Image: AAP/Joe Castro

As we wait to see whether the Reserve Bank's 0.5 point interest rate cuts and the government's tax cut package will push the economy out of its torpor, keep an eye on the prime minister's home state of New South Wales.

The first stage of the tax cuts package is expected to inject around $7 billion into the economy over the next few months -- much smaller than the Rudd government's stimulus packages in response to the financial crisis eleven years ago, but aimed entirely at low and, particularly, middle income earners, who are much more likely to spend their tax refunds than high income earners. At most, a third of the tax cuts, or around $2.3 billion, will end up in NSW, which desperately needs stimulus.