Around Australia, business people are looking at how to benefit from the $42 billion stimulus package. The building industry and those retailers selling lower priced goods will be key beneficiaries. Although the “hand out” money will go to a different group of people to the December package, they will tend to be lower income so it is probable that they will follow similar spending patterns to the December winners.
According to the Commonwealth Bank, about one third of the money distributed was saved, another third was used to paid off loans and the final third was spent. From the profit results, a big chunk of that spending went to those who were selling lower priced goods. JB Hi-Fi was the stand out beneficiary in the interims that have come in so far, but Woolworths, Coles, Harvey Norman and other retailers with broad appeal will have been helped.
Those in the building industry are going to receive an enormous boost as schools hit the scene with a vast array of building projects. I was talking to the principal of a state primary school who believes he will have $800,000 to spend and he wants to spend as much as possible among local builders and suppliers. Builders and suppliers need to get to know their local school principals.
In Victoria there will be an enormous surge in home building activity to replace houses lost in the bushfires. Industrial companies like CSR, Boral and Fletcher Building are going to be big winners as home owners rush to take advantage of the insulation rebates.
While this will create a large number of jobs, there are a lot of companies that are very close to making decisions about major retrenchments. The overall picture is that we are entering into unchartered waters where all the major economies are spending vast sums. Malcolm Turnbull is right; in time it will come back to bite us, but right now is all about lessening the impact of the crisis.
We are fortunate that, unlike the US and Britain, our package does not have to include provisions for bailing out the banks.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
