Alan,
You wrote;
As Prof Stiglitz wrote, "Kevin Rudd … realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon. So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place. Rudd's stimulus worked: Australia had the shortest and shallowest of recessions of the advanced industrial countries."

Why does this matter? Two reasons. First, Australians are entitled to base their vote on valid analysis rather than the falsehoods rife in the mainstream media.

Second, according to the OECD, another severe downturn is likely.

Will Australians stick with the managers who took Australia from 12th-ranked to top of the world during the last downturn? Or switch to the Coalition whose proposed policies saw the nations which implemented them fare poorly?

My Comment; Hear! Hear!
I have been trying to say similar things on OLO for some time. I only have a science degree with a year of university economics plus fifty years of reading so do not rate well with editors, particularly as I oppose neo-liberal idiocy. Even the ability to get a distinction in second year university physics while working full time doesn't rate.

I credit the Rudd Government actions mainly to the group of four, Gillard, Tanner, Swan and Rudd and the first three have already been lost to the common weal due to the lies and stupidity of the right wing media and the nut cases on the Opposition front bench.

Australia will pay dearly if Rupert Murdoch and Tony Abbott win on 7th September.

Every Australian, except the racketeers, would benefit if the Labor Party were to take citizens into its confidence and educate everyone about the truths of Modern Money Theory as revealed by the blogs at New Economic Perspectives and by Australia's Professor Bill Mitchell. One of the better posters on NEP, J D Alt, is an architect! For economics what you really need is nous.

< What did Australia do differently from the rest of the world? Two things. Australia moved swiftly with huge cash handouts to families. While other regimes were wondering what was happening, the Rudd Government shovelled out billions to be spent however households wished. >

Alan, I can’t see that this was the thing that ‘saved’ Australia’s economy during the GFC.

As huge as this was: 3.3% of GDP, it was still only a very small amount of money on a per-capita basis. And I can’t imagine that everyone would have simply rushed out and spent it. Surely a large portion of the population just put it in the bank and continued on as normal regardless.

I think that Rudd was far too ready to blow an enormous chunk of our financial reserves at a time when things weren’t really going too badly. Surely such a significant action should be reserved for when it is really needed.

This is a big fear of mine: that as the economy worsens, which it is bound to do given that we seem to have no sense of sustainability or supply/demand balance in this country, all the easy options for dealing with it will be utilised early on, so that when the hard times really bite, we’ll have no national financial wherewithal to deal with it.

It is much more likely that Australia came through the GFC pretty much unscathed, and moved ahead in the international rankings in terms of conventional economic wellbeing, due to the combination of factors that you discuss in the first part of your article, rather than Rudd’s shovelling out of billions to ordinary folk across the country.

Alan and Foyle, it's great to see that you don't belong to the Liberal Rudd-Hackers and you give the man the credit he is owed.

Last night we saw the real Tony for a few seconds as he insulted our Prime Minister. He showed his lack of breeding, his skill at lying and obfuscation, his pedestrian mind, his subservience to the wealthy classes.

Rudd, despite his flaws, cares about the people of Australia. His time in the wilderness has made him a better human, a more consultative one. He deserves a chance to show his full potential.

Thuggish Tony will lead Australia into the wilderness and make the rich even better off by punishing the battlers!

Now I start to see your plan Alan.

You are spouting all this absolute rubbish to lure the nutters out of hiding so we can identify them.

What do you plan to do with them all, after you have them?

Scratching your funny bone today are you Graham? After reading the first three articles, I had to go check the calendar. I thought it must be April fools day.

Costello saved us from the GFC, as it was his policies, taken earlier, which set things up for us to be in such an ideal position. Our banks had a great banking regulator who had clamped down on them, unlike US or European banks, thanks to Costello appointing him. Our debt was zilch, as Costello had paid off our debts, which left money in the kitty to be spent, unlike other countries. Mining investment had started to boom, as he had set up the economy, along with the good fortune of increased Chinese consumption, for them to make long term investments. All that Rudd did was take the credit for that which Costello had set up

Lack of "Breeding" for stating the obvious, my the Left has become a copy of their "Top Hat" stereotype; Rudd is a mouth with a motor. The GFC was survived because at the the time, unlike most of the world, we lacked the "FC". Owed nothing (Sovereign) in fact money in the bank, strong banks and an outwardly focused economy deep in with China. Now as we go cap in hand to the money changers they will ask how will you pay, how many generations of your children will you enslave, what did you do with it last time?
Nine hundred dollars on ciggies, pokies and flat screens, vastly overpriced white elephants called School Halls (saved a bit by private schools spending effectively), burning down houses with ceiling bats, laughable energy programs (free, ineffective light bulbs, cornflake packet type surveys) and on and on.

What growth industries are the result of the last 6 years of Rudd / Gillard / Rudd genius? Illegal boaties with at least 4% funerals plus accommodation and keep for the chronically welfare dependent 95%, destructive windmills scarifying the countryside, increasingly faltering solar cells still being paid for, FTTH now obsolete, a ballooning and bloating "Public Service", closure and still birth of export industries including gas, aluminum, cattle, iron, coil springs and cars.

Hi Alan,

One has to admire your persistence. Sadly I have come to the conclusion that it’s not persistence at all, its desperation.

