Government to stimulate next month?

Following yesterday’s fairy dust forecasts from the Australian Treasury, we get this today from The Australian:

A day after announcing $16.4 billion in savings to hit a wafer-thin $1.1 billion surplus this year, the Treasurer said the government was prepared to stimulate the economy if unemployment rose above budget forecasts.

“What we will choose is the economic settings which promote growth and jobs in our economy,” the Treasurer told ABC radio, when asked if he would start spending again if unemployment rose above 5.5 per cent.

So, with unemployment at 5.4%, there is every chance we can expect stimulus to commence next month. What a charade.

Houses and Holes
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Comments

  1. Good news! Growth and jobs aren’t stimulated by property price rises; that’s asset price growth. As I read it, the policy of asset price revaluation has now been superseded by ‘real’ growth. In NZ we have a city to rebuild and defective housing to replace. In Australia you have very little of that, but there’s likely to be a mass of newly built properties hitting your market over the next 18 months. Existing housing, anyone!

    • Last I saw the RBA was looking to stimulate housing construction a tad.

      Probably just to beef up that number of properties hitting the market and maybe to take the sting out of the kicking vendors (at some point) are going to take, by helping them get jobs as tradies.

      Good to see those japesters at the Age are on the ball: http://theage.domain.com.au/real-estate-news/vendors-warned-be-realistic-20121023-282gi.html

      Bullshido is a great life philosophy and reality (as I used to know it) just a construct. People need strength to believe. Bullshido gives them that.

      Just a little massaged into the unemployment data and the budget surplus (not to mention real estate data, or the AUD value) makes me feel a million dollars!!!

      • reusachtigeMEMBER

        1200 scheduled Auctions! I guarantee you the UE’s rehash of the industry propaganda will only show up but a small small fraction of that amount as actually occurring.

    • Good news! Growth and jobs aren’t stimulated by property price rises;

      Well if people are drawing down on the increased equity to consume stuff, I would say tha does create jobs.

      Sustainable …no.

      Intelligent.. hell no… but this is Australia.

  2. It will be interesting to see what they waste taxpayers money on this time. Perhaps they can bury jars full of cash in the ground? Or will they just try and encourage people to mortgage their lives away again?

  3. 0.1% increase is enough to turn the free money tap on… what chance next set of figures coming in at 5.49%

  4. Spending a bit money on some useful projects as an alternative to cranking the interest rate lever is a worthwhile idea.

    Picking useful projects as against brain dead pork fests will be the challenge but that is not an insurmountable obstacle.

    Rather than funding it by flogging govt securities to overseas central banks (who are spending the product of their printing machines) and driving up the exchange rate how about selling govt bonds to retail investors only.

    Limit ownership to local individuals and SMSF’s.

    A market in retail government securities would be a nice addition to the investment options for the average joe.

    Plus it will give us a good idea of what sort of return is required to encourage a person to invest in our government.

    Tying bond issues to specific projects might be a good way of limiting the ‘fog’ of large pots of money concealing what they are being used for and the ‘returns’ on the bonds being paid from general revenue when the revenue assumptions prove to be fraudulent.

  5. ““What we will choose is the economic settings which promote growth and jobs in our economy,”

    Code for we will increase Govt Debt to create MORE make work jobs to ensure the UE stats stay under a threshold that threatens Labours re-election chances.

    Also known as : whatever it takes.

    • You see giving people jobs rather than letting them languish in unemployment as a threat to an abstract accounting identity?

      My priorities run the reverse of that.

      • And if giving these people jobs to do things that aren’t needed or wanted costs jobs in other, productive and demanded areas in the long run you would see this as a good thing I assume?

        Then again, I suppose the government can just print more money as they need to. What could possibly go wrong?

        • I read your comment as: “in an environment of rising unemployment, government creating jobs in one place will destroy high quality jobs in other places – therefore government should not seek to alleiviate rising unemployment.”

          Do you have any actual proof of this? Or are you just banging the free-market ideology drum?

          • I read your comment as “when the economy goes south, rather than encourage businesses to grow and invest, making us more productive and efficient, the government should simply borrow a lot of money and get people to do stuff simply for the sake of it and this will make us more productive in the future and ‘save’ us from recessions”

            Do you have any evidence to prove this or are you just banging the Keynesian/Socialist ideological drum?

