The telly news led with rhetoric suggesting the February retail figures showed that spending “dried up” after the December stimulus, and the opposition chimed in with their claim that “the money was saved” (which apparently is terrible, even though it frees up more money for spending…) But… Peter Martin links to analysis which contradicts the narrative of the day:
The ABS stopped calculating the trend (the dark line) in November because “it is not possible to determine the trend in retail turnover through the period affected by the Federal Government Economic Security Strategy Package and other influences associated with global economic conditions”.
But it is absolutely clear where retail was going. The December stimulus payments broke the trend and continue to do so.
Even with the 2 per cent fall in seasonally adjusted spending in February we are still spending far more in the shops than we would have without the payments.
The graph says it all. Pity it can’t be juxtapositioned with Oppositions absurd criticisms of the package.
How could the opposition get it right? They only know if it’s left it’s wrong, right?
I’d find the sight of the left thinking they’re fixing the economy by pissing tens of billions of dollars down the drain much more hilarious if I wasn’t in it.
This sugar crash is going to be pretty ugly.
Kim, things are more complicated than that.
The size of the government injection was around $10billion. Meer’s analysis suggests that the impact on retail sales was around $2billion. That is a multiplier of only 0.2. So, at first pass, it seems correct to say that the majority of the stimulus was saved and so wasn’t particularly effective in stimulating the economy.
But there are a whole host of other things that have to be taken into account. First, we don’t know what the counterfactual was – for example, if without the stimulus retail spending would have fallen over the same period, then the multiplier would be higher.
On the other hand, retail sales are also only one component of consumption, and many of the items in retail sales are imported. So, it is possible that the higher retail sales reflected substitution from other categories of consumption, which would push the multiplier down further. On top of that, if a large fraction of the increase in retail sales was imported, the multiplier on GDP would be lower again.
We also don’t know what will happen to retail sales in March. But if the December increase largely reflected a bring-forward as families wanted to enjoy their Christmas, then even the $2b will be an over-estimate of the impact.
Finally, determining the impact is complicated because petrol prices and interest rates fell significantly toward the end of the year – both of which will have boosted household’s effective real disposable incomes and hence consumption.
So, while the coalition’s mantra that it was all saved is most likely untrue, it is probably also true that the stimulus was only weakly effective (unless you believe that retail sales would have collapsed in December without the stimulus – which is of course possible).
If the next bout of stimulus has a multiplier of only 0.2 then we will all be in a lot of trouble because the government is banking on a multiplier of almost triple that….
“…and the opposition chimed in with their claim that “the money was saved” (which apparently is terrible, even though it frees up more money for spending…)”
Leaving aside the statistical issues, is it your claim that whether or not fiscal stimulus is actually used for short-term consumption is immaterial to whether or not the fiscal stimulus is, as public policy, successful? Perhaps I have misunderstood this Keynesianism racket.
BBB
And correct me if I’m wrong, but isn’t the Opposition’s ‘chime in’ that you identify merely pointing out that the overwhelming majority of the fiscal stimulus has been saved? This claim is backed up by the analysis that you cite with apparent approval.
BBB
Labor Outsider: the first stimullus went to mostly to old-age pensioners. I’m gonna go out on a limb here and say age pensioners, as a rule, are much more reuluctant to spend than the rest of us (for the simple reason that most already have the big things they need and don’t have kids at home). Ross Gittins said not to believe the rubbish about the stimulus not stimulating, and I think the next stimulus – going to younger people – will stimulate even more. And keep this in mind: there’s a world-wide recession the likes of which we haven’t seen since the big D in the 30′s – I find it amazing that we’ve only had a 2% drop. After all, the media has been wall-to-wall economic armaggedon and people are worried. It’s like those clowns who say Japan’s stimulus didn’t work during their “lost decade” – I wonder what would have happened if they didn’t spend.
And Craig Mc: you have to deal with the economy you’ve got. I’m guessing there’s between 1 to 2 million (more?) jobs in retail. The government is simply responding to that reality. I’d prefer that more people worked in good union jobs in, say, manufacturing, but I still wouldn’t call a retail job “the drain”.
