Wall St was down 94 overnight, its biggest fall in a month, while the local market is down 66.
Rudd’s stimulus has nothing to do with the economy
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The “go hard, go early, go households” advice given to government last year is starting to look a little sick. Serious doubts are being raised about the stimulus spending spree of last year and early this year. The Australian economy has proven to be remarkably resilient — this is no accident and has nothing to do with us being “the lucky country”. Australians enjoy a strong robust economy because of a generation of hard-fought and hard-won economic reform. Last year the government was very keen not to be seen to be “doing nothing”. Anyone who had the temerity to criticise the stimulus packages was pilloried as advocating a “do nothing strategy”. Unfortunately this argument proved to be very powerful. But as I told the Senate Inquiry into the stimulus package on February 9 this year, “The government is not ‘doing nothing’”. By that stage the Reserve Bank had lowered interest rates and to the extent that unemployment had increased, welfare payments would have been increasing too. So monetary policy had responded and the so-called “automatic stabilisers” had responded too. We shouldn’t also forget that the exchange rate had depreciated. The forex rate acts as a shock absorber to the economy. That is one of the functions of a floating exchange rate — the Hawke Government’s greatest and most important reform. This all raises the question of why the government and its advisors over-reacted to the international crisis. One easy explanation is that Treasury, in particular, is still shell-shocked from the experience of the early 1990s. That is the last time that Australia actually experienced a recession. Bryan Caplan of George Mason University has argued that decision makers have systematic biases in their thinking. These biases are at work in the current government’s approach to economic policy. Pessimistic bias is the tendency to over-estimate the severity of economic problems. The idea that the Global Financial Crisis is similar to the Great Depression is simply nonsense. Australian unemployment in the 1930s peaked at over 25%. Unemployment is now at levels not seen since the early 2000s. The “collapse” in forecast revenue, that so spooked the government, returned us to levels not seen since 2006. This bias re-enforced the anti-market bias that already affected the government and we saw arguments from the Prime Minister about the evils and failures of market mechanisms. Ultimately this then fed into one of the oldest of economic biases — make work schemes. The problem with the government’s stimulus package is that it creates a series of make-work schemes. Make work, any work is never a good economic policy. The cash hand-outs largely transformed private debt into public debt — whether or not it did actually boost retail sales is an open question. But it is the other spending that will create difficulties going forward. To be sure, having better sheds or another gym or school halls is great for the kids, but what is the additional economic benefit from having these things? This type of expenditure is better managed, financed and undertaken at the local level and not by the federal government. The government argued that the stimulus package was intended to save jobs. That may well be an admirable goal. But why then stimulate the construction industry? Were the unemployed bankers and brokers and lawyers expected to get jobs building school halls? If the government wanted to protect jobs in the expected downturn, they should have bought out the State payroll tax. This may well have saved some, but not all, jobs lost over the past six months or so. That would have been “doing something” but it might not have been “seen to be doing something”. Of course the government will claim that it was their policies that have resulted in the Australian economy doing so well. Yet, the US had a huge stimulus package and then entered into recession, while the French have hardly had a stimulus package and also entered, and have now exited, recession. The reality of the economic situation is far more messy than official sound bites would have us believe. Sinclair Davidson is professor at the School of Economics, Finance and Marketing and a senior fellow at the Institute of Public Affairs. |
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50 Comments
(((((The cash hand-outs largely transformed private debt into public debt )))))
Yes, this is true and it means generations to come will be “enslaved” to service the debt…was this the goal from the outset?
(((((The reality of the economic situation is far more messy than official sound bites would have us believe.)))))
Sinclair!!!…please tell us you are not a conspiracy theorist.
Sinclair,
Let me guess; you’re a climate change sceptic also…
I think I sort of understand most of the article but I don’t understand why it was written. Is the writer telling me that if I have insured my home against fire, and my home hasn’t burned down, then I made a stupid decision and wasted my money?
Isn’t hindsight a wonderful thing.
It is one thing to suggest there are things we might do better next time.
It is quite another to be critical of a government which was working in an economic environment dominated by international panic.