          • Well I wouldn’t put it quite the way you did but I would draw your attention to the fact that Australia successfully rode out the GFC without a technical recession, without a huge spike in unemployment and with the nation-wide delivery of public goods that will continue to serve a useful purpose for many decades.

            On the other hand, we could always try the European approach, since it’s obviosly been such a stellar success for them. Collapsing economies, massive unemployment and the emergence of a despair-filled generation of youth, whose loss of opportunity and hopelessness during their formative years will impact upon their generations productivity in the future.

            Sounds like just the place private business would solidly grow and invest in huh?

            Regardless of your disdain, the facts are that government spending supports a healthy private sector.

          • Actually 3d1k, as a resident of a resource town, I remember mining going sharply backwards at the time.

          • Australia successfully rode out the GFC without a technical recession, without a huge spike in unemployment

            Thanks largely to the govt. stimulus which kicked the credit-creation engine back into life (after it had stalled and house prices started falling). This was NOT a good thing and only succeeded in kicking the can down the road which in the process made the problem worse

          • Lef-tee,

            The only thing the government did to HELP get us through the GFC was increase the FHB’s grant and reinflate the housing bubble. This was only possible because China decided to buy more of our dirt. It had nothing to do with government ‘providing public goods’. Nothing at all, if this strategy worked it would have worked in every country that did it. The US ‘stimulated’ and their recession got worse! Facts are against you completely.

            “On the other hand, we could always try the European approach”

            You mean the European ‘make work’, welfare state, government as the biggest sector in the economy, red tape lumbered approach that you promote? Yeah, that’s really worked well for them. Look how productive they are!

            Have you ever even researched just how HARD it is to start a business in Europe due purely to red tape and anti-business regulations (not even mentioning the idiocy of having a monetary union)? Blaming governments that reduce spending in Europe for the current problems is utterly absurd and pure socialist drivel. Yes them spending less has hit GDP but only because government made up most of the economy in the first place!
            “the facts are that government spending supports a healthy private sector.”

            Wrong wrong wrong! The private sector supports the government, which THEN provides public goods that cannot be provided for by the private sector. Read that again, everything paid for by the government is actually paid for by the private sector first. Talk about missing the most basic of basic facts.

          • The role of unemployment in a capitalist society is to raise productivity, e.g. to lower wages and to increase profitability. If there is no new technology in real economy, which can dramatically improve the productivity, the only way to achieve this aim is trough unemployment, e.g. lowering wages. If the national real capital cannot renew itself on a higher technological level, the exit from a crisis may be very remote.

      • My definition of “jobs” might differ from yours.

        Does anyone on here have figures at hand that explain the ratio of public sector (including fake private sector e.g. NBN) vs private sector employment?

        • I watched a documentary the other day on the Roman empire. At it’s height, without communications any faster than a horse and a rider, they built and ran an empire with no more than 10,000 bureaucrats.

          How many bureaucrats are there in just Melbourne for just Victoria? 100,000?

          • I don’t know, but perhaps the government stimulus should be to build a spaceship for them all.

            Let’s call it “Golgafrinchan Ark B” for the sake of argument……..

      • Lef-tee,

        What you describe are not jobs. And the sooner we get them into REAL jobs the better. Burying their numbers in the ranks of the growing Public Service is irresponsible. If the true state of the “unemployed” was to be relied apon, more pressure could be put on Govts to deliver the policies that actually CREATE jobs and not conceal their failures.

        Your priorities then are those of concealment and deceiving the public. Just like those Europens who have done such a great job of keeping their people gainfully employed. Great outcomes there, hey?

        • Exactly right. What do these people think happens when you ‘place’ someone in a secure, pointless, make work public service job? They wait for the economy to get back on track then find a job in the private sector where they work ten times as hard for a little bit more money? Of course not, they stay there as long as they can!

          At least the dole gives people an incentive (even forces them) to look for work. When you ‘make work’ taxpayers are paying for that person to do essentially nothing until they decide to move or retire.

          What a joke.

          • “Regardless of your disdain, the facts are that government spending supports a healthy private sector.”

            Where do you dream this up Lef-tee? What you state is not a fact. With many European Govts comprising over 50% of their economies , how has it worked out for Greece, Spain, Portugal? Closely followed by France and Germany. In those econommies Politicians are the mainstay of the economy. It has been the uncontolled growth of Govts in Europe that has led to these upheavels we see. Are you blind?

