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Better Economic Managers?

By 2353NM

If you have a memory that is better than the media and Coalition Government hope you do, you would probably remember when the Rudd ALP Government, challenged by what are arguably similar economic conditions to those today, primed the economy with a three-pronged approach. The theory was that there was some immediate stimulus to the economy — effectively giving most Australian families and welfare recipients a $900 cheque, another injection once everyone had spent their ‘windfall’ in the form of subsidies for home energy efficiency measures such as insulation (with an added dividend of reducing the demand for energy into the future) and finally an injection of significant cash into infrastructure, best remembered as the school hall building program.

It is impossible to state with certainty that the Rudd Government stimulus measures were the sole reason Australia apparently did not suffer as greatly as a number of other ‘developed’ economies as a result of the Global Financial Crisis, because we don’t have the alternate lived experience to compare with. However, the UK and USA, both with conservative governments who sailed a different course, were affected to a far greater extent by the economic circumstances of the time. Even if there was absolutely no economic benefit, which is a doubtful premise as people were easily convinced to spend ‘free’ money, those that insulated their houses are generally still enjoying the benefits through reduced energy bills, as are students and staff at the numerous schools across the country that received a school hall, which have a multitude of different uses depending on the creativity of the school community.

Different people spent the cheques in different ways. Some paid it off the mortgage, did some work around the house, fixed the car and so on. Kogan released the ‘Kevin37’ — a $900 37 inch high definition television, and shock horror some chose to spend their money at the pokies. Regardless of how people spent it, it did give a lot of people some money to put back into the economy at the time. The cheque printers and Australia Post delivered additional items, shops had more people buying and even the additional spend at the pokies meant additional shifts were required by the hospitality staff who work in the ‘pokies palaces’.

However, the media were not so friendly. A number of conservative politicians and media commentators including Andrew Bolt (yes, he has been around that long) were critical

The first lot of Rudd’s cheques went out to many people who hadn’t actually earned that cash, or qualified for the handout because they already were too careless with money.

In fact, they were sent to precisely the people the Government guessed were most likely to spend them, not save.

Not surprisingly, millions promptly went on the pokies.

Frydenberg’s first budget also contained some stimulus in the form of cash handouts. Rather than mailing cheques around the country, Morrison’s LNP Government chose to retrospectively introduce some tax cuts that will give those who complete a tax return up to $1,080 per annum (depending on the individual’s tax position and income) once they have lodged their tax return for 2018/9 and the next two years. So far there is no mention of further measures to prime the economy such as Rudd’s environmental measures and infrastructure spending. Probably unsurprisingly, the Tax Office was reporting record early lodgements.

The delivery method is different (cheques are so 2008!) but the concept is similar. Up to 10 million Australians are getting a government handout for the next three years to go out and spend with no strings attached. Clearly, the ‘better economic managers’ are as they claim because they’ve shown capacity to update the value and process behind something done by the other side of politics 10 years ago.

It’s a pretty safe bet that some of the $1,080 ‘rebate’ payments will again end up being swallowed by the machines at the local pokies palace or otherwise spent in ways conservative commentators have considered unwise in the past. How people spend their ‘low- and middle-income rebate’ is really their business and none of us have the right to impose our own beliefs on others. Again, even extra demand at the pokies palaces will require additional hospitality staff to work and who knows Kogan might reinvent the ‘Kevin 37’. However, in 2019, where is the confected moral outrage by the likes of conservative politicians or commentators such as Andrew Bolt and their fellow travellers claiming that the ‘free’ money is horrible policy because some of it will be wasted by people who don’t deserve it?

If you can only hear crickets, it’s probably because the ‘better economic managers’ are handing out the cash this time.

What do you think?

This article was originally published on The Political Sword.

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13 comments

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  1. Andrew Smith

    Australians have become well conditioned like LNP MPs and related, to reflexively claim high cost of living e.g. energy.

    However, if you ask what % of their income is spent on energy, and if they know, it can be cheaper than poorer nations both nominal/real terms.

    What’s the point? It conditions voters to preclude public services as any support would be deemed ‘a cost’.

    This base argument is applied to anything, which can be precluded by cost or tax.

  2. king1394

    The Building the Education Revolution or BER, rudely described as the school hall program, was much broader than we recall. Many schools got covered outdoor areas, and new classroom blocks. Computers in schools were also greatly boosted. The private schools participated too, with the wealthier one splurging on impressive gateways, and indoor sports facilities. As with the Pink batts, the Liberal Party conspiracy to depict the great achievements of the Rudd economic stimuli for education as waste and mismanagement of the taxpayers dollars is far from truth

  3. Phil Pryor

    There are industries which deliver wealth and make money circulate; even if one doesn’t like the industry, just call it illth, dirty money. But the cash gougers and conservative scrape and slice merchants need money, the ultimate penis proxy, and Murdoch’s media maggot machine is aimed at getting conservative consensus about bottom line fattening, to retain a prosperous class of exclusive insiders relying on brainless consumerism and unlimited exploitation and growth at any cost to keep up the money flow, Decency does not matter, nor moral or ethical or environmental considerations. Get it, grab it, gouge it NOW, is the way, but at what cost to this planet?

  4. Matters Not

    Re:

    private schools participated too, with the wealthier one splurging on impressive gateways, and indoor sports facilities. Wesley College, Haileybury College and Caulfield Grammar in Melbourne, together with Knox Grammar in Sydney, spent $402 million. They teach fewer than 13,000 students.The poorest 1,800 schools spent less than $370 million. They teach 107,000 students.
    Indeed they did. They were the big winners then and the gap has widened at an ever accelerating pace. Today we learn that:

    Australia’s four richest schools spent more on new facilities and renovations than the poorest 1,800 schools combined.

