THE Government's hope that a $12.7 billion windfall for taxpayers will translate into a job-creating spending spree may be thwarted by debt conscious Aussies, a news.com.au readers' poll indicates.
Asked whether they would use their share of the one-off payment to spend, save or pay off debt, only one quarter of readers polled by 4.05pm (AEST) said they would spend it.
52 per cent would pay off debt, and 23 per cent would save the money, the poll found.
"If you are lucky enough to recieve some of this package spend it wisely, and save as much as you can. The world is in the problem it is because everybody has been living a life they cannot afford, thinking that house prices will always go up and plasma tv's are an essential item.
"There is no doubt that the government wants you to spend this money consuming, this is why it is called an 'economic stimulus package' rather than calling it a 'family support package', if they really cared about the Australian people, they would be telling all the recipients of this money to use it where they have to (food, education, housing), pay off credit card debt, and those who can, save, save, save. "
The payments were part of the Federal Government's $42 billion nation building and employment economic stimulus plan aimed at retaining 90,000 jobs over the next two years.
The Budget is now expected to sink into a $22.5billion deficit in the 2008/09 financial year, a massive deterioration from the $5.4 billion surplus projected, and deepening into deficits of over $30 billion in the following two years.
The Reserve Bank also acted to help spark the slowing economy today.
At 2.30pm (AEDT) the Reserve Bank cut the official interest rate to 3.25 per cent, the lowest rate in 45 years.
Out of the big banks, Westpac and ANZ have passed on the full 100 point cut to their standard variable home loans. Commonwealth and NAB say rates are currently under review.
Treasurer Wayne Swan said other banks should follow the RBA's lead "in a timely way".
RBA governor Glenn Stevens said the board took into account the package of measures announced by the Government earlier today.
"The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad," he said.
The one percentage point cut will save home owners an average of $186 a month in mortgage repayments.
Billed as a "rapid response" to the deteriorating global economic conditions, the centrepiece of the Government's plan is $28.8 billion of spending on schools, housing, energy efficiency in homes, community infrastructure and roads, and support to small business to be delivered mostly in 2009-10 and 2010-11.
The remaining third of the plan is an immediate injection of $12.7 billion in one-off bonus payments of $950 each for low- and middle-income households and individuals through five bonuses to be paid in the next few weeks.
It means 8.7 million workers earning $100,000 or less will receive a lump sum payment of up to $950 each from April.
About 1.5 million single-income families will also receive the payment, provided they receive Family Tax Benefit Part B, in the fortnight beginning March 11. But the bad news is the unemployment rate is predicted to rise to 7 per cent by mid-next year, up from 4.5 per cent in December.
The package includes: * $12.7 billion for immediate one-off payments to working Australians, families with school-age children, farmers, single income families and for those undergoing training;
* $14.7 billion to be invested in school infrastructure and maintenance and bringing forward funding for trade training centres;
* $6.6 billion