will the gillard government last 3 yrs?, page-86

Pallys,

"1)Dont remember the spendathon assisting the exporter."

Don't forget the cash handouts. Also many exporting companies rely on both domestic and export sales. By way of example, my sister's company relies on exports, international tourists and domestic tourists. The first two virtually dried up. It was only the bouyancy of the domestic economy that allowed her the time to realign more to the domestic market and survive. She's been in business for twenty years or so, and knows what she's doing.
Your absolutely correct in assuming that the stimulus helped some more than others. However, it's the overall effect that's important.

1A)(sic) More the pubs, tattoo parlers, tourist industry (offshore), gambling institutions. Statistics back this up."

I agree. It's called the multiplier effect. Even money spent on imported goods has a flow on effect. I get my $900 and spend $350 at the tattoo parlour (not likely lol). The tattooist gets his dreads redone for $300. The hairstylist buys an ipod for $250. Whilst there is leakage at this point because the ipod is imported, the retailer goes and makes a bet with a bookie. The bookie....and so on. Stimulus works in a downturn. Ironically, those that spent the money irresponsibly rather than say, pay of a credit card, helped the most. Ain't life cruel. Classic Keynesian economics. Works a treat in a low inflation environment when unemployment is rising, although much more difficult to do with stagflation (high unemployment/high inflation). At those times a stimulus leads to higher inflation and interest rates. Anyway, we didn't and don't have stagflation, thank god.

Your'e obviously opposed to the stimulus package. This was the mistake that was made 80 years ago during the Depression. As the government made less and less out of tax and went further into debt, they tried to curb spending more and more. As they cut back more became unemployed and the debt worsened. We know how that story ended.


"2) Always hear we are short of skilled workers."

True. Howard's solution was temporary work visas, rather than investing in education infrastructure. Much of those earnings end up overseas and don't add anything to the skills base of our own population. To address the problem of a skills shortage in the long term, you need to invest in training and education. An additional dividend is an increase in both productivity and GDP. A good investment.

"3) And there is a shortage of housing."

True. We need more traing places for more skilled plumbers, builders etc.. Also, and more importantly, we desperately need more land released (NSW Labor a shocker) to make housing more affordable.

"4) glad your not running anything that one could put dough into especially the building industry as you think the BER was OK I gather."

I do. Besides the need to redresss depleted infrastructure from the past decade, the stimulus was vital. See answer to your first point for reasons why.

From my earlier post:
The BER IMHO was a success, when taken in the context of what needed to happen within a limited timeframe. Money needed to get out there ASAP, and only 5% was found to have been spent inefficiently, with over 97% of schools satisfied (independent report) that they received value for money. Only hear about the odd million dollar barbie or whatever. With the luxury of time, and the situation dictated that was not possible, there were of course some mistakes that could have been avoided. No government, past or present, of any persuasion would achieve 100% efficiency on an ambitious 23,00 projects within such a short time frame. Basically, it achieved what it was supposed to, as reflected in the current stats for the economy.

5.1% unemployment (rest of developed world around 10%)
inflation within the 2-3% target
Growth - never went into recession.

The insulation scheme was a disaster from start to finish yet the BER achieved it's end. Again, you only heard about the less than 3% of cases and not the more than 97% of cases. Same phenomenom as when people are asked to rank causes of death from highest to lowest. They tend to rank high media coverage deaths as the most and vica versa. In fact they bear no relation to actual relative numbers.

Debt - there are obvious differences between Australia and New Zealand. However, similar to us, NZ had been running surpluses for the last decade during the boom. They had the same catastrophising over a stimulus package. They went into a deep recession, high unemployment and accumulated a large debt that will take at least twice as long as us to pay off.

Peter