Your frantic efforts to get Rudd and the ALP “off the hook” for their past disasters is not going too well. I have no idea what it is you think you can do for the ALP. Australia has stopped listening to the whole ALP mob, particularly on economics, so why on earth do you think that any Australian, other than the “rusted on’s” would possibly believe your economic wizardry?

You now appear to be left with the surviving members of your support base, Foyle and David G. There is something very obvious you are not getting Alan?

Just to put things in perspective for you, Sportsbet has Abbott at $1.06 and Rudd at $7.50.

Please start writing about something else, this is now boring. You’ve crashed and burned, get over it and move on

AA makes a great contribution to OLO, but most Aust's disagree with him, at least if bookmakers are to be believed

Here is one economist who does not think Labor has done a good job.
http://www.oliver-marc-hartwich.com/publications/nz-finance-minister-puts-swan-to-shame

To quote from the piece:
If a week is a long time in politics, two years is an eternity. In 2011, Wayne Swan was named the Euromoney Finance Minister of the Year. The news was hard to believe even at the time, but in hindsight Euromoney's choice looks even stranger.

Australia's public finances are in a state of such obvious disrepair that no one would dream of awarding any prizes for sound fiscal management to an Australian treasurer today.

But New Zealand's Minister of Finance, Bill English, might be the frontrunner for the world's best finance minister. His achievements since assuming office in late 2008 put Swan's fiscal mismanagement into perspective.

...The government has also quietly reformed the welfare state. There have been massive changes to state housing tenure. Policies helping single parents into work were introduced, plus measures to move beneficiaries on sickness and invalid benefits back into the labour market.

On top of it all, the New Zealand government produced a series of "zero budgets" where only education and health recorded modest spending increases. New programs had to be funded from cuts elsewhere.

As a result, a budget surplus will be delivered next year, ahead of schedule. This is an impressive turnaround, achieved by doing precisely the opposite of Australia's approach of the past five years. In New Zealand, there were no great announcements of meaningless measures, and no shovelling cash out the door to fund them. Instead, a measured, responsible and sometimes dour approach has delivered the goods.

Hope following is true indicator and holds.

http://news.ninemsn.com.au/national/2013/08/22/17/20/poll-shows-rudd-could-lose-own-seat

I see the Murdoch cheer leaders are out in their vitriolic best, probably makes a change from Poufter bashing.

What a ridiculous thing to say Kipp. You should retract.

Some merely hope for the end of Rudd, what is wrong with that.

Greetings all,

Thanks for the comments.

@Ludwig, re: “As huge as this was: 3.3% of GDP was still only a very small amount of money on a per-capita basis. I can’t imagine that everyone would have simply rushed out and spent it. Surely a large portion of the population put it in the bank and continued on as normal.”

Correct. The 3.3% of GDP was the initial helicopter drop. It prevented the immediate halt in consumer spending which triggered lay-offs in all comparable countries. But this wasn’t enough.

By the end of 2010 the Government had spent more than 10% of its 2007 GDP – a staggering $79.1 billion all up. $10.4 billion in October 2008 and another $4.7 billion to December 2008’s nation building package. A further $41.5 billion was allocated to infrastructure and jobs in February 2009 and, finally, $22.5 billion in the 2009 budget.

Re: “I think that Rudd was far too ready to blow an enormous chunk of our financial reserves at a time when things weren’t really going too badly. Surely such a significant action should be reserved for when it is really needed.”

That’s exactly what the Coalition in Australia said, Ludwig. Also exactly what every other Western government actually did, except Poland. Those two alone spent swiftly and extensively. They alone avoided recession.

Re: “It is much more likely that Australia came through the GFC pretty much unscathed, and moved ahead in the international rankings in terms of conventional economic wellbeing, due to the combination of factors that you discuss in the first part of your article, rather than Rudd’s shovelling out of billions to ordinary folk across the country.”

No. The experience of other economies reveals this cannot be so.

@Yabby and @EQ: Yes, that is the narrative Australians have been fed, mostly via the Murdoch media. And which many believe.

That article in The Australian is a prime example - riddled with blatant lies, along with more subtle distortions.

It is simply not true. Please check the links in the article here and indicate any flaw in the argument.

Cheers,

Alan

Alan the flaw in the argument is that no other country had created the combination of factors which Costello created, as he made the best of Australia's potential and business responded by investing.
That is what carried Australia through. Rudd just twiddled the dials a bit and now that the unions are back in charge, as they threw their muscle around whilst Gillard ran things, business has lost confidence.

the thing that annoys me about these poor students of policy and society like AA is that there is always someone to blame.

Though we live in a democracy where all are free to push their agenda, and for all to make sense of the madness and issues around them, these sad excuses of commentators give no credit to the people when they make their minds up against their beloved team. It was the same when I was at university in the late 1990s; most of the academics always had someone else to blame rather than accepting the will of the people.

The people will indeed speak in the next election to decide just which side should be given the chance to boost the economy and other matters

EQ and others
Over the last 17 quarters the NZ employment rate has ranged between 6.0 and 7.3%.
Aiming for a budget surplus is a foolish idea while unemployment is so high. The article you referred readers to was obviously written by a neo-liberal who understands little about the change in money theory imposed by the move away from the gold standard in 1971, a move advocated by Lord Keynes in his General Theory. Your recommended article may be written by a PhD graduate but he understands as little about macroeconomics and a Tea Party member.

