THE Opposition will vote against the Government’s $42 billion financial stimulus package, Malcolm Turnbull says.
“Someone has to stand up for fiscal discipline,” Mr Turnbull told the House of Representatives. “Someone has to stand up for levels of debt for future generations.”
Whatever the House Republicans can do, we can do better? Conciliating his own party? Trying to be relevant?
Turnbull’s decision reminds me of the biggest mistake Kim Beazley made – trying to block the tax cuts in the 2005 budget. The argument about fairness was complex. The then government said “he doesn’t want you to have money”. Eventually Beazley caved, but his poll numbers never recovered, and the rest of his career was a short prelude to its end.
Update: Turnbull makes his case.
Update: Bernard Keane on Malcolm Turnbull committing political suicide.
Silly, silly, silly. What is he thinking?? Who are the electorate targets for this? The only people it will bother will be rusted on one side or the other already.
What patrickg said. Mental.
Never mind what is right or wrong, just follow the populist line. Good to see Rudd (and you Mark) arguing the Howard line. Pity it took a change of government to get you on message.
What a goose.
Meanwhile the greens and Mr X are being the true opposition, having reasonable suggestions to delay estimates hearings to properly review the Bills.
In what way has Turnbull made the case that the package is “wrong”, Andrew? I can’t see it.
There are several things Malcolm seems to have forgotten.Sure, never get between voters and a pile of money. But more importantly, one of the people being hurt by his tupidity are arguably in his own constituency (not in Wentworth but nation wide.) ie, farmers.
Secondly however one might pick at Rudd about this (preserving capitalism, FFS!)most voters think he’s at least trying to do something to mitigate the effects of the Second Great Depression, and he’s been honest enough to admit it mightn’t work. And most of them probably know enough about basic economics to realise stimulus packages are the traditional way out of such a mess.
Honestly, Malcolm’s getting worse. If he keeps on going this way he’s soon going to need a brain transplant.
I don’t mind too much missing out this time. Everybody’s got to get the opportunity to do some spending to get us out of this mess, and Rudd is helping people and business do this in various ways. But saving this decrepit capitalist system? Stuff that.
Brilliant politics! Just because every developed country in the world is producing similar, but generally larger, packages doesn’t mean that we should.
Tax cutz, particularly for Mal and his mates is definitely the answer. Particularly if the question is how do we make matters worse?
Joshua Gans on why the argument about deficits is wrong:
http://economics.com.au/?p=2395
I’m getting married in December. Am I permitted to save my stimuli for then?
The Beazley paradigm is erroneous, because Beazley has polling numbers from which a fall could occur. It’s hard to believe the LNP’s polling figures falling any further.
So long as Turnbull keeps his cards close to his chest about what he’d do, rather than pulling a Doyle (type “Eastlink tolls no-tolls Doyle” into Google if you don’t know what I’m talking about). Turnbull should simply let the package swim or sink and stay on the sidelines.
They’re not rock bottom – and Malcolm has a way to go before he matches Brendan’s numbers as Oppo Leader.
Re #3. Just because a policy is populist, doen’t mean it’s inherently wrong. Most commentators I’ve read such as Ross Gittings seem to think that it is both populist and right for the times.
If you think it’s wrong give reasons why, but don’t suggest that it’s wrong because it’s populist.
Dumb. Particularly when one of his arguments this morning was that the previous stimulus package didn’t work. Lo and behold the December retail figures come out showing the highest monthly increase since the introduction of the GST. In the words of the great sage, Homer Simpson, DOH!
http://business.smh.com.au/business/surprise-jump-in-retail-sales-20090204-7xa3.html
Update: Turnbull makes his case.
The money should be spent on building real infrastructure – not these stupid give aways (if they aren’t going to cut taxes)
Priority order for me – Defence, Health, Communications, Transport, Education.
The ALP could even pork barrel that into their most marginal electorates and I would be happy.
As it is, the majority of it will be once off wastes.
And as for dicatating that every school will build a new building – what if that isn’t the school neeed/priority? What is deep sewerage connection is more important? What if renovation is more cost effective? The Hollowmen rings truer everyday.
Update: Bernard Keane on Malcolm Turnbull committing political suicide.
Colin Barnett has come out and declared he supports the stimulus
http://news.theage.com.au/breaking-news-national/barnett-defies-turnbull-to-support-plan-20090204-7xf6.html
Turnbull is toast.
I absolutely agree with Razor, although my priority list would begin with education, transport and health.
If the package falls in a heap, as is quite possible, Turnbull will be able to say “I told you so.”
And there is another danger.
In terms of raising capital, the experience of the last 9 months or so has demonstrated that Australia, despite the fundamental soundness of its finances, is closer to the bottom of the capital-raising food chain than to the top.
Even Germany wasn’t able to complete a capital raising recently.
$42B is a lot of money, even if they are Australian dollars. It is quite likely that foreign finance will be reluctant to buy the bonds that will be used to fund the government deficit. This is likely to cause Australian interest rates to rise.
Turnbull will then have the housing stress card to play, which is always the trump in marginal electorates.
Katz wrote:
He’s not smart enough to play that kind of long game. This is more about a failed attempt to keep the Liberal party relevant. Actual, dyed in the wool “fiscal conservatives” are such a small part of the political spectrum (as opposed to normal old conservatives) that he’s playing to a tiny crowd that he thinks is influential (aka the Australian newspaper, the IPA etc.)
