The Senate Committee into the Rudd $42 billion package has concluded. Some revealing snippets from the report taken from the dissenting section:
Using only the $10.4 billion and $42 billion packages, Treasury calculates that Australia’s stimulus is 4.9 per cent of GDP. This is four times the size of the US stimulus as a proportion of GDP (1.2 per cent) as shown in the Treasury evidence. It also showed that the UK’s stimulus was 1.4 per cent of GDP, Germany was 2.6 per cent of GDP, Japan was 2.6 per cent of GDP and France at 1.4 per cent of GDP….
The Government claimed that the $10.4 billion package will create about 75,000 jobs at an average cost of $139,000 per job; infrastructure package of $4.7 billion will create 32,000 jobs at a cost of $147,000 per job; COAG package of $15.1 billion will create 133,000 jobs at a cost of $114,000 per job. Yet, the $41.5 billion package will “support” up to 90,000 jobs over the next two years at an average cost of $461,000 per job or $230,500 per job per year. Coalition Senators note the change in language and Treasury’s inability to account for this….
The IMF’s World Economic Outlook (October 2008, page 178) concludes that “revenue based stimulus measures seem to be more effective in boosting real GDP than expenditure based measures”, especially in advanced economies like Australia’s…The Government has rejected the possibility of tax cuts which so many other countries consider superior to a handout only package.
In regard to long term effects on economic growth and employment, Treasury has confirmed that “in the long run we are not talking about saving jobs”…
There were also some references to past quotes made by Treasury Secretary and ALP yes man Dr Henry, about expansionary fiscal policy crowding out private sector investment. With the change of Government it seems that he has changed his tune though.
The written responses by the minor parties were pretty week, which tends to indicate that they will roll over on the vote later this week. It is clear they really don’t understand the issues and they will use the package to push for inclusion of their own pet projects and concerns. Very disappointing.