          • “MattR, this a pointlessy stupid comment you are making. It bears stuff-all relation to reality.”

            Yeah, true, this isn’t exactly what has happened in Greece, Spain and across Europe. Not at all. Viva la government!

        • I think that a lot of people – including the self-employed during the stimulus – would be surprised to hear that they were in fact unemployed, idle and producing nothing, supporting neither their families nor other private businesses and their employees with their spending.

          Seriously – what constitutes a “real” job and why?

          • Lef-tee,

            Not wasting an argument with you. The Left never recognise Debt because it’s ALWAYS someone elses problem and ALWAYS someone elses pocket. The Left always have their snouts in someone elses trough and has always been thus.

          • The right always dismiss private debt, despite the fact that it dwarfs government debt, and is not of itself invested in more productive investment. What it generally produces, is short-term thinking, which runs contrary to the kind of strategic, long-term investments goverments need to make to maintain a semblance of a balanced economy and social infrastructure. You are making an argument for the primacy of short-term thinking and self-interest.

          • “long-term investments goverments need to make to maintain a semblance of a balanced economy and social infrastructure.”

            You mean like falty pink batts, overpriced school halls, inflating the housing bubble and building a network that nobody uses? Yeah, what ‘long term’ investment we have right there.

            You talk as though the private sector is just the financial sector.

            Your comment is complete nonsense anyway, with 3 year election cycles government hardly have a long term focus. Their focus is on getting elected and retaining power, everything else is secondary.

          • “That’s just so much rehearsed LNP rhetoric, champ.”

            Only I don’t vote LNP as I have already stated. Funny that eh?

          • “Somehow it has infiltrated LDP rhetoric. Go figure.”

            /sigh

            Couldn’t be that you’re wrong and your views are pure partisan drivel or anything, lol…

          • Somehow it has infiltrated LDP rhetoric. Go figure.

            Somehow ? The LDP is basically the LNP, but without the latter’s empathy and concern for the less fortunate.

  6. ‘The Treasurer Wayne Swan has further revealed that it is the intention of the Government to reintroduce the popular FHB grant, $25,000 for existing dwellings and $75,000 for new builds. The Government recognises the importance of the housing sector to the Australian economy together the need to offset the rising concern in regard to insufficient housing stock apparent in all mainland states.

    In addition the Government cognizant of the cost of living pressures facing Australian families will introduce the Australian Family Bonus, payable to all elegible Part A and Part B recipients at the rate of $5,000 per household. This new arrangement is the palpable demonstration of Government commitment to Labor values and Australian families.

    A comprehensive portfolio of stimulus measures will be deployed to ensure Australia retains it’s near full employment rate of 5.5%. No expenditure will go unspent. The Treasurer has denied Opposition assertions that the one-off Registered Voter Bonus of $2,500 is pork-barrelling of the electorate. The Treasurer insists that this payment is simply consolidation of Australian democratic principles’.

    Further information contact office of John McTernan. 🙂

        • I may be very much mistaken, but weren’t the pork-barreling measures mentioned by the MineBot above all introduced by the Howard government? Namely, the First Home Owners Grant, Family Tax Benefits A and B.

          And isn’t it true that Abbott and Hockey have spent much of today banging on about Swannie “hurting families” by cutting back on another Howard bribe — the Baby Bonus.

          While I agree that Swannie would stimulate in a heartbeat if he thought it would win the election, its completely delusional to believe that Abbott and Hockey wouldn’t do exactly the same thing. These bribes are Howard government policies after all.

  7. Pretty stark choice for voters emerging.

    ALP: Successfully managed the economy through an unprecedented global financial crisis. Kept unemployment strong, kept rates low, kept inflation under control, kept our banks strong, avoided a crash in house prices, maintained one of the lowest government debt to GDP ratios in the world, and remains focused on keeping the economy growing, and keeping people in jobs. Hasn’t lost sight of long-term strategic expenditure necessary to keep our economy strong. Focused on delivering a world class education system, a productivity boosting national broadband network, and maintaining an equitable health care system the envy of the world. Understands the importance of engaging with the global community, and welcomes foreign investment.

