So, the problem was, to a significant extent, inflated property prices, share prices divorced from earnings value, too much personal debt. And the solution is ..... stimulate the housing market, give us all money we haven't earned yet to buy lots of foreign consumer goods and rack up national debt. Okay, the stimulus and other things appear to have got us through the GFC with only a few of us suffering much harm along the way. But surely it also means that we, as a community, still haven't really grasped why the GFC happened and, therefore, why won't it happen again ?

I can understand the case for a modest stimulus package, providing it is well managed and targetted at cushioning the effects of unemployment and business downturn for those in the front line of the GFC, so to speak. But for those of us with secure jobs, the cash splash was a freebie that wasn't warranted. I'm not a masochist, but surely if many of us haven't experienced a little pain during the GFC, why will we change ? I suspect in 50 years' time, economics students will be taught this as a case study of short termism that fixed nothing in the longer run!

You must be a fortune teller or something to predict the longer term.

I note that the school's program has had to be delayed because they can't get builders at reasonable prices. This suggests that whether the stimulus worked or not, it was unnecessary, at least in this form, because the industry would look to be working at pretty well 100% capacity.

At the beginning of this year, all construction projects in my town simply stopped dead. Large numbers of building workers were laid off.

It appears that the stimulus has returned the sector to near-full capacity. Everywhere I drive here, building projects are in full swing once more where six or seven months ago, there were just abandoned construction sites.

There is no doubt when there is taxpayer money being thrown around there will be some bad judgements, mismanagement and some who will abuse the process.

Overall the spin-off effects of the stimulus seem to be working given Australia's position relative to other nations in the GFC.

I am not sure about stimulus packages in the form of rebates - home insulation, solar and water even though the intentions are good. Rebates tend to inflate the prices giving any win-falls to a small section of business (and if you are lucky a handful of consumers).

Spending on schools has been long overdue but I would question some of the projects as being perhaps not as necessary as increasing the bank of social housing to reduce incredibly long waiting lists in some states. And to help reduce homelessness caused by inflated rents, availability of rental properties and the high cost of housing.

Could tax cuts be a better way of stimulating the economy? Spreading the 'wind-falls' around more evenly to stimulate various sectors. Probably not given the money would be spread a bit thin on the ground - $42B divided by the number of taxpayers (anyone know the figures?

Last time I looked the workforce was about 6 million. So that's $7,000 each Pelican. Not that I would have recommended tax cuts, and certainly not of that quantum.

I don't think there is any doubt that the stimulus package was far too large and very badly targetted. And it won't do any long term good to the economy.

But I also have problems with some of the critics who say that the jobs it created cost hundreds of thousands each.

We don't need the type of stimulus packages they might have needed in previous depressions/recessions because welfare takes up so much of the slack in the economy when things turn down.

But we could have used any available additional capacity in the economy to add to the nation's stock of capital at cheap prices. Building school libraries is not one of those things that needed to be done at this time. Getting the infrastructure right for the next upswing was.

I disagree that the stimulus was far to large. It could perhaps have been better targetted overall - it was dispensed in haste in response to an almost unprecedented event - but to argue that it was a completely unnecessary waste seems akin to arguing that 2+2 does not equal 4.

Targetting consumers certainly worked - good thing too. Retail, wholesale and transport together employ amost a quater of the workforce. Had that gone down the gurgler, unemployment would have skyrocketed.

Business investment remains generally weak and our labour market is only just hanging on with strong fiscal support. Withdrawing the stimulus right now would be unwise.

I see no convincing cas for returning the budget to surplus in the near future. In any case, most of the time, surpluses do more harm than good. We the public are convinced that the opposite is the case because we completely misunderstand the most basic functioning of a modern economy and the basic mechanics of the thing we call "money".

Two topics here. Taxation, and stimulus.

I have long thought that the taxation system should be overhauled to award the taxpayer, rather than to punish them as is often the case.

In my view, a person’s retirement should be reflective on the amount of taxes they have contributed throughout their working lives.

Imagine a system whereby if one had been continually employed for say 50 odd years, paid taxes every week, then was rewarded with a decent retirement package upon retirement. Now consideration should also be given to mothers who, while not paying taxes during the raising of their children, have in fact earned the right to a decent retirement.

Our current system is the reverse of this whereby, the harder you work, the more taxes you pay, and the less you get back upon retirement.

As long as this system remains, tax avoidance will continue to be high.

Stimulus
There is a simple way to make people spend the stimulus.

A debit card with an expiry date. Use it or loose it!.

If such a card were distributed, with an expiry date, and a restriction on certain purchases and no cash out facility, 100% of all stimulus would be spent within an allotted period or it would quite simply be lost. Much like the way many mobile phone caps work.

We may well need to consider a system like this for welfare going forward in an effort to stop the recipient (NOT ALL) from wasting tax payers (NOT THE GOVERNMENTS) money.

I have no problem with an overhaul of the tax system. Though I'm not sure that those who pay more tax have automatically worked harder. I know plently of people who all work with equall vigour and dedication, yet there are stark differences in the rate of renumeration they recieve. A nurse for example, works long, hard and with dedication yet does not recieve anything like the pay of a worker at the local alumina refinery.

The bulk of the "cash splash" appears to have been spent already, so I don't think issuing debit cards is necessary. It is easier for the government to simply credit private bank accounts - the same way it conducts most of it's spending.

Another point is that what has not been spent has financed the private sector's desire to save - which is really only deferred spending.

Welfare is the provision of the federal government and as such, it is not "taxpayer's money" - that appearence is an illusion.

Imagine Australia is a new country and it is day one. The government has no money, so it must tax us to get it before it can spend anything. Miraculously, we have all woken up with Australian denominated currency in our hands and bank accounts, which the mean old government - having none of it's own - will straight away begin taxing from us.

See anything wrong with this picture? How is it that we all came to be holding Australian denominated fiancial assets - and yet the government had none? What mysterious process brought Australian currency into existence in the hands of the private sector first so that the government could tax it later?

The causality runs in reverse. Australian demoninated currency is the sole creation of the Australian government. It's spending is the source of the funds that we use to pay taxes and buy government bonds - (federal) taxes and the buying of bonds simply represent Australian demoninated financial assets "going back to meet their maker".

So if the government does not spend first, ultimately it can't tax at all.

$7000 each would be too much per taxpayer - agreed Graham. The problem with tax cuts in terms of stimulating the economy also might be that people will use it to reduce debt. Which is not a bad thing from a personal viewpoint but goes against the whole concept of stimulus.

I agree that the Government needed to stimulate the economy but also agree with Fozz and Graham that some of the money could have been better targetted particularly given the Government's focus on issues like homelessness and renewable energy infrastructure.

Certainly there were gaping holes in all the state transport systems that needed to be fixed but there are also projects being done for the sake of spending rather than need - which knowing bureacratic processes can be hard to monitor from a strategic position.