Any government that issues a currency can always pay the bill for anything available for sale in the currency it issues. I would be interested in any explanation which can show why that is not true. Read the UMKC blogs at New Economic Perspectives.
http://neweconomicperspectives.org/

When there is 7.3% unemployment there is obviously people's time for sale. If there are also available for sale the materials to build something that the public could benefit from, then then the government can pay for the completed item. The public ends up with something worthwhile, an asset, and the government can owe the debt to the Reserve Bank which it owns on our behalf.

There is not even any need to pay interest by borrowing the saving of the private sector. Governments choose to do that because they do not trust themselves or the opposition but the interest is always unnecessary upper crust welfare.

Abbott advocates that there should be no class jealousy but he then introduces a motherhood leave scheme that benefits some mothers-to-be much more that others. That scheme is the ultimate distortion of both the welfare and the taxation system. Who will pay the extra tax burden of the 3200 companies? Who else other that people who consume their products!

@ Chris lewis
"The thing that annoys me about these poor students of policy and society like AA is that there is always someone to blame."
Yes but at least some of us know where the blame lies. Howard and Costello ignored the advice of the Reserve Bank Governor and the G7 finance ministers in 1998 (The G7 guys didn't have the courage of their own convictions) and progressively derived Australians of their financial savings for all the period of their tenure.

Those who already owned home felt wealthy but it was at the expense of the younger generation force into oversized mortgages or to paying high rents. There may have been little government debt but there were few common weal assets and the private sector debt was enormous by 2007. John Ralston Saul summed the situation accurately at the University of NSW on 19 January 1999 and his 2005 book, "The Collapse of Globalism", written before it actually happened.

@spindoc
"You now appear to be left with the surviving members of your support base, Foyle and David G. There is something very obvious you are not getting Alan?"

I don't know Alan but I do know that, according to modern economic theory, he talks a lot sense. A lot more that most of those who comment on this article.

Abbott and Hockey either do not understand the 15 year old modern theory (which is completely supported by empirical evidence)
or they are deliberately misleading the public. Hockey continues to claim a sovereign government is just like his parents' small business. That is absolute crap, and he should know it.

If you think running budget surpluses makes a lot of sense for a sovereign (currency issuing) government in a period of economic slackness then maybe you can explain why the economies of Portugal, Ireland, Italy, Greece and Spain etc haven't recovered from a six year collapse whereas Australia and Poland came through virtually slump free. Why is Australia showing 14% growth? It wasn't simply because of China. We still have a current account deficit.

Who said we were saved yet. The worst is yet to come.http://cecaust.com.au/ The new plan for our banks is called "bail in" ie a CONFISCATION of depositors money like Cyprus. See the written proof on the CEC site which the Financial Stability Board refers to as "Bail in".

This week at the people's forum on Sky News ,Kevin Rudd was asked about his Govt taking 0.5% of depositor's money who have accounts of $250,000 or more. Rudd referred to this as the Financial Stability Fund. Abbott when asked about it tried to to paint it as a tax on banks. It is a tax on depositors. When asked about his position on this, Abott would not discount it's implementation when he got into power.

‘morning Foyle,

Since we are all numbskulls and don’t understand the wizardry of your much vaunted “Modern Economic Theory”, perhaps you could assist by applying it to the outstanding questions asked of Alan Austin?

This would be an excellent opportunity for you to apply your skills to some real life questions, especially since you have taken on the role of answering questions of Alan to which has not yet responded.

<< When are you going to point out the good things the “other” nations are actually doing to get themselves out of the poo? Then we can determine what, if anything we could adopt, rather than your endless off shore bleating.

Why are the Europeans in such an economic mess?
What did they do wrong?
What are they doing to get out of it?
What progress are they making?

Show us something positive that has worked for the EU.>>

So looking foreword to hearing how the “other” countries against which we are being compared have applied your and Alan’s economic wizardry?

Over to you.

Australia's economy has grown by 14% under the ALP, regardless of what people think.

While change is ahead, I adamantly believe it is this ALP Government that has the capacity to understand the direction required to balance the complexities at the top and bottom of Australia's economy,

a) I like this ALP team, [as true blue Australian people],

b) I like the basic line-up of Ministers. Finally the right people have the right portfolio.

c) The cohesion between knowledge and capacity is refreshing and is similar to the quality within the 2007 ALP election team which I felt strongly was a credit to Australia at that time.

d) As a citizen I feel I can speak openly to this team, being as critical as I can be, pushing for those issues that I feel are important when it comes to Australian values - Australian progressive policies which help build a nation locally at the same time being engaged at a global level... productively.

I agree with this quote Foyle [Thank You]. As Prof Stiglitz wrote, "Kevin Rudd … realized that it was important to act early, with money that would be spent quickly, but that there was a risk that the crisis would not be over soon. So the first part of the stimulus was cash grants, followed by investments, which would take longer to put into place. Rudd's stimulus worked: Australia had the shortest and shallowest of recessions of the advanced industrial countries."

I care about the ideas and policies that are also flushed by the Greens among those of other parties and I care that Australia does as much as it can to work with policies within the UN. Ie:'prosperity' and conditions based on a wide range of indicators from health, education, employment, shelter to access to water...

http://www.unchs.org/categories.asp?catid=559

See UN State of the World's Cities 2012/2013 report.