    LNP: Squandered a period of unprecedented growth by doling out money to those who needed it least, and championed the creation of a massive slush fund for politicians’ and bureaucrats’ pensions. Opposed the stimulus necessary to keep people in jobs. Opposed the stimulus necessary to keep the economy strong. Opposed the stimulus necessary to maintain a strong banking sector and housing market. Opposes a more equitable education system. Opposes a more equitable health care system. Is dangerously obsessed with Australia’s low level of government debt. Would rather pay down debt than create jobs. Led by a man whose response to a straight question is minutes of bizarre silence. Led by a man who admits he can’t be trusted. Led by a man who once supported Climate Change. Who flip flops on policy. Led by a man who broke his ‘iron-clad’ promise not to remove the safety net for Medicare. Led by a man who now promises a generous paid parental leave scheme to lure female voters. Led by a man who addresses lynch mobs calling our Prime Minister a ‘bitch’. Who supports Can-Do Campbell Newman’s wrecking ball approach to the Queensland economy. Who wants to shut Australia off from the global investments that help support our economy.

      • Not with Abbott as leader, Hockey as his Treasurer in waiting, and Sophie Mirabella, Christopher Pyne and George Brandis the faces of compassionate conservatism. They are the gifts that keep on giving.

        • I guess it’s just as well that in your democratic system you fine people if they choose not to vote. Forcing people to opt for any alternative in the face of punishment must have its benefits though, is suppose.

          • I guess it’s just as well that in your democratic system you fine people if they choose not to vote. Forcing people to opt for any alternative in the face of punishment must have its benefits though, is suppose.

            The law says you have to show up and be marked off, not that you have to vote for one of the candidates.

          • Really? The last time I looked it said nothing about just turning up; it made all sorts of noises about age and compulsion and penalties. But I do take your point 🙂

        • Your comment reads like an ALP press release mate. It’s just nonsense, especially given the facts and how the government actually are.

          Also, I am LDP not Coalition.

          • Nothing but the facts there, champ. The truth hurts – suck it up.

            I wouldn’t stoop to the kind of rhetoric thrown about on this site by the usual erstwhile Tea Party nutty bars.

          • The time for fun is over Mr 1k. The LNP has made it clear they will absolutely gut this economy. They now pose a greater threat to our nation’s prosperity and hard fought equality than at any time in our recent political history. Abbott, Hockey, Mirabella, Morrison, Bishop and Brandis are not compassionate conservatives, they are dangerous ideologues.

          • Spleen, the LNP have done nothing of the sort – frankly, apart from the questioning of some of ALP’s ‘big schemes’ I don’t recall seeing anything too different from much ALP – a little on industrial relations, a little alleged restraint, welcome removal of some taxes – but I do hope there’s more.

          • What facts? Where are the facts? The fact that the ALP reinflated the housing bubble and that this was only possible because China bought more of our stuff? Or the fact that your entire comment is pure partisan garbage and nothing but ALP good, Coalition Bad?

            Where is your evidence?

            Want to know the facts? The ALP were left a huge surplus and will leave the next government a massive debt with absolutely nothing to show for it. They have made doing business harder in every possible way, increased regulations, increased taxes, spent more on welfare and more. Oh and they spent tens of billions on an internet network that nobody uses and will be obsolete by the time it’s finished. Great work there!

            “I wouldn’t stoop to the kind of rhetoric thrown about on this site by the usual erstwhile Tea Party nutty bars.”

            Instead you settle for the usual big government socialist rhetoric based on an ideology that has seen Europe become a complete basket case.

            Heard it all before, boring.

            “not compassionate conservatives, they are dangerous ideologues”

            Oh but your a compassionate socialist aren’t you, not a blinded ideologue or anything. Not at all. lol…

          • “I’m just meeting your facts with facts, champ. The rhetoric is all yours.”

            Keep telling yourself that champ.

          • Spleen, the LNP have done nothing of the sort – frankly, apart from the questioning of some of ALP’s ‘big schemes’ I don’t recall seeing anything too different from much ALP – a little on industrial relations, a little alleged restraint, welcome removal of some taxes – but I do hope there’s more.

            We’ll have to remember this the next time you try to argue how bad Labor is for the economy.

          • Want to know the facts? The ALP were left a huge surplus and will leave the next government a massive debt with absolutely nothing to show for it. They have made doing business harder in every possible way, increased regulations, increased taxes, spent more on welfare and more. Oh and they spent tens of billions on an internet network that nobody uses and will be obsolete by the time it’s finished. Great work there!
            This rhetoric brought to you courtesy of the words Dishonesty, Hypocrisy, and the number 0.

