Australia's 'cash splash' stimulus bid criticised
Monday, 27 April 2009
SYDNEY, Apr 26 (AFP): Australian taxpayers may be delighted as the government doles out billions of dollars of spending money, but some economists and politicians are critical of Canberra's stimulus policy.
A total of 7.7 billion dollars (5.5 billion US) in one-off cash payments is flowing to more than seven million students, pensioners and workers as part of Prime Minister Kevin Rudd's plan to stimulate the economy.
It is the second wave of cash payments since the global economic downturn began to bite in Australia, plunging the economy into recession, costing thousands of jobs and driving unemployment up to 5.7 per cent.
The conservative opposition Liberal Party has slammed the cash bonuses, saying the money was more likely to be used on credit card debt or overseas travel than in stimulating economic activity.
"The only thing I'll guarantee you these cash splashes will deliver is bigger and bigger mountains of debt which will mean higher interest rates and higher taxes in the future, but no jobs," said party leader Malcolm Turnbull.
Bringing forward tax cuts or investing in infrastructure projects would have been a more prudent use of the money, said Griffith University's Tony Makin.
He said a "knee-jerk" bid to boost consumption -- adopted in several countries around the world -- was the wrong approach and Rudd had "overstepped the mark" with the cash payments.
"To the extent that the household bonuses are spent on consumption a lot of this spending will go on imports," Makin said.
"It might assist the retail sector but the retail sector is only a small part of the economy and a lot of the goods and services provided are imports, and higher spending on imports is not going to assist the Australian economy."
A total of 7.7 billion dollars (5.5 billion US) in one-off cash payments is flowing to more than seven million students, pensioners and workers as part of Prime Minister Kevin Rudd's plan to stimulate the economy.
It is the second wave of cash payments since the global economic downturn began to bite in Australia, plunging the economy into recession, costing thousands of jobs and driving unemployment up to 5.7 per cent.
The conservative opposition Liberal Party has slammed the cash bonuses, saying the money was more likely to be used on credit card debt or overseas travel than in stimulating economic activity.
"The only thing I'll guarantee you these cash splashes will deliver is bigger and bigger mountains of debt which will mean higher interest rates and higher taxes in the future, but no jobs," said party leader Malcolm Turnbull.
Bringing forward tax cuts or investing in infrastructure projects would have been a more prudent use of the money, said Griffith University's Tony Makin.
He said a "knee-jerk" bid to boost consumption -- adopted in several countries around the world -- was the wrong approach and Rudd had "overstepped the mark" with the cash payments.
"To the extent that the household bonuses are spent on consumption a lot of this spending will go on imports," Makin said.
"It might assist the retail sector but the retail sector is only a small part of the economy and a lot of the goods and services provided are imports, and higher spending on imports is not going to assist the Australian economy."