Clearly also; the writer doesn’t understand the psychological importance of symbols.
Luck? Perhaps. Hard-won economic reform? Maybe. But have we forgotten that for years we as a nation have been digging up our (finite) resources and shipping them overseas faster than we can measure … then banking much of the proceeds for the inevitable rainy day or - in Howard and Costello’s case - to show how clever they really are.
It worked and may well work again. Pity our poor grandchildfren, though, when all that’s left are empty holes in the ground.
I don’t understand the bloggers problem. The article does a good job of illustrating why, if we think we are capable of thinking about the GFC and economy at all, we should be willing to get to grips with complexity. (There is a connection with the climate here: deterministic chaos/dynamic non-linear systems etc. Only politicians and media egotists think sound bites are good enough). Of course the headline is misleading: it is only Rudd’s likely decisions about the stimulus that have nothing much to do with the economy. Clearly the initial decisions, guranteeing the banks etc., did quite a lot to make people believe that the biggest (Australian) actor in the economy would do whatever it took to keep the ship afloat and that, to an unknowable degree - a bit like the handing of cash to consumers - had unknowable positive effects on economic activity.
Like Davidson, I think, and thought, there could have been better ways of getting the considerable reservoir of private cash and credit moving again in the economy, but the worst that can be said for the Rudd packages now is that some of it will look like decidedly sub-optimum ways of spending borrowed money. Better than work for the dole though just in case some forget that we have always taken non-economic factors into account in putting people to work.
“Starting to look a bit sick” is a rather political/populist manner of commentary for a professional when his valid point really is that the economy is so complex that the combined effects of lower interest rates, exchange rate changes etc. are impossible to be precise about even in retrospect. Davidson referers to his evidence given in February this year - not October last year. Maybe his prognoses offered back then stack up well against the old Treasury and Reserve Bank hands with their sometimes quantified (and now not prescient looking) but often unquantified, and indeed dogmatic rather than reasoned, gloom mongering. Perhaps he will tell us.
Let us join in enjoying the fact that Steve Keen’s 15 minutes of fame and ABC stardom is over but, in the spirit of charity, hope that NSW government incompetence has ensured that house values are still low enough in Sydney for Keen to be able to replace the house that he told us he had sold as a mark of his confidence in the coming collapse of housing prices….
David Ingram: please attend to the importance of time. Not just the time value of money (investment capital specifically) but that too. How long will it be before the resources Australia exports now are exhausted, even just counting those that are already well delineated? It would take so many decades that looking back over such a period you can see economies totally transformed by unforseen technological and social developments. What plans are you implying should be made and implemented? Even improving the human infrastructure/capital which sounds so sensible, and is, might simply ensure our brightest and best talents can live outside Australia where brains are valued and tax rates low.
Keeping nimble and not all welded to the government teat, in contrast to the disastrous Latin American economies of the 20th century is the key. Change will be needed because time will bring sudden declines in prices for our resources (a sample of which we experienced in the last year) as China’s efforts to diversify its sources succeed in opening up Africa, Siberia and Central Asia. None of this justifies urgent action to recreate manufacturing as it once was if that was what you were hankering after.
I usually find the use of the phrase “going forward” a fairly reliable indicator of the quality of an opinion.
It looks to me, a layman, that Professor Davidson does not understand how money is created and destroyed, and the consequences of a massive evaporation of money within the system through the triple whammy of debt defaults, credit tightening and a stampede to pay off debt, by those who can.
How does government spending money on construction projects help unemployed bankers, brokers and lawyers? Well, it helps by injecting new money into a system from which money has disappeared. To the extent that there is new money, it is mostly a creation of the government debt. Public debt which is deliberately replacing some of the private debt that has evaporated - written off or paid off. I thought economists were supposed to understand this stuff.
I am sure there are others better qualified to critique this opinion, but I could not stay silent over such obvious nonsense.
