Someone has to correct the economic misunderstandings in reference to the proposition that the stimulus package improved Australia’s fiscal position and kept us out of recession.
Australia did not endure the recession nor was it at risk of a recession during the Global Financial Crisis. Australia was buoyed by industry infrastructure which ensured a high capacity for employment at a strong wage level. Therefore the capacity to subsidise credit which undermined other countries was still manageable for most Australians with loans and mortgages. We were less advanced in the accumulation of risks in terms of loan to equity and loan to liquidity ratios.
Australia’s small population means in economic terms that it accrues much of its wealth from exports and it does not require a high consumption society to return a substantive financial margin to upkeep the national treasury or to recycle currency.
The economic underwriting to this industry infrastructure were the Commonwealth surpluses achieved while the Liberal Government enjoyed high returns from resources, taxes and the variable influences in the domestic and international markets. I have never voted for the Liberals and never will however it was the soundness of their economic trends, in light of the fact it’s sadly hands off with the filthily rich with by Australian governments or you go out as Mr Rudd did, that isolated Australia from the GFC. Mr Howard’s Government did inherit a $50 billion debt from his Labor predecessors and Mr Howard handed over to Mr Rudd a $20 billion surplus. Now we have a $90 billion debt.
The $42 billion stimulus splurge was an utter misspend and blew away the surplus. It is economic naivete by politicians to claim that this package pulled us out of a recession that never happened nor would. It’s a Clayton’s claim by Mr Swan.
The $42 billion stimulus could have been spent on the National Broadband Network which has been estimated at $43 billion however will certainly blow out past this estimation. The NBN is a venture that needs to be well managed as it can be incorporated by other means than a direct outlay by the Commonwealth of such monies at a time when the health sector desperately craves assistance. At this time we have a deficit of $90 billion. Many schools, hospitals and businesses actually have high speed connections and fibre optic! The NBN should not be implemented en masse and rather by demand and over time.
The financial crisis in other western countries was the cumulative result of an advanced credit crisis, the contravention of commonsensical monetary regulations which underwrote unreasonable lending, and devalued house prices. At the time of lending house prices were recklessly over valued and over priced. Commodities and shares with their variable fluctuations in value were recklessly over exposed as financial underwriting by the major lenders and banks. The bubble had to burst for borrowers and lenders.
Australia did not have a part in any recession. It’s turn shall arrive. The stimulus package played no role in keeping Australia out of recession other than to perceptually diminish some of the perceived panic which was arising or was fabricated. The stimulus package was manipulated, without substantive evidence, to make financial wizards out of the so-called miracle workers. In the kindest terms I view the stimulus package as a placebo.
America’s unemployment is 10% however Australia’s has remained at 5%. The Global Financial Crisis was exploited by some sectors in Australia to trim their workforces and for the RBA and Treasury to inadvertently assist the real estate and housing industry to exploit people by procuring demand for land and homes at prices that may in time devalue as they did in the USA. Australian house prices especially in the wider metropolitan suburbs of cities will not be sustainable as the nation’s surpluses diminish, national deficits increase, debt to GDP proportionately increases, inflation rises, interest rates rise, and as industry infrastructure cannot be upheld to current levels and wages are hit and jobs diminish. Capitalism is a tough gig, it requires a good juggling act, it needs expertise and it needs dignity and honesty.
Due to the lower interest rates, once again rising, and the perceived $14,000 and $21,000 first home buyer assists many families were exploited by lenders. These souls are now paying off mortgages that which for many families are ticking bombs. Australian cities have the world’s highest home and land prices. It is an economic circus and a crisis in waiting.
The Labor Party should stop lying about the stimulus package, and the Greens should stop claiming they were pivotal in passing it. Economic nonsense as the package was not remedial and rather at best an ignorant spend.
Australians need to appreciate that that industry infrastructure and its capacity for output are what have protected the Australian economy for at least the time being. In light of the increasing prospect of various resources depletion and subsequent economic pressures the future prospects of the Australian economy can be preserved by adept higher taxes upon those industries, such as mining and banking, most of the profit share market and by the shoring up of surpluses so as to increasingly nourish the social services that profoundly assist in the economic security of Australia.
Australia strives to a globally comparative good standard of living because it provides some benefits to 6.6 million Centrelink recipients. We try to accommodate our neediest unlike America which is a country very harsh on its poor and testimony to this are the millions living on its streets. In the financial year 2010/11 Australia will spend $114 billion on welfare out of a total Gross National Product of $331 billion. This assists the economy by diminishing the risk of various burdens on the economy. A healthy society diminishes risks such as abject poverty and ill health which accumulate associative financial burdens and further layers of bureaucracy. The only way to improve our chances of defeating the prospect of chilly recessions and scary high costs of living is to have housing prices slowly brought down, mortgages brought down concomitantly, interest rates regulated and unbiased, lending heavily regulated and with a prohibitive onus, taxes on the high end of the profit share market strongly increased and reinvested in infrastructure and health services which in turn lower inflation and assist in making daily living needs more affordable.
To sum up, there was no prospect of an Australian recession linked to the GFC and the stimulus package was economic stupidity and Australia will be best served by increasing taxes on the sectors that can afford them and in nourishing the social services which increase the quality of life of those at the bottom end and thus keep Australia economically rational.
Gerry Georgatos
Senate Candidate WA
Ecological, Social Justice, Aboriginal Party
Media Contact: Gerry Georgatos – 0430 657 309
Recent Comments