    Thank fully we have needs based funding. Imagine the outcome without this pursuit of equality (from both sides of the political aisle). read the detail and weep.

    https://www.abc.net.au/news/2019-08-13/rich-school-poor-school-australias-great-education-divide/11383384

    And let’s not forget, in the extended lead-up to the last election – and before – Shorten travelled the length and breadth of the country doing special deals with the Catholic sector. Principle(s) forgotten. Needs based funding reduced to political needs while the majority of children still to be left in funding limbo – to be consoled by empty promises of long-standing.

  5. 2353NM

    King1394 – you’re correct, Rudd’s infrastructure funding did far more than build school halls. Some schools (public and private) were also very innovative in designing something that fitted their particular needs to fit with in the budget and guidelines. Others were not.

    Matters not – the school spending report out today is a good headline – but that is about it. Clearly there is a cost in sending your child to any of those schools. If the school is using grant funding to educate the students and the parents fees to build the Concert Halls, employ specialist grounds staff, sporting coaches and so on, we really don’t have the right to argue how people spend their money.

    What we do have a right to argue is if the schools that charge considerable fees are also gaining funding over and above the funding given to students on a per-capita basis in one of the 1800 schools that spend comparatively little capital works funding. Who knows, there are probably a million and one reasons why some of the ‘lesser’ 1800 didn’t spend on capital works in the reporting period – and also some that made poor choices or don’t get the funding they need.

    I’ll take your statement that Shorten crossed the country ‘doing deals’ with the Catholic sector at face value – as I don’t have any evidence either way. If so, for a political party based on equity for all to do this doesn’t look good, obviously the politics outweighed the adherence to ALP’s published dogma.

  6. Matters Not

    2353NM re:

    really don’t have the right to argue how people spend their money.

    Agree. But as citizens we do have the right to argue how funds for education are spent from the public purse – particularly when it’s done under the heading of needs based funding. Some of these schools charge fees of $36 000 plus and yet they also get funding from both the State and Federal governments for recurrent expenditure. Monies that would be better spent on those in need. Tonight on The Drum even a former LNP education Minister argued the same line as I present.

    As for:

    there are probably a million and one reasons why some of the ‘lesser’ 1800 didn’t spend on capital works in the reporting period

    Possibly so – but there’s one reason that really stands out – they don’t have access to that level of funding.

    Then there’s:

    don’t have any evidence either way.

    Well it’s there for those who pay attention. And it’s not a recent development because Labor has sold out public schools for years at both the Federal and State levels.

  7. totaram

    All this is interesting and revealing at some esoteric level. However, the punters in “voterland” have no idea about all this. They will never get to find out about it and it is all too complicated for them anyway.

    What can we do about that? Nothing, is what I am increasingly coming to realise. So is there any need to even read these articles? I could use my time more fruitfully by doing something more interesting like looking into the Hahn-Banach Theorem and its relation to Farkas’ Lemma.

  8. New England Cocky

    UHM … When have the Liarbrals eve been better economic managers since WWII?

  9. Matters Not

    2353NM – on reflection and back to the point I (reflexively) agreed on.

    don’t have the right to argue how people spend their money

    What if that spending results in the ‘other’ being disadvantaged – particularly in the longer term? You know – admission to a particular university because of intensive individualised, coaching? Or in a recent case(s) in the US where wealthy parents bribed the powerful to give scholarship(s) to undeserving offspring?

    Wealthy parents paid Singer to illegally arrange to have their children admitted to elite schools by bribing admissions testing officials, athletics staff, and coaches at universities

    https://edition.cnn.com/2019/03/14/us/college-admission-cheating-universities-react/index.html

    Is there no limit to the advantage (broadly defined) which wealth can buy? Is the idea of a meritocracy via educational attainment to be consigned to the historical dustbin? Or should we simply shrug our shoulders and let it all go through to the keeper? And in so doing – fail our offspring?

    Or should we just accept as common sense that we:

    don’t have the right to argue how people spend their money

    Perhaps not?

  10. Matters Not

    Re:

    What can we do about that? Nothing, is what I am increasingly coming to realise

    And yet others persist! Giving meaning to life recognising it’s perhaps our ontological task?

    The really big tasks are never easy. Don’t underestimate your advocacy of MMT. People do listen.

  11. Kaye Lee

    Even without having to embrace MMT, the government can borrow for ten years at an interest rate of less than 1%. If you can’t find a project that would bring a better than 1% return, then you shouldn’t be in government.

    No-one ever talks about debt anymore, which is probably a good thing. But they also don’t talk about public investment, except for things like Barnaby’s inland rail boondoggle, or some sort of arms race so we can say our soldiers have more stuff than yours (which isn’t true about anyone that counts).

    We should be borrowing (apologies to MMTers) and spending on infrastructure, education, public housing, lifting people out of poverty, primary healthcare, early intervention for kids in need, transitional jobs training, research – things that we KNOW bring an economic and productivity return far greater than 1% as well as benefiting society.

  12. Zathras

    I remember how the Coalition howled that most of Rudd’s handout would be blown on “tattoos and drugs”.

    Apparently people have changed their spending patterns since then because that argument has disappeared from the media.

    Higher income earners will probably use their windfall on overseas trips or shares or just stash it away.

    “To help it grow you need to water a plant at the roots, not sprinkle it on the leaves”.

  13. Peter F

    The BER brought froward some projects by as much as 40 years. The value of this in education terms is incalculable.

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