I would have had no problem with the stimulas package, if only they (the government) did not give away my money in the form of cash handouts. There is at least precedence in the US and Europe for infrastructure stimulas to work…but just giving out cash….thats fucking retarded and some dead beat mum/dad with 8 kids living in public housing recieved my future taxed hard earned 900 . Thats fucked.
DONT BE CONFUSED, LABOUR ARE NOT PROGRESSIVES. THEY ARE NOT CENTRE LEFT.THEY ARE NOT INTELLIGENT LABOUR ARE WIN AT ALL COSTS SPEND US INTO A HOLE WANKAS.
For gods sake they used recomendations by the IMF and the World Bank as reasons to provide stimulas, Has anyone seen the records of both NGO’s?…they stink they both shit at what they do. The IMF just about destroyed africa for fucks sake, the world banks sucks at monetary policy. Australia did well because APPRA and other government organisations effectively managaged our economy and financial institutions, not by following non australian advice.We felt we needed to provide stimulas in the forms of cash handouts?***Shakes his head***….GTFO of our lives government we dont want your high taxes and your social engineering. Dont spend my money by “giving it out”…it reminds me of this Jefferson line when they did this..”The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants”…thats what i felt like
Australia is a bug on the international financial windshield, china and other importers pick up their local consumption..and wallah, australia is humming along again, the stimulas package Labour gave us was far to small % GDP to make any real impact. We pick up when our exports do. Not to mention the international community was back on track alot quicker.
I dont honestly care that much about the stimulas packages, if the government wants to buy some votes, im ok with that, most governments do it at some stage.
……. but the level of social engineering, the alcopops tax, education revolutions…health revolutions, broadband revolutions…just because you use the word revolution does not make it ok. FUCK OF OUT OF OUR LIVES LABOUR, DO YOUR JOBs, RUN THE COUNTRY AND STFU. STOP TRYING TO FIX THINGS THAT ARE NOT BROKEN. AND STOP WITH THE SOCIAL ENGINEERING. Otherwise Jefferson might come back to haunt you.
Another Coalition shill from the Institute of Public Affairs. Enough said.
Another person who thinks they can tell me what to do/think or say previously from the institute of Marx and lenin. Enough said.
“Serious doubts are being raised about the stimulus spending spree of last year and early this year.”
By whom? The opposition?
The same party that presided over 12 years of education, health, resource and aged care infrastructure degradation, during which time Australians money was tapped off into massive pork barrels, what couldn’t be spent in time was NOT given back (government is meant to be not for profit after all). It was locked up in the future fund. Well now is that tomorrow. That money is not the coalition’s thrift, it is taxpayers pain.
“The cash hand-outs largely transformed private debt into public debt — whether or not it did actually boost retail sales is an open question.” ???
Well you really are out of touch - the retail sales question has been even acknowledged by the opposition. Over those same 12 years Australians voluntarily went into debt by getting on the ‘housing ladder’ to build a household that could survive a future that the hyper-individualist government was spruiking. In this period household debt went from 250 billion to 1.2 trillion (ABS 4102.0 2009) . Yes trillion. Don’t talk to us of private debt becoming public debt; especially those of us locked into personal debt with houses and sale prices below our commitments.
It is laughable to hear those of your persuasion Sinclair, that believe the stimulus spending was a ‘spree’. That money is ours - and it is not debt that our grandchildren will be paying off. The so called ‘massive debt’ is proportionally small compared with all developed nations. It is not going to be paid by our progeny like the carping harpies in opposition suggest. Public debt is not amortised across the headcount. Besides I wanted my money in the the old coalition pork coffers spilt for just such an occassion. It is working Sinclair - face the facts old cheese.
MADEINAUSTRALIA - “and some dead beat mum/dad with 8 kids living in public housing recieved my future taxed hard earned 900 . ” Well I’m not, and I take exception to your offensive language. I’m one of those people who’s one of the impoverished in the country - a woman on a single aged pension. I suppose you don’t or didn’t object to Howard/Costello tax cuts and super surcharge removals that gave a minority of Australians(those on $100,000+ - about 600,000 out of 21 million?) $38 billion over 4 years? You don’t mind millionaires receiving family benefits, or obscenely rich private schools receiving even more millions? That’s OK too I suppose?