These equity issues spell for me Economic Security as opposed to Economic Insecurity, an issue we face as a globe.

http://www.miacat.com/

It is interesting, amazing, and often downright depressing how many right-wingers claim that night is day, black is white etc. Still, yes, let's discuss New Zealand. Apparently, New Zealand's approach to the GFC led to downturn and increased unemployment. Details on this are discussed here: http://inside.org.au/the-land-of-the-long-white-mirage/

The problem we have this election is: do we let the foxes and vultures once again run the hen house so that 1% of people end up with most of the wealth; or do we give LABOR, which everyone knows is not the best at things financial but, underneath it all, does have a heart, another chance?

Miacat has made some interesting points. I would urge everyone to consider them carefully.

The salt of the earth type Australians cannot afford to give the money-grubbers complete control so they can bring in Howard-Mark2!

<< Australia's economy has grown by 14% under the ALP, regardless of what people think. >>

But Miacat, how much of that growth is due to good management and how much is due to 1. Very high immigration and 2. Digging up our once-off mineral resources at an ever-more rapid rate?

How does average per-capita economic growth compare to this 14%?

How well does this 14% translate into real quality-of-life improvements?

Does this 14% take us closer or further away from a longer term secure (sustainable) future?

So often we see economic growth being expressed as the primary indicator of our government's performance and our national wellbeing.

This is just so fundamentally wrong!!

I don’t have any confidence that the ALP will manage our economy well if they win the election.

Trouble is of course that the Coalition would be every bit as bad!

Australia is not recognized as the world's best managed economy, neither was the stimulus as effective as Alan suggests.

Wayne Swan is widely regarded as a joke, and the huge initial stimulus drop was shown to be almost totally ineffective.

The school halls and pink batts debacles were shown to be spectacular examples of managerial incompetence.

Hi miacat, I think you made a little error there. You said the Australia's economy has grown by 14% under the ALP, where as I'm sure you meant the Australia's economy has grown by 14% despite the ALP. the ALP.

Of course the question then follows, what the hell did they do with all that extra money? Most of us are poorer, not richer, as we became under Howard.

You then tell us you like the ALP team. You like the ministers & their portfolios. Just one thing mate, is it this bunch, the bunch before this leadership spill, or the bunch you expect to have after the next spill.

You must be a great thinker, most of us can't keep up with who is in & who's out, except for Penny Wong. She must be good, she has picked the winner on every vote. Really bright that girl, but a bit short on principles. Oh that's right, that's a highly valued trait in the Labor mob.

Morning all,

Thanks again.

@Yabby, re: “Alan the flaw in the argument is that no other country had created the combination of factors which Costello created …”

Nonsense. When Costello left, Australia was tracking 12th in the world behind the USA, Switzerland, the Netherlands, Denmark, Japan, Norway, Singapore, Finland, Iceland, Taiwan and Luxembourg. Australia was travelling just about average.

Re: “he made the best of Australia's potential and business responded by investing.”

No. Australia's world ranking fell from 6th to 12th during the Howard/Costello years. Overall management was poor.

Re: “That's what carried Australia through.”

Nonsense. Refer Joseph Stiglitz and others.

Re: “Rudd just twiddled the dials a bit …”

No. Rudd's was the greatest Keynesian intervention the world has ever seen. Refer links in the article.

Everything you say is verifiably false, Yabby. Do you read The Australian?

@David G, re: “do we give LABOR, which everyone knows is not the best at things financial … another chance?”

Just curious about Labor being “not the best at things financial", David.

The second claim of this series is that Australia’s Government has managed the global financial crisis better than any administration in the world. Australia rose from 12th-ranked economy to the top. On all indicators, Australia now is travelling better than any economy ever.

The first claim is that Australia’s mendacious media has convinced a large swathe of the population of the opposite.

So, David, in what finance area do you regard the Government to have performed poorly relative to their predecessors or relative to other administrations?

@Shadow Minister, re: “Australia is not recognized as the world's best managed economy”

It certainly is, SM.

Re: “neither was the stimulus as effective as Alan suggests.”

It certainly was, SM.

Re; “Wayne Swan is widely regarded as a joke.”

Not at all, SM.

Re: “and the huge initial stimulus drop was shown to be almost totally ineffective.”

No. The opposite is true. Refer embedded links.

You’ve been reading The Australian again, haven’t you, SM?

@Spindoc, are there further questions you would like addressed? Just re-post if there are. Thanks.

Cheers,

AA

Well there is the rub, Alan. When Govts make economic decisions, they have long term implications. As the scenario played out, Costello was proven correct and America (aka George Bush economics) was proven flawed. It took Costello years to set it up and it paid off. When companies plan to invest, they think in terms of years and decades, not next week. It is the same with small business.

These little facts clearly go over your head.

Rudd may have saved Australia during the global financial crisis but that's nothing compared to Abbott's idea of buying up all the secondhand fishing boats in Indonesia so they can't be bought by nasty people smugglers.

Think of the money that will pour into Government coffers as it sells the quaint craft to Aussies, hundred of thousands of them. Don't mind that such craft tend to sink or have engines that are stuffed. Tony's our man, a veritable genius in fact!

Let's face it, no normal person could dream up such a ridiculous idea. Yet this man wants to be Prime Minister of our country.

God help us all!

