Stimulus package

[Largesse]

Thank you Beej.... finally, someone who is able to make an educated response in this forum!

Thats a big call mate....
I see plenty of educated responses on various topics every day on this forum.

Sure you don't want to retract that?

 

[jono1887]

Absolutely not in his own eyes. On the contrary he loves every minute of it.
If ever there was an example of someone who believes his own bull****, it's the Ruddmeister.

Apparently Ross Gittens seems to believe this apparent 'bull' and for those of you have been following his articles for many years would know that he has swung toward the right previously yet he is mostly an objective economics writer...
http://business.smh.com.au/business/stimulus-strategy-sorted-down-to-a-t-20090529-bq7g.html?page=-1

Do you think they are attempting to stimulate the economy with these dumb cash handouts which will provide a small tick upwards in the quarterly figures in terms of retail sales, or could they just be looking after their voter base?
You seem like a Labor fan in which case you will only see what you want to.

There is one view that it would be sensible to let the unviable businesses fail, e.g. how much of taxpayer funds have repeatedly been channelled into propping up the unprofitable car industry?

Well, the Libs wouldn't have been borrowing money to give to people to buy plasmas, go to the pub etc.
Yes they would be borrowing, but would have spent on worthwhile infrastructure to offer Australia a long term benefit. What long term benefit occurs for the country from all the dollars that have gone on rubbish?

Maybe just find out what does happen before you start being so derisive about criticism, jono.
The estate of the deceased will process and bank these cheques.
How is that stimulating the economy, huh?

These Dumb cash bonuses happen to be one of the only ways to instantly stimulate the economy. The moment those cheques enter your mailbox... i can bet that for most of the population, that stimulation would have entered into the economy instantly. Here is some basic year 12 economics for you... the use of these cash bonuses have 2 effects on the economy

- Increased Sentiment
- Multiplied Effect Flows

We all know of the almost instant boost in consumer sentiment from the cash hand outs. Together with the basic multiplier effect as the cash flows within the economy, the initial ~$20b would have probably had a total effect of ~$80bn running into the economy is the MPC was about 75% which is probably a decent approximation. So by the initial cash handout, Rudd was able to stimulate the economy by 80bn and not 20 in a matter of weeks.

Worthwhile infrastructure?? the Liberals had 12 years of economic prosperity yet still failed to bring about these infrastructure projects... what makes you think they would be able to run them out over night just because theres a recession??

I agree Smurf. What a waste! Filling in the potholes would have a much better
effect for the country.

You wonder why these politicians invent things like a "future" fund.
Howard did some things to improve infrastructure but certainly not enough to
expand port capacity.

Looks like Rudd is doing the same.

If you had bothered to read the article - http://business.smh.com.au/business/stimulus-strategy-sorted-down-to-a-t-20090529-bq7g.html?page=-1
or even learn about the actual stimulus package, you would know that 1/3 of the stimulus is actually going towards those kind of things "Their stimulus spending has gone through three stages: first, the cash bonuses announced in October last year and in February this year; second, the small "shovel-ready" capital works (on primary schools, road black spots, rail crossings, roof insulation and public housing) announced in February; and, third, the larger and longer-term infrastructure projects (on road, rail, ports and broadband) announced in the budget."

By the way if your such a great economist you'd understand that speeding up infrastructure projects is a better way to stimulate economies during a recession rather than cash handouts.

Can you tell me how you would speed up the building of hospitals, roads, rail and ports in the matter of weeks... im sure construction starting within weeks would have extremely poor planning that would have greater long term consequences. These large scale infrastructure projects require months of planning before construction even starts.

Perhaps it is you guys that need the greater education before you start questioning my economics major... like i said in my previous post, get more education before you blame the govt for everything!

 

[jono1887]

Thats a big call mate....
I see plenty of educated responses on various topics every day on this forum.

Sure you don't want to retract that?

Ok, perhaps in this thread.... i retract my previous statement

 

[Pappon]

Perhaps it is you guys that need the greater education before you start questioning my economics major... like i said in my previous post, get more education before you blame the govt for everything!

http://www.abc.net.au/news/stories/2009/04/23/2551275.htm

Below in red is a quote from a QUALIFIED economist argue with that someone who KNOWS MORE THAN YOU

The Federal Government has spent just under $21 billion on cash handouts as part of its two economic stimulus packages.

