Tonight my wife came home and asked me what I’d do with the money we were getting. At first I didn’t comprehend, these days we seem to pay money out at a great rate – we don’t usually get it given to us. Then she explained. I was speechless.
This has in no doubt been covered by many news outlets and mass media – and why not, it is news! Officially (?) called ‘Stimulus package #2’ (unofficially titled: “let’s hope this works better than the first one”).
My immediate thought was: “So let me get this straight – we’re [Australia is] going to combat gross negligence by US financiers & Wall Street (and other negligent lenders) by giving away cash..?”. Right.
Fine, so I’m not an economist. I’ve a fairly pedestrian understanding (I read a book on world economics on a flight from L.A. to Vancouver once) and it pretty much gave me the gist of how everything balances out (well, pre-2008 at least).
I’m simply stupefied at this new revelation. I knew a Labor government was going to throw away that carefully gathered budget surplus (and, let’s face it they have in their first year in office) but now they’re mortgaging our nation’s future in their second year? Last year was one spending spree after another (despite the publicly stated focus on “cutting spending”) – yes, well done indeed.
Don’t get me wrong. I am, of course, only addressing 12.7 billion dollars here (being doled out). $28.8 billion will be invested into schools, housing, energy and infrastructure which is long, long overdue. I’ve been saying for years that we need another Snowy Mountains project.. or Sydney Harbour bridge-type-project. Something the nation can gather around.
(1) “The federal Budget is expected to sink into a $22.5 billion deficit in the 2008/09 financial year, a massive deterioration from the projected $5.4 billion surplus, and deepening into deficits of over $30 billion in the following two years.”
However, I’m more than a little concerned at how much oversight is going to go into managing this money. This isn’t some spare change the government is throwing – it could represent a generation’s worth of debt – MY generation.
Secondly, what does this do for the many thousands (or more) of people who have been shafted over their superannuation last year? A government mandated superannuation I might add.
My father and I had a chat about this topic tonight. His suggestion was instead of giving out cash, why not create a local products subsidy? Take that 12 billion.. yes, billion (Dr. Evil moment) dollars and make our local produce and products cheaper for the consumer to purchase.
This would both increase overall consumer spending (products become cheaper) and also create more jobs locally (more money comes back into local businesses) without the country having to raise import tariffs (which would make imported products dearer) etc. This sounds far more plausible, and ensures that half of the money doesn’t drop into a poker machine (and other unproductive uses).
So my Dad and I aren’t economics gurus, but we can think constructively. The question is.. can anyone in government do the same? Is this the best they could come up with?
This kind of plan is what you get when you elect the popular guy (Kevin Rudd). Yes, that’s right, you elected (2) the DFAT guy. Can you believe just a little while ago the press (4) threw praise at Mr. Rudd when he addressed the Chinese Premier (at the APEC summit) in Mandarin? With his background, wouldn’t it be appalling if he couldn’t?
Oh, you’re wondering about Treasurer Wayne Swan’s credentials in finance and economics – check out his notably short (3) ALP profile – Mr. Swan is a professional public administrator. Fair enough he served as shadow treasurer, but is this the guy you want as treasurer?
Check out this quote:
(1) “Commonwealth Bank of Australia senior economist Michael Workman said the cheques to households would boost consumption in the short term.”
Doesn’t that sound like a band-aid solution to you? The government is so quick to borrow heavily against the future for a short term solution. I sure hope that in April the Australian people will enjoy spending the money which would have helped them a whole lot more in a couple of years’ time.
I’ll leave you with a quote from the PM:
(5) "Nobody knows how long and deep this part of the economic cycle will be."
[ (1) http://www.news.com.au/business/story/0,27753,25002290-462,00.html ]
[ (2) http://www.alp.org.au/people/rudd_kevin.php ]
[ (3) http://www.alp.org.au/people/qld/swan_wayne.php ]
[ (4) http://www.news.com.au/heraldsun/story/0,21985,22376210-662,00.html ]
[ (5) http://www.news.com.au/business/story/0,27753,25002190-462,00.html ]