Alan, I do agree with you that the MSM have tricked Australians into believing that everything that LABOR did during its six years was a disaster! In the 'MSM' I include some of the pollsters.

The problem for LABOR seems to centre around broken promises, the mismanagement of some of the GFC initiatives, and initiating grandiose schemes which are partly or totally unfunded.

Like you, I fear what Abbott and the Capitalist Moguls will do to this country given the possibility of a LABOR demolition.

Any society that puts greed at the top of its aspirational goals will end up like the U.S.: a basket case!

Good morning Alan
Todays Australian carried the results of a poll in Griffith. You know Kevvys Electorate.
Labor 48 Liberal 52. Two party preferred. Seems you haven.'t convinced the electors of Griffith of the merits of keeping kevvy. Word has it he is looking for accommodation in green socialist debt ridden Europe. You'll be able to cry in your coffees together.

Source of information "The Australian", sorry fail; must try harder !!

AA said ‘Will Australians stick with the managers who took Australia from 12th-ranked to top of the world during the last downturn? Or switch to the Coalition whose proposed policies saw the nations which implemented them fare poorly?
The world will watch with interest’.

Well it looks increasingly likely that Australians will not settle for Labor. It looks increasingly likely that Aust’s do not rely on a set of numbers, which are quite meaningless for many Australians. It looks like that Austs do not approve of poor management of many important programs, divisiveness amongst Labor MPs, and so on.
So I expect the world will look on and say hey, those Austs are a savvy lot; they have an ability to look beyond data and know what really is going on with their pollies

Chris,

Do I recall you representing yourself as not being politically partisan?

Because, it's fairly obvious that you are.

"Austs" are anything but savvy - comfortable and accustomed to being led by the nose by media-driven populist policies election in, election out......

Alan, you wrote on Thursday, 22 August 2013 7:49:00 PM:

<< By the end of 2010 the Government had spent more than 10% of its 2007 GDP – a staggering $79.1 billion all up. $10.4 billion in October 2008 and another $4.7 billion to December 2008’s nation building package. A further $41.5 billion was allocated to infrastructure and jobs in February 2009 and, finally, $22.5 billion in the 2009 budget. >>

There are too many unknowns here. For example; how much would have been spent on infrastructure, jobs and ‘nation building’ just as a matter of normal government expenditure in the absence of the GFC scare?

One could argue that this sort of expenditure is exactly what the government should be doing anyway, within budgetary restraints.

So, how much of this expenditure was due to the GFC scare? How did this sit with the budgetary consequences – debt and foregone expense on other things, for example? And what was the real impact of this expenditure in terms of riding comfortably through the GFC?

I appreciate your comparisons with other countries. But ultimately it doesn’t answer these questions. So we really can’t say whether it was a good thing or not. And consequently we can’t applaud Rudd for his staggeringly enormous expenditure at that time…. if indeed it was staggeringly higher than what would have been spent anyway!

I simply don’t have a feeling either way for this stuff, other than to say that the 900-odd $ cheque sent out to all households seemed like a pretty ratty and highly inefficient way to stimulate the economy.

I will note one more thing – the maintenance of very high immigration in a time of economic uncertainty seemed foolish. An apparently greatly increased effort was put into creating jobs and building infrastructure, while at the same time we continued importing at a great rate people who needed jobs and demanded more infrastructure!

Poirot, I am not a partisan supporter of anyone.

I criticise and support individual policies on their merits.

But one has to make the right choice in 2013. for me, it cannot be Labor. It is not good enough, but who knows in the future

Hi again Ludwig,

Thanks for this further input.

Re: “how much would have been spent on infrastructure, jobs and ‘nation building’ just as a matter of normal government expenditure in the absence of the GFC scare?”

Good point. Some. But much less than 10% of GDP.

Re: “One could argue this sort of expenditure is exactly what the government should be doing anyway, within budgetary restraints.”

Correct. IMF forward estimates show Australia’s net debt reducing steadily from 12.7% of GDP this year to 5.6% in five years. Treasury now estimates unemployment rising to 6.25% next year.

A wiser plan would be borrowing more now while interest rates are low, keeping people employed and building much-needed infrastructure. Australia could increase its debt to six times current levels and still have lower debt than the USA, the UK, France, Belgium and Japan.

Doubling debt now would seem prudent.

This is one area where Australians will suffer as a direct result of self-interested Opposition and media hysteria.

Re: “how much of this expenditure was due to the GFC scare? How did this sit with the budgetary consequences – debt and foregone expense on other things, for example?”

Budgetary and other consequences were virtually all positive: low jobless, strong growth, low debt, increasing productivity, low interest rates, low inflation, strong currency and enhanced credit rating.

There’s scope for further borrowing for “foregone expense on other things”.

Re: “And what was the real impact of this expenditure in terms of riding comfortably through the GFC?”

That is precisely the point of the article, Ludwig. Australia alone spent 10% of its GDP on stimulus, did so swiftly, went first with a helicopter cash drop, then extremely well-targeted infrastructure spending, keeping tax levels steady.

Australia rocketed to the top of the world's economies, and continues moving ahead.

Second most aggressive nation with stimulus was Poland, though with lower spending, more slowly. Poland and Australia were the only OECD nations to avoid recession.

Canada, Mexico and South Korea came next in infrastructure investment. They also emerged from the GFC reasonably soundly.