The Libs want to create the impression that most of the stimulus is going on “the cash splash”. That’s just dishonest. Overwhelmingly money is being spent on things like building new school buildings and other public works. The “cash splash” is just to fill the gap until the public works can get up and running.
My only complaint about the 2 stimulus packages is that they aren’t large enough (though it was about the size sensible economists said it should be).
…sorry I put my apostrophe in the wrong place – guess where!
P.S. Oldies face a lot of cross-pressures that make them reluctant to spent – super has declined dramatically.
I wonder if there is a way of measuring where else the money was spent, apart from retail?
For example, my Grandmother spent her bonus before christmas on getting her car serviced – doubt this would be recorded in ‘retail sales’ figures, but was certainly spent in a productive way, helping out a small local business. Apparently most of her friends spent their money on similar service-y type things, rather than on buying Christmas gifts or similar. Anyway. Just a thought. Maybe the figures do capture that activity?
BAS statements (GST returns) measure this for every business in the economy. It’s one of the reasons we have them.
Taking money out of the hands of people who produce wealth & jobs and putting it into the hands of people already on welfare is actually detrimental to the economy. Sure you’ll get a sugar-rush of spending if you target the right recipients but it will all be quickly gone. We should always be looking for a way to create wealth, not just spend it.
Kill payroll tax and you’ll really encourage business to hold employment levels. That puts the money in the hands of job creators – and you’ll actually be accomplishing some genuine long-term reform while you’re at it. Currently we have a $15B/year penalty on employment in this economy (which I expect flows onto exports). If the government insists on spending billions, then put it there.
They can trade off the states with an increase in the GST, but defer that increase for a few years. Here’s a trick – announce an increase in the GST to take effect on July 1 2011 and watch activity spike to beat it like it did in 98/99.
As I recall the treasury modelling was that about a billion would be spent each month for seven months, and the rest saved. So if so far 2 billion has been spent in 3 months they were 2/3s right – not great, but closer than the opposition.
Of course there are all the possible distorting factors mentioned above, so that $2billion could be a lot higher or lower.
Labor Outsider,
I don’t quite understand why the Government has done it this way.
Economists and economic commentators seem to agree that stimulus is better provided through monetary policy where possible.
Of course, the Americans have now run out of interest rate to cut. But we haven’t. So I would have thought it would be more sensible to:
a) use monetary policy for short-term stimulus, until it hit 0% or close,
b) while laying the groundwork — the CBA, administrative, and legal work — necessary for a round of big projects later in the year or in 2010 (this might be traditional Keynesian things like roads and bridges, or more new-fangled stuff like renewable energy).
The advantages would be:
a) a higher multiplier (there was a table on Krugman’s blog a while back, suggesting a higher multiplier from infrastructure work than from consumer handouts), and
b) you get the social benefit of the infrastructure (assuming you had done the CBA right).
But instead the surplus has been blown on cash handouts. It doesn’t make any sense to me.
Is this really about the political need of Rudd to be seen to be doing something?
Well, I got my electricity bill and phone bill subsidy today and as I’d already paid both bills guess what – I spent it on books. Just sayin’.
“But instead the surplus has been blown on cash handouts. It doesn’t make any sense to me.”
Rubbish. Contrary to the Liberal propaganda those who have benefited from the cash handups have used the money wisely. And that amount spent, if you had have read what Ginja said @7, is small in comparison to the rest of the stimulus package.
Craig Mc: this money isn’t going to people on welfare. It’s going taxpayers – not the unemployed. You have to have lodged a tax return for FY 2008 to receive the payment. The only people who will have received stimulus money who could be described as being on welfare are parents and students. Age pensioners have received money, too, but most pensioners would probably resent being described as being on welfare because they paid taxes all their life to support the pension system.
I always find it scary to have a peek into the amazingly ill-informed world of the Tory. But this touches on the real Tory objection: it’s not a tax cut – as would have happened under Howard – whose benefits go disproportionately to wealthy Liberal types (apparently they’re the only ones to create wealth). Instead, it’s going to us average wage slaves who’ll actually spend the money.