Is it really necessary to use offensive language to get your point across? Are you consistent in your criticisms? Probably not! Did you ever criticize Howard & Co for their neglect re infrastructure? That the huge surpluses only meant they’d taken money from the community while the real needs were allowed to wind down? For example, Howard received at least $13 billion on excise on petrol plus the GST, but did he put all that money back into roads or public transport? No, never! Lucky if he put $8 billion back in. That was my money too - wasted on what? Killing Iraqis and Afghanis or locking up kids in detention centres - most admirable!
Incidently, Labor is spelt without the “u” in Australia. If Howard hadn’t let so many areas run down while he spent obscene amounts buying votes(how many million per minute did he promise in 2004 election campaign? Some obscene amount.) there wouldn’t be the need to have any type of ‘revolution’?
Evidently: from the RBA website
“There’s a growing consensus that the worst of the global downturn is behind us and that Australia can avoid a recession. Minutes from this month’s Reserve Bank meeting indicate that the board is now comfortable with the way the economy is tracking. While it reserves the right to cut rates further, leading economists say that won’t be necessary. Many also believe that Treasury forecasts for an unemployment rate above 8 per cent will prove too pessimistic. “
this was from the RBA website at their last meeting were a rate cut was given…notice the wording. The “global downturn is behind us, australia can avoid a recession”.
It dosnt read “due to stimulas from the government Australia will avoid a recession.” Australia is a bug on the international windshield. If the world economy picks up australias does. Australia is doing well because the world is doing better.
If you think the stimulas package has anything to do with australia avoiding a recession or doing anything else apart pissing of tax payers then your a fucking idiot.
If the world actually had the recession that was predicted kevins stimulas package would have been a 10 second hand job in a 18 hour sex session.
I like a diversity of opinion, but “MADEINAUSTRALIA” (if that really is your name!) you should learn or remember real words. Communicating can be fun!
Why is it that people want to play politics but are blinded to the real issues?
Sinclair Davidson’s article is a good one, but straight away out come all the agenda driven would-be parlimentarian press secretaries who wanna brand it Left or Right.
The enemy is neither Left or Right, besides, they own both sides.
…heres the rub. In a cyclical down-turn such as the GFC, stimulus packages such as we have seen, are designed to hold back the inevitable. First comes Day and then comes Night.
Stimulus packages only serve to delay the Night and make it darker and longer while placing the burden on tax payers to pick up the bill. This ensures debt servitude for generations to come just as we have seen in the US sub-prime crisis and financial derivitive fiasco….the debt is shifted from private to public….Bingo!!!..just as Sinclair explained in his article and the Hidden Hand wins again.
All you politically bent experts need to wake up and smell the coffee!!!…if everybody was Right, there would be nobody Left, and if everybody was left, there would be nobody Right.
MadeinAustralia - your reference is really quite silly, selective and misleading. I will quibble with you no more after this as you are serious knob-end with a foul mouth. Note the alternate spelling to your ‘stimulas’ too,
Now go and check the latest RBA monetary policy (August 2009) wherein para 2 says and I quote
“A number of factors have contributed to this comparatively good performance of the Australian economy. One is the strong state of Australia’s financial system. Another is the significant monetary stimulus arising from the 4¼ percentage point reduction in the cash rate since September last year, with the lower rates largely passed through to end-borrowers. A third factor has been the fiscal stimulus which, in particular, has provided a considerable lift to household disposable incomes over the past nine months. The depreciation of the exchange rate last year also provided a stimulus to domestic activity although much of this has been unwound by the appreciation over recent months. Finally, the strong recovery in China, which has boosted commodity prices and demand for Australia’s exports, has also been important. While most countries have recorded declines in exports volumes of at least 10 per cent since September last year, Australia’s exports volumes are estimated to have recorded a small rise over this period.”
Now lighten up, sod off, and leave the debate to those committed to facts over ideology.