The case is compelling, Ludwig.

Cheers,

AA

*Australia could increase its debt to six times current levels and still have lower debt than the USA, the UK, France, Belgium and Japan.*

Why on earth should Australia emulate any of those countries? It is exactly because we had so little debt, that we came through the GFC so well. We hardly want to land up a basket case like France, which relies on Germany for its currency strength. America has the advantage of innovation and a free market, unlike us, as well as being the global reserve currency, strong because of so many basket cases around. The US can borrow in US $. Australia cannot and given that we still run a current account deficit, despite great terms of trade, what we really need to do is get real about costs. Apart from mining and agriculture, most of the rest of the economy is built on ever more expensive houses being built for ever more migrants. Hardly sustainable in the longer term.

KIPP

Today, same paper, same story, same data ... different pollster.

ABC 24 news. Today, same story, same data, same pollster.

Kipp, where to now? Seems you have two messengers to shoot today. lol.

oh and Kipp when Abbott and Pyne were asked, in a news conference screened on ABC 24, whether such a result was poetic justice. Both men could barely contained their laughter as Abbott said. 'There is still two weeks to go.'
Kevvy abandoned a planned debate in Griffith last Thursday, when news of the polling broke. He bolted to Melbourne, uis now holed up in Canberra ... probably sulking (my opinion), and likely will not visit Griffith again.
Tony Abbott is likely to visit the Bulimba Festival tomorrow. That festival is a yearly highlight in Griffith. Normally that festival would be blessed by saint kevvy and his presence would be huge on his calender given he has regarded Bulimba as his personal Duchy.

yep I am laughing my head off.

i recall advising kevin that..most people
are a FEW DAYS AWAY FROM POVERTY..and that bailing out the bankers..NEVER trickles down

so i advised him..to..spend a fraction of what a bank bail out would cost..and bailout the banks via depositing the needed cash with the poor acount holder's

i explained..some of the money theory..[via lots of links]
but these largely..were ignored

he made wayne thank me
via an email..but we got our bailout..not the bankers

my further concern was that with default
homeowners would loose equity..as the market got overwelmed
[and as now is happening..speculators snap them up..[at pennies the dollar][and get free tax incentives to send us all broke

add the rent assistance
as we subsidise these greedyxsharks

it must also be noted..that IF he had of taken further advice
[to only bailout..likely default..

*ACTUAL default..
thenonly,,when*.;.HOMEOWNERS were going to ACTUALLY..default..to bail them out....not the money changers wanting to send us broke

that would have cost only a fraction..now piisssed down the drain
which will shortly begin..*hyper inflating..as the poor CONTINUE stagflation..and the rich..[ALLRREADY..too big to fail..get even bigger

but now
stuff the money changers
let the,just try it again..again and again
its insane..now we got to war..in syria..
http://forum.onlineopinion.com.au/thread.asp?discussion=5978#170492
just like bush did last time

just so we cant commenorate
let alone think about.. the lies of 911..that beat up
revenge for the bushe cartel oil acces..and its long planned revenge

*buy back..the fed
next time..dont bailout banks..save the system
reinflate the TRUE/value inflation has stolen..from* our coinage

its devalued 100fold
thus weere one cent bough much..in days gone by
simply by govt saying so..one cent=one dollar..80cents deemed to equal.$50..ie bailout THE POOR*..

who have long ripped off the most.

just the basics tony
kevin is dead in the water..unless he talks of war..like bushe howard did before stealing an extra trillion..on greed/destruction/war

With hindsight, many economists recognize that John Howard's economic management was world class, and that Labor's management of the economy was less than competent. The $9bn cash splash has been shown to have generated less than 1% of the economic activity it was supposed to do, and the school halls debacle provided buildings of minimal use to the country for double the price of similar buildings done in the private sector.

The result is that Labor's election campaign is desperately trying to avoid talking about the economy.

Dear SM,

Talking about avoidance ...

What about the Coalition's policy costings?

What about giving actual facts and figures on
this country's economic standing.

As Alan keeps telling you SM you really aught
to stop reading what comes down the MSM colon -
especially The Australian.

<< A wiser plan would be borrowing more now while interest rates are low, keeping people employed and building much-needed infrastructure. >>

Alan, I can’t see it. A wiser plan would surely be to reduce immigration right down so that we wouldn’t need to constantly create so many jobs or build so much infrastructure!

We could then concentrate on measures to keep the employment rate of the established population high, and to actually improve infrastructure for the established population instead of having to build an enormous amount of new stuff for ever-more people.

And… we'd have a much better chance of doing it without going further into debt! Or if we did choose to go further into debt in order to fund this, we would get a much better result at the end of it.

The immigration rate / population growth rate is absolutely integral to this stuff!

For as long as we maintain high immigration, any further expenditure that we put into keeping people employed and building much-needed infrastructure is not likely to get us ahead. What it will do is just create more of the same for ever-more people… and consequently there will always be the demand for us to spend more on keeping people employed and building much-needed infrastructure! And thus there will always be pressure on us to borrow more… and thus it will be extremely hard for us to ever pay off our debt!

The continuously increasing demand for everything has got everything to do with this debate about financial / economic / debt issues!

Now, if we were to head towards a stable population and a sustainable society, then I’d be all for us going further into debt to fund it and make it happen more quickly, if it was deemed appropriate.

