reduce the JobSeeker payment to $800 per fortnight and then it is due to return to $40 per day at the end of December.

Welfare advocate group ACOSS CEO Cassandra Goldie said people were terrified of what was around the corner, having had the relief of finally being able to buy the "essentials of life".

"One million children will be affected by these cuts if the federal government does not act," Dr Goldie said.

Australian Retailers Association CEO Paul Zahra agreed that every dollar given in social security is spent.

"Every dollar spent in retail gives someone a job," he said.

"We can clearly see you can't have an economic recovery without a retail recovery."

However, there was less uniform agreement among the three speakers about personal tax cuts.

The government has flagged it may bring forward already legislated tax cuts which are due to operate from 2022. There is another stage in 2024.

Dr Goldie firmly opposes these tax cuts, which will come at a cost of $12 billion and will see people on six-digit salaries get $50 per week but those on low or modest incomes get just $5.

"This proposal would give dollars to people most likely to save the extra dollars, and giving to people who probably need it the least," she said.

Mr Richardson also has a minor hesitation in supporting the tax cuts simply because some of the money is less likely to be spent.

But Mr Zahra said he was keen to see the tax cut brought forward.

"I think we'd all welcome a tax cut," he said, although he did concede the timing was probably not great.

The budget on October 6 was delayed from its traditional May release because of the pandemic.

Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)

Incentives for businesses to invest and create jobs will be at the heart of the federal budget, a Morrison government minister says.

Assistant Treasurer Michael Sukkar said the budget delayed from May to be delivered on October 6 will have a "singular focus" on jobs.

"This budget will be about trying to encourage as many Australians, as many businesses, to invest to create jobs," Mr Sukkar told Sky News on Tuesday.

Bringing forward infrastructure projects would also be part of the plan, he said.

His upbeat comments came as a leading economist warned Australia's rebound from recession is likely to be drawn out affair, resulting in an even higher jobless rate.

National Australia Bank chief economist Alan Oster believes the sheer magnitude of the fall in economic activity in the June quarter, and the subsequent lockdowns in Victoria, means the recovery will likely be protracted.

"Policymakers have provided unprecedented support but we think there will need to be more," he said.

"This would help businesses and the economy recover more quickly and the focus can again return to growth."

NAB's business survey for August pointed to a weakening employment outlook.

Its business conditions index fell six points to minus six points in August, unwinding most of the previous month's gain.

Mr Oster said the decline was led by a drop in the survey's employment index, suggesting while the Australian economy is generally starting to open up, the labour market is still in decline.

He said the deterioration in conditions was broad-based across the states, with sharp declines in Queensland, Tasmania and South Australia, but only a modest decline in Victoria.

"The fact that the other states have seen a pull-back suggests that the virus continues to pose a risk everywhere, not just states with significant containment measures in place," Mr Oster said.

The business confidence index made only a modest six-point improvement to an index of minus eight points after falling sharply in July, indicating sentiment still remains fragile.

The Australian Bureau of Statistics weekly payrolls report revealed the number of jobs across Australia fell by 0.4 per cent over the month to August 22.

But this was the result of payrolls in Victoria falling two per cent in that period while the rest of the nation saw a modest 0.1 per cent rise in jobs.

"While payroll jobs continued to fall in Victoria into the third week of August, it was at a slower rate than earlier in the month," ABS head of labour statistics at Bjorn Jarvis said.

RBC Capital Markets head of strategy Su-Lin Ong said there are signs of resilience and encouraging trends despite Victoria's challenges.

"But (this) may well suffer some setback with Premier Andrews' recently announced drawn out and cautious exit plan from the current set of restrictions," she said.

Commonwealth Bank senior economist Belinda Allen said consumer spending was unlikely to rebound meaningfully in Victoria until November.

Still, Australians appear to have taken confirmation of the country's first recession since the early 1990s in their stride.

The weekly ANZ-Roy Morgan consumer confidence index rose one per cent, with respondents optimistic about future economic conditions, which jumped 4.1 per cent.

But ANZ head of Australian economics David Plank is quick to point out the survey was carried out before the Victorian government announced it was extending its harsh coronavirus lockdown.

"Even taking this into account, the uptick in confidence comes as a positive surprise," Mr Plank said.

He felt the jump in "future economic conditions" may indicate that a number of people think the economic situation is close to the bottom.