New research from The Australia Institute has shown that a majority of Australians plan to save the tax cuts announced in the Budget, bringing into question their ability to stimulate economic activity. The Australia Institute poll of 1005 Australians between 8 and 9 October 2020 also showed a majority of Australians think the Budget will be good for the economy and almost half of Australians think they’ll be better off personally as a result of the measures it contained. Key Findings:

• Half of Australians (52%) intend to save about three quarters or more of the tax cut, including 39% who intend to save all of the tax cut.
o 77% of Australians intend to save half or more of the tax cut.

• The share of Australians who think that the Budget will be good for the Australian economy increased from 44% in 2019 to 58% in 2020.

• Almost half of Australians (47%) think that they personally will be better off as a result of the Budget, an increase on 34% from the previous year.

• Income support for people looking for work is the most popular Budget priority (chosen by 31%), followed by infrastructure and government services (26%).
o Only 20% of Australians choose bringing forward income tax cuts as the priority, followed by 12% who choose decreasing the deficit.

• “While a big-spending budget has been well received, voters still want the Government to prioritise direct support for the unemployed over tax cuts,” said Ben Oquist, Executive Director of the Australia Institute.

• “The results also highlight the second-rate economics of tax cuts — with a huge proportion of the tax cuts likely to be saved rather than spent.

• “Numerous leading Australian economists and academics warned the Government that tax cuts make for very poor stimulus in a recession, because of people’s tendency to save in uncertain times.

• “While the proportion of people who are happy with the Budget has increased from last year, the strong preference for saving the tax cuts will undermine their stimulatory effect.”