Consumer confidence struck a near-three low in the wake of last week’s federal budget.

Workers are grappling with the toughest budget in decades at a time when wages growth is failing to keep pace with inflation.

Little wonder consumer confidence has tanked to its lowest level in nearly three years.

But Prime Minister Tony Abbott has dangled the carrot of future personal income tax cuts as he battles to sell his government’s first budget.

“The whole point of getting the budget under control is so that we can give tax cuts in the not-too-distant future,” he told Fairfax radio on Wednesday.

Mr Abbott believes confidence will rebound because his budget is the only plan to tackle the “debt and deficit disaster”.

It has some way to go.

The Westpac-Melbourne Institute consumer confidence tumbled 6.8 per cent in May, with the survey period taking in the full reaction to last week’s budget.

The confidence index dropped to 92.9 points, remaining below the key 100 level that indicates there are more pessimists than optimists.

“The sharp fall in the index is clearly indicating an unfavourable response to the recent federal budget,” Westpac chief economist Bill Evans said.

Shadow treasurer Chris Bowen says the government is preaching pessimism through its budget, forcing the country to accept lesser standards.

“A government determined to throw a blanket of gloom and doom over our country,” Mr Bowen told the National Press Club in Canberra.

The confidence drop is comparable to the seven per cent decline in May 2013 when former treasurer Wayne Swan deliver his last budget.

However, 59.2 per cent of respondents believe their family finances will be worse off over next 12 months after Treasurer Joe Hockey’s budget, compared to the 45.6 per cent who felt hard done-by after Mr Swan’s effort.

Welfare groups expect to be swamped with requests for help as people won’t be able to afford to see a doctor as a result of changes to Medicare, including the proposed $7 co-payment and increase to prescriptions, according to a Salvation Army survey.

Separately, an analysis of the budget by PricewaterhouseCoopers says, while the federal government has “definitively solved” its debt problem, it has placed a further debt burden on the states and territories.

“Tax reform is required to decrease ballooning debt of the states and territories, as well as fund vital investment in infrastructure,” PwC partner Paul Abbey said.

Other data on Wednesday showed wages are growing at their slowest pace in at least 17 years.

The wage price index – the Reserve Bank’s preferred measure of wages growth – rose 0.7 per cent in the March quarter, keeping the annual rate at 2.6 per cent and the lowest level since the series began in 1997.

This compares with an inflation rate of 2.9 per cent.