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Westpac has today released new economic modelling revealing the powerful ripple effect of local spending. According to Westpac economists, Australia could benefit from a $16 billion boost in nominal GDP with approximately 38,000 new jobs if every household redirected $100 of their existing weekly budget into Australian products or businesses.
The analysis estimates more than one third of first-round gains would benefit industries dominated by small to medium enterprises (SMEs), particularly in the retail trade, manufacturing, and accommodation and hospitality sectors.
Westpac Chief Executive, Business & Wealth, Paul Fowler, says backing local businesses is essential for Australia’s prosperity.
“Australia is home to world-class innovators, farmers, winemakers, manufacturers, and service providers who are making an impact globally,” Fowler said.
“By backing local businesses, we’re celebrating what makes our country unique and increasing career opportunities in Australia.
“That’s why it’s more important than ever to make every dollar count. When you choose to spend locally, you’re not just buying a product or service, you’re investing in jobs, supporting your neighbours, and helping communities flourish.
“It’s not about spending more – we know budgets are tight. It’s about redirecting existing spending to support Australian businesses and our country.”
Westpac’s analysis also demonstrates the power of investing in Australian businesses which creates a strong multiplier effect.
“Every dollar you spend with an Australian business has a multiplier effect. Not only does that dollar pay the wages of the business, it travels down the supply chain benefiting other Australian businesses,” Fowler said.
“If you buy a coffee and cookie at your local café, for example, you’re not only helping to pay the wages of the workers in that café, you’re supporting the dairy farmer who produced the milk, the manufacturer who baked the cookie, and the farmers who supplied the eggs, sugar and flour to make that cookie.
“That’s the magic of the multiplier effect. It’s about Australians supporting Australian businesses, who in turn support each other right through the economy.
“Our message to Australian consumers is simple: When you’re at the supermarket, look for products that are Australian made and use Australian ingredients. Choose Aussie wines this celebration season, visit Aussie towns for your summer holiday and consider buying gifts from local businesses.”
ENDS
About the economic modelling
The $100 a week household reallocation is traced through the latest ABS 2022-23 Input-Output table to estimate the net impact on GDP and employment taking into account any import leakages. This gives a static direct and indirect impact (first round) which is then run through the Oxford Economics model to capture the dynamic effects. SME shares are calculated from the ABS Counts of Australian Businesses, including Entries and Exits and are as of end FY24.
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