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"...public opinion deserves to be respected as well as despised" G.W.F. Hegel, 'Philosophy of Right'

through a distorted lens « Previous | |Next »
February 7, 2009

According to Dennis Shanahan in The Australian the Liberal decision to reject the Rudd Government's second stimulus package has:

has blind-sided the Government over the $42 billion stimulus package... left Kevin Rudd politically flat-footed and frustrated...and given the Opposition an early advantage....Caught off balance and unprepared, Rudd is cranking up his depiction of Turnbull as being uncaring, out of touch and irresponsible, as the Labor leader tries to claw back Turnbull's initial break and gain ground in the longer term.

Shanahan talks in terms of the Liberal's Senate blockage of the $42 billion stimulus whereas the political reality at this stage is that the legislation will pass the Senate next week in modified form due to the Greens and the 2 Independents.

Spoonerneoliberalism.jpg Spooner

Is Rudd, looking unprepared and wrong footed, as Shanahan claims? Surely it is the Liberals who are looking isolated as business groups back Rudd's state intervention? The policy reality is that it is Rudd who has sharpened the ideological differences, pushed the Liberals to the right and put in place a strategy to keep the Liberals out of office by locking in Middle Australia behind Labor.

| Posted by Gary Sauer-Thompson at 9:51 AM | | Comments (22)
Comments

Comments

Shamaham is a joke, a sad joke.
He is a propagandist pure and simple.
You don't have to read his crap to know what line he will take he is boringly predictable.
The only time I read him is when someone links to him.

In the words of Monty Python: "Silly person" [unfortunately also dangerous].

I'm sure all sensible people agree that Shanahan is nothing but a dishonest shill for the doctrinaire dries in the opposition. Why anyone reads his rubbish is beyond me.

Nevertheless Turnbull has potentially done us a favour. Maybe the Greens will force a few desirable changes in the package before it gets through the Senate, like giving some immediate assistance to those on unemployment and disability benefits.

Rooting for the Liberals when they're feeling low is the major task in Shanahan's job description. They must be expecting a thumping in the polls.

Dennis is working off talkback, vox pop and internet polls. Genius. He'll be copping a pasting for that at the Poll Bludger.

Gary,
Think you're correct and Shanahan is wrong, wrong wrong.
Turnbull's threat to block Stimulus II was recognised as an empty guesture as soon as he uttered it.
His poor showing on last Wednesday's "7.30 Report" was rather telling.
I suspect that the Libs have been working the mouse furiously in an attempt to make it appear as if online popular opinion is with them on this issue.
Even those people I know who get nothing from this latest 'package' are in favour of its contents.

Clarence girl,

This is probably less than helpful, but scrolling through the comments at Poll Bludger earlier today, someone said that Jack the Insider (a friend of an aunty's neighbour-style) said that both sides have people sitting around stacking internet polls, only the Libs are better organised so more effective. [Ahoy, Mr Conroy, Minister for all things internetty who appears to have missed something internetty].

"Even those people I know who get nothing from this latest 'package' are in favour of its contents."

Not so here on the salubrious Gold Coast, where I'm hearing a lot of complaining about breeders getting yet another handout, even from breeders. The rest they don't even seem to know about, or care.

Given that 20% of the GC work force is in or associated with the construction industry, and the state govt is freeing up contract regulations, you'd think things would be otherwise, but people aren't hearing that. All they're hearing is that indiscriminate breeders are getting another handout, and they're not happy about it.

Demographics would account for some of that, but I wouldn't be surprised if it was more widespread.

Ken,
hopefully The Greens will push for a greater environmental dividend, and also give support for those who will lose their jobs and those on disability pensions.

As you have pointed out the Government's policy was notably devoid of anything for the jobless, even though it's modelled on a forecast of rising unemployment.

Lyn,
Lets not forget that it is February here which traditionally the worst month on the coast.

Apart from that I hear construction jobs are drying up. Ask the kiwi workers. There wondering where else to go.

