Laura Tingle writes:

"Last year's massive economic recuse packages have
been wildly successful in keeping the economy afloat.
That funding is continuing to prop up the economy into
2021 even before any spending measures in this year's
budget come into effect."

The economy staying afloat has re-assured households that
they can go out and spend without fear of losing their
jobs hanging over them.

The job market has surged back to life creating almost a
million extra jobs since the bleakest times last year.
Income tax flowing to the government has also surged and
government spending on things like unemployment benefits
has been slashed.

Along with a soaring iron ore price the bounce back has
drastically reduced the size of the forecast budget
deficit in 2020-2021 and 2021-22 by almost $60 billion
over those 2 years alone.

There's more at the following link:

http://www.abc.net.au/news/2021-05-12/budget-2021-laura-tingle-analysis-/100132468

thinkabit,
There are indeed essential differences between government and private spending for creating general business activity. But not the one you mentioned- governments have long maintained a consensus that propping up failing businesses is bad policy.

The biggest real difference is that the private sector has no interest in doing what's not directly profitable. But the government does: it has an interest in providing the things that make private sector businesses more productive (as this ultimately results in increased tax revenue). It also has a democratic mandate to provide things that improve the population's quality of life.

Government borrowing is no more inflationary than private sector borrowing.

ALP veteran "Richo" referring to the Big Budget/Big Debt nightmare says, "Josh is welcome in our party now. He is a great Labor treasurer.

The debt forecast is a follows:

2020-21 $617 billion
2021-22 $729 billion
2022-23 $830 billion
2023-24 $920 billion
2024-25 $980 billion

Josh Freydenberg says that Australia's "effective" management of the Chinese 'flu makes it more attractive for immigrants. He hasn't given thought to the fact that the larger the population, the greater the chance our luck will run out. And it is luck, not 'effective management'; lucky we are an island, lucky we have a small population, and lucky we have the climate we do. Minimal domestic infection, with the cases we do have among people allowed to cross our international border because the government is too weak to stop them.

Let's hope our lousy treasure never gets to be immigration minister.

Aidan wrote: "Where the creation of physical wealth is being hampered by a lack of money, increasing the supply of money DOES result in an increase in the creation of net physical wealth."

That is certainly true. But how that applies in the current situation is baffling. In a situation where the government has been running two record level deficits and plans on running many more, all of it based on borrowed/printed money, it ought to be clear to even the dullest that we don't have a 'lack of money'. Indeed we have a tidal wave of money.

There is this belief that the government had to do all this to save the economy. But what is forgotten is that the economy only needs to be saved from the government. The myriad lockdowns have created this mess and now the government is spending the nation's future to paper over the disaster.

We are currently surviving only on higher than expected resource prices. If they fall or if the Chinese decide to really put the boot in by buying elsewhere, we have nowhere to turn.

All of this would be barely tolerable if the international situation were rosy and we could rely on being saved by a growing international economy. But a quick look across the Pacific sees a US economy with a significant risk of high inflation and low growth (following the April jobs outcome). Anyone with a memory of the late 1970s and the Carter economy will know that a sick US bodes ill for Australia. It used to be said that when the US sneezes the world catches cold. But in our current state, thanks to this and previous administration's profligacy, we cannot afford to even catch a sniffle, let alone a cold.

Buckle down folks. Its gunna be a rocky next few years.

mhaze,
> it ought to be clear to even the dullest that we don't have a 'lack of money'. Indeed we have a tidal wave of money.

It may appear that way if you look at government spending in isolation. But the extra government spending is there to make up for the huge fall in private spending (compared to pre pandemic levels). It's the combination of the two that matters, and there'd be a severe lack of money had not the government stepped up to mitigate the private sector shortfall.

> But what is forgotten is that the economy only needs to be saved from the government.

That's rubbish. The economy needs to be saved from a demand shortage, and the pandemic itself did far more to cause that shortage than the lockdowns did.

> We are currently surviving only on higher than expected resource prices.

No, we're thriving on higher than expected resource prices. Were they not so high, our dollar would be lower and the government would have to run even bigger deficits, but survival would not be a problem.

Our mineral resources are fungible, so the damage the Chinese can do is limited. Their actions are a nuisance, but they're hurting themselves more than us.

The USA's growth looks set to recover quickly now that Biden's passed a huge stimulus bill and huge numbers of Americans are being vaccinated. It's certainly not like the 1970s when OPEC's curtailment of oil production wrecked the economies of a world overly dependent on oil.