In the meantime, I’ll be playing the worlds smallest violin for him as the bumblers in the Lib party room attempt to re-shine the Costello turd. Turnbull just lost them the next election though.
(from Turnbull makes his case)
Except that a household earning $80k with two incomes could expect to get $1900 ($950 for each worker) under the stimulus package, plus the tax cuts in July 09 and July 10.
Who are the electorate targets for this?
People on Newstart? (Ok, stop laughing.) The people in my office who don’t believe in recessions (“We can always print more money”) and see this as “typical Labor overspending”?
What would really have been funny (in a horribly sad and unfortunate way) is if Turnbull had attacked the truly bad points of this package.
As a lot of people (such as Tim Colebatch in The Age today) have pointed out, a lot of the cash handouts will go to people like me who a) don’t really need the money, and b) are less likely to spend it, thus limiting the effects.
Both on economic and equity grounds, much more of the cash should have gone to those worst off in our community, either directly or through infrastructure that helps them.
But can you imagine the leader of the Liberal Party – a party that spent 11 years demonizing the worst-off – standing up and making that argument?
Turnbull was once a merchant banker. Interest rates were his bread and butter.
Sad thing is, a significant proportion of the spend is crap. A blatant bribe for votes that could be better spent elsewhere. It isn’t impossible for Turnbull to enunciate this without saying “No” to the whole thing.
Unfortunately, like Zombie Mao said, it’s The Greens and independents who are coming up with constructive comments but no one (in the public) pays attention.
Yes, Katz: interest rates and helping the poorest in our community. His merchant bank was heavily into micro-financing thousands of promising unemployed citizens into hard-edged, innovating entrepreneurs, if I recall correctly.
He didn’t need to go to a King’s Cross gutter at 3am like Brendan. He’d already met hundreds of the destitute in his own office. And given them each a cuppa and a helping hand.
The politics of this were pretty predictable really. Malcolm has nothing much to lose by voting No (just as the entire Republican House did last week on Obama’s legislation). He knows that Rudd’s legislation will get through the Senate in the end, and then nobody much will remember his blather, to appease his stupid backbenchers, as the caravan moves on.
Rudd will already have his papers prepared for the quick senate inquiry at the end of the week, on the assumption that Malcolm would play the ball as he has. The Greens will then be able to get on board in good conscience, and those other two non-entities will be able to steal a little oxygen and then get out of the way.
All is well.
Perhaps he just wants to make the government deal with the Greens, Mr. X and Fielding?
I think Bernard Keane is right – the Senate passage doesn’t matter politically – it’s something the media will obsess over, but the overriding political message is one of donothingism and obstructionism from the Opposition – newly branded by Rudd as extreme free marketeers.
Contra Grace, I think Malcolm does have a lot to lose. This is one of those moments where the blather does matter, just like it mattered for Beazley in regard to those tax cuts. Of course what he says is meaningless in terms of its ultimate effects, however this seems to be one of those times when ill considered statements might be remembered for years to come (and if so will come back to haunt him). I am sure Beazley made some other stupid political statements, most of which we don’t remember, however for Malcolm to say he will oppose this package at this time is tempting fate in my opinion. Of course this is a pudding we will have to wait to taste…
“Perhaps he just wants to make the government deal with the Greens, Mr. X and Fielding?”
Which would benefit Labor, The Greens, Xenophon and Fielding and still leave Turnbull looking like an “out of touch neoliberal hell-bent on obstructionism”.
Oz @ 30 – not if they get into a bit of a fight about what should and shouldn’t be in there. It’ll be about the independents and greens being obstructionist, not the opposition (although I’m sure the government will keep trying to push the blame the coalition).
And if things get worse, as they’re likely to, Turnbull can say “I told you so” even if his plans would have been no better or even worse.
Turnbull is being smart here. If the debt package relieves the recession to some extent nobody will give it any credit anyway. They will only notice what’s in front of their noses next election. Perhaps a still faltering economy and a huge debt.
Turnbull will be able to say that this government put the county into debt like Labor always does. The context of fighting the GFC will be so old & boring.
Unprincipled but politically the only way to fly.
And Fielding on the ABC today, “Straya” several times and the one I liked,out of a lot more,”frankerly” hard to top that. He’s got to be related to Hanson.
Hmmm, I think the idea that people automatically punish a government in charge of a recession is a bit specious – I’m not so sure it’s an accurate reflection of the truth.
It certainly isn’t based on past experience. Hawke and Keating were both re-elected in the face of a developing and an immediately past recession with a slow recovery cycle. It’s what governments do about them that matters – particularly since the “world economy” has been pinged as the cause this time.
Chris, I don’t think there will be a huge rift between Labor and the minors.
The Greens already have some minor amendments on the table, like ensuring the new homes built are energy efficient. Xenophon’s met with Labor and both him and Fielding are voting for an inquiry to begin tomorrow which they expect to be completed by mid next week.
The end result will be a package that is passed with the support of the cross benches with some minor tweaks and leaves the Liberals hanging.
1990 and 1993 were won with politics, not governing. Can anyone remember a 1990 ALP election policy? I think it was simply “Don’t be Andrew Peacock”. And everyone remembers what happen in 1993.
