He expects a similar amount will be refunded to households in 2020/21.

Consumers expected to spend

Mr Aird compared this tax relief to the $900 cash splash by the Rudd government during the financial crisis in 2009, when economic conditions were far worse.

"At the time, unemployment was rising briskly in Australia to 5.5 per cent by March 2009. Consumer confidence had tanked and job security fears were at their highest level on record.

"Against that backdrop it would have been reasonable to assume that households may save the money rather than spend it."

"But the collective response of households indicates that a large proportion of consumers spent the additional money."

With this in mind, Mr Aird expected consumers would still spend a significant amount of their rebate this time, despite high household debt levels, and that would stimulate the economy in unison with the two 0.25 percentage point rate cuts.


"The messaging around the current tax rebate is different this time. Unemployment is very low and the capacity to give tax refunds has been made possible by strong employment growth and an external sector that is doing incredibly well.

"If such a response is replicated this time around we could see a material bounce in retail trade and consumer spending for a three-four month period from July 2019."

"The backdrop for tax cuts is much more favourable from a spending perspective than when cash was handed out in 2009."

JP Morgan's Tom Kennedy has already suggested the first stage tax cut could boost 2019 annual gross domestic product growth by 0.15 percentage points.

Benefit to be more 'spread out'

But ANZ economist Adelaide Timbrell said the tax cuts would be slower to flow through to consumption this time.

"Over the last 10 years, Australian households have changed," Ms Timbrell said, comparing the tax cuts with the cash handouts by the Rudd government.

"We are more indebted and our non-discretionary expenses are higher; we spend more on travel and less on retail. And this may affect how we spend, this time around."


"We think a slower and more spread-out pattern of spending growth is likely," Ms Timbrell said.

Like the post-financial crisis bonuses, the tax cuts this year will be delivered as one sum, which generally leads to shorter-term spikes in spending, the ANZ analysis said.

"The key difference being that they would be delivered through tax returns, rather than automatic bonus payments. So household use of tax cuts will be spread out over the second half of 2019, whereas the post-GFC was more concentrated," Ms Timbrell said.

ANZ's head of Australian economics David Plank said given the jitters in the economy the timing of tax cuts had been ideal.

"As it so happens these tax cuts are very well timed - if by accident rather than design," Mr Plank said.