But the IMF's chief economist, Olivier Blanchard, has told ABC1's 7:30 Report that speeding up infrastructure projects is a better way to stimulate economies during a recession.

:

 

[Largesse]

Perhaps it is you guys that need the greater education before you start questioning my economics major... like i said in my previous post, get more education before you blame the govt for everything!

hilarious.

 

[Pappon]

If you were such a great economist you might understand that major infrastructure projects can take up to 2 years to get going from the decision to spend some money on something, due to the need for project definition, tender process, then actual ramp up, design/construction etc. And the thing with trying to fiscally stimulate an economy in a downturn is you are meant to hit the stimulus FAST initially - the earlier in the downturn cycle the better, hence the cash payments.

one key work you overlooked speeding up infastructure projects

Anyway as pointed out by Ross Gittins in the article I posted on the first page of this thread( http://business.smh.com.au/business/stimulus-strategy-sorted-down-to-a-t-20090529-bq7g.html?page=-1 ), there are 3 prongs to the government stimulus. The first was the 2 rounds of cash payments ($22B), the second was "shovel ready" capital works projects that could get underway quickly (new school buildings, non major roadworks, home insulation etc) - this is about another $23B odd. The third round ARE the major infrastructure projects you are on about - rail, road, ports, datacomms etc - the spending there is about another $21B+.

So each prong of stimulus is roughly one third of the total spend of $67B, and designed to occur immediately at first and then run for the next 4 years due to the longer term infrastructure projects.

So if you are going to criticise a governments actions at least understand properly what they actually are!



Beej

Have a look at the mess the NSW state was in PRIOR to the economic meltdown do you honestly still believe they are qualified to run this nation you guys are fools who sell themselves to the devil.
The only people i know that vote for labor are dole bludgers who don't want to work and get this country going.

The labor government has now changed salary sacrificing laws so that any salary sacrificing into super will now be included as income tax?
How can you do that to HARD WORKING people that are doing the right thing to try to create themselves a life that when they retire they do not depend on the on the government. HARD WORKING PEOPLE ALWAYS come under the hammer with labor.

Labor creates a life for people with no incentive to work hard.

Liberals had unemployment at record lows labor had unemployment in the 90s reccession at 10-11% plus a 96 billion debt level. I had to see both of your financial situations Jono and Beej if you think debts and high unemployment levels are the way to go, you guys are kidding yourselves.

YOU Beej you were around when interest rates were 18% in the 90s how someone can go through that and not learn is beyond me you really (i'm sorry for the insult there is really no other better word) are a fool

 

[jono1887]

http://www.abc.net.au/news/stories/2009/04/23/2551275.htm

Below in red is a quote from a QUALIFIED economist argue with that someone who KNOWS MORE THAN YOU

The Federal Government has spent just under $21 billion on cash handouts as part of its two economic stimulus packages.

But the IMF's chief economist, Olivier Blanchard, has told ABC1's 7:30 Report that speeding up infrastructure projects is a better way to stimulate economies during a recession.

:

notice the article also states - "Typically with these type of measures, is that it takes so long to actually get them going that by the time you put them in place, the recession is gone,"

but Rudd has still placed 2/3 of his stimulus package into those measures... but by giving out the cash handouts, its an instant boost into the economy

 

[Pappon]

notice the article also states - "Typically with these type of measures, is that it takes so long to actually get them going that by the time you put them in place, the recession is gone,"

but Rudd has still placed 2/3 of his stimulus package into those measures... but by giving out the cash handouts, its an instant boost into the economy

The article also states you overlooked a key word speeding up
Wasn't the majority of payments SAVED :bonk: yeh that will stimulate

 

[jono1887]

The article also states you overlooked a key word speeding up
Wasn't the majority of payments SAVED :bonk: yeh that will stimulate

I think by looking at the retail figures for the quarter after that last cash handout, its more than obvious that a large proportion was spent :

 

[Pappon]

I think by looking at the retail figures for the quarter after that last cash handout, its more than obvious that a large proportion was spent :

Post them up and provide a comparison for the last 2 years

 

[Largesse]

I think by looking at the retail figures for the quarter after that last cash handout, its more than obvious that a large proportion was spent :

China and Japan will be so happy banking all our stimulus dollars

 

[Pappon]

I think by looking at the retail figures for the quarter after that last cash handout, its more than obvious that a large proportion was spent :

C'mon where are they are you currently searching around via google because you don't know what they were?