Having said that, I wouldn’t put it past the current opposition to be that incompetent. But if the recession is alive and kicking in November 2010 (or whenever Rudd goes), expect a closer election result than the 54-46 the last Newspoll suggested. But still expect a Rudd victory.
Here, my version, hopefully at least moderately objective and accurate, is how Channel 7 4.30 pm TV news presented, in essence, it’s 2 lead items in SA.
Turnbull is going to vote against schools and Australian people getting money to combat GFC.
CEO of Aust. Retail Assoc. says Chrissy retail numbers were really good, thanks to Rudd/ALP stimulus package.
Yep, hannah’s dad, that’s the message that’ll get through. Anything else will just be noise as far as the public are concerned. Turnbull’s impaled himself on the skewer Rudd presented him with.
I think Turnbull might actually be vindicated by history here. Rudd keeps throwing $1000 cheques at people. What for? It won’t stop the recession, it won;t put a dent in consumer lack of confidence, it won’t save anyone’s job and it won;t bring in debt.
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And later on we won’t have money left.
Read the post title in our blog roll and laughed so hard that the mouse skeetered right off its pad.
Once again you hit the nail right on the head, Mark!
Mark,
You were not arguing that the package was wrong or right – just that Turnbull is arguing a case different from the mainstream view and is likely to therefore be unpopular. Howard kept doing what was popular and attracted (rightly in some cases) crticism from many here for doing so. It is interesting to see that you have now turned that around to argue against the coalition merely for disagreeing with the populist line.
Are you *ever* optimistic, Adrien? Just wondering…
You write that on the same day that the December sales figures showed growth in retail spending of 3.8% in one month – the biggest monthly increase since 2000.
I dont think the point is whether or not Malcolm is vindicated by history, those arguing that his comments are clever also need to consider that we are just as likely to forget his cleverness as we are to forget Rudd’s largesse. This is especially so given something will be passed that MT will try to take the credit for. The thing that is most likely to be remembered (if anything that anyone says in this whole period is remembered) is him campaigning against it. That is the risk, sometimes what people say is remembered and comes back to haunt them. Being “proved” right is rarely a political asset- can anyone think of a politican who was rewarded for an “I told you so, I told you so” by being made Prime Minster (as this is what MT is angling for of course)?
clarencegirl @ 41 – For this post the text on the title bar of my browser window says “Never get between Australians and a pile of money at Larvatus Prodeo”. I guess the ad selling must be doing well!
Winston Churchill.
Eva Cox makes some good points about how the unemployed and low income earners who don’t file a tax return miss out yet again.
see http://www.crikey.com.au/Politics/20090204-Rudds-sexist-moralistic-stimulus-package.html
I imagine Treasury and government advisors came up with several proposals on where best to focus spending on infrastructure for the latest stimulus package. The suggestion of schools must have appealed particularly to Rudd’s political instincts, his own commitment to the education revolution aside. How could Turnbull have walked so readily into Rudd’s parlor and risked alienating parents, teachers and communities across Australia who already see themselves soon enjoying those libraries, laboratories and assembly halls, so necessary, but denied them this past decade of booming prosperity. To say nothing of the thousamds of local building contractors, tradespeople and suppliers who are heaving a sigh of relief about job survival over the next couple of years. After the lamentable media performances of Bishop, Turnbull and the world’s greatest treasurer over the past week I guess it’s not surprising the Coalition are caught in Rudd’s silken trap. What fools indeed!
It is reassuring at a time of national crisis to have someone running the country who can think and write objectively, show some altruism, listen to advice, take big risks and seemingly remain calm and ahead of the political game. This is not polical opportunism. I think he has the country’s best interests at heart. I am trusting him on climate change too, limited as his carbon reduction policies are so far.
I think there is one way to understand what Turnbull is doing. Right now, the Libs are being dealt out of the game. The financial crisis, combined with the slide toward a possible recession has unleashed a whirlwind of government policy that is making the Libs look irrelevent. On top of that, there recent polling has been dreadful. Turnbull knows that he cannot turn this around quickly and that he really isn’t the master of his own destiny at the moment. So, he has taken a punt. He wants to make sure that the government owns the response to the crisis. He knows that Rudd isn’t going to be blamed for the commencement of a recession. But he will be held accountable for getting the economy back on track. He is betting that people won’t remember the substance of his own response, just that he said that it wouldn’t work. Perhaps he is also placing a wager on the possibility that the capital markets will eventually take a dislike to the increase in debt and sell the dollar off.
Anyway, I think that he thinks that it is a risk worth taking to make the Libs relevent at the next election – they want to be able to say I told you so.
Of course, the upshot is that if the downturn is mild, and things are broadly back on track by the time of the next election, the Libs are screwed!
I taught in schools in inner and outer metro, regional rural city and small country.
I was often on the school council.
I can assure you lot that this time yesterday, as soon as the news got out that schools were going to have billions spent on them, every school a winner, or near enough, councillors, principals, grounds staff, teachers, parents, ‘mums’ in the canteen [sorry about the sexism], even the kids, started a wish list in their heads and started sharing it with their colleagues
Had half the money spent before tea time.
In all my years of teaching, far too many, I only once saw a vaguely comparable amount spent on a school and that was because the enrolment was about to nearly double the next year and the place was literally falling to bits through years, decades, of neglect.
Mr Truss’ suggestion that country schools will miss out will run firmly against reality.
