Jan England ITR Southern Australia - The Australian Prime Minister has committed the package below to the Australian people – monies going mainly to pensioners; carers; and the low income families.

Retailers Optimistic in Christmas Lead-Up

By Gerard McManus and Stephen McMahon October 15, 2008 02:36am

RETAIL king Gerry Harvey says the Rudd Government's $10.4 billion stimulus package will help retailers and boost consumer confidence.

"Sure it will help. It's more money in the economy," he said. "It's about confidence, and I'm trying to tell people out there that the world is not good at the moment - but it's not Armageddon. It's not a disaster."

Mr Harvey, who owns Harvey Norman, said he was yet to see the impact of last week's interest rate cut on sales, but was optimistic about the next few months.

The Australian Retailers' Association said the package could boost the Christmas holiday shopping season.

"Prime Minister Rudd's plan for a Christmas bonus is great news for consumers . . . and even better news for retailers hard-hit by months of reduced consumer demand," executive director Richard Evans said.

Last week's interest rate cut and the Government's package had provided some relief to retailers, Mr Evans said.

Former Reserve Bank governor Bernie Fraser warned the $10 billion stimulus would be wasted if it ended up only providing a short-lived boost to consumer spending.

Mr Fraser said the Government should use the Budget surplus to fast-track major infrastructure developments around the country.

Deutsche Bank chief economist Tony Meer said the cash injection was well-pitched at pensioners and lower-income households.

"Give 'em a buck and they will spend a buck," Mr Meer said. "If the money is given to the wealthier part of the economy, then they will save it, and the Government wants to get the money into the economy quickly."

NAB chief economist Alan Oster expects the payment will boost GDP by about 1.5 per cent next year. He is forecasting a government surplus of $7 billion next year and a deficit of $10 billion in 2010.

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