The federal government says record consumer spending is a clear sign that its stimulus packages are working and protecting a million workers in the retail sector.
The opposition says the government is getting “very little bang for a very big buck”.
Consumers spent a record $19.3 billion in March when the government started rolling out billions of dollars in its second round of cash handouts.
This was a seasonally adjusted 2.2 per cent increase in spending compared to February, and much stronger than the 0.5 per cent increase forecast by economists.
“Today\’s data, showing retail trade four times higher than expected, is undeniable proof that the government\’s economic stimulus package has been extremely successful in supporting a retail sector which employs over one million Australians,” Treasurer Wayne Swan said.
Official April labour force data is released on Thursday and could see the jobless rate hit six per cent for the first time in six years, up from 5.7 per cent in April, economists say.
Centrelink started distributing some $2.7 billion in one-off payments to single-income families and the back-to-school bonus in March as part of the government\’s $42 billion stimulus package.
The Tax Office will continue to make payments to taxpayers until May 16.
Treasurer Swan said Opposition Leader Malcolm Turnbull needed to admit he was “plain wrong” to oppose the government\’s two stimulus packages.
But Mr Turnbull said the government is getting only a modest return from its billions of dollars in cash handouts.
He told the National Press Club in Canberra if you hand out money “obviously some of it will be spent”.
But he said only about 17 per cent of the December “cash splash” was spent.
“So that had an impact on retail sales figures, but it was very little bang for a very big buck,” Mr Turnbull said.
Still, the International Monetary Fund said it expects Australia\’s “strong policy response” will see an economic recovery start towards the end of the year.
But it said in its Regional Economic Outlook for Asia and the Pacific, released on Wednesday, that while Australia\’s positive financial conditions could add 0.25 percentage points to growth, they “have further scope for improvement going forward given the considerable monetary policy space”.
The RBA left its cash rate unchanged at a 49-year low of 3.0 per cent on Tuesday after its monthly board meeting, saying “monetary policy has been eased significantly”.
It has cut the cash rate by 425 basis points since September, but it remains by far the highest among the world\’s advanced economies.
Outlining its reasoning for the rate decision, RBA governor Glenn Stevens said there were “signs of stabilisation” in the global economy and a pick-up in activity in China.
But the IMF warns the global crisis has hit Australia\’s Asian neighbours hard, and it may take some time before the region\’s economies recover.
It says “forceful” monetary and fiscal policies will need to be sustained through 2010.
“The spillovers from the global crisis have impacted Asia with unexpected speed and force,” the IMF said.
“The downswing has been even larger than in other regions, and sharper than at the epicentre of the global crisis.”
It said China\’s growth will slow down “notably” in 2009 before recovering with an “aggressive” policy response maintaining growth at rates necessary to generate jobs consistent with social stability.
But Australia\’s other major trading partner, Japan, is expected to experience “a long and severe” recession.
Despite a difficult global market, Australia posted its second largest trade surplus on record in March with exports holding steady, while imports dropped three per cent.
The trade balance of goods and services was a seasonally adjusted surplus of $2.498 billion, after February\’s surplus was revised down to $1.752 billion.
Exports were underpinned by a 10 per cent increase in rural exports, with a 41 per cent increase in cereal grains and other cereal products.