Liz 45: Did I have an objection to the government giving tax back to people who earned it??fuck no…As for family benefits, im against them as a principal. Not just for rich people, im against all of them. You should not have kids if you cant afford them. The government should not sponsor families
As for my language I will use any language i want and fuck you for scolding me, stop being a social engineer. I do what i want when i want and fuck what the government tells me.
Yes Howard did neglect infrastructure, but is it the job of the government to build ports and rail??? you realise though private enterprise was doing it themselves. Its not up to the government to built office towers. If private enterprise needs a port, they should fund it themselves.
Howard receieved extra fuel excise because private industry was booming, not because of your $40 dollars a week, and they didnt spend the money on cash hand outs to people who dont pay tax. I dont give a shit what you say its not the governments job to redistribute wealth.
Im sure the howard government gave money back to the states in the form of tied grants, it is after all the states who are in charge of roads and most infrastructure, so your wrong again, and its the states who were mostly controlled by labour.
they should fuck of out of our lives, and as for the use of the term labor, yes i spell it labour because thats how i feel about what they do to our country, like a swollen pregnant women holding to much extra weight, thus is labours social engineering. A baby is usless suckling of a mothers free nutrients, eventually though it has to be born, that birth is the liberal party.
MadeinAustralia your language is offensive as are you. If you wish to have readers take note of your observations, that is not the method. There are levels of acceptable abuse and foul comments, you are over that limit.
actually evidently im trying to pen responses in between meetings, sorry i did not get a chance to check my spelling and grammar.
I forgot about the grammar police, what was you motto? to correct and serve?GTFO
RAYMONDCHURCH:
what are acceptable levels of abuse and foul comments??? Maybe we should hold an enquiry on it, maybe as a labor supporter you could socially engineer people to use acceptable language.
Its the internet buddy who cares?
…ohh wait thats right, Labor wants to ban shit on the internet to, and not just Child porn, but all types of different websites they dont agree with. Fuck of Labor with your social engineering.
or RAYMONDCHURCH you could just accept that nobody cares what you think and that arguing on the internet is like running in the special olympics, even if you win, your still retarded.
Can you help me with this question Sinclair: What exactly do you guys do at the “Institute of Public Affairs”?
Is it like the “Pond’s Beauty Institute” or the Schwarzkopf “Institute for Hair Hygiene”?
On your website’s About page is says: “The Institute of Public Affairs is an independent, non-profit public policy think tank, dedicated to preserving and strengthening the foundations of economic and political freedom… Since 1943, the IPA has been at the forefront of the political and policy debate, defining the contemporary political landscape.”
Really? “economic and political freedm”? and “defining the contemporary political landscape”? What have the IPA defined in the political landscape? How do you guys derive funding? Do you sell anything? Can I purchse “think tank” how-to’s on tape?
The executive director is John Roskam, that brilliant “climate change skeptic” who used to go on Jon Fayne’s radio program and think through policy on the show. Most of the time he was at odds with the other guests, Jon Fayne and anyone else who called through. And John’s background?
“John Roskam is the Executive Director of the Institute of Public Affairs. Before joining the IPA, he was the Executive Director of The Menzies Research Centre in Canberra. He has also held positions as Chief of Staff to Dr David Kemp, the Federal Minister for Employment, Education, Training and Youth Affairs, as Senior Advisor to Don Hayward, Victorian Minister for Education in the first Kennett Government, and as Manager of Government and Corporate Affairs for Rio Tinto.”
Yeah.. ok… where do I sign up?
And the IPA’s board memers? Rod Kemp? Michael Kroger? Michael Hickinbotham? No details against each on the profile page, I wonder who they are? Impartial economic and political freedom fighters to be sure!
MadeInAustralia, sounds like you would rather have been made somewhere else. If you want to live in a country where the government will ‘get the fuck out of your life’ etc etc, there’s plenty of Randian paradises waiting for you around the world. How about Somalia? No real government to speak of, not much public infrastructure, no public health system, and no dole bludgers sapping your pay packet. What are you waiting for, mate?
