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Pensioners and parents counting pennies from the Government's cash bonuses.



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RN PM Pensioners and parents counting pennies from the Government's cash bonuses

04/12/2008

Pensioners and parents counting pennies from the Government's cash bonuses

PM - Thursday, 4 December , 2008 18:22:00

Reporter: Emily Bourke

MARK COLVIN: Starting next Monday, aged and disability pensioners, carers and veterans will start receiving their cash bonuses through the Government's $10-billion stimulus package.

As many as two million families will also receive tidy sums of $1,000 for each child in their care.

The Government wants people to spend the money and quickly, especially in light of yesterday's GDP figures.

But there are questions about whether the stimulus will achieve its aims.

Some worry that the cash bonuses will be used to pay off old debts rather than go towards a pre-Christmas splurge.

Emily Bourke reports.

EMILY BOURKE: The $8.7-billion in cash bonuses will be rolled out from next Monday.

Four million pensioners and seniors will get lump sum payments that start at $1,400.

For Mary Jane who lives on a disability support pension in community housing in western Melbourne, next week's cash bonus already has a home.

MARY JANE: I will be able to pay off my credit card after having my car serviced and hopefully buy a new mattress for my bed.

I guess it will free up Christmas a little bit for me. My poor grandchildren have had to have just bits and pieces the last few years, but I might be able to buy something a bit more decent for them this year.

EMILY BOURKE: For low to middle income families, payments of $1,000 will be made for each child in their care.

Marina Randall from the Salvation Army says for many the cash is likely to be spent catching up on outstanding debts.

MARINA RANDALL: Some of them are in debt, owing to back rents. Some of them are in debt owing to utility companies, insurances, car registrations, vehicle maintenance, all of those sorts of things that we would consider to be normal living expenses.

EMILY BOURKE: But she says it's possible the money will be frittered away on drugs and alcohol.

MARINA RANDALL: There is always a concern that people will make inappropriate choices or choices that are really not good for themselves or their families, that's always the case.

The reality is though that there will always be somebody, and the percentages would be, you know, extremely low, who would make choices with their resources that perhaps most of us would we wish they hadn't made choices about.

EMILY BOURKE: Forensic accountant Brett Warfield completed a 10 year study into problem gambling earlier this year.

He says people in the grip of a gambling addiction might lose the cash at the track or at the pokies.

BRETT WARFIELD: From our research there is a higher risk, for those people to use part or the majority of that money to gamble with as opposed to for their day to day needs

EMILY BOURKE: Lin Hatfield Dodds, the national director of UnitingCare Australia says perversely it makes little difference if the cash bonuses are spent on vice.

LIN-HATFIELD DODDS: The brutal reality from an economic perspective in terms of fiscal stimulus, that

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doesn't matter. But most very low income Australians ensure that their children have adequate footwear, that they can put a little aside a little bit to get their kids to the dentist or the doctor. They're usually using it, you know, to pay off their rent backlog, so people are using it to meet their most basic needs.

EMILY BOURKE: But she says the one-off payments won't do much to ease the growing strain on the providers of social services who met in Canberra this week to discuss in the impact of the global financial crisis.

LIN HATFIELD-DODDS: We had 30 experts from across the community sector; CEOs who are running very large and complex organisation, all of whom said the community services are generally terribly underfunded and were simply unable with the impacts on our funding the impacts on our investments to be able to meet the projected need we can see coming down the line. That's general, let alone the projected

extra needs due to the financial crisis.

EMILY BOURKE: And after the GDP figures showing the Australian economy at a virtual standstill, the cash payments couldn't come at better time.

Shane Oliver is the chief economist at AMP Capital Investors.

SHANE OLIVER: Whether it's playing on the pokies or whether it's buying a new car or a new mattress doesn't really matter. The key is the difference between the spending and saving component.

But in this sort of environment of uncertainty about unemployment and uncertainty about job prospects, I think a big chunk will be saved and that will mean that the economic impact of the stimulus package probably won't be as great as the headline numbers would suggest.

It still will help cushion the blow were it not for those payments but by the same token, not necessarily enough to stop the economy ultimately going into recession or a mild recession next year.

EMILY BOURKE: For now at least for Mary Jane in western Melbourne the lump sum payment will prove a financial and emotional cushion in the lead up to Christmas.

MARY JANE: It will help others feel a bit better about Christmas. In the past they haven't been able to buy gifts and they've wanted to. This will help them a lot and give them a sense of satisfaction in being able to give when normally they can't.

MARK COLVIN: Mary Jane from western Melbourne ending Emily Bourke's report.

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