While I agree that the Australian Government needs to do something to stimulate the economy, I'm yet to be convinced that handing out cash to the general public is the best solution, especially after hearing what people are spending their $900 bonus on. For example computer games, televisions, sending money to overseas relatives in need, overseas holidays and paying off debt.
With the country now in debt how will the Labour Government recoup it's losses in the future? I'm afraid increased taxes or curved expenditure will be it's only solution. An increase in land tax, GST and income tax will be inevitable over time and even less will be spent on improving community services. Therefore, we have to wonder if it's worth having a short term stimulus of $900 today only to be paying extra taxes tomorrow and also will the government have to reduce it's future spending in order to make up for the debt it has created?
If not through increased taxes the government will look at other ways to tighten its belt. Will the Rudd Government reduce spending by neglecting roads, schools and hospitals? Under the Liberals Party, Howard and Costello ran a surplus economy and yet limited funds were dedicated towards fixing schools etc..so one is left to wonder what portion of cash will be placed towards these services when our economy is in deficit? I'm not entirely persuaded that solving this financial crisis is to curve expenditure or create debt for our future generation.
Seeing that the Government has chosen the cash hand out path, the only way our economy will be stimulated is if people actually go out and spend their $900 stimulus payments. What the Australian people decide to spend their money on will determine whether the package is a success or a failure. I have heard of people not spending their payment locally or saving their cash hand out to pay for debt and increased land tax bills. So how will this help stimulate our economy? In my view it doesn't. So did the Government think of this when they introduced the stimulus? Did they presume that everyone would go out and buy "books and music" as the media reports of Kevin Rudd. Someone buying Chinese made electrical goods or going on an overseas trip to New Zealand will not help the Aussie economy. In my opinion the Government should have chosen a different way of distributing its cash, perhaps in the form of rebates. Doesn't it make more sense to encourage people to buy energy efficient products (such as solar panel installation) or recycling incentives (such as water tank installation) rather than offer free cash? Rebate incentives create jobs.
While I understand that the government needs an immediate stimulus plan, I think I would much rather see tax payer dollars spent on improved infrastructure, and service/community improvement. That is, money spent on improving transport services, schools, libraries, hospitals, community and social services.
An acquaintence was stating that she received the $900 stimulus payout. She went on to say that she was looking for kindergarten placement for her child so that she could return to the workforce. She approached a few centers in her local area only to be told that there were no placements. Providing simple community services such as daycare would be of greater assistance to this family rather than having a one off $900 payment. (Imaging how many new jobs $42 billion could have created) Having the relevant services in a community provides greater stimulus than anything else. In child care there seems to be a great demand but not enough supply. So why didn't both Governments detect this sooner?
Stimulus packages are short term solutions and don't avoid recessions. The last stimulus reflected this as it did not make our country recession proof. If money is spent on infrastructure or rebates, the effect of the money spent will be a long term solution.
The other point (I believe) is that not everybody needs a $900 payment to help stimulate the economy. Although I understand that someone on $80,000 pays tax, I cannot see how someone on this income needs "government assistance" to stimulate the economy and someone on low income doesn't. For example, causal workers or low income workers who paid tax but received a tax refund because the tax threshold was not met, do not get the stimulus.
If you are one of the lucky ones to receive the $900 cash hand out, make your spending count. An important point to note is that if the money is not spent in Australia it really won't help the Australian economy in any case.
What will you spend you $900 cash hand out on?
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