Don’t say we didn’t warn you. If you design stimulus measures around business investment incentives amid huge oversupply then what you get is a big, fat donut. Via ABS capex expectations today:
Estimate 4 for 2020-21 is $104,984m in total. This is 6.3% higher than Estimate 3 for 2020-21.
Estimate 4 for 2020-21 is $36,027m for mining. This is -5.8% lower than Estimate 3 for 2020-21.
Estimate 4 for 2020-21 is $9,378m for manufacturing. This is 13.9% higher than Estimate 3 for 2020-21.
Estimate 4 for 2020-21 is $59,579m for services. This is 14.1% higher than Estimate 3 for 2020-21.
In short, Depressionberg Unstimulus of $13bn plus will deliver roughly a 10% FALL in business investment in 2020/21.
If the same amount were put into a permanent JobSeeker lift and infrastructure then you’d likely see higher business investment as it responded to stronger aggregate demand and greater supply constraints.
Instead, we will see more failing business investment incentives, as we already did this week. Because if at first you don’t succeed then do more of the same stupid stuff.