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.