Methinks Jane Goodall has a better grip on global economic real politik than either the IPA, the ALP or the Coalition: Unsustainable growth fetish aka foolish little people breathing in their own foetid funk on a Melbourne or Sydney skyline.
Anybody in business would know that we are certainly not outof the woods yet. The people who make their living out of manipulating the money business may want to promote this idea but anybody who contributes to the real world knows we have a long way to go. The Rudd Governent made the right decision to promote the economy the way they did. The IPA and the LNP simply want to run down the economy so they can use this as an excuse to get back into power.
Keith Bedford
“Out of the woods” - pure Jane Goodall if you ask me.
HAhaha Jeebus been reading the american blogs i see, this argument is used a fair bit over there. you could have at least been a bit original, not used the exact same country, there are many other nations who have little or no government. But, I want little government, not no government, and i want nill and i mean no, social engineering, so dont misrepresent my position. I want Australia before Rudd, Gillard and co. I want rudd to be what he promised to be, an economic conservative…an exact replica of Howard
Dont be dramatic.
In response to the article, the stimulus package was billed as a short term boost for domestic spending until the infrastructure projects kicked in. Let’s be honest, no one had any idea where the world economy was going four months ago, and had the global economy crashed outright, each $900 cheque would have been a cushion for what would have been mass retrenchments throughout the middle class - enough time for people who got laid off to pay some bills and restructure their spending commitments. It was sensible policy.
MadeInAustralia, you’re correct, I do follow American politics, and I used the example of Somalia to test your response, because your angry rantings sound very similar to the angry rantings I read from American Republicans on blog sites.
I don’t intend to misrepresent you, but it’s difficult when you contradict yourself half the time, and make meaningless blanket statements the other half of the time.
‘i want no social engineering’ - Any piece of legislation can be interpreted as social engineering. In a democracy, the people elect the government based off their platform - what they believe - and yes, once they are in government they will go to work putting that platform into place. If you don’t want party X’s social vision, don’t vote for them.
‘it’s not a government’s job to redistribute wealth’ - Well sorry, that’s just what governments do. Whether it’s socialism for the rich bankers who are ‘too big to fail’ like they do in America, or handouts for the middle class like they do it here in Australia.
‘But, I want little government, not no government’ - Name me one country in the developed world that passes your definition of ‘little government’?
‘I would have had no problem with the stimulas package, if only they (the government) did not give away my money in the form of cash handouts.’ - So are you ok with the government spending money when it’s on the things that you want?
‘Don’t be dramatic’ - Great advice!
I thought this was a good article, although it is sure to rub the ALP and its supporters up the wrong way…
I remember the early 90’s recession well, the guy with the halo on his head and the worlds best treasurer (Keating lol) put us into it before the rest of the world!
Well referenced Evidently, the RBA was spot on. One of the problems of the stimulus, highlighted by Sinclair, was the ‘create a job….. any job!’ philosophy at the time, this was too short sighted and those jobs will eventually turn to dust. More should have been done to support the engine room of the economy, small to medium business.
I also think history will not be so kind to the quality of the stimulus package, I for one spent it overseas on scuba diving and lots of alcohol in a Balinese hotel.
Keith Bedford, are you really serious - Rudd Government promoting the economy?? Maybe now however I still firmly believe, as do many many unbiased commentators, that the ALP put the ‘fear of god’ into too many companies and drove confidence levels down further than where they needed to be (a political strategy, of course). I don’t think too many unbiased commentators would disagree with this!
All we heard from the Rudd Government was that this was an ‘unprecedented’ global catastrophy (amongst other Rudd’isms), which ABSOLUTELY killed confidence - he was too scared to say anything else unless it backfired on his popularity.
As a very basic example - I never once heard “this is an ‘unprecedented’ global catastrophy…. BUT YOU KNOW WHAT, we are very well placed to ride through this storm as we have no debt and because of A, B and C”. Even still, our big 4 represent 50% of the remaining banks in the world with a AA rating (I believe…).
Sure the GFC was unprecedented in recent times but Rudd was certainly more prepared to throw petrol, understandable when you are worth over $200M!
