Following the government s announcement of a second economic stimulus package yesterday, our major media sources have had much to say about the effectiveness (or otherwise) of the PM s strategies.
Here s what some editors and analysts are saying about Mr Rudd s $42bn golden handshake:
The Australian: a bold plan
- The high cost is justified by the depressing economic figures, and by the challenge of preventing job losses
- Scepticism regarding the economic benefits of $150m worth of level crossing boom-gate spending
- Accepts the government s assertion that this package is about saving Australia from an economic crunch that could set us back by years
- There are some dangers in the package:
o long-term deficits if growth does not return
o less capacity for community spending
o lump-sum payments are normally inferior to tax cuts, although tax cuts take time to work
- Kevin Rudd had no choice but to act boldly, and has taken responsibility for the crisis
The Age – Michelle Grattan: this package will be well-received
- the one-off bonuses (as opposed to tax cuts) makes it easier for the government to return to surplus
- the infrastructure spending is consistent with Kevin Rudd s education revolution and will be a popular program among voters
- the package is weak on offers for the unemployed
- the government can t be confident these measures will keep Australia from recession
The Age Editorial: a commendable response to genuine crisis
- Aspects of the plan may be debatable. Its size and urgency are not.
- The government is to be commended for the urgency, scale and structure of its response to the global economic crisis
- Questionable fairness of a flat $950 bonus, and neglect of pensioners whose incomes are hit by rate cuts
- Favourable response to infrastructure spending: every $1 spent boosts economic activity by $1.40
The Daily Telegraph: this is more of a political strategy than an economic one
- A relatively well-positioned economy is being affected by exaggerated and negative commentary. Mr Rudd should be more positive!
- A one-off fiscal stimulus is short-lived and of questionable effectiveness.
- The Reserve Bank damaged the economy through mishandling monetary policy in the second half of 2007
- The government should restore business and consumer confidence through tax cuts
Australian Financial Review: handouts raise concerns
- Suspicion that the new package is aimed at avoiding a technical recession, a political strategy not economic
- Nothing for major infrastructure which would provide productive long term investment
- Insulation handouts are a gimmick, not an energy efficiency policy
- Tax cuts would be better for small and medium businesses
Bloomberg: more than appropriate
- Given the state of the global economy, the loss of the budget surplus is necessary
- Australia is facing greater obstacles than officials in Canberra and Sydney are admitting to
Further Information
- Australian Financial Review
