To tell you the truth, I’m not at all surprised that the Labor Government who had inherited an economy that was some $30 billion in the black to one that is projected in the next budget to be around $70 billion in the red. I’m not even surprised that they are blaming on the global recession. What I am surprised about is that Rudd’s popularity is still so high. It seems that the majority of Australians can’t see that Labor’s mismanagement is sending Australia into a debt so high that it is going to take a lot more than Wayne Swan’s projected 6 years to get out of.
According to Rudd;
It is responsible for us to have embraced such a (deficit) strategy to deal with the challenges presented to us and other economies with the global recession and to do so within that responsible framework.
The way I see it though is that their strategy so far has been seriously flawed, especially the part where they virtually threw some $20 billion down a virtual black hole. I’m talking about all the money they gave away as part of the stimulus package, a strategy than many have said has failed.
I’m sort of wandering if people realize that all this money they are squandering is borrowed money, money we have to pay back, with interest. I don’t know what sort of interest rates a government gets, but if we look at say 5%, that means that the Government has to pay back $3.5 billion in Interest. That is $3.5 billion less that the government can spend on health or education.
So, where will they get it? From us of course, the Australian tax payers. Already they are preparing to scale back the 30 per cent private health insurance rebate thereby breaking an election promise. This in itself can have dire consequences like putting more pressure on an already struggling public heath system.
I am left wondering how far into the shit we have to go before people wake up to the fact that Rudd and Swan are screwing the economy.
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They have been saying the same thing about our old Labour Government here in NZ. But six months into the new National Government’s term here (probably its only term, despite the polls) the Tories are ditching their tax cuts because the economic situation is so bad the country couldn’t afford them any more. Well Labour could have told them that, they did tell them that but Kiwis believed all the Tories BS about tax cuts. During Labour’s 9 years of governmented they believed in targeted assistance, and support for families. Yes, some single people did fail to get some support too! They always appear to.
Now the Tories are relying on a 9 day fortnight with some subsidised support for the tenth day as a means of saving jobs. I have no truck with Tories, but say I hope it works dear John Key! You on the other hand just rubbish your Labor government because you are philosophically opposed to them; I say give the governments a little time because we are experiencing the worst economic situations we have experienced in our respective countries since the depression in the 1930’s.
So suck on a sav and have a glass of beer and relax a little, Peter boy!
I’m not rubbishing them at all, I’m simply calling it how I see it Peter. The fact that we have an economic crisis is exactly why they should sot be throwing money away needlessly and the 20+ billion dollars they just threw away is a perfect example. It didn’t do what it was supposed to do and put us more into debt than we needed to be.
It’s not my fault they do not think things through before implementing their strategies. I would much prefer they listen to other parties rather than just say up you Jack, this is what we think is best and that’s what we are going to do. If they did take the time they would not have given money to the dead, people overseas and those in prison in the hope it would stimulate the economy. Pull the other leg mate.
“What I am surprised about is that Rudd’s popularity is still so high…
…The way I see it though is that their strategy so far has been seriously flawed, especially the part where they virtually threw some $20 billion down a virtual black hole.”
I think you answered your own question; K Rudd gave away ALL the money. Of course he is going to be popular with the 50% of people who received, never mind that that it won’t work. It just needs to last long enough until election time and even if it goes badly he can say he, ‘did something’, even though that ‘something’ was screw around with the Australian economy.
And then K Rudd’s calling for ‘restructuring’ and even nationalisation of the banking industry. If they can’t manage the economy all that well, do we really want them managing our banks?
The thing is I was one of those that received some money in the first stimulus and I like the majority of Aussies used it to pay off debt, thereby not stimulating the economy. Even so I knew I, and my kids, would be paying for it in the long run by increased taxes. I can’t believe that others can not see the long term effect of this extravagant waste of money.
“The thing is I was one of those that received some money in the first stimulus and I like the majority of Aussies used it to pay off debt, thereby not stimulating the economy.”
Well that is hardly their fault. They simply did the only logical thing and not what was demanded of them from on high. In fact, I remember reading about the exact same effect seen throughout America when their government, under Bush, started the first stimulus package. No sane person was going to spend like the government expected, there or here.
“Even so I knew I, and my kids, would be paying for it in the long run by increased taxes. I can’t believe that others can not see the long term effect of this extravagant waste of money.”
Agreed.
What annoys me more is that people are claiming that this wouldn’t have happened under a liberal government. Fact of the matter is that it would have; if not now then further down the track. Both governments, Liberal or Labor, would be more than happy to pay people to dig holes and pay others to fill them in if they thought it would save the economy from recession. And to all intents and purposes, they are.
I’ve even been hearing calls by some to reinstate national service in order to keep the unemployment rate down.
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“Well that is hardly their fault. They simply did the only logical thing and not what was demanded of them from on high. In fact, I remember reading about the exact same effect seen throughout America when their government, under Bush, started the first stimulus package. No sane person was going to spend like the government expected, there or here.”
That’s exactly my point, so how could the Government not see this? I also agree that while this may well have happened under a Liberal Government, perhaps the size of the deficit would not be so great?
“That’s exactly my point, so how could the Government not see this?”
Because the government didn’t want to see it. Politicians don’t get re-elected by standing around and doing nothing, even when that is the best option.
“Perhaps the size of the deficit would not be so great?”
I wouldn’t be so sure. When it doubt politicians of any stripe, run to their economic advisors who are predominately Keynesian. The advisors tell them that deficit spending is inevitable and ‘good’ in a recession as government needs to interfere in order to boost spending, create jobs etc. This involves building more buildings, opening up more services, dropping interest rates to control supply and demand and a whole host of other ideas, including stimulus packages. Unfortunately this means increasing government spending, which needs funding from somewhere, either in the form of loans or increased taxes. And then there’s that added problem that government services are almost, always, badly run. So for us, it’s lose/lose.
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I’m not so sure, after all Turnbull did say that he would not have used the the portion of the stimulus package that gave away money and that alone would mean we would be $22 billion odd dollars better off.
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Just be grateful you are not picking up the tab for Obama. The US is going to be in debt for so long my home will be an archaeological site when it’s paid. If it ever gets paid.
At least you guys have a bigger tax pool, but yes you’re right, we’re both going to be facing tough times and all we can hope is that our respective governments make the right decisions from now on.
You can go to any western nation and the argument will be the same (except for the amounts). I am in Canada at the moment, same thing, replace Kevin Rudd = Stephen Harper, Kevin Rudd = John Keys, Kevin Rudd = Gordon Brown.
The problem with your assertion Sire is that it is unprovable, does deficit spending work or not work is up in the air, in exactly the same way as whether or not tax-cuts stimulate spending.
We just don’t know, but… what I do know is that in Canberra there are a group of basically honest people trying to make the best of a difficult situation.
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But time itself has proven that I was right. From the first day that they stated they were giving everyone $950 dollars to stimulate the economy I said it would not work and I was right. The majority of people either put it into savings, because of the scare mongering, or they put it towards a loan or credit card debt.
But time hasn’t and can’t prove because the premise is unprovable.
You can’t prove the contrary, that if it wasn’t done, thee economy would be even worst than it currently is. This means that I can plausibly argue the exact opposite from what you are saying, that is without the stimulus we would all be on the streets eating catfood.
On the preponderance it was better to do something rather than do nothing.
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Perhaps not but you can prove that what they did do did not have the required effect, and therefore it was a failure and a waste of money. Money that could have been used to stimulate the economy in a more productive way.