To save you the time of having to read through all the papers and websites for some hard-hitting and rational arguments for and against the Australian Government’s proposed AUD$42 billion economic stimulus plan - I have summarised four important editorial sources to give you an overview.
In summary:
> The Wall Street Journal - negative
> The Australian - negative
> Sydney Morning Herald - positive
> The Canberra Times - cynical, yet neither here nor there.
The Sydney Morning Herald favors one-off payments against the Coalition’s position of tax cuts and tax reform:
“Even if they are, the one-off effective tax payback is better in the circumstances than the permanent tax cuts advocated by the Coalition, which would be much slower-acting as a stimulus. A reduced credit card balance would bring forward the moment when households feel secure enough to start spending more of any surplus income.
We should not, in any case, think that this package and the other measures that will follow - like the engineering projects soon to be announced by Infrastructure Australia or the national broadband network - will entirely protect Australia from what is approaching, tsunami-like, from collapsing economies around the world. The Government thinks this package will generate 90,000 jobs - but its jobless forecast suggests the number of people of out work will be many more than that by mid-2010, and that the economy will show little growth for the next year or two.”
The Australian favors the Coalitions position, that tax cuts are more effective:
“..despite the Government’s argument that it is essential to start people spending quickly, lump-sum payments are inferior to tax cuts in normal times. As a matter of principle, it is better for people to keep more of the money they earn in the first place, rather than to pay too much of it in tax and receive some back in welfare payments later. The package is reminiscent of the unsuccessful strategy used by Gough Whitlam, a man Mr Rudd admires, in the 1970s.”
The Canberra Times is cynical as to the chances of Rudd’s package working as it will be administered by Australia’s extraordinarily inefficient States, but does not have an editorial position on the Coalition option:
“Of yesterday’s $42billion package, $28billion is focus on infrastructure, primarily education infrastructure, rather than going directly into the pockets of the cash-poor. Most of it, whether on schools or roads, will have to be administered by the states.
..yet the record of the states in delivering on their commitments is lamentable. And the record of the Commonwealth, in being able to bribe, cajole or force better delivery is, if anything worse.”
Respected global business newspaper The Wall Street Journal is extremely critical of the Rudd package:
“Borrowing money from the public and then redistributing that wealth isn’t the way to do that, mate.
Mr. Rudd’s Labor government sold its latest spending spree, announced yesterday, as a “national building and jobs plan.” The A$41.5 billion ($26 billion) package amounts to about 2% of projected 2009 GDP. Of that figure, the only true stimulus is a temporary A$2.7 billion tax break for small businesses.
The rest of the money will be lavished on infrastructure, the poor, public servants and pet projects. Some of this spending may arguably represent worthwhile long-term investment — A$14.7 billion, for instance, will be directed to building and renovating schools; another A$6.6 billion will build low-income housing. But building things like boom gates for railway crossings won’t do much to pump-prime the economy now.”
Notes:
* Image used under Creative Commons via Flickr user Neubie