Each school that gets, whatever it gets, willl be as pleased as punch to have got it.
In country towns everybody knows what goes on at the school, trust me on that.
And if they get #250,000 they will be happy and not care less that some other school with 10-20 times the students got more.
A quarter mill in the hand is a helluva lot better than the nothing they had the day before yesterday.
And Malcolm wants to take the dream away????
Ouch!
A ton of people I know on Facebook yesterday were chatting about what they would do with the cash payments, hannah’s dad. That’s the psychology of all this – everyone’s counting the moolah and deciding what to do with it – including as you say schools and parents – and Turnbull’s saying “I’m against it”.
A number of people have suggested some sort of insurance policy motivation for Malcolm’s decision. Maybe so. But how far can he drive down the Liberal Party in the short term before it becomes a vehicle that just won’t be serviceable in the medium term?
I reckon they are betting that around 60-40 is their floor….I’m not sure that is right, but we will soon find out!!
Wow, that’s his “case”? O.k., yeah, jobs, sure, and maybe a smaller package would be sensible, maybe, but, well, could he substantiate that a little? Could he offer something more in the way of argument than just being argumentative?
I won’t get a damn thing out of this for myself – except maybe, if the stimulus package works, gets a bit of confidence out there, keeping my job for a little while longer – but I’ll support deficits.
Oppositions frequently vote against government bills. I don’t really understand the reactions to Turnbull’s announcement. It smacks of an unfortunate tendency to reflexively import US political arguments (the Republicans opposed the stimulus! Turnbull’s doing the same!) as if they could be applied directly to our own situation.
Sadly, most of the blogosphere discussion (not just on this thread) has maintained the approach established in the Howard years whereby the main interest is in the calculus of party-political benefits with the merits of the legislation being a secondary consideration. No doubt most commentators will eagerly await the next Newspoll and then trumpet their interpretation of whether Rudd has scored a win or a loss in the never-ending petty point-scoring that obsesses political pundits.
The government’s package is poorly-designed and open to justifiable criticism on all sorts of grounds. The opposition has the right and some would say the duty to hold it up to scrutiny and to oppose it if necessary. Deciding to spend $42 billion on a range of programs that have never been subjected to proper examination, and asking for approval within 48 hours, is a grossly irresponsible way to govern.
Having said that, I have to add that the Family First cipher in the Senate is the biggest fool to infest the place since Albert Field.
Small sample I know; but I get home tonight an the 25 year old totally apolitical Me generation says. “looks as though we won’t get the money after all” I say why? She says because that pr**k Malcolm Turnbull wants to take it off us”. Yesterday she had never heard of the turd.
Well done Malcolm!
She and her mates do vote BTW.
Huggy
Ken makes an important point. The politics of this are interesting, but the detail of the policy is what is most important. As was the case during the Howard years, I suspect that the key criteria was how to get the money out the door to key constituencies, rather than a detailed analysis of how to maximise the benefits for a given cost. I note here that we are rather more poorly served than the US system, for all its floors. There, you at least have a paper drawn up the the Council of Economic Advisers that sets out the estimated impact of the plan and the assumptions that underpin those estimates. We won’t get anything that transparent here. Moreover, in the US they have the Congressional Budget Office that is independently staffed that can rigorously assess government plans such as this and test the assumptions. Here, we only have the politicised Treasury and we have no idea what their independent views are. The non-government parties are inadequately resourced and staffed to scrutinise legislation like this as well.
If we had something like a CBO in Australia, or an independent fiscal authority with the mandate to scrutinise the economic impact and long-run budgetary impact of all government policies (and opposition plans as well) we would be in a much better position to judge the merits of packages like this.
What word is there from independents regarding their likelihood on voting for the package? I.e., will it get past the senate?
That should read “flaws” not floors!!
Huggybunny Try explaining to the 25 year old that the budget is headed for a deficit of 200 billion dollars which represents $10,000 for each and every one of us including her. And that it has to be paid back with interest. Kind of like her creditcard. Perhaps you could explain about living whithin your means. And the pride of working and saving your own money without expecting Government handouts.
Did you read her the story of the magic pudding when she was younger?
#57 all accounts i heard on the MSM were that the independents would eventually let it through early next week.
re: #54 and #56 (and possibly others on the same line.) I think the problem of Turnbull’s actions is that the media (and blogosphere if you like) will jump around and run the easy line about Turnbull blocking the money. I am surprised he didn’t agree to pass it in the Reps but then ask for the kind of quick scrutiny in the Senate that the Greens and Xenofielding (kudos to Bernard Keane for that one) will give it. He should have framed the argument as “We need a stimulus, but is this perfect?” rather than “This isn’t perfect, we don’t need it.”
I guess they might have been finding it hard to isolate one or two elements that they could single out as being dodgy, that they could then use to argue that the whole thing needs close scrutiny. Going by question time, it sounded like Turnbull said something today such as, ‘sure education spending is good, but is it the most important use of our money now?’ No prizes for guessing the line used by the government for that one. As it is, the Liberal’s decision to block the legislation has taken all the attention leaving less time for the smaller and more important issues such as the details.
