Lessons from the recent economic crisis: The Australian Household Stimulus Package

As other countries, Australia was hit by the international crisis. While European countries implemented austerity measures worsening social conditions of their population and pushing the economy into a fallacious fiscal adjustment, the prompt reaction of the Australian government limited the possible negative effects caused by the macroeconomic shock and favoured the process of economic recovery. In particular, this paper provides an impact evaluation analysis at household and child level of the 2009 Household Stimulus Package which was composed by three main cash payments: the Back to School Bonus, the Single Income Family Bonus and the Tax Bonus for Working Australians. Using data from the 2008 and 2009 HILDA surveys, the results show that these cash payments reduced the risk of poverty and stimulated consumption expenditure. Nonetheless, only the Back to School Bonus and the Single Income Family Bonus were really important in achieving these goals, while the Tax Bonus for Working Australians did not contribute to stimulate consumption and failed to reduce the risk of poverty. Thus, the analysis confirms the crucial role of governments to protect the most vulnerable groups avoiding a dramatic deterioration of social outcomes and favouring a fast economic recovery when interventions are timely and well-targeted.