Stimulus funds should flow into economy quickly

Economists say the early impact of the Federal Government's $42 billion stimulus package will be noticed when the payments flow from next month.

The stimulus plan made it through the Senate yesterday after a week of wrangling in Federal Parliament.

The cash handouts will start to roll from next month, beginning with the single income and back to school bonuses from March 11.

Farmers and students get their money from February 24 and then the tax bonus of up to $900 will be paid in April.

Forecaster Chris Richardson from Access Economics says judging the success of the spending will be difficult, but he expects the money to be pumped into the economy quickly.

"We will never know how well this package did or didn't do," he said.

But he has crunched the numbers and he says not all of the money will be returned to the economy, but it will be a better result than similar moves overseas.

"[With] the US package, only between 12 and 20 cents in the dollar of that will be timely, temporary and targeted," he said.

"In Australia, our package is about 54 cents."Political debate

Federal Opposition Leader Malcolm Turnbull predicted his decision to oppose the stimulus package would not be popular and he may have been right.

One poll in today's West Australian newspaper reveals a six-point fall in the Coalition's support.

And although it has now passed the Parliament, the $42 billion package is expected remain at the forefront of political debate.

"The Government has acted to support jobs, while others have argued we should do nothing to support jobs," Prime Minister Kevin Rudd said yesterday.

To win the Senate's backing the Government had to deal with the Greens and independents.

But the National Farmers Federation (NFF) has voiced concerns about the deal the Government struck with Independent Senator Nick Xenophon to bring forward funding for water buybacks on the Murray River.

The chairman of the NFF's water taskforce, Laurie Arthur, says without extra infrastructure the buyback will make a difficult situation worse.

"It'd be a real pity if we had this water purchased out of the areas and it took three, four or five years before any investment went in there because the towns, the communities around those irrigation farms, they need support now," he said.

But the Australian Conservation Foundation president Don Henry says the environment is the winner.

"Boy oh boy, we can't do too much for the Murray-Darling at the moment," he said.

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Sat 14th February 2009 - 12:18pm