 

[Pappon]

I think by looking at the retail figures for the quarter after that last cash handout, its more than obvious that a large proportion was spent :

I thought you knew them off the top of your head i've been waiting 20 mins for these figures.

 

[Pappon]

I think by looking at the retail figures for the quarter after that last cash handout, its more than obvious that a large proportion was spent :

30 minutes where are the figures?

 

[Julia]

This is somewhat of a tangent to the above discussion, but relevant to the ethics of governments.

Remember the announcement in the Budget that contributions to Super would be limited to, I think, half the amount it's been to date? And the Henry review is considering raising the preservation age to 67 in line with the increased pension eligibility age.

An article in today's paper describes how a non- reported clause was inserted into the budget ensuring that MP's are immune from any such measures.
Their Super is a defined benefit scheme, meaning they get a guaranteed lifetime payment. The taxpayer might not realise that we are contributing over 15% to the pollies' Super, in contrast to the 9% for the population at large.

And if the GFC continues to reduce value of shares etc, then that's just fine for politicians, doesn't affect them at all, because they've written up the legislation to ensure the loyal taxpayer just makes up the difference to their defined benefit level.

And they surely don't have to work till 67 to access these benefits.

 

[Beej]

Have a look at the mess the NSW state was in PRIOR to the economic meltdown do you honestly still believe they are qualified to run this nation you guys are fools who sell themselves to the devil.
The only people i know that vote for labor are dole bludgers who don't want to work and get this country going.

Well that's a stale state government that has been in power for too long. Just like when Howard/Liberals stayed in too long at federal level, they became just as reckless/useless.

The labor government has now changed salary sacrificing laws so that any salary sacrificing into super will now be included as income tax?

You really need to get your facts straight. What they have done is changed the maximum amount that can be salary sacrificed. For most people it's reduced from $50k to $25k - which is still quite lot. Salary sacrificing huge amounts into super and being taxed at only 15% is the greatest high income earner/executive tax reduction trick/rort out there! Not such a bad thing to limit that a bit more than Howard/Costello did.

How can you do that to HARD WORKING people that are doing the right thing to try to create themselves a life that when they retire they do not depend on the on the government. HARD WORKING PEOPLE ALWAYS come under the hammer with labor.

Labor creates a life for people with no incentive to work hard.

So basically this comment is just a biased political crap rant based on a false premise because you are WRONG in your understanding of what has been changed re super salary sacrifice contribution limits.

I find generalisations like the above to be an indication of a one eyed politically biased person who rarely objectively looks at the actual facts behind any issues.

Liberals had unemployment at record lows labor had unemployment in the 90s reccession at 10-11% plus a 96 billion debt level. I had to see both of your financial situations Jono and Beej if you think debts and high unemployment levels are the way to go, you guys are kidding yourselves.

Nice straw man. For a start, Hawke/Keating were left with a HUGE budget deficit and national debt by - you guessed it - John W Howard who was the treasurer in the Fraser Liberal government that was in power until 1983. The following LABOR government brought the budget back into surplus and paid down large amounts of the debt. Unemployment was also at 10% and was brought down to about 6%. So reducing debt, creating budget surpluses from deficit and reducing unemployment are by no means the exclusive domain of the Liberal governments! What's more up until 1996 when Howard got in unemployment and the budget deficits were steadily shrinking already (under the Keating LABOR government) as the country recovered from the 1991/92 recession.

YOU Beej you were around when interest rates were 18% in the 90s how someone can go through that and not learn is beyond me you really (i'm sorry for the insult there is really no other better word) are a fool

What should I have learnt exactly according to you? I think only a fool would exclusively blame the government of the day or even a particular political party for all the economic woes of the world. Clearly (as seen by the current GFC!) economics is just not that simple, unless you have a very simple mind....

Here's what I learnt: Due to the huge structural changes in the economy and the macro-economic reforms of the Hawke/Keating years, post the 90s recession Australia was able to move out of the previous high inflation environment of the 70s/80s that was responsible for the environment in which 18% interest rates were possible, into a new prolonged period of low inflation/low interest rates and high economic growth., where 18% interest rates were now a virtual impossibility.