But with the continuous growth mindset absolutely entrenched, I think that going further into debt would be extremely dangerous and likely to lead to us having permanently rapidly increasing debt in order to just struggle to uphold the same employment rate and standard of services and infrastructure!

continued

Alan, can I ask you just exactly what debt means in the sense that we are talking about it here.

I guess it means ongoing interest payments of some millions of dollars annually. Does it also mean that we are beholden to the donor countries or the IMF in an increasing manner, and are thus pressured to do what they want regardless of what might be good for our economy, environment, quality of life or future?

Are we losing some control over our own destiny by going further into debt?

Greetings all,

@Ludwig: immigration will probably be determined on moral and political arguments about good global citizenship.

On the economics, however, evidence suggests net migration is okay.

Which are the world’s richest countries? They include Australia, Canada, the USA, Luxembourg, Liechtenstein, United Arab Emirates, Qatar, Singapore and Hong Kong.

These are in the top 25 nations by net intake. So positive migration correlates with wealth rather than poverty.

@Yabby, re: “Why should Australia emulate any of those countries [USA, UK, France, Belgium and Japan]?”

You shouldn’t. They are emulating Australia.

Re: “It is exactly because we had so little debt, that we came through the GFC so well.”

No, the evidence shows exactly the opposite. Low debt countries fared badly through the GFC. High debt countries fared well.

There was one exception – Australia. But Australia’s success had nothing whatsoever to do with debt.

Refer links embedded here:

http://www.independentaustralia.net/2013/politics/we-really-must-talk-about-this-debt-nonsense/

Re: “most of the rest of the economy is built on ever more expensive houses being built for ever more migrants. Hardly sustainable in the longer term.”

Of course it’s sustainable. The USA, Canada and Australia have accepted migrants for more than 220 years. Will prosper by doing so for another 220 years. Or are you looking longer term than that?

@Imajulianutter, re: “With hindsight, many economists recognize that John Howard's economic management was world class, and that Labor's management of the economy was less than competent.”

No, they don’t. The Howard years are universally regarded outside Australia’s Murdoch media as dismally disappointing. Opportunities squandered. Profitable enterprises flogged off for a pittance. Gold reserves sold at rock bottom prices – just before the price almost trebled. And $4.5 billion lost gambling on foreign exchange markets.

In 2007 Australia’s cash in the bank was only 7.2% of GDP. Pathetically low given the rivers of revenue from asset sales, the mining boom and a flourishing economy generally.

Finland had 72.5% of GDP in the bank. Norway had 138.8%. Australia’s miserable 7.2% was one reason economists rate Australia’s economic management then as among the worst in the world.

Try this quiz:

https://newmatilda.com/2013/03/15/could-you-be-treasurer-take-our-quiz

Cheers,

AA

The reason Alan Austin & others think our government saved us
from the GFC is because they do not understand what caused it.

Most economists and commentators did not predict the GFC.
They were looking in the wrong direction.
It was predicted, quite accurately, some 10 years earlier, indeed
a few predicted it 50 years earlier.

How can you write a piece about macroeconomics without even mentioning monetary policy? Macro is 90% about money, with the fundamental relationship between money output and prices being given by the equation of exchange MV=PY (maybe you ought to look it up). Nominal GDP is ultimately determined by whoever controls the printing press.
The case for fiscal stimulus can only be made when interest rates are zero. That is 100% consistant with modern Keyensian economics. But evidence now shows that even at the zero bound monetary policy is highly potent.

In the end the question boils down to this: Do you really believe that in absense of the fiscal stimulus the RBA would have let Australia fall into recession, even after nearly 2 decades of stable aggregate demand growth? Even when the RBA started in a much better position than other central banks (nominal GDP growing at an annual rate of more than 10% by mid 2008 compared to about 4% in the US) and we were far less exposed to the crisis than most other countries?

Hello again.

@Bazz, re “The reason Alan Austin & others think our government saved us from the GFC is they don’t understand what caused it.”

Perhaps, Bazz. Causes could be a fascinating discussion.

Nevertheless, Australia was whacked in the last 2008 quarter with GDP growth negative 0.7%, the worst since “the recession we had to have”.

Jobless exploded from 4.1% in September 2008 to 5.8% in nine months.

What happened next is the topic here. All other developed countries continued down the S-bend.

Australia alone avoided deep recession and returned to positive growth in GDP and jobs – with Poland second.

It's certainly worth understanding why Australia and Poland performed better than everywhere else.

The rest of the world understands that the stimulus intervention was critical. It's entirely appropriate Australians understand this also.

@Grimm23, re: “How can you write a piece about macroeconomics without even mentioning monetary policy?”

Because monetary policy has not been the subject of suppression of information, distorted analysis and outright lies, as has fiscal policy.

These articles simply seek to provide information readily available abroad which Australia's mainstream media have sought – successfully – to conceal.

Re: “Do you really believe that in absence of fiscal stimulus the RBA would have let Australia fall into recession, even after nearly 2 decades of stable aggregate demand growth?”

No government wants recession, Grimm. But every developed nation except Australia and Poland copped one.

The data shows the fiscal policy in these two nations was different from everywhere else – specifically, rapid cash handouts to households and vast infrastructure spending.

