Dead benefit from Rudd's stimulus plan

Prime Minister Kevin Rudd. Photo / AP

CANBERRA - Prime Minister Kevin Rudd's largesse has extended beyond the grave and to the economies of more than a dozen other countries, the Australian Taxation Office has confirmed.

Included in a A$40 million ($50 million) payout to the dead are about 5400 New Zealanders, who between them will receive almost A$5 million of the cash bonuses Rudd distributed in a bid to breathe life into his own faltering economy.

They are among 27,252 people living abroad - mostly in Britain and New Zealand - and almost 16,000 dead who will benefit from payments of up to A$900 each, mailed by cheque or lodged electronically by the Taxation Office.

Confirmation of the payments during hearings by a parliamentary committee has further outraged an Opposition mauling Rudd over an economic strategy that will burden the nation with massive budget deficits for years to come.

"It just shows the absurdity of this cash splash," Opposition Leader Malcolm Turnbull said.

The payments were ordered by Rudd last year in the hope that almost eight million taxpayers would jointly take an extra A$6.8 billion out of their accounts and leap into a spending spree sufficient to ease the worst of the pain flowing from the global economic crisis.

The payments have been given to all workers earning less than A$100,000 in 2007-08 and who were Australian residents for tax purposes - meaning that they either lived in Australia permanently or had worked in the country for six months in the same job.

It was easier said than done.

Tax Commissioner Michael D'Ascenzo told Parliament's public accounts committee that this was the largest single payment ever made using the tax system.

Just to get it operating, the Taxation Office spent A$21.4 million to set up a dedicated tax bonus hotline that has been swamped by more than 8000 calls a day, paid A$11.5 million for a special marketing and communications strategy and spent A$17 million on processing and managing payments.

Speed, D'Ascenzo said, was of the essence: "Inherent in the Government's objective was the constraint that payment had to be made quickly to have the desired effect and impact."

Inevitably, payments missed Rudd's target. Under the tax rules people can work or live overseas for part of the year and still qualify as a resident, and foreigners working temporarily in Australia could, in some cases, also meet the criteria.

If a tax return included an overseas address it did not necessarily mean a person was excluded, D'Ascenzo said.

As a result, payments were made to people living in Britain, New Zealand, Ireland, Canada, Europe, the United States, Asia and South America. Nor did the bonuses stop at the grave.

Payments have been sent to the last recorded address or to the executors of the estates of 15,934 people who have died after qualifying under the tax rules.

A Taxation Office spokeswoman said the number of payments made to the dead or people living overseas was less than half of one per cent of the total.

She also said that published estimates of the value of these payments might not be correct, as not all may have been paid at the maximum rate of A$900.

But the Opposition has leapt on the revelation with glee, bolstering its earlier claims that the money was wasted because most people either saved it, paid off their debts, or put it into mortgages.

"The fact that [the dead and people overseas] are receiving A$900 cheques from the Rudd Government to stimulate the Australian economy says everything about their financial incompetence and their disregard for taxpayers' money," Liberal Treasury spokesman Joe Hockey said.

Finance Minister Lindsay Tanner said that it had been impossible to determine which taxpayers had died recently or were now living overseas.

He also said that the money would not be wasted because it would flow out from the estates of the dead, and from the substantial number of expatriates who would return to Australia in the not too distant future.

GRATEFUL DEAD
* A$40 million stimulus payout to dead and expats
* 27,252 people living abroad, 16,000 dead received cash meant to improve the Australian economy
* 40 per cent of the payments were accounted for by expats living in New Zealand and Britain
* 5400 people in New Zealand received almost A$5 million
* A$11.5 million cost to promote the payout