27 September 2023

COVID cash: How Aussies spent their one-off $750 stimulus payments

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Catherine Hanrahan* says new data from the Australian Bureau of Statistices (ABS) has revealed how Australian spent their Federal Government COVID-19 stimulus payments.


Nearly a third of people who received the Federal Government’s first COVID-19 stimulus payments saved the money, Australian Bureau of Statistics (ABS) data shows.

The one-off $750 payment was made in March to about 6.5 million Australians on government benefits, at a cost of $4.8 billion.

The payment was delivered early in the pandemic as a precursor to the JobKeeper and JobSeeker programs in a bid to stimulate economic activity.

At the time it was announced, Treasurer Josh Frydenberg said he did not want to tell Australians how to spend the money.

“But what we do know from experience is that they will spend that money, and that money will encourage economic activity,” he said.

However, of the millions of people that received payments not everyone put it back into the economy immediately — 29 per cent saved it, and 28 per cent used it to pay bills.

NSW residents were more likely to use the money primarily to pay household bills (35 per cent), compared with 22 per cent who saved it.

The survey of about 2,600 people, conducted between May 10 and 23, found 12 per cent mainly used the money to buy food.

It also showed less than 10 per cent of people used it to pay their mortgage or rent.

A second package, now known as JobSeeker, of a $550 fortnightly supplement to those on unemployment and other benefits, was made in late April at a cost of $14.1 billion.

The data showed nearly 70 per cent of the stimulus went to people aged 65 and over, and 45 per cent of that group added the money to their savings.

Household finances program director at the Grattan Institute, Brendan Coates, said 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,” he said.

“They are saving for a rainy day, even when it is pouring outside.”

He said the higher numbers saving the money in South Australia reflected the state’s older average age.

Nearly half — 47 per cent — of Tasmanians received the stimulus money.

He expected the saved money to be spent over the next few months.

“Savings rates rise even if the payments are effective,” he said.

“You don’t spend it all, that gives us more of a buffer as we come off the JobKeeper and JobSeeker payments.”

Around half the people who received a stimulus payment were unemployed or not in the labour force, and receiving the Newstart allowance which was subsequently replaced by the JobSeeker program.

Executive Director of Anglicare Australia Kasy Chambers said at the start of the pandemic when the $750 was dispersed, there were two cohorts of people on Newstart.

She said one group, who were managing to live on the old Newstart allowance but spending about 20 per cent more than they were getting every week, would have spent the stimulus money.

However, she said the second group did not expect to lose their jobs and had some savings as a financial buffer.

“In our emergency release centres, we are now seeing people who have managed to make ends meet until now, but it is getting harder,” she said.

“They have worked through the goodwill of friends and family, and their savings.”

She said people in the big cities like Sydney were under more financial pressure because of high rents, and casualisation of the workforce which had made work more precarious.

*Catherine Hanrahan is a contributor at ABC.

This article first appeared at abc.net.au

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