Household spending flat as tax cuts saved for rainy day

[Pelican Press 0]

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Household spending flat as tax cuts saved for rainy day

Federal tax cuts have not led to a cash splurge, with household spending remaining flat in August.

Figures from the *********** Bureau of Statistics showed household spending was unchanged in the month.

It comes after spending patterns went backwards by 0.5 per cent in July and 0.1 per cent in June.

The bureau said concerns the federal government’s tax cuts would lead to an increase in spending had not eventuated.

“Growth in household spending has stalled at the start of the financial year, even as the federal government’s stage three tax cuts came into effect on July 1,” ABS head of business statistics Robert Ewing said.

Discretionary spending rose 0.2 per cent during August, up 1.2 per cent for the past 12 months.

But spending on essential items fell 0.4 per cent, driven by a fall in people paying for motoring goods and food.

“In August, spending on services rose 0.4 per cent, growing for the second month in a row,” Mr Ewing said.

“The rise was led by higher spending on air travel, hotel accommodation and dining out.

“Growth was offset by a 0.3 per cent fall in spending on goods, as households spent less on new vehicles and automotive fuel.”

Spending on alcohol and tobacco fell the most during August, down by 9.4 per cent, while transport spending went back 2.6 per cent.

The flat spending figures came as the value of new home loans being issued continues to rise.

New housing loans increased one per cent to $30.4 billion in August, ABS figures revealed.

New investor loans rose to $11.7 billion, an increase of 34.2 per cent from the same time in 2023.

Owner-occupier loans also rose 0.7 per cent to $18.7 billion.

However, ABS head of finance statistics Mish Tan said the number of first-home buyers dropped 1.5 per cent in August compared with July.

Dr Tan said Queensland was leading the charge for new home loans.

“There were state-by-state variations in the year leading up to August’s modest housing loan rises,” she said.

“Lending in Queensland grew strongly in the past 12 months and was the key driver behind the August increase.

“The total value of lending for housing in Queensland rose by just over 40 per cent in the past 12 months. This $2 billion rise was more than any other state.”

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