Oil price fall: Worth six rate cuts

The fall in crude prices has the potential to put $12 billion into household pockets each year … That’s about six times more than from a 0.25% rate cut.

Summary: The crude oil price slump has triggered a debate in Australia about whether it is a positive or negative influence on the economy, with some arguing the fall will hurt government revenues. However, these arguments fail to consider that households – where governments derive three quarters of their revenue – send foreigners $30 billion each and every year to buy their fuel. Theoretically, then, the 40% drop in crude should see savings of up to $12 billion a year – a massive stimulus to the economy.

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