Ken,
It’s a fair point but the Opposition aren’t dissecting the package, they’re opposing it on pretty much ideological grounds ie tax cuts over cash payments. A flat out No is as unconstructive as the Government’s attempt to railroad it through. I haven’t heard their view on the insulation issue and they have been strangely quiet over the education spending other than in QT where they suggested by shouting that hospitals may have been a better option. Similar comment on the housing issue. The Greens on the other hand have been constructive.
I think we can all think of how the money could be spent in a different way but housing, schools and insulation are all pretty good measures IMO and its always the case that some things will miss out. As for the cash payments, I think today’s retail figures show that cash payments work, at least in the short term, for the retail sector so if it keeps these people in a job for only 5 months more, the ledger for those people is still on the positive when compared to Newstart payments.
Katz: with rates at 6%, what mortgage stress? The only stress that comes from mortgages at that rate is if you don’t have a job to service it, and unemployment is another thing altogether.
David Ruble: Turnbull is smart enough, he just doesn’t have any room to move any more.
Mark: Hawke & Keating did win in the face of economic recovery, but the seeds for eventual defeat were sown (“recession we had to have”), and sprouted once the Liberals had cleared away the impediments for people to vote for them.
Taking Ken’s valid observations to heart, politics is less important than economic and social impact, I’ll suggest that at least two of the initiatives are worthwhile.
The funding for schools.
Maybe it would have been better to have spent some of that money on personnel, particularly noting John Quiggin’s point that money spent on wages returns more to the economy. But I still see it as money well spent and a nice shiny new building sparkling in the sunshine is not going to do local confidence any harm.
Insulation for housing.
Before this was announced I saw on a site somewhere that just over 50% of Aussie homes were insulated [70% in Vic/SA, 40 odd % elsewhere]. That lowness of that figure surprised me.
Surely, without quibbling too much significantly increasing that % has got to be a ‘good thing’ in several ways?
The ‘value’ of the rest of the spending I’ll leave to youse guys.
Seconded LO. I agree with you Ken, the only thing I would add is that all the moral stands in the world won’t help you for shit if you’re committing suicide (see, Democrats, Australian).
Also, if I felt Malc and the Libs gave a shit about anyone but themselves, I might have a different feeling about it. The syphilitic liver flukes that were happy to send money out the door for eleven years to the people who needed it least, screwing over everyone left right and centre, and making the regional partnerships into a cash explosion of bukkake-like proportions have suddenly discovered a conscience along the with the concept of governance? I’ve got a hell of a bridge to sell.
Mark – You write that on the same day that the December sales figures showed growth in retail spending of 3.8% in one month – the biggest monthly increase since 2000.
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Yeah. I noticed the feeding frenzy was just as shark-like this year. That leads me to doubt the wisdom of these cheques even more. One of our biggest problems is unsustainable debt. Now we haven’t gotten into deep shit yet and obviously a lot of us have n idea we’re going to get into it. But recession = lost jobs. Lose job – how d’ya pay mortgage. Lots of defaults on mortgage = ?????
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We should be working to pay off debt not spend more money on shit, yes? No?
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Rudd appears to bolstering consumer confidence before it’s actually been lost. I know it’s a tough call when do you actually intervene (assuming you should). But still it just seems like this is just throwing money at people who’ve been throwing money around on tic too long.
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I could be wrong. It’s just a feeling. Economically I’m a fence sitter and it’s interesting to have this happen just as I’ve grasped the major arguments.
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Are you *ever* optimistic, Adrien? Just wondering…
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Personally yeah? Surprised?
“Small sample I know; but I get home tonight an the 25 year old totally apolitical Me generation says. “looks as though we won’t get the money after all” I say why? She says because that pr**k Malcolm Turnbull wants to take it off us”. Yesterday she had never heard of the turd.”
Which was exactly the line that Costello used to use. Tell her that Huggy Bunny and she should snap out of it
AFAIK Turnbull doesn’t oppose a stimulus package. He thinks that there’s mileage to be made out of Rudd’s screeching insistence that he must be obeyed within 48 hours or else. Bob Brown has a not dissimilar line. Should be interesting…
Ms Bishop on “PM” complained that many folk SAVED their Christmas bonus (when the Govt wanted them to spend it). She then advocated wide income tax cuts. It didn’t seem to occur to her that some folk might save them too.
Adrien – think of it this way. The stimulus can both increase household saving and increase household consumption, if the increase in household disposable income is even larger. This is what appears to have happened with the stimulus at the end of last year. The increase in disposable income is made possible by transferring consumption from the future to today – the cost is higher future taxes. Fiscal policy is trying to smooth the business cycle and ensure that any household deleveraging isn’t so large as to destroy the economy – avoiding the paradox of thrift if you like. Of course, if deleveraging is necessary it cannot be avoided forever. Anyway, the cash giveaway is only one part of the stimulus – the other is public expenditure on things that the private sector can’t or won’t provide – it is pretty unlikely that much private investment will be crowded out at the moment.
malcolm, bloody wll make up your mind fer chrissake. If yer intention is to block these measures tell us wot you intend to do.Please exploin why you find these initiatives so offensive.Immediately elucidate your grand plan to rescue the great unwashed from the evils of not only the GFC, but the deep and imminent threat of the Rudd Rescue Revolution.
I for one am sceptical about both approaches, I abhorr the use of language that Rudd has adopted ( crisis,disaster, war etc).Rudd appears to truly enjoy the persona of drama queen, hence the need to commandeer the media for the lecture.Pity he didn’t realise it would give the other bore equal bullshit time.