Paul Burns: I’ll be spending most of my money on books, too (that would really outrage the Neanderthals on the Right).
Paulus, I’m in complete agreement with you. The strategy you’ve outlined would almost certainly be more stimulatory than the mix we have right now.
Ginja, you place to much faith in Gittins. Note that I didn’t say that there was no need for a stimulus, not that the stimulus had no effect. I said that it appears to have been smaller than what the government anticipated, though there is a great deal of uncertainty surrounding any estimate because we don’t know how retail sales would have behaved over the past 3 months in the absence of the stimulus.
In my view it is important that fiscal stimulus be as cost effective as possible with as large multipliers as possible. Remember, we are effectively borrowing from the future (which will have to be paid back in higher taxes) for any stimulus we undertake, so you want to maximise the benefits from that borrowing.
With respect to Japan, you are getting into quite a complicated area. Even the Japanese acknowledge that while their enormous stimulus probably helped mitigate the worst of the short-term effects of their banking crisis, enormous sums of money were wasted on unproductice infrastructure which has undermined the efficiency of their capital stock and hence longer-term potential growth.
Ms Laurie – I’m pretty sure that your grandmother’s servicing of her car won’t appear in retail sales but it will be picked up in services consumption through the national accounts. Because the biggest spike related to the stimulus was recorded in December, that number will actually have its largest effect on the March quarter national accounts because it will push the March quarter average well above the December quarter average (despite the increase coming mainly in December). It will be interesting to see whether consumption increases when that data is released early in June.
Labor Outsider, you’re sounding like a Liberal Insider. This crisis has revealed just how much right-wing economic claptrap has influenced otherwise sensible Lefties.
I can’t say for certain that the government will have to raise taxes in the future to pay for the stimulus. Chance are they will, but it could be a very small amount. If we had of done what Turnbull wanted – permanent tax cuts – we’d have much bigger problems in the future. We’ve cut taxes by that much that governments here and around the world could literally double the top tax rate and they’d still not be at the levels we had in the post-war era (assuming they pay any taxes at all). And in any case, I happen to think that taxes for the wealthy are too low and growing inequality a real worry (here and everywhere else). Besides, Australia has virtually no government debt. We could be spending four the amount – and more – of what we’re spending and only then catch up to the debt levels of comparable countries.
If the Libs hadn’t cut capital gains tax, imagine how much more money the government would have, instead of it going…..we’re did it go, exactly?
Paulus, part of the stimulus – a minority portion – has gone to personal payments (most has gone on physical infrastructure). The government has done it this way for a very simple reason: time. The most important thing about the stimulus package is not that money is spent on worthy things or that it fits into the Tory/Protestant work ethic of who is deserving and who isn’t. The important thing is to inject money into the economy – fast. It’s like an injection of blood before emergency surgery begins.
…I meant spending four times the amount…
…and I used “we’re” incorrectly…havin’ a shocker.
Ginja why would you think that the”right” would be outraged if you buy books?
Ginja, I’m not making a political point in the sense of defending the coalition’s stance on this issue. For example, given that Australia’s budget deficit is now almost certainly structural rather than cyclical, the permanent tax cut argued for by the coalition would be a mistake in my view. All I am saying is that it is important that fiscal stimulus be designed well and monitored for their effectivenes.
joe2, I wasn’t making any judgements on whether people use money “wisely” or not. Unfortunately, what may be “wise” for an individual or household at the moment — saving money or paying off debts — may not be good for the economy as a whole.
Ginja, you’re quite right that only a portion of the stimulus has gone to personal payments. Most has indeed gone to infrastructure. I should have been clearer about that. Nonetheless, that minority portion is still $12.7 billion, which is a lot of moolah that could have done more good if used in different ways, in my opinion.
“The important thing is to inject money into the economy – fast.”
Sure. But monetary policy — cutting the official interest rate — is the fastest and most efficient way of doing so. Most economists agree on that. The government should have left it to the RBA until rates had come down as far as they can.