As for the stimulus! My advice for all is not to sell your country down the toilet for a quick fix of a thousand dollars. What is coming will come anyway and will pass in time. Some will lose everything some will do it hard and some will get richer. That is the nature of things.

Yes Les, every Jan/Feb is bad. Nobody has work after Christmas and payments for last year's work roll in very slowly.

The difference this year is that there's nothing new coming. Tender notices dried up back in November.

We've scraped through in past years, but this year we've had to let everyone go apart from a day here and there and hope their cashies get them through.

I've heard the Bligh Govt are loosening up the permit system so everyone can do government work. Hopefully something will come of that.

Henry Ergas, the Coalition's resident economist, has an op-ed in The Australian, that gives five reasons why a fiscal stimulus may not work.It is the economic rationale for Les' view that Rudd is selling the country down the toilet for a quick fix of a thousand dollars. I'm working my way though them slowly trying to figure them out. Here is the first reason:

Australia is a small, open economy with a flexible exchange rate. There is consequently a real possibility that any increase in demand caused by fiscal easing will merely raise interest rates, induce capital inflow from abroad, appreciate the currency and reduce net exports. With growth in China and Japan slowing significantly, why implement measures that could exacerbate Australia's expected export downturn?

I don't follow. Interest rates are coming down. The RBA is expected to continue to reduce them, albeit slowly.There is no sign of inflationary pressures. Ergas says:
In the Keynesian framework, monetary policy, on the other hand, is actually more effective in an open economy. A monetary policy-induced reduction in interest rates boosts aggregate demand and induces capital outflow, leading to a depreciation of the exchange rate and a reduction in imports.

As a result, even if we take the Keynesian approach seriously, fiscal stimulus may not only be ineffective, but by impeding or slowing further reductions in interest rates may stand in the way of a more effective response.

Ergas quotes Treasury to back this argument up --but it is Treasury who has proposed the fiscal stimulus approach and argued before the Senate that it can be effective.

I cannot buy the first reason. I'm sticking to my view that a fiscal stimulus is effective in cushioning the effects of the recession.

Lyn,

I have been talking to concreters lately gauging their opinions. They are usually the first to feel the pinch because thy are at the start of jobs. They are telling me that work is drying up real fast. Lots have no work and those that do are looking for jobs in the building game on projects that will last a year or so and accepting reduced pay rates.
Other trades are already trying to find enough to call a weeks work. I read the tipping point to be 2 months from now. This may take the form of a mass exodus to Queensland of migrating workers looking for jobs that aren't here.

On the good side; Housing affordability will drastically improve and caravan sales will go through the roof.

On the bad side; Theft crime will double.

On the funny side; Rudd's promise to fix infrastructure(hospitals,education,internet) has now got a new name "Stimulus" Same money different name but now they don't have to show results just say "Oh well we tried"

We went to the concrete guys too and heard the same thing. Back up the line, developers have stuff in the pipeline but they're holding off. Tilers are looking for refurbs but there's not much of that either. Suppliers are becoming alarmed.

The only ones still doing ok are landscapers, who work at the tail end of things.

I haven't seen any evidence that affordability is improving, though there do seem to be more for sale signs around.

On your mass exodus, it's probably an insensitive thing to say, but wouldn't you think a lot of people would be thinking of going to either Victoria or the northern floods for the big rebuilds?

Funny side: yeah, it's getting to the point where buying milk at the corner shop will be an act of stimulus. Getting sick of the rhetoric is one of the hazards of being informed.

Remember Hawke and Keating had 'belt tightening'? One more notch people. Just one more notch and we can all go out and indulge.

Lyn,

Yes you are right about tradies going to those areas. Thats a good idea. They went up north after the cyclones.

I see a drop in numbers using public transport through Griffith uni. Is there something going on there that has reduced student numbers?

As for the one more notch yes good idea. Lets apply the G.S.T to food and raise it to 15% across the board. That'll raise revenue for the states.

Semester doesn't start until March Les. With the hospital construction taking up so much cheap parking space it will be interesting to see whether people take public transport instead.