The opposition seems to be incapable of accepting their situation. It is probably high time that they were reminded that they no longer have to be consulted,they don’t have a friggin say anymore, they got the boot at the last election.
Its a bit of a storm in a tea-cup which course is taken because a rising tide lifts all boats. The UK didn’t go in for Keynsianism during the 30′s but still managed to muddle through.
Honestly I’m not sure about all the angst on these threads – the cons are as finished as fascism was after WW2. Democratic socialism reigns supreme ( the Vatican is the exception that proves the rule ) So the real question now is what happens if democratic-socialism fails.
It looks like a Dodo to me – but your mileage may vary.
Getting back to Mark’s headline for this thread “Never get between Australians and a pile of money”, well we had a yum cha lunch today with two friends who both lamented that there was nothing in Rudd’s stimulus package for them. Problem is that He is on $400K pa and She is a landlady with 10 rental properties. We of course picked up the tab for the lunch. I’m not asking for commentary about why we picked up the tab.
I’m quite pleased to see $6.4b spending on public housing because that sort of expenditure when Keating spent out of the ‘recession we had to have’ was the biggest boost to public housing for many years.
Even the Industry Commission recognised the cost effectiveness of providing that sort of assistance to people on low incomes, and if you can generate spending that keeps jobs in Australia in the construction industry, so much the better.
I’ll be in Canberra on Friday being briefed on the package – it’s been 15 years hard graft lobbying with nothing to show for it … until now. It’s good social policy to spend on public housing, whenever you do it. Turnbull is on a hiding to nothing.
My point is that my totally apolitical sample of one becomes aware of Malcolm for the first time when he cruelly rips her bribe away. This person is at uni and working and has a hex debt; suddenly she seems to have a Pauline conversion and starts to rabbit on about Malcolm looking after his merchant wanker mates, etc- turns into a raving Bolshevik in front of my astonished eyes. Cannot claim any influence over her – we just share a house.
My conclusion is that if Malcolm can turn my totally apolitical, uncritical and uncaring totally self centred sample of one into an instant raving revolutionary he is totally stuffed.
Huggy
The government’s package is in fact well designed but of course is open to ‘justifiable’ criticism and on all sorts of grounds. That would be the case no matter what it was about and how long they took to draft it. There is no perfect package that covers every angle and especially one designed as an ‘emergency’ to stop the loss of jobs through short term and medium term measures.
The Government has got the balance as good as you could and it provides something useful to the country. But the incessant criticism from the usual crowd is as expected.
Of course the purists obsessed with correctness and seemingly not concerned with the immediacy of the problem will put saving jobs and endeavoring to ‘save’ the economy as the lower priority. This is the very attitude that Kruggman was lambasting a few weeks ago, it was a tactic of the Republicans to side track the stimulus package, concerned as they are that it might work.
It is an easy way to make cheap points and because of the nature of the package there will inevitably be many to be made.
The opposition have the right to question the package and argue of its necessity.
Do they agree a stimulus package is needed? If so will the package as designed provide stimulus? Yes and yes. It is not an irresponsible way to govern at all if the urgency is there, and the entire economic and business community say that it is, and if the package is meeting the urgent need, which it will. The Opposition have to make the case against if they intend to deny it.
So the Opposition is actually the irresponsible party here, not the Government, for saying they will not support the package, prior to questioning the government and giving reasonable reasons.
The manner of the Oppositions denial of the package was fully political. Which means it has put its own political issues before the well being of the country.
I am amazed that anyone would use the Republicans as an example given that their cheer leader and mentor stated he wants Obama to fail. And it is widely discussed that the Republicans are threatening to block the stimulus package because they also don’t want Obama to succeed and don’t want to miss the opportunity to feed many hundreds of millions more into the pocket of friends.
So I suppose there is a comparison between the Republicans and the Liberals both seem to be willing to sacrifice their people/jobs/business/country for personal political reasons.
The government’s package is needed, timely and suits the purpose.
Turnbull seems like he has made himself an enemy of the people with his denial of the package without offering anything better. And they have had plenty of time to think up their own.
This morning it seemed like everyone was talking about how they were going to spend their $950 before their disappointment on hearing Turnbull’s plans.
Well I was scathing in my criticism of Howard’s back-of-an-envelope Murray-Darling ‘plan’ and this is no better. The potential for much of the school money to be misspent is obvious; there is no attempt to determine priorities as between schools, so some will end up with money they don’t need and others will use it for silly purposes; the insulation scheme will cause a huge spike in the industry with all its predictable problems and fraud; the one-off payments are a very inefficient way to stimulate economic activity; and so on. It’s terrible governance that smacks of panic and deserves to be labelled as such, not celebrated just because it’s caused problems for Turnbull. I’m all for making the opposition’s life hard but not at a cost of $42 billion.
Wizofaus, I talked about this before.
All the minors have expressed a desire to pass the stimulus. The Greens have some minor amendments, which the government will accept because they’re good, and Xenophon and Fielding want an inquiry which will be over in 3 days.
I’m sure we are looking forward to doing or duty and supporting the economy with the small cheque that has been given to each tax payer to use as he/she sees fit.
