Given I have complained long and loud for many years about the lack of attention paid to housing issues by the previous federal government, and the current government’s previous actions in throwing extra money at the inefficient and regressive First Home Owners Grant in their first stimulus package, I have to balance the ledger given yesterday’s announcement. The federal government’s plan to increase the stock of social housing by building an extra 20 000 new houses – plus upgrading another 2500 houses to make them usable – is overdue but very welcome. It is easily the best aspect of the major package of measures (in effect a mini-Budget) released by the Rudd government yesterday.
I am not convinced about all the overall economic benefit of all the cash handouts – I suspect a lot of it will go on saving or repaying debt, rather than job generating consumption, even though it is targeted mostly at lower income earners who are more likely to spend it. It’s unfair that the unemployed miss out yet again though.
Other measures such as the infrastructure money for schools and the funding of insulation for housing will have long-term as well as short-term benefits, although it’s a pity this sort of expenditure wasn’t extended to include retro-fitting office buildings to make them energy efficient. This would have larger savings on greenhouse emissions than insulation in residential housing, but a perceived handout for owners of office blocks would presumably be far less popular politically than handouts for homeowners.
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“… I suspect a lot of it will go on saving or repaying debt, rather than job generating consumption …”
The net effect could be the same, in that people may start spending more once they’ve paid off their credit card (etc) debts.
Yes, it’s long gone time substantial funds were put into public housing, but with 100,000 homeless Australians, it still won’t be enough.
I thought it was quite rude of Rudd to start “tuning up” the State Premiers with all of his proposals before ANYTHING had been approved in the Senate.
I think a lot of people will put their cash handouts into their mortgages.
Some families stand to receive thousands of dollars. I’m wondering if that’s economically responsible, or even necessary, considering interest rates have hit rock bottom.
Yes, we must spare a thought for the long term unemployed who are genuinely seeking work. They only get about $225 a week to live on, and are probably very well represented amongst those living on the street.
I think it’s going to be a tough Winter for a lot of people, with charities stretched beyond breaking point trying to provide food, shelter, warm blankets and clothing for people living on the streets.
Now would be a good time to get out the knitting needles and crochet hooks to make some warm beanies and scarves, and to search through the cupboards for unused blankets.
Those who don’t knit or crochet could supply money to buy yarn, or go out and buy some throw rugs for homeless people to wrap around themselves. Lincraft have some good ones with pictures of various animals printed on them for only $5.99 each – an excellent price. In Brisbane, you will find them in the City at the Myer Centre, and at the Sunnybank Hills Shopping Centre.
When you’re sleeping outdoors, it gets cold in the early Autumn. Friends have told me they’ve seen whole families sleeping in the City Botanical Gardens.
I wonder why some people keep saying that now that we have hard data from Treasury that a large part of the last ‘hand out’ did get spent in December and January will see more.
There is also a known effect that people who receive a windfall will often end up spending more than they receive. And of course when people reduce debt there is that relaxation on being frugal which increases their spending.
I think you would need to give out $20,000 before you could say that most of it would be saved.
In any case there is little choice. Demand has vanished in an instant and the pain is about to be handed out. The cash bonuses will save a lot of jobs for a time, until infrastructure money starts flowing.
There is a quadruple benefit from spending a premium if need be to save jobs. It keeps down social dislocation, keeps down govt expenditure on unemployment, keeps up the tax base and, allows the country to benefit immediately from any upward swing in global demand.
There would be also an effect in maintaining asset values.
It is a much much better thing to do than Ms Bishop’s suggestion that we wait and see if the ship sinks before we start bailing.
I can’t speak for why others keep saying it, but I’m saying it because it’s an enormous amount of money, some of which doesn’t seem to me to be overly well targetted – (in an economic sense at least; it may be well targetted politically). It’s true that there was a spike in retail spending after the last handout, but I don’t thinkit’s accurate to say a “large part” of the last hand out has been spent. It seems to have been about on forecast so far (which is good), but whether the rest of it will flow through as anticipated remains to be seen.
I certainly agree it’s a much better thing that the ‘wait and see’ approach. And it’s also true – judging by the wildly varying views amongst economtsts, let alone everyone else – that everyone is in the dark to some extent about what is best to do.
Chances are nothing is going to return things to around where they were before for quite a long time – which is in most ways a good thing, as collectively we were living well beyond our means, relying in part on asset price bubbles.