Rudd's cash bonus prompts retail boom13/01/2009 8:12:21 PM...

Rudd's cash bonus prompts retail boom
13/01/2009 8:12:21 PM

Australian market update
Market Indices 13 January,2009
13/01/2009 21:31 Sydney, Australia.
Index Value Change
All Ordinaries 3593.9 -30.1
S&P/ASX 200 3654.6 -28.7

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The Rudd government's stimulus package appears to have had its desired effect, with Christmas retail spending up on previous years.

The Australian Retailers Association (ARA) said retail sales skyrocketed in the last weeks of December, following a very slow November period.

ARA director Richard Evans said sales reached $37 billion, a two per cent increase on December 2007.

"By the last two weeks of December, Australians were more confident about gift giving with reduced petrol prices, lowering interest rates and the Rudd government's cash bonus," Mr Evans said in a statement.

The apparent success of the policy and the impact of the slowing world economy looks likely to prompt a second stimulus package.

Treasurer Wayne Swan refused to rule in or out the need for a further economic stimulus package or to bring forward $4.5 billion in tax cuts due in July 2010.

But Mr Swan said the notion that Australia was better placed than other economies to deal with the global economic crisis fallout had been borne out by Standard & Poors' reaffirmation of Australia's credit rating.

"There's no doubt there is a marked slowing of world growth. That's impacting on domestic growth. That will lead to an up-tick in unemployment in this country," Mr Swan told reporters on Tuesday.

Housing Finance figures to be released on Wednesday would also give the latest indication of extent of the softening of the domestic housing market.

Mr Swan said it was too early to say whether another economic stimulus package was needed.

"We will observe its impacts as we move through the early part of the year," Mr Swan said.

"We will take whatever measures are required to support jobs and to strengthen the Australian economy in the face of a slowing world economy."

Opposition Leader Malcolm Turnbull repeated his call for the 2010 tax cuts to be brought forward as an incentive and a way of preserving jobs.

A $3.4 billion tax cut is already locked in for July 1 this year.

"The great virtue of tax cuts is that they provide incentives to hire, incentives to invest and they provide those incentives right across the economy," Mr Turnbull told reporters.

Mr Turnbull singled out employment as the most important issue this year and the test of the government's economic management.

Mr Swan pointed to the S&P assessment which he said described the Australia economy as resilient and one of the strongest economies in the world.

"We're not immune from the global financial crisis but if there was one country in the world where you'd want to be in the middle of a global financial crisis it is Australia," Mr Swan said.

"And that is reaffirmed by the credit rating given to Australia by Standard and Poor's."

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13/01/2009 21:31 Sydney, Australia. 13 January,2009
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