As Henry Ergas explains:
If the RBA feels compelled to keep interest rates at their current setting, then Ergas’ warning will have been validated. We will know next week.
I agree, Paulus about interest rates – sort of. But I don’t think fiscal policy should wait on the RBA. It’s my amateur guess that the RBA should drop interest rates to the floor (we’re in that much trouble). But 2 things to consider: first, the RBA may be keeping its powder dry for future shocks (to drop interest rates further – a psychological thing), and second, banks have been reluctant to pass on the all the interest rate cuts (with the tacit support of the government that understandably wants to keep our banks as healthy as possible). So just because the RBA is independent, it doesn’t mean fiscal and monetary policy aren’t working in tandem. The question to ask is why so many are obsessed by monetary policy – right-wing ideology perhaps? If there’s a silver lining in all this, it’s that Rudd no longer has to worry about inflation and we can spend money on good things like schools.
In the circumstances, any stimulus is going to be big and ugly and vulgar and we can all pick it to pieces. But I still think people are missing the most important thing: timeliness.
And fair point, Labor Outsider – but like I say, timeliness is the main thing.
Leigh: you haven’t noticed just a hint of anti-intellectualism in the modern Liberal Party?
No I have’nt Ginja,could you point that out to me?
And one more point, Paulus: Henry Ergas asumes we live in normal times. I think we’re a long, long way off from worrying about interest rates going up. Worry about deflation (an even worse problem to climb out of). Whenever an economist frets about inflation nowadays, it’s a good guess they’re on the Right of the spectrum – the very people who landed us in this mess. But a good debate, this.
Ginja before you go can you point out the anti-intellectulism of the right ?
Oh jeez, people being paid hundreds of millions and/or plugging fast money opportunities that even they didn’t understand.
What makes you think informed and actionable comments about this issue are gonna come from any website that doesn’t include real time comments by Charles Adams, Chas Addams, Hermes, Warren Buffet, Loki, JP Morgan, Sir Isaac Newton and the Las Vegas Gaming Control Board?
Incidentally the most conspicuously richest person I met in Las Vegas last time owned the laundry concession for several major hotels there. Steaming out stains is always a growth industry.
Oh fuck, I’ve quite lost track of the comment above I meant to quote as the lead into my last comment.
But really all the folks above talking about inflation, deflation and monetary and fiscal policy sound like the British Admiralty in 1915 hoping that loudly denouncing U-Boats will make ‘em just go away.
It’s not that kinda world anymore.
We didn’t just denounce ‘em. We rammed the buggers with our dreadnoughts. Or, to be more precise, with the Dreadnought.
The principles of naval strategy didn’t get thrown out the window just because of the appearance of those silly little submersible torpedo-boats. The country that introduced ‘em got soundly thrashed. And again, 25 years later.
Likewise, the concepts of macro-economics aren’t about to be thrown out the window now. Indeed, they form the only conceivable framework for understanding what the hell is going on.
“The principles of naval strategy didn’t get thrown out the window just because of the appearance of those silly little submersible torpedo-boats.”
So why have most competent first world navies spent over the last few decades an increasingly large proportion of their budget on ASW?
“Indeed, they form the only conceivable framework for understanding what the hell is going on.”
That’s what they said about “crossing the T”. And besides, can anyone really explain what the hell is really going on now?
“Likewise, the concepts of macro-economics aren’t about to be thrown out the window now.”
What have they done for us lately?
“those silly little submersible torpedo-boats.”
Who have now grown into the most long lived and effective deliverers of the MAD wrath of the sun.
Good luck finding a modern financial industry equivalent of Jackie Fisher or Hyman Rickover.
“So why have most competent first world navies spent over the last few decades an increasingly large proportion of their budget on ASW?”
Technologies come and go, but concepts prove remarkably enduring. When I was First Sea Lord in 1905, what did they teach the midshipmen? Mahan. What do they teach ‘em now? “Mahan Revisited”.