MADE IN AUSTRALIA,
THANK YOU FOR SHOWING ME HOW TO BLOG IN CAPITAL LETTERS. NOW MY ABUSIVE BLOGS CAN LOOK THOUGHTFUL AND INTELLIGENT - JUST LIKE YOURS.
CHEERS.
JULES!!!!!!!!
“GTFO of our lives government we dont want your high taxes and your social engineering.”
“HAhaha Jeebus been reading the american blogs i see, this argument is used a fair bit over there. “
He’s not the only one, apparently.
JEEBUS
(((Any piece of legislation can be interpreted as social engineering. In a democracy, the people elect the government based off their platform - what they believe - and yes, once they are in government they will go to work putting that platform into place. If you don’t want party X’s social vision, don’t vote for them. )))))
I must be on a different planet. There are exceptions, but we all know that as soon as politicians get elected, out goes their back-bone and in goes party policy. Just ask Mal Meninga…. and maybe Peter Garret.
wow - interesting article, crazy crazy comments thread. lots of fun
The really good thing about being an economist is that it doesn’t matter if you’re wrong. You keep your job regardless.
You predict that interest rates will rise and they don’t, no problem you’re an economist after all.
You predict the mother of all recessions and it doesn’t eventuate, no problem you’re an economist.
The only odd thing about all of this is that people even bother to ask your opinion in the first instance.
spot on Bullmore!!!! if you happened to take an interest in x-rates 6 months ago, the AUD would be trading at sub 55c US!
i’m with rundle.
I have no doubt that most people would agree, at some level, that the cash handouts to voters (dubbed stimulus payments) were well over the top.
The sheer opulence of it will cost Australia for decades. Can you imagine future generations thanking us for lumping them with $300 billion worth of debt just so we could spend $900 on ourselves (I know some of the money went elsewhere as well).
Their reaction when they are told they should thank us for it will be well worth noting. I wonder how many courageous left wing defenders of the Rudd/Swan bribe (that is in reality what it was) will still be defending it then? Would the lefts reaction be the same had the Howard/Costello delivered it? Would the academics reaction have been the same?
No, I have no doubt future generations will look at this and correctly recognise it as one of the worst wastes of public money since the Whitlam days.
So where should the money have been concentrated? On developing and encouraging small business growth in Australia. This provides jobs, keeps money circulating in the economy and provides a platform for the future.
Sinclair Davidson observed that State payroll tax would have been the correct starting point for the government. Unfortunately it does not buy many votes as it is not as politically sexy as a cash handout to the voting public.
I believe Davidson was right, the Australian economy has been resilient, due in no small part to both the previous coalition and labor governments (shock, horror, but credit where it is due and Hawke and Keating did a lot to set up our economy). But I don’t believe the ‘stimulus’ to be anything other than a false idol.
Now that Rudd and Swan have maxed out the credit cards, the gains of the previous 26 years have been wiped. It is quite likely that for the next decade at least, we will be, to quote a former ALP MP “up to our necks in shit sandwiches and chewing furiously”. Thanks Rudd and Swan.
madeinaustralia “As for family benefits, im against them as a principal.”
are you a school principal ( god forbid ) or do you mean principle? i need to know so I can pull any and all students related to your educational institution immediately!
Can’t understand why Crikey is bothering to publish such drivel.
And what Bullmore said.
Reminds me of Stephen Long who’d have trouble predicting when the sun would rise. Yet the ABC still trot him out on Lateline as though he has some expertise beyond consistently getting it wrong.
Adrian, are you upset because there is no blatant left wing leaning to this article? It is an attempt to be fair and balanced, but then alp supporters tend to dislike that approach.
Pedro, take your brain matter back 2000 to 2007, blow out the cobwebs, you have a good deal of space in there for them to gather, when the atmosphere clears, remember what trend the blogs and commentators themes of News Ltd publications, particularly the Australian, The Herald, The Telegraph, were taking? Surely not blatant support for the Howard Govt, surely not rantings and ravings by right wing Howard huggers against anything that looked like ALP policy, comment and everything inbetween.
