Budgets batter confidence

The State and Federal Budgets have helped drive WA consumer confidence to its lowest level on record, just as BHP Billiton axes 170 jobs from its Pilbara workforce.

Confirming that spending cuts on top of a softening economy have hit the sentiment of the State's shoppers, a survey found few consumers were confident about the state of the economy despite the strength of the housing market.

The WA Chamber of Commerce and Industry-Curtin University survey found just 29 per cent of people expect the economy to improve in the coming year.

In December, almost half of those surveyed were upbeat about the economy.

While cost-of-living concerns remained the biggest factor weighing on consumers, half of those quizzed said the political environment was a major issue.

The survey period covered the release of the debut Budgets of Mike Nahan and Joe Hockey.

The State Budget lifted overall costs on the average WA family by $324 while the Federal fiscal blueprint included a tax increase on high-income earners and cuts to welfare payments including those flowing to middle-income families.

Chamber chief economist John Nicolaou said it was clear the two Budgets had hit the perceptions of WA consumers.

"It's understandable that consumers were feeling uncertain in the lead-up to both State and Federal Budgets," he said.

"Policymakers have been sending strong signals that government spending would have to be cut while not ruling out tax increases, and these messages have been a key driver of sentiment."

The concerns about the two Budgets appear to have reinforced concerns about the WA economy.

In the most recent survey about 42 per cent said the domestic economy was a factor in their concerns.

In the previous March quarter survey 30 per cent cited the domestic economy.

Consumers are responding by lifting their savings and winding back debts. This has been reflected in soggy retail sales figures over recent months.

The concerns about the State economy have been highlighted by BHP's decision to follow on from last week's decision to cut 100 staff from its Perth headquarters with 170 from its Pilbara operations.

Most of the jobs will go at the Mt Whaleback mine.

The company said the cuts were not related to the recent fall in the price of iron ore but were part of an overall effort to cut costs.