we can now speak to michael heath in sydney.nel, what are the challenges facing the new treasurer? >> well, his challenges are. . myriad.re he's got week, the prices. he's got a pretty big budget deficit and a central bank with relatively limited policy ammunition. a range of challenges against him. on the positive side, australian dollar has dropped quite a lot, which is going to provide some stimulus to the economy. there's been 24 years without a technical recession in australia. he does have a couple things going in his favor. but he really has to craft a narrative. morrison's never had the economic portfolio. what are the pundits saying about how he's likely to perform? >> it's really up in the air. he's been a standout minister, i think it's fair to say, under tony abbott. he deserved promotion. but he made his name as the heart man on immigration, turning back asylum-seekers trying to get to australia by boat, and being quite callous. he is capable of getting across his brief. he's going to need to do that. this is a lot

michael heath joins us live from sydney. what is the extent of china bistro impact on australia?ina's impact on australia? how much? guest: is a bit of both but china is australia's biggest trading partner, and is the most dependent developed economy on china. people are using the rba is a guide for what might be happening in china. the rba noticed a further softening in chinese economic conditions and also noted the volatility and global stocks daily driven by china but it was much more descriptive than prescriptive. get a betteryou'll reading today with the release of current account information and a lot of that was driven by a drop in trade volumes and perhaps another noted that key commodity prices were much lower. the other part that it left out was due to lower demand in china. the central bank knows that the public is very attuned to what is going on in china. in many respects it is a blend , but china is absolutely crucial. jon: thank you very much. i remember when i was in australia politician read drew a map of the world and put australia physically closer to china. lo

let's speak to michael heath now in sydney. what are the challenges facing the new treasurer? michael: where do you begin? he has a lot on his plate. the main one is china's slowdown. australia is incredibly dependent on china. he will have to try to refocus the debate on generating growth domestically. the prior two years, not a lot has been done in terms of reform. basically, he is going to need whereiculate a narrative growth and jobs will come from in the economy. mining is starting to wind down. he is going to have to fit his proposed reforms into the narrative. australia's tax system has not had a lot of reform. had a consumption tax 15 years ago and prior to that, not much has been done. industrial relations, they need to free up the labor market a bit. the other issue is that the country needs to look at innovation. it is going to need to concentrate on human capital rather than natural resources, which has sustained it for the past 10, 15 years or so. at the same time, he has quite a large budget deficit by australian standards. plate, so iton his will be quite a steep