One must not fall into the mistake of thinking that some new tech appears and instantly everything changes. Colin Gray makes this point well in Modern Strategy: he discusses how the proponents of satellites and space warfare were rushing around telling everyone breathlessly that war has totally changed, and all earlier principles are now obsolete. Crap, says Gray, basically.
Anyway, this ain’t a miltech thread.
“What have they done for us lately?”
Given us the policy framework underpinning half a century of prosperity (relative to everything in human history beforehand). That’s what.
So what bit of “lately” don’t you understand?
Plus I bet Alf Mahan didn’t see this coming.
But yer right mon petit cauldronist, we’re cooking the metaphor until it squeals.
No? It could be…
I’m pretty sure there’s a Hyman Rickover in the porn industry. May not be his real name, tho’.
So worrying about how to pay back debt is a right wing ideology?
Everyone sneers at the sub-prime lifestyle where large debts were run up to fund lifestyles rather than investments. Yet, here we are doing it on a national scale. Every household budgeter knows there’s good debt and bad debt, and we’re indulging in the bad kind.
Yup, Craig Mc: worrying about government debt is right-wing ideology – in Australia, at this point in time, that is. The reason: we have so little of it. The Australian government finds itself in the position roughly akin to someone earning $100,000 a year with a loan of a few thousand dollars. Is that unmanageable?
You touch on an interesting point about subprime loans. There seems to be a lot of smug tut-tutting from comfortably well-off right-wingers about people in the US who took out subprime loans (it doesn’t hurt that blacks seemed to be the target for a lot of predatory subprime lending). I’m sure there were lots of people who used debt to fund a lifestyle they couldn’t afford. But I’m just as sure that in the US a lot of people got into debt just to keep their family’s head above water, to maintain a modest standard of living. Paul Krugman and others have written a lot about how so much risk has been shifted onto individuals in the US – no universal health care, a weak social safety net, laws that hound unions (the US has had only 1 federal minimum wage increase in 10 years).
Lefties have been saying for years there’s been too much debt – in the private sector. Why only blame governments and individuals? Why not corporations borrowing massively to pay for unproductive – and often disastrous – mergers? Right-wing ideology, perhaps?
I take it that the Right isn’t now against all forms of borrowing. Capitalism’s is in more trouble than I thought if that’s the Right’s new position.
It finds itself in the position of going from debt of 0% of GDP (and before that – in surplus!) in November to 5% in March. That’s probably six years of future budget surpluses in just 4 months. Continue that behavior for a year and that’s a generation’s worth of debt. And for what? Will there be the equivalent of the Snowy Scheme afterwards? A new electrical grid? Water resource diversion? Any grand infrastructure that will produce wealth for generations? Bollocks there will.
Will it be putting it back into the hands of entrepreneurs and business to generate wealth and employment? Only as far as retail – the very last leg of the economy – often one step from the importer’s warehouse. I say it’s ineffective – there are far better solutions available.
Also, the reason why we had 0% debt in the first place was because of that “right wing ideology” of worrying about government debt. Ideas like “not worrying” about that government debt made Whitlam, Cain/Kirner, and now Iemma famous for their fiscal management.
And it’s not just the 5% that needs to be paid back – it’s the interest (over $1B a year on current rates). How’s this for a left-wing perspective – that’s a billion that won’t be spent on hospitals or schools each year.
Rather than perhaps adjust their standard of living to circumstances? I’ll leave the rubber-necking of the American train-wreck for another day. Let’s just say that no lunatic financial policy would be complete without some racist conspiracy theory chaser in contemporary America.
But for this discussion, I’m just worried about Australia.
The smarter lefties would have made a distinction between investment and consumption, and smarter ones again would have realised that, beyond inflation, it’s none of their business. When a business that has borrowed too much goes broke, investors lose. That’s the risk they know going in.
Whenever a government borrows, taxpayers act as guarantors. That’s my risk, and I don’t get to dump it like a shareholder can. I want something more than consumption for my risk, and so far I’m not getting it.