Now the boot is on the other foot and spare me, after 18 months the wimps that remain from the rodent years cant take a few wacks around their disorganised, disloyal, pathetic heads.
Well mate get used to a good deal of critical comment, your rabble of an Opposition is providing plenty of material day after day, week after week. Its a well of abundant stupidity. The ALP and their members took a flogging for 12 years, I suggest the remnants of the ragged right get used to a similar period of informed retaliation. Dont you enjoy the word ‘informed’, not part of your vocabulary. Dont like what you read here, then slink back to your pied pipers Bolt and Akerman, the fertiliser they write should keep your hate levels up.
Wow, such aggresive ad hominen from ray church - maybe you should change your last name from church. Seriously ray, there is counselling out there, pyschosis is treatable.
You always know when someone has no arguement, they cease arguing real points and begin ranting against the man, because the intellect is limited, isn’t it ray. Oops, I just did a ray.
Read my previous again Pedro. You simply justify the points I made, thanks.
You made points ray? Wow! We’ll get a forensic team out to look for them.
Like all your points ray, they can’t have gotten far.
Good for you Pedro, you dig your hole deeper. Dig on.
No pedro dear, I am not ‘upset’ about anything actually.
Just can’t understand why Crikey is bothering publishing material from a second-rate, ideolgically driven academic whose views are largely discredited. Next they’ll be publishing articles by Piers and Andrew and the whole range of nutters who have plenty of outlets for their views.
Up to them of course, but not what I come to Crikey for. Also it has nothing to do with the usual simplification of ‘right v left’ that you seem to like indulging in.
Sorry take that back, I have no evidence or way of knowing if SD is a second-rate academic or not. He may also keep his ideology seperate from his academic work.
Actually Adrian, I gave credit to Hawke and Keating as well as Howard and Costello - I still believe they all had a hand in the good position Australia found itself in when the GFC hit. Most people who have studied or work in finance do as well. Is that the left vs right simplification you were talking about?
On the other hand what Rudd has done is a disaster in the making and has had very little positive impact. And all for short term political gain! But I certainly notice the hate coming through in your little pious rantings adrian. As if you aren’t simply pushing the left agenda by attacking someone who dared critique Rudds approach.
I’m still trying to work out what ‘hole’ my good mate ray is talking about though. No one else can work it out either, it’s turning into quite a sport. Come on ray, give us another pearler to play with, we know you can’t help it.
Pedro - I suspect that we might barrack for the same Dry team but I would rather you didn’t undermine good cases by not bothering about the figures. The cash handouts are in fact pretty trivial in the overall scheme of things as familiarity with any of the regular anlalytical papers by Saul Eslake and other respectable economists and economic writers would remind you. True the school buildings are probably going to look like decidedly sub-optimal ways of spending borrowed money even in a GFC but the cash handouts are only a small proportion of what will have to be borrowed simply to make up between the difference between the tax revenue based on last year’s resource prices and what can be expected post GFC especially given the Howard government’s promised and the Rudd government’s given tax cuts. To the extent that those transfers to current consumers from future taxpayers (including the current consumers) kept businesses earning profits and people employed and off the dole that also helped to minimise what was, after all, only a part of the stimulus package. That is not to say that the Rudd goverment couldn’t have done better. Just don’t spoil a case by gross exaggeration please.
Oh dear Madeinaustralia, perhaps we need to send you to a re-education camp? You Sound more like an Anachist than a right-winger to me! Can’t you just be a good little worker and do what you’re told? Pull you’re finger out sport, get back to work, someone’s gotta pay for this mess.
…And Pedro, trying to speak in a civil tone will get you no-where here, you’re obviously a Nazi, Julius proved it!….We’ll fix you too, once the department for the abolishment of no left-wing critical posts is formed!
honestly, why do all the left-wingers get so up tight ? You won the election, Malcom is smashed every direction he turns, the coalition is as unified as a pack of rabid cats, Australia’s wealth has been squandered and we’ve got massive levels of debt…I thought you’d all be happy……