The Rudd Government is carefully planning its next stimulus package, no doubt to be released before Parliament goes back next month.
Speculation is rife on what form it will take. Will it be Tax Cuts, a boost to infrastructure spending or more investment in skills and training? Or, god forbid, will it be a boost to welfare payments, or a further instant cash handouts to those who least need it?
I'm a big supporter of a mix of all of the first three of those suggestions. Tax cuts are widespread and they are equitable. Although they are slow in coming, and not an instant stimulus, there is an argument for their long term effect. They do stimulate an economy - but not in terms of purchases on Plasma TVs or a new poker machine...
More money for Infrastructure, for the most part coordinated by the States will have a long term benefit to the economy, whilst in the short term helping to stimulate it and retain jobs. Victoria and most of the States have projects ready to go - all they need is the cash.
And Investing in skills and training seems wise, to meet the likely increased demand when unemployment starts to creep up.
But an increase in welfare payments or one off payments as we saw in December to Pensioners, Parents and self funded retirees is not just bad economics, its unfair and its not going to work. It also increases Australia's reliance on welfare - and that is unsustainable.
One of the arguments we heard for much of the last year, particularly from pensioners, was that the cost of living was rising and they couldn't survive on their payments. Well guess what? The CPI went backwards in the last quarter.
That's right oldies, prices are actually coming down. And you wont have to wait long for more savings, the old supply and demand rule coming into play.
Keep in mind that despite the hype you might hear in the tabloid press, welfare payments in Australia are very generous. And its not just the payments, its the benefits attached. The health care card that pensioners receive entitles them to a range of discounts that regular working people don't get.
What we don't need right now, is more money given to pensioners and self funded retirees to blow on one off purchases or poker machines. There Ive said it. We all know that just as the world economy spiralled downward in December, one of the things that went up was revenue at gambling venues.
Coincidence that it was the same month that Kevin Rudd gave pensioners a couple of thousand dollars? I think not.
I wont start on single parents just yet - i will save that for another post. However, i will say that they are one group who are doing it better than most in society. Yes whingeing oldies, i despise them more than you.
I do have a hope that Kevin Rudd and Wayne Swan will provide a long term stimulus package - we had the quick fix - that didn't work. What we need is a 2 to 3 year plan, which takes into account the long road we have ahead.
The only answer is tax cuts, boost to infrastructure spending and investing in skills. I hope someone is listening.
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About Just Grumpy
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