Government AND individuals? Corporations VS Individuals? Corporations ARE individuals. Individuals that choose to belong together in a partnership. Their money. Their risk. Their reward. They sign on for their debt. Individuals don’t get much choice about belonging to a government or repaying the debt they run up. I should know, I’ve had to pay off the bills left by two spendthrift governments in my lifetime.
No, just generally government borrowing. They’re guilty until proven innocent. They’re the stupidest, most venal, parasitic, newscycle-driven and shallow organizations civilization has yet produced. Just because democracy beats the alternatives doesn’t mean I trust them with my cheque-book.
“How’s this for a left-wing perspective – that’s a billion that won’t be spent on hospitals or schools each year.”
Well you are correct that the payback interest is going elsewhere. Off to those who were prepared to take a safe bet with their money. What you forget is that a very large part of the initial package is actually going to the schools that you are showing so much concern for. Money for insulation in roofing has been mocked by Hockey and co. That will go towards efficient use of scarce available resources. How can that be a bad thing in the long term?
Australians as a whole will be left with a little bit of debt that will have kept the economy from coming to an abrupt hault. People on the lower end of the income scale will have had some financial pressure taken off them. Whatever they do with the money is bound to be of common good. Craig Mc you protest too much!
Gee, that’s a doozy of a rant. Here’s mine:
I’d have to check in more detail that 5% figure. I’ve heard the Oppostion bandy it about, but it’s more complicated than that – and it’s certainly not being spent in just a few months. As always, it will have a multiplier effect and the government will take some of it back in taxes – so keep your hair on. Have you checked the levels of government debt in the US, Japan, Brtiain, or any other comparable country? I think you’ll be surprised. We’re not even in the same universe. Most of the money is going on public works – school buildings, public housing, defence housing, public works by local councils. More wisely spent than, I dunno, Seasprite helicopters?
Where do right-wingers get this goverment-is-agin-us stuff? Some are, but they’re elected by us, and unlike corporations, we all get a vote. I certainly don’t accept that governments are any more venal than corporations. When right-wingers move into high dudgeon the mask often slips and you begin to wonder just how deep their commitment to democracy really is. Shades of Pinochet.
And, sorry, what happens in the private sector is my business. Their money, their risk, their reward, has quickly become our money, our risk, our problem as the whole system is in danger of coming down. Most of us didn’t have a vote on how massive corporations behaved – yet we’ll wear the consequences.
It’s not always as simple as people adjusting living standards to their circumstances. People live where the work is, and that usually pushes house – and other – prices up. Often people can’t move due to family commitments. And if you work for a pittance at Wal-Mart there’s only so much adjusting you can do.
As for Whitlam/Cain/Kirner, they were often the victim of what went on in the private sector (Cain and Kirner had to deal with mess from the shenanigans of the financial sector). It was people working in the Victorian public sector who paid the biggest price. I know it’s not the politically correct to say anything that could be construed as giving a tick to the NSW Government, but Carr and Iemma have been very, very conservative on fiscal policy – to a fault, often needlessly so.
My suspicions were correct about that dodgy 5% figure – completely misleading. In fact, it’s absolute bunk.
If you go to the Treasury website and look up Updated Economic and Fiscal Outlook, you’ll find this:
“The Australian Government cector net debt for 2008-09 is estimated to be -$16.2 billion (-1.3 per cent of GDP). Net debt is expected to increase across the forward estimates to 5.2 per cent of GDP in 2011-12.”
It goes on to say:
“The overwhelming majority of the increase is due to the collapse in tax receipts from the deteriorating global economic outlook and the unwinding of the commodities boom. A secondary impact is the increase in payments typically accociated with a slowing economy. A third component is the Government’s temporary measures put in place to support jobs.”
And here’s the whammy:
“Australian Government net debt remains very low by international standards. The average net debt for OECD countries in 2010 is estimated to be around 45 per cent of GDP.”
I wish I could provide the accompanying chart of our debt compared to other countries – it’s quite amazing. Australia barely registers on the thing – the others tower over it like skyscrapers. Could someone provide a link?