The Liberal party is supposed to be about the individual, Labor involves the individual in the recover package and they oppose it, is it because the state should be spending it on infrastructure ( my preference) or giving the tax break ( which is what it is) in some other form, no doubt one that returns more tax to the rich and less to the middle class.
Idiots, it is one person one vote, we do not get a vote proportional to our contribution to government revenue.
Oz @ 75 – you don’t think that Fielding and Xenophon are going to use that time to ask for special treatment for Victoria and SA respectively?
Obviously interest rates alone are not an indicator of how comfortable or confident we feel about spending.
“The ratio of household debt to annual household disposable income has more than tripled since the early 1990s, to around 160 per cent…”
Is it any surprise that some people would consider holding on to their govt handouts? Foe many, consuming just isn’t a glamorous as it once was.
How on earth can you wreck a financial system that relies on creating money out of thin air?
Chris, while the inquiry is going on and immediately after, they’ll probably ask for something else, or a tweak, but they’ve both said they want it passed quickly.
It’ll be passed by the end of next week. The week after, at the latest.
Brendon,
Simply because it does not. That nonsence is worthy of Rothbard or Douglas. The financial system does not, ever, create money “out of thin air”. If it did, no bank could ever fail.
“It’ll be passed by the end of next week. The week after, at the latest.”
It’ll be passed in plenty of time to make sure the government can’t point a finger at any other party when the payments are later than advertised.
Mr Greenspan? Alan??? Mr Wizard? Is that you?
Andrew Reynolds @ 81 “The financial system does not, ever, create money “out of thin air”. If it did, no bank could ever fail”
Try and wade through Steve Keen’s DebtWatch No 31 February 2009: “The Roving Cavaliers of Credit @ http://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/
In summary it says that banks create credit and 12 months later the central bank creates money in contrast to the orthodox economic theory that govts create money, the banks lend money
In reply to 59
Huggybunny perhaps instead you could explain to chrisl that government revenue depends on economic activity, and that the government will in fact get a large percentage of the $950 back in tax (in the short term if it is spent – GST 10% should be easy to comprehend – , or in the slightly longer term if it is saved and lent for spending). In other words, suggest to chrisl that he think a little deeper about how the money will flow and stop pretending a household budget is the same as the budget of a taxing entity.
This package sucks in economic terms.
Obiwan’s proposal has an estimated multiplier of 1 – every dollar spent generates a dollar of economic activity.
Kev’a only has a multiplier of 0.3.
Must and can do better. Mal is right to oppose it – it is an insult to Australians.
(multiplier estmates from ABN Amro)
Whatever happened to those “Guaranteed Wealth Creation Through Speculation” seminars, so plentiful a few months ago? The system hasn’t changed that much, has it? There’s still money to be made for those with an “aspirational” streak.
….I kinda miss those pitchmen.
“….I kinda miss those pitchmen.”
You can make money at any time in the economic cycle. You just have to know where in the cycle you are….
Arseholes
OMG!!!! The Libs are standing in the way of my big wad of cash (”stimulus”)….!!!!
WTF? Where’s the fuckin noose?
Good grief, their brain dead idiocy is astonishing.
I can’t even remember at the first post why they were doing this. All I know is they’re standing in the way of my big wad of cash!
Hang them I say!
(I think I speak generally for all working families in saying that….)
(PS, I’m serious people!)
……Yeah yeah ok I copy and pasted that from another post of mine somewhere else; it just means I feel strongly….
Razor, I think things are a bit more complicated than that. And it illustrates the problem with Australia’s fiscal institutions.
One interpretation is that the government is really assuming a multiplier of 0.3 – in which case it would be dreadful value for money.
Another, is that the baseline that ABN is working from is wrong. For example, Treasury may have provided some internal numbers that suggested that without a large package, the economy would have contracted by 1.5% in 2009 – in which case the multiplier would be closer to 1. But there is no way the government would admit that things were looking that bad prior to the package being announced as it doesn’t want to scare people too much.
Yet another is that they are being deliberately conservative so that they are more likely to suprise on the upside – it is much better to exceed expecations afterall.
Finally, they might be factoring in that the global economy will get even worse over the next few months, offsetting some of the impact of the stimulus. This is of course related to my second point.
Bottom line – the lack of transparency about the baseline and assumptions about multipliers, etc makes it very difficult to assess the package properly.
Ambigulous @ 67,
Research is showing one-off stimulus payments get saved because they are one-off, but tax cuts get spent because they are permanent and people feel safe factoring them into their budget.
billie,
It is OT, but if you want to have a discussion on that subject it has gone on for a very long time. I would suggest starting here if you want to read up. Marx, and Steve Keen for that matter, totally misunderstand both the nature of money and “neo-classical theory” (Keen seems to imagine there is only one).
He also obviously has no idea how a bank actually works.
Andrew, let me first note that I disagree with Ken Lovell as well – this package isn’t a back of an envelope thing – clearly it’s been worked over by Treasury for quite some time. The government’s communications strategy in keeping a tight lid on it (before fertilising the political ground) doesn’t mean that it was cooked up out of thin air yesterday. Everything we know – aside from what’s been said about the process in the Fin for example – suggests that’s not how they operate. If, as was suggested today, the Senate Committee wants to interrogate Ken Henry, I’m sure they’ll learn that and what assumptions went into it – which we already know – if anyone calmed down long enough to pay attention to the Treasury modelling about the degree to which it will stimulate GDP and the reasoning behind that modelling. It’s all out there already, and I’m also sure that the figures on retail spending for December would have been known at the time the package was finalised.