    • I expect that when it comes to the rock throwing and “partisan” accusations spleen that you are able to defend without rancour your clearly Socialist/Trot ideologies. Products of the world class recently completed education system that you have traversed, no doubt.

      It’s abundantly clear your view of the world and and your expectation that Taxpayers and Govt satisfy your claims of entitlement without putting to much effort in.

      • Nothing but the facts there, GSM. I take pains to avoid the kind of empty rhetoric beloved by the hand wringing conservative mouth breathers on this site.

          • I would never follow the example of the conservative right basement dwellers on this site by repeating partisan political rhetoric ad nauseum. Not me. Never.

          • but..were left a huge surplus,from a hugely indebted private sector facing a GFC meltdown…to begin,n I don’t like getting into politics..
            Cheers

    • “…kept rates low, kept inflation under control, kept our banks strong…”

      One, keeping rates low is a bad thing as the interest rate is the value of work and two, just like the rest of the western world our banks are not strong as they have trillions in derivatives floating over their heads.

      Your LNP criticisms are reasonably valid.

      Nothing significant.

      • No, keeping rates low is a good thing. The LNP have been saying it for years. Made it into an election issue not 8 years ago. Banged that drum so loudly nothing else mattered. External drivers or macro implications weren’t a factor then, why should they be now ? Lower interest rates are good. The ALP has delivered lower interest rates. They have succeeded in delivering on core LNP policy.

        Our banks are strong. The market has confidence in them – their share prices tell us so. The LNP believes in the effectiveness of markets, and supports a strong banking system. The ALP has successfully delivered on another core LNP policy. Our banks derivatives exposure is within the parameters of effective, best practice risk management. A non-issue.

        • I can’t agree that low interest rates are good. That punishes hard-working savers and rewards imprudent borrowers. We want low tax and high interest rates.

  8. If the Government was to stimulate the best way would be to create a VC fund to support innovation. This would be the opposite to what they have done with freezing funding of Commercialisation Australia. Anyone who has ever tried to commercialise an idea knows very well that the biggest challenge is funding and the fact that no one wants to invest in it does not mean that the idea is useless e.g. read http://en.wikipedia.org/wiki/James_Dyson. I know of many examples of Australian inventions that have gone overseas because no one wanted to fund their local comercialisation. We now buy these products made by overseas companies.

    • I don’t recall anywhere in James Dyson’s story where he was ever propped up by either government of VC funding!

      Government really has no place funding commercialisation purely for the fact they aren’t a commercial organisation.

      The public sector are red-tape maniacs and any funding provided by them up-front is so political as to be ridiculously unreliable (eg Green Car Innovation Fund canned at a moments notice) It’s simply not worth the over-head to deal with them.

      There is already a 146% R&D tax concession in place, only down side is it’s paid in arrears not up front like Investor money.

  9. Wow, what a ‘turfing frenzy in the above comments. The ‘cash for comments’ community really haven’t done themselves proud in this thread.

  10. Mmmm. 40% of our workforce as casuals and part time workers. The official unemployment numbers mean nothing. We survived the GFC as millions of workers simply lost hours. Same as Switzerland, the number 1 casualised workforce.

    • In one way this is a good situation to be in. It means that the pain of any economic downturn is more broadly shared. Instead of a smaller number losing their jobs entirely, a larger number work reduced hours.

  11. I am more than a little concerned that if you use that picture of Mr Swan again, a broken monitor may ensue.

  12. If this stimulus revolves around legitimate public infrastructure projects then that is a good thing as it’ll boost emplacement and GDP.

    However if it’s just more property market manipulation to bail themselves (Billions of AOFM dollars sunk into the RMBS market) and the banks out in an effort to prevent the ponzi scheme from collapsing until AFTER the next Fed election, then Swan and the boys (& girl) should be lined up and shot!

    Seeing as these halfwits driving the bus only see houses and holes… what else can be expected??

  13. So much nonsense from the extreme commenters here, I’ve had enough.

    You do realise there are people here who are trying to weigh up the debate clearly without your overwhelming extreme left wing or right wing political bias?

    You know, like what to do with their money or wealth or their business if the government stimulates or not?

    So grow up you lot and let the adults discuss things.