April 3 (Bloomberg) -- Melbourne retailer Ruslan Kogan has billions of reasons to name a television sales deal after Australian Prime Minister Kevin Rudd.

Rudd is trying to boost economic growth with cash handouts totaling A$12.2 billion ($8.75 billion), or as much as A$950 to individuals. To attract some of that money, Kogan, 26, is advertising a 37-inch LCD TV he dubbed the Kevin37 for A$900.

“How people spend the bonus is up to them; I’d personally recommend paying off loans as a priority,” Kogan said. “But in these economic conditions, people are spending more time at home.”

The largest government handouts among developed economies this year have inspired similar pitches by travel agents, restaurants and even brothels following the weakest annual retail-sales growth in eight years during 2008. The risk for Rudd is that consumers -- whose spending accounts for more than half the economy and helps sustain 1.5 million retail employees -- won’t pay out enough to prevent Australia from slipping into its first recession in two decades.

“If a substantial proportion is spent, it will help retail sales hold the line, rather than decline as they have elsewhere in the world,” said David Rumbens, a director at Canberra-based research company Access Economics. “It will support jobs and businesses at a critical time.”

With companies such as BHP Billiton Ltd., the world’s biggest miner, firing workers at the fastest pace in two decades and the unemployment rate at a four-year high of 5.2 percent, some households will likely hold on to some of the money.

Stash Cash

Still, there’s evidence Australians may not stash all the cash, which the government began distributing last month. In December, retail sales rose 3.8 percent, the biggest increase in eight years, driven by A$8.9 billion in government handouts to pensioners.

A survey released March 10 of 1,000 people by Australia’s national retailers’ association found that more than half will save the money or use it to pay off debt. Twenty-two percent said they plan to buy clothes, furniture and appliances, while 22 percent will use it for general living expenses.

To lure consumers, Paris-based Accor SA, Europe’s biggest hotel owner, is offering a “Ruddy Good Value” with three nights for couples at its Sydney Ibis hotel. Est., the Sydney Morning Herald’s 2006 restaurant of the year, added a “credit- crunch” lunch for A$50, one-third less than the regular price.

Special Promotions

Qantas Airways Ltd., Australia’s largest carrier, and department-store operators David Jones Ltd. and Myer Group Pty. also announced special promotions.

Pip Marquet, who manages the After Dark brothel in Sydney’s beachside suburb of Brookvale, said business has increased since she advertised a “Let us stimulate you” deal in a local newspaper.

“I imagine people are using at least some of the package to stimulate themselves,” Marquet said. “Perhaps they feel the need for some pampering.”

Annual retail-sales growth slowed to 0.6 percent last year as Australia’s benchmark S&P/ASX 200 stock index plunged 41 percent and house prices slid 3.3 percent. Waning global demand for the country’s mineral exports also stemmed a five-year boost to earnings that helped drive up Australian incomes by the most in 30 years.

To spur expansion and prevent a slump in the property market, Reserve Bank of Australia Governor Glenn Stevens has slashed the benchmark interest rate since September by a record four percentage points to a 45-year low of 3.25 percent.

“There are probably still some difficult times ahead,” and the economy will shrink this year for the first time since 1991, Deputy Governor Ric Battellino said March 31.

Biggest Increase

The same day, the Paris-based Organization for Economic Development and Cooperation said Australia’s stimulus package will still help, adding 1 percentage point to growth this year -- the biggest increase, alongside the U.S., of any developed country.

The government began distributing grants of A$900 in March to 1.5 million low-income families and 2.8 million payments of A$950 to parents with school-aged children. Apprentices and farmers also received cash. Starting this month, about 8.7 million taxpayers earning less than A$100,000 will get as much as A$900.

“This hasn’t been replicated anywhere in the world, if you look at the size of the stimulus and the way they’ve directed it,” said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney.

Rudd, 51, is also spending an extra A$30 billion this year on schools, hospitals, roads and other infrastructure projects.

Coupons for Consumers

Japan and South Korea are the only other countries in the Group of Twenty nations handing cash directly to consumers so far this year. On March 4, Japan authorized payments of at least 12,000 yen ($121) to individuals. On March 24, Korea said it will give 4.2 trillion won ($3.2 billion) in cash and coupons to low-income earners.

Last year, the U.S. distributed checks of as much as $1,200 to married couples who earned less than $150,000 in 2007, and an extra $300 per child, to stoke the world’s biggest economy, which has since fallen into its deepest recession in a quarter century. U.S. consumer spending tumbled at a 4.3 percent annual rate in the fourth quarter, the steepest slide since 1980.

James McIntyre, an economist at Commonwealth Bank of Australia in Sydney, estimates Rudd’s handouts will boost total household spending by 0.6 percent in the first half of 2009, adding about 0.3 percentage points to gross domestic product for the period. GDP shrank 0.5 percent in the fourth quarter, the first contraction since 2000.

Harvey World Travel Group is encouraging Australians to “have a holiday on Kevin” with a “travel-stimulus sale” that includes a five-night resort holiday for A$879 on the tropical Pacific island of Vanuatu, a four-hour flight from Sydney.

“If you’ve got the money, there hasn’t been a better time to travel,” said company spokesman James Brodie.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

Last Updated: April 2, 2009 15:43 EDT