Secondly – to reinforce the point that it’s been designed carefully – from the responses from economists, there appears to be a fair degree of consensus that a focus on small ready to go projects plus a staggered cash injection is a good combination. The point’s already been made on this thread – but it’s worth repeating – anyone who knows anyone who works in a school will know that there are wishlists of “fix this now” put up constantly to state departments of education. It’s much easier to get these things up and running than to build a new hospital or a train line or whatever. And the assumption is that people will be more likely to spend a one off payment than $20 a week over a year – and that appears to make sense. Not to mention the fact that the quantum for the great majority of folk is higher than “bringing forward the tax cuts” would secure. And the point is to pump the money into the economy as quickly as possible while we wait for the infrastructure spend to come on stream.
Thirdly, as Angharad and Andrew Bartlett have said, the investment in social housing is very long overdue and very welcome.
I’m quite pleased with the package both politically and in policy terms – it’s a good Labor mini-budget. Sorry that Tories don’t like it – but hey, Howard lost the election, even if Malcolm et al haven’t really got their head around that.
On the politics, the headline in the Brisbane MX when I was getting a train at about 6.30pm was “Don’t Spend It Yet – Malcolm Says No”.
I’ll say it again – Keane is right. It’s very close to political suicide by Turnbull.
Ps – I think the degree of heat, if I can use that word, with which this is being discussed also suggests that we’ve just seen a defining political moment.
Malcolm is toast.
I think that last comment goes a little far Mark. From what I understand, there was majority support in the partyroom for the decision. It is a long-term play. They are gambling that the stimulus will be ineffective and are prepared to risk a further deterioration in the polls over the next few months so that if things do turn out badly, they can claim that the ALP took the country further into debt for nothing.
As I have said, I think it is a risky strategy that I doubt will pay off, but I can understand why the decision was made. They have no point of differentiation at the moment and are in a terrible position for the next election. To give themselves a chance of winning, they are going to risk a hammering.
The fall out will be interesting to watch!!
They’ll get their hammering, LO, I suspect. It might take another 20 seats or so for them to finally realise they’ve lost. Whoever said that Beazley and the Labor Party in opposition made a huge mistake by trying to carry on as if they were still in government and determining the fate of measures in the Senate had a very good point to make.
I see there’s been another outbreak today of Liberal backbenchers wanting to vote against the IR bills. That will enter the mix sooner rather than later. Kevin’s already been asking why the Coalition would want to make people’s jobs less secure. I have no doubt that’s been factored into the “paint the Coalition as extremists” play.
The government has also left open the option of more stimulus in the May budget, I note.
Kochie this morning: phone poll: 68% in favour of Malcolm blocking the stimulus package. I guess Liberal voters get up early.
Sunrise again : Phone poll, 1500 voters, 72% in favour of Turnbull – but the vast majority of e-mails being sent to Kochie are really pissed off at Turnbull. I reckon Joe Hockey, who was on very early, got the Lib staffers and others to man the phones.
Out of curiosity Paul, what did Kochie think of the package?
LO: fish swim, bears shit in the woods, the Pope is a Catholic and conservatives always play the long game. Conservatives always believe they’ll be borne out eventually, that the trendy ephemera will pass away and their timeless principles will remain.
The Japanese government in the ’90s ran stimuli repeatedly and were re-elected because they were seen to be Doing Something, which is more than can be said for Turnbull et al regardless of what might happen. Punishing Labor for getting us into heaps of debt with nothing to show for it is a three-term proposition, Turnbull is PM by 2012 at the latest or he’s outta there.
patrickg @ 100,
He didn’t really say much. He was a bit freaked out about the request for extra borrowing capacity, but mostly he was on about Rudd and Gillard not turning up for the vote @ 5.30 in the morning. Anthony Albanese put paid to that one very quick -n said he’d have an election on Rudd and Gillard not working hard enough any day. Seems there wewre hardly ant Libs there either. )Makes for a cranky Question Time I reckon.) Only watched it with half an eye as I was getting ready to go out.
Andrew E,
Good to see you recognise the parallel. Japan in the 1990′s – excellent choice. The stimulus packages did well there, didn’t they?
It is good to see Rudd taking us down that path.
LO #68 – Yeah I got that far in Keynesian 101. I know what Rudd is trying to do. But I’m not sure it’s a good idea to do it now. After all as far as I could tell the Great Australian Apathy was working well in December. Most people I talked to about the GFC had no idea it had anything to do with them.
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And we have a lot of trouble with debt.
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I can see the counter side. People start hoarding, cutting down, they stop spending, jobs go blah blah blah. I guess we’ll see.
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I think perhaps the best thing that could come out of this is that we might be able to get past the Keynes-Friedman dichotomy of the 20th century and develop something new to fuck the world with.
Mark – Malcolm is toast.
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Alright admit it. You’re itching for the ultimate in 80s retro aren’t ya? You want the Libs do go back to their Musical Leader schtick with the Howard-Peacock-Howard-Peacock dance yes?
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And it’d be great to have a laugh at the Smirking Fish falling on his face, finally learning the real reason onward never gave up the leadership (no one likes a smirking fish).
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Y’know I’m beginning to suspect you’re not entirely objective.