How Aussies Spent their Stimulus Payments
The Australian Government continues to invest record amounts of money into the national economy in an effort to insulate against the negative effects of COVID-19. Along with the massive JobKeeper and JobSeeker programs, one-off $750 stimulus payments have been made to millions of Aussies over recent weeks. Data from the Australian Bureau of Statistics (ABS) tells us how the money has been spent, with differences between states highlighting spending pressures and the impact of COVID-19 on the ground.
The Australian Government has released two separate one-off stimulus packages to Australian citizens and permanent residents. The first $750 payment was made in March, with roughly 6.5 million Australians on government benefits receiving the money in their bank accounts. This initial stimulus package came at a cost of $4.8 billion, with the second package released in July to many of the people who did not qualify for ongoing relief packages.
The money was an attempt by the Government to stimulate the national economy, with people on benefits hopefully more likely to spend in their local community. While Treasurer Josh Frydenberg said he did not want to tell people how to spend the money at the time, the first package was a direct attempt to keep the economy ticking over during dark days. According to Mr Frydenberg, "what we do know from experience is that they will spend that money, and that money will encourage economic activity." Based on ABS data, he was only somewhat correct.
Not everyone who received the $750 payment put the money back into the economy, at least not immediately. On a national basis, 29% of people saved their money, 28% used it to pay bills, and 12% used it to pay for food and non-alcoholic beverages. The survey, which involved about 2,600 people and was conducted between May 10 and 23, showed that less than 10% of people used they money to pay their existing mortgage or rent.
These numbers differed widely based on state of residence, with people in New South Wales and Victoria more likely to spend a significant sum on household bills compared to people living in other states. NSW residents spent 35% of their funds on household bills, followed by Victorian residents at 29%, South Australian residents at 25%, and Queensland residents at 24%. This discrepancy was also seen in savings figures, with people from South Australia the most likely to save their money at 37%, followed by Queenslanders at 34%, and Victorians at 29%.
According to Brendan Coates, Household finances program director at the Grattan Institute, retirees tended to save extra money: "Our research shows that the average retiree is a net saver, that even applies to those receiving the pension... They are saving for a rainy day, even when it is pouring outside." Higher numbers of retirees in South Australia could account for the higher savings rate. More money was spent on household bills in big cities like Sydney and Melbourne, with people living there under more financial pressure during COVID-19 times due to high relative rents, rising unemployment, and workforce casualisation.