Saving rather than spending the Federal Government’s bonus payment will still be good for the economy, says Reserve Bank of Australia (RBA) governor Glenn Stevens.
While the stimulus package has been designed to go to the lowest income earners to encourage them to reinject it into the economy, he notes that saving still has a beneficial effect.
“That presumably takes the place of private saving that would otherwise have been done over a longer period, so it brings forward the point at which households become confident enough to lift spending,” he said in a speech presented at the Australian Business Economists annual dinner last night.
A survey conducted by News Limited publication The Daily Telegraph, indicated that only 15 percent of respondents would buy Christmas presents with the bonus, with almost half saying they would use it to pay bills and put it towards their mortgage. A quarter of the 1,001 respondents said they would save the money, putting it towards a new house, a new car and ‘a rainy day’.
