Tuesday, March 10, 2009

ZERO to 12,700 jobs in $12.7 billion package

According to the Australian Made Campaign every dollar spent on Australian made or grown goods benefits the Australian economy, with every one million dollars invested in the Australian manufacturing sector, twelve new full time jobs are created.

Based on this assumption, the "best" case scenario for the Australian Federal Government's package of $12.7 billion in one-off bonus payments of $950 each for low- and middle-income households and individuals would be for 12,700 jobs to be created.

The "worst" case scenario is that "ZERO" jobs are created if all of this money is spent on non-Australian made or grown goods.

Should the Australian Government be promoting an education campaign to the Australian people who will receive this money to ensure that it is spent to maximise the long term benefit of the Australian economy by investing in Australian made or grown products?

Or do we believe the Australian low- and middle-income households and individuals understand the importance of their investment decision with these funds?

11 comments:

  1. Hi Laurie,

    Very good and informative article.Thanks for sharing.

    I wonder if the government itself realises this concept considering the fact that in politics the idea of such handouts would be to get a green tick in the voters box for next election.

    Investing is infrastructure would have been the way to go. However, since the hand outs have been declared already one hopes that people invest in Aussie goods to genuinely boost economy.

    Regards
    Firdause Behramkamdin

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  2. It is difficult to expect the government to say "buy Australian" as they do not want to appear as coming accross as being protectionists.
    We all know that this would be most benifitial for the ecomony, but I am not confident that it will be the way.
    Infrastructure investment, Accellerated Depreciation and other incentives towards business investing and improving processes in manufacturing would all proove fruitful in my view without appearing as protectionists.

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  3. The Australian Federal Government stimulus package is worth a total of $42 billion, details on the package as below:

    - $12.7 billion for immediate one-off payments to working Australians, families with school-age children, farmers, single income families and for those undergoing training;

    - $14.7 billion to be invested in school infrastructure and maintenance and bringing forward funding for trade training centres;

    - $6.6 billion for to increase the national stock of public and community housing by about 20,000;

    - $3.9 billion to provide free insulation to 2.7 million homes and solar hot water rebates;

    - $890 million to fix regional roads and blackspots, to install railway boom gates and for regional and local government infrastructure;

    - $2.7 billion small and general business tax break to provide deductions for some equipment purchases before the end of June 2009.

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  4. It is interesting to note that a government department is spending thousands of dollars on creating awareness of heartburn and its prevention with a TV advertisement campaign.

    Yet I haven't seen one advertisement yet to promote buying Australian made or grown goods/services on