From Bass in the AFR today:
According to estimates by UBS chief economist Scott Haslem, early carbon tax household compensation payments amount to $1.5 billion in the June quarter, which should boost household disposable income in the quarter by just over 0.5 per cent.
There was also an extra $1.3 billion cash payment late last month as part of the Schoolkids package, and there’s another $4.1 billion in carbon tax compensation coming over this financial year.
Together with stronger employment growth, the expiration of the $1.8 billion flood levy and the lowering in interest rates to date, Haslem estimates the household sector’s “free cash flow” will grow by 8 per cent in the year to March 2013, well up on the 4 per cent growth in the year just passed.
National Australia Bank senior economist Spiros Papadopoulos noted that the recent lift in consumer spending and employment growth has already been recognised by the Reserve Bank of Australia – which in this week’s post-meeting policy statement dropped an earlier reference to “precautionary behaviour” by both households and business.
Of course, the growth support from the Gillard government’s cash splash is ironic, as earlier this year economists feared the impact of huge fiscal drag as the budget moved into surplus. So far, at least, those fears – like those around the carbon tax – seem exaggerated.