Now to their credit Howard/Costello did well to capitalise on this and keep the reforms going (to a lesser extent though) through their time in power helping to deliver a golden period for Australia (with a lot of help from the Chinese driven commodities boom of course!). Just a pity they didn't really bank the proceeds of that and set us up even better for the current malaise. Instead we are left with a structural commonwealth budget problem because as Tony Abbot admitted a few weeks ago the whole Howard/Costello fiscal management philosophy was based around the idea of "Magic Pudding" economics!

Cheers,

Beej

 

[jono1887]

30 minutes where are the figures?

I'm sorry if i dont wait around on these forums for a reply... i do have other stuff to do... but here there are -

"Consumers spent a record $19.3 billion in March when the government started rolling out billions of dollars in its second round of cash handouts.

This was a seasonally adjusted 2.2 per cent increase in spending compared to February, and much stronger than the 0.5 per cent increase forecast by economists"

"Australian Bureau of Statistics figures during the week put the jump in overall retail sales for December compared with a month earlier at 3.8 per cent. The strongest performers were household goods (up 9.9 per cent), department stores (up 8.3 per cent) and clothing and manchester (up 5.8 per cent)."

http://www.sbs.com.au/news/article/1017438/Retail-rises-'thanks-to-stimulus-package'
http://business.theage.com.au/busin...package-sets-tills-ringing-20090206-800l.html

happy now?

 

[Pappon]

Remember the announcement in the Budget that contributions to Super would be limited to, I think, half the amount it's been to date? And the Henry review is considering raising the preservation age to 67 in line with the increased pension eligibility age.

I have a friend who's wife is a stay at home mum they receive centrelink benefits ontop of his wage. Currently he salary sacrifices some of his pay into his his super and currently until 30 June means that his salary sacrificing into super is not classed as income tax.

As of the 1st of July this salary sacrificing he would have been doing is now classed at income tax which reduces their payments. My friend makes $35k per year and still gets the **** which is not fair at all, he's a hard worker and now because of how labor has changed the laws with salary sacrificing into super he's worse off oh and did i mention he earns 35k per year.

This is a low income worker trying his best to make ends meet and look out for his future, it's not right.

Governments IMO as instilled to do the best for the masses Labor never does this IMO

 

[Pappon]

I'm sorry if i dont wait around on these forums for a reply... i do have other stuff to do... but here there are -

"Consumers spent a record $19.3 billion in March when the government started rolling out billions of dollars in its second round of cash handouts.

This was a seasonally adjusted 2.2 per cent increase in spending compared to February, and much stronger than the 0.5 per cent increase forecast by economists"

"Australian Bureau of Statistics figures during the week put the jump in overall retail sales for December compared with a month earlier at 3.8 per cent. The strongest performers were household goods (up 9.9 per cent), department stores (up 8.3 per cent) and clothing and manchester (up 5.8 per cent)."

http://www.sbs.com.au/news/article/1017438/Retail-rises-'thanks-to-stimulus-package'
http://business.theage.com.au/busin...package-sets-tills-ringing-20090206-800l.html

happy now?

No i said state a comparison for the last 2 years earlier "Consumers spent a record $19.3 billion in March when the government started rolling out billions of dollars in its second round of cash handouts. the 'record' could have been up by only $1 from last year STATE a comparison to see the whole picture. Compare it with the same month for the last 2 years running. Also while i'm at it isn't December/christmas an obligatory time to spend for our loved ones of course retail sales will be up

 

[Julia]

I

"Australian Bureau of Statistics figures during the week put the jump in overall retail sales for December compared with a month earlier at 3.8 per cent. The strongest performers were household goods (up 9.9 per cent), department stores (up 8.3 per cent) and clothing and manchester (up 5.8 per cent)."

How about a comparison with December in previous years (adjusted for inflation of course)? Wouldn't the retail sales level have been higher in December than November anyway, due to people buying Christmas gifts?

And if there was in fact a 3.8% jump just for December, what's the long term benefit of that? There's a one off splat in the figures and then nothing.

Yes, infrastructure projects do take longer but provide ongoing benefits.

I love the way you suggest the cash splash had the benefit of "increased consumer sentiment" (or some similar expression).
Imo the translation of this is that your average Aussie said to themselves:
"Hey, ain't Mr Rudd a great bloke! We'll go on telling the pollsters how much we like him, and we'll be voting for him again at the next election."

I guess that's definitely increased consumer sentiment and just what the government had in mind.