This package is primarily aimed at construction and retail. Anything that boosts retail increases state revenues via GST, and bits and pieces of the construction bit will also go to the states. Plus the money for local councils a while back.

Increasing taxes during a recession Les?

That will cause people to spend less and firms to not invest. The policy aim is to increase effective demand to get things moving in again.

Lyn,
The stats I was looking at relate only to the last 2 weeks against the same period for the last 3 years.

C'mon Gary,
Australia is a business. Either it borrows its way out of this or harvests its crop.

Australia is a society that has an open market economy which some people say ought to be governed as if it were a business.

You are pretty alone in wanting to increase taxes during a major global recession in which banks have stopped lending to small and medium business. Malcolm Turnbull is willing to spend big time. His conflict with Rudd is that Rudd's stimulus package is, in the words of Henry Ergas, too much too soon:

Second, even if discretionary fiscal policy were effective, the proposed package appears to be too much, too soon. Unemployment is projected to remain fairly close to the non-accelerating inflation rate of unemployment (the rate that is sustainable in the long run) in the near term. Given the scale of the proposed spending, there is surely a risk that the Government is depleting its ammunition and accumulating future costs before the case for doing so is well-established.

His reason is this:
Were the economic outlook to worsen, what room for manoeuvre would be left? With the tragedy in Victoria adding to the pressures on public expenditure, wouldn't a more cautious approach, such as that adopted in Canada (which is more exposed to the US downturn than we are), make sense?

The problem with the business analogy is that it fails to recognise that Australia is a state that has responsibility to manage and shape the economy.

Clarencegirl
Libs backflip! Oh no, not again!

Turnbull initially declared last Wednesday that the Coalition would not support the Rudd Stimulus package at all. On the weekend, Turnbull called on the Prime Minister to negotiate with him.

A day after Newspoll revealed a slump in support for both the Coalition and Turnbull they now say they are open to supporting the majority of the package -- the $28b infrastructure component providing funding for school and housing projects.

Their primary concern is with the Government’s $12.7b tax bonus handout. They want tax cuts.

Gary,
At some point all that is borrowed will need to be paid back. The states all seem to be headed down the heavy borrowings road. My point is that at some point in the future we the tax payer will have to pay it back.
The G.S.T seems the most likely scenario to me. I guess I am just thinking ahead of you's as usual trying to come up with solutions rather than eloquently written pasted opinions of others.

Les.
increased government comes from increased business activity that arises from increased consumer demand that is given a boost by a stimulus. That is the Keynesian economic theory that underpins the Rudd stimulus package.

Your increase tax rates proposal means that you oppose the Rudd stimulus package on the grounds---I'm guessing here--- that governments shouldn't run up big debts.

The negotiations on the stimulus package Mark 11 are at a delicate stage. Xenophon wants increased spending in the Murray-Darling Basin to help regional communities. Increase spending appears to mean faster buyback of over allocated water licences. He proposes to do this by cutting the cash bonuses from $950 to $900 and that money pumped into the ailing Murray-Darling Basin. Sounds sensible.

The Australian Greens have concerns over the one-off cash payments--they are seen to be the weakest part of the package.

Gary,
I see no value in handing out $950 again as most will be spent on food. This will not stimulate non food retail as is what is required. This is why the government isn't offering immediate tax cuts because the extra $20pw would just go in the shopping trolleys.
I read the next boom to be 12 years off so yes I am opposed to governments running up huge debts on the never never especially some of the crap state governments we have around the place at the moment (crap as in financial managers)

As I said I was thinking ahead of yous so you could assume that I am thinking about these tax increases in the future not next week.
Yes too it is a pig of a tax but it could be dressed up to look like a cow given the right incentives. One only has to convince the dumb people they will be better off and its a winner. Like when they dressed up Kevin Rudd.
Whens the next election I can smells the bacon fryin' Thelma.

As always I think spending wads of money on water infrastructure and the Murray is a good idea.