Joe Hockey has warned that confidence will be the first casualty of the latest slump in shares prices.
But the treasurer has been quick to remind people that Australia has one of the fastest-growing economies in the world at the moment and that the fundamentals for the global economy remain positive.
The ASX tumbled just over four per cent on Monday, wiping some $60 billion off share prices and extending last week’s losses amid a widespread global market sell-off.
“Markets will go up and down … the fundamentals are still good for the global economy and particularly for the United States economy which is still growing relatively strongly and now has full employment,” Mr Hockey told ABC radio.
Europe was doing better than anyone expected 12 months ago and China, even though it has had significant market volatility, did not reflect the fact the economy there would continue to grow relatively strongly.
The treasurer will be travelling to Turkey next week to attend a G20 meeting of finance ministers and central bankers.
He hopes to get a better indication on the pending decision by the US Federal Reserve to increase interest rates.
“The more transparency we can get from the Federal Reserve and (chair) Janet Yellen in particular, the more it will help to address some of the volatility in global stock markets,” Mr Hockey later told Sky News.
At this stage the treasurer remains comfortable with his forecasts in his budget in terms of the iron ore price and the correction in the Australian dollar at a time of low interest rates in Australia.
“So far I don’t think anything is particularly surprising,” he said.
He also has dismissed suggestions the government will go to the polls early next year to avoid handing down another May budget.
The treasurer gave a speech justifying the need for personal income tax cuts, but he remains opposed to cutting generous superannuation tax concessions as part of the government’s tax reform agenda.
“You have seen in markets today, there is a great deal of volatility in returns for superannuants … now is not the time to hit them with a new tax,” he said.