Stimulating stimulus

Our friend Possum over at Crikey has an excellent post on how the pre-Christmas stimulus package worked exactly as intended.

Treasury estimated when the package was released that around 30% of it would be saved, 30% would be spent in the first quarter of 2009, another 30% would be spent in the second quarter of 2009 and only 10% would be spent in the run up to Christmas. 7 to 9% plus a smidgen more for what inevitably flowed through into the informal economy (that part of the economy that can’t really be measured properly) is as close to 10% as you’ll get. Treasury was spot on.

Of course, the usual suspects in the media will ignore the facts and will continue to sprout the lines that the stimulus failed. As Possum says, will Bolt retract this statement?

That’s the theory, but here’s the reality. All the Prime Minister’s spending so far – not least last month’s $8 billion of handouts – has failed.

Because the evidence shows that it did not fail.

In the senate this evening Treasury official David Gruen said:

Australia is suffering from insufficient aggregate demand for the whole economy,

The package has been framed with the thought in the back of our mind that it is important to come up with spending plans that will deliver stimulus to the economy quickly … perhaps, let’s say, over 2009 and perhaps into 2010. 

This does not look good for the opposition as the operative word here is “quickly”. And what the opposition is doing is slowing down the application of the stimulus.


Turnbull echoes discredited US Republicans

It is interesting that the discredited US Republicans and Australia Liberals are singing from the same sheet music. Obama and Rudd’s stimulus packages are too large and should use tax cuts as their main weapon.

As John Amato argues at the Huffington Post:

Obama was elected to bring change to the economy, not to debate the merits of tax cuts all over again. We had that discussion for 18 months and Obama won. Tax cuts lost. Why is the media ignoring that fact?
Why aren’t there hundreds of economists on my TV explaining the stimulus package?

Too large. Should be replaced by tax cuts. This mantra echoes in Australian conservative rhetoric:

Defying the widespread support for the package from economists and business groups, Coalition MPs met early yesterday and backed Mr Turnbull’s argument that, despite the political risk, the package was too big and risked passing massive debts to future taxpayers.

Instead, he proposed a smaller package of up to $20billion based on bringing forward tax cuts already planned for July this year and next year.
Battle lines drawn on $42bn plan

It seems that John Howard was not the last to take his lead from Republican politicians.

Kevin Rennie

Andrew Robb wasting valuable space

Andrew Robb, the Federal Member for Goldstein and Shadow Minister for Infrastructure, has just sent out a four page, glossy “Special Family Newsletter’ to his electorate.

Despite the claim that it’s “with the compliments of” Andrew, I have my usual objections to taxes paying for the publication and postage of blatant propaganda and PR. Given his prominent position on Malcolm Turnbull’s team, you’d expect his message to the electors to focus on the current economic crisis.

But Mr. Robb has his priorities right. The centre spread has ‘My Times Tables’ and ‘100 Ways to Praise Your Child’. It tells families to, “Remember a HUG is worth 1000 words”. Or tens of thousands of dollars of public money in this case.

But there is a message. It contains such gems as:

As we all know, a good education is vital.

Of course, the greatest source of help and support for children are their parents.

A “back to basics’ approach mightn’t be ‘trendy’ but getting the fundamentals right is so important.

If Robb is serious about representing his electorate, then public meetings and written communications that address the financial crisis and seek feedback are the least we should expect. Perhaps a public forum on his website might also promote some democratic participation. I suggest the electors use the contact details there to let the Liberals know what they think of their opposition to the stimulus package.

Kevin Rennie

200,000 but who’s counting…?

who would’ve thunk it…?