"If you look across the Tasman, New Zealand has done just as well it seems as Australia without going into anything like the same level of debt and deficit that we have."
Umm Tony, New Zealand went into recession - for five consecutive quarters .
Related Posts
. Ken Henry's devastating question to Senators
. Wind back the stimulus? Where's the love?
. Hockeynomics - at times an embarrassment
14 comments:
I get the feeling that comment might get a run in the first Question Time of the year
Tony Abbott really doesn't have a clue...
Na, Grog, the government won't raise it because it would be publicly pouring a bucket over our Kiwi cousins as much as over Abbott. Which being a "responsible" (aka cautious) lot they won't want to do.
It was a stupid thing for Abbott to say, but it still might do OK as a soundbite because most TV watchers will simply be unaware that NZ has suffered a big recession. Or that its public-debt-to-GDP ratio is, as a consequence, higher than ours.
The last is in fact an interesting point. Had we not had a spending spree and consequently suffered a crash we may have had more, not less, government debt because of the collapse in revenue. This result is of course sensitive to exactly what counterfactual we assume but it's certainly possible, even probable.
Is this guy really up to being PM?
I notice Uhlmann immediately nailed Abbott about his false claim.
Oh.
Wait a sec.
No he didn't.
I wonder why?
fred
Yer, lucky we're a hole-in-the-ground for China.
NZ isn't "blessed" with iron ore and coal. If the Chinese suddenly went crazy for dairy and lamb, and discovered a massive iron ore deposit in Tibet, the situation would be reversed.
This idea that govt stimulus policy was the only factor that saved Australia from a serious downturn is complete nonsense. Not that I'm arguing against stimulus, but its pretty clear in hindsight that Australia overdid the stimulus and NZ underdid it, but both governments are still defending their policies.
P.S. When is Red Kezza back? I can't handle another week of Uhlmann.
At The 7.30 Report we called him "the bloodnut"
How can you think the Australian Government overdid the stimulus when we have 13% underutilised labour in our economy, and 6% unemployment?
That just doesn't make sense.
This idea that govt stimulus policy was the only factor that saved Australia from a serious downturn is complete nonsense. Not that I'm arguing against stimulus, but its pretty clear in hindsight that Australia overdid the stimulus and NZ underdid it - carbonsink
I never said it was the only factor, but it certainly was a factor; that's what I meant by my reference to choice of counterfactual. But a collapse in retail sales and house prices would have been a Very Bad Thing last year.
The NZers certainly underdid their stimulus, but I can't see how you can possibly say we overdid it. Note especially that our public-debt-to-GDP ratio is now the lowest in the whole OECD. If anything we could have benefited from an even bigger stimulus (unemployment, after all, is now about a third higher than it was).
We could certainly do with a string of Budget deficits to build infrastructure (broadly defined - include research and education in it). If the Australian government was a company people would be talking about a lazy balance sheet and missed growth opportunities.
Australia could have done with a bit more "creative destruction" this cycle. 20+ years without a significant downturn just sets us up for a bigger fall.
We blew the resources boom bounty on middle class welfare. We could have ploughed it into a SWF or infrastructure for a time when the world doesn't want our dirt.
There are many ways to calculate that size of stimulus should be.
One way is to ask the question "How much money it would take to fix the symptom."
The another way is to use the business cycle to determine what the you can spend base of past govt saving. Generally, with a average 10 year business cycle, you have 3 bad years and 7 good years. So you spend the surplus of the 7 good years in the 3 bad year.
Just as the crisis was starting, my back of the envelope calculation was that we spend $140 billion between stimulus & increased welfare benefits. That's based on an expected surplus at the time of $20 billion. In hindsight, the Howard Govt should have been running bigger surpluses. At the time, the opposition was calling for smaller surpluses & more spending (generally not infrastructure either).
Where do people think interest rates will be in 5 or 10 years? In 5 years, NZ stimulus might look right and that we over did it for short term relief.
Remember we have an election cycle and internet speed media feed back that doesn't inform the public well. Not a good combination for long term planning.
And that Uhlmann let Abbott get away with this.
That says as much about Uhlmann as it does the Mad Abbott.
Generally (aside from this) Uhlmann gave Abbott a very easy ride indeed.
Contrast that to his treatment of Peter Garrett the following night. Interrupted him frequently, constantly challenging what he was saying.
The contrast spells the bias.
"We blew the resources boom bounty on middle class welfare."
Actually I suspect that more of the resource boom bounty went on upper middle class tax cuts, including superannuation tax expenditures.
Most of the increase in family payments under the previous government went to families with joint incomes between about $35,000 and $70,000 - who probably qualify as lower middle class but are hardly rich.
Actually we could work this out - I feel an ARC application coming on.
Post a Comment