And just for fun:
“The fact we could have lower taxes, higher spending and bigger surpluses for about five years – in other words, we could have a magic pudding – led some people to think that thrift, prudence, responsibility had somehow become irrelevant.”
- Tony Abbott on the responsible fiscal policy of the last years of the Howard government (quoted in today’s SMH). Nuff said.
Sorry for the typos on the previous post – s is becoming c. Posts take so long nowadays on LP. Is it to check them for libel? I want finish this stoush before I go to the pub!
For reference Australia’s GDP is about $800B. The figure you’re citing is as of February. That won’t include the $42B stimulus package, which alone represents about 5% of GDP.
And that’s just the beginning according to this article (although it sounds like that includes state government debt – it’s hard to tell. I can’t see where else we would have had $50B of bonds these last five years).
I think everyone else has gone home, but I’ll persist.
And yes, we do get to vote for corporations, with our capital and custom. We even get a vote at board elections! Of course we don’t if we don’t own any stock, but then it’s none of our business. It’s especially none of government’s business. If a corporation is badly run, it should meet its fate in the market place and be consumed by well run corporations.
Don’t confuse capitalism with the quasi-government banking system in the USA. Fannie Mae/Freddie Mac and a succession of socialist impositions on banking prudence have led us to that mess. That and allowing entities too big to fail to become too big in the first place. Fortunately, that’s not an issue in Australia. America’s binge of stupidity is a topic for another day.
Cain/Kirner “victims”? That’s a good one. They were responsible for Victoria’s banking troubles, not victims. They took a century old public institution, made it chase commercial loans, and then idly watched as it garnered a comic reputation for lender of last resort throughout the marketplace. Then they made whole new one (the VEDC) and got it to do the same – because one disastrous adventure is never enough!
Carr/Iemma’s conservative fiscal policies? So conservative the state’s utterly broke!
I’m glad you find it comforting that we’re not borrowing as much as, say, Italy or the USA. Just because there are worse idiots running some other countries, or more to the point – most other countries weren’t as blessed by previous governments as ours was – doesn’t make me more comfortable about the idiots running this one.
Are you sure Tony Abbott wasn’t talking about your good self?
Why so silent, Craig Mc? Don’t believe all you hear from Liberal politicians, the Murdoch press, or commercial talkback. It’ll rot your brain.
Not being an economist, I don’t regularly go trawling through the figures, but a five minute check on the Treasury website is enough to put these myths to rest.
I’d add that long-range economic forecasts are almost always off. The global economy is so bad we’ll probably exceed that 5.2% figure. But that doesn’t let right-wingers off the hook for using the figure in a highly misleading way. If we exceed our estimate other countries will surely exceed theirs, too. My guesses before on how much the Government would have to spend before we caught up with comparable countries was off – turns out we’re in a much better position than even I thought.
My last post was posted before that last post by Carig Mc.
Oh dear, oh dear! Why do I waste my time?
First of all, the NSW Government budget is in deficit, it is not utterly broke. That’s ridiculous.
The Feb. Updated Economic Outlook came out with the stimulus package (that’s kinda why it came out). The $42 billion stimulus package is only part of a number of factors that the Treasury estimates will put us into deficit by 5.2% in 2011-12. As I point out in one of my quotes from Treasury, the government revenue boom turning into a bust, and the fact that more people will be using government entitlements and services, is the real main reason for the deterioration in government finances. The stimulus package is only a small part of it. The stimulus package – $28.8 billion of which is being spent on public works – will is designed to increase economic activity.
It’s one of the Right’s talking points that Freddie and Fannie got us into this mess – it’s an attempt by pro-deregulation Republicans to spread the blame to Democrats. But that’s been debunked – read Nobel Laureate Paul Krugman’s “Fannie, Freddie and You” (NY Times 14 July, 2008).
Sorry, had to break for tea.
On the Tony Abbott comment – what he’s really saying is what’s good for the goose isn’t good for the gander. Do as we say in Opposition, not as we did in Government. He’s seen the light since leaving office, and discovered that socialist spending is different from morally upright Tory spending.