Re: “the RBA started in a much better position than other central banks (nominal GDP growing at an annual rate of more than 10% by mid 2008 …”

Not true, Grimm. The World Bank database shows pre-GFC growth rates (2007) were:

Australia 3.787990603
Germany 3.269045323
Ireland 5.445086556
Israel 5.496800779
New Zealand 3.562548069
Sweden 3.314245356
The UK 3.632672257

Australia was about average then. It is top of the pile now.

Reasons for this surge ought not be suppressed or denied for the political advantage of the wealthy few.

Cheers,

AA

Alan, go and tell the Greeks that high debt is the way to solve their problems! Fact is that Australia still runs a regular current account deficit each year, despite some of the best terms of trade ever. We aren't paying our way, but borrowing to bankroll the lifestyle. That is not sustainable. Australia can't just keep growing in population either. Already the city of Perth is highly dependant on gas powered water desalination for its water supplies.
Our soils are some of the poorest in the world and we can't keep mining those soils either, as we do now.

You are confusing nominal and real GDP. If you want to judge the effect of fiscal or monetary policy on aggregate demand you have to use nominal figures.

And if you look it up Australia's nominal GDP was grew at over 10% in the year to 01/07/2008. The US was already in recession in December 2007. Nominal GDP was falling in the UK in the first quarter of 2008. Australia was far better placed to start with (and the RBA has a more forward looking monetary policy and is more flexible with its inflation target).

But don't take my word for it. I'll quote Paul Krugman (of all people) to show that the fiscal stimulus in Australia was not needed:

"This is a curious thing for him to say, because it’s an outright lie; as anyone who has been reading me, Martin Wolf, Brad DeLong, Simon Wren-Lewis, etc. knows, our case has always been that fiscal stimulus is justified only when you’re up against the zero lower bound on interest rates." http://mobile.nytimes.com/blogs/krugman/2013/04/22/very-sensitive-people/

"Simon Wren-Lewis is deeply annoyed at the IMF, and understandably so. How can you publish a paper about fiscal adjustment that explicitly takes no account of monetary policy, and claim that it has any relevance to current problems?

The central fact of macro policy in these times isn’t subtle:

In normal times, the central bank can offset fiscal contraction by cutting interest rates. Since late 2008, however, the interest rates the Fed can control have been limited by the zero lower bound. This means that there is no offset to the negative effects of fiscal consolidation — which means that this is not the time to be doing such consolidation, which should wait until we emerge from this condition. We’re in a St. Augustine economy: Grant me chastity and continence, but not yet." http://mobile.nytimes.com/blogs/krugman/2013/08/24/the-macroeconomics-of-sisyphus/?from=krugman

I disagree with Krugman. I think that monetary policy is still powerful at the zero bound. But even a die-hard Keyensian like Krugman will tell you that fiscal stimulus in Australia was unnecessary!!
You are just relying on correlation to prove causation.

Dudd and Juliar claimed that Labor had saved hundreds of thousands of jobs, but their unemployment figures have been manipulated:

"The government is not running on its record. The Prime Minister is not focused on his achievements. He is running a campaign built on fabrications and future glory. He has been caught lying, without compunction, on multiple occasions. This is not even the most insidious mischief.

The government has manipulated the official statistics. It has compromised the reputation of the Treasury. An example of the endless spin cycle is the manipulation of the unemployment rate, a basic measure of the economy and thus, indirectly, a measure of the government's performance. The official rate is 5.7 per cent. It has been trending up for a year, from 5.2 per cent, a 10 per cent rise in 12 months. The real unemployment rate is higher, about 6.2 per cent according to a study by Andrew Baker of the Centre for Independent Studies.

Baker found that more than 100,000 job-seekers had been moved out of the unemployment ranks by shifting them into training schemes. ''An astonishing 360,000 unemployed people are classified as non-job-seekers,'' Baker wrote in his centre's monograph. ''The number [in training schemes has] skyrocketed from 62,500 in 2009 to 150,000 in 2012 … People on welfare who are not required to look for work will stay on welfare longer.'' He estimates that if the unemployed who are classified as ''non-job-seekers'' was included in the unemployment baseline number, the rate would be 6.2 per cent.

Even the Organisation for Economic Co-operation and Development (OECD) finds something is amiss with Australia's unemployment data, noting recently: ''The non job-seeker population is so large that it needs more analysis and attention.''

Not good, considering that when Rudd came to power in 2007 the official, uncooked, unemployment rate was 4.5 per cent. Despite a resources boom and $300 billion in government deficit spending, the unemployment rate has risen about 37 per cent under Labor."

http://www.rba.gov.au/speeches/2013/sp-ag-100413.html

There you go Alan, just for you.

So what really did save Australia's economy?

Whatever it was it was not Labor.

Ludwig;
The interest is not $millions, it is $Billions.
Even at 1% it is $3,000,000,000 a year.
I have a feeling that a lot of it is 2% to 3%.

Just our fuel import bill will soon be $115,000,000 A DAY plus processing in Singapore.

It is about time the pollies realised that we are close to world
wide zero growth. Some countries are already there some are sliding
there a bit slower, but eventually we will all get there.

Sustainable economies are the only way and that demands zero population growth.

Anyone who thinks we can have continous growth is either a madman or an economist.

PS
If you want to see a glimps of the future with uncontrolled growth;

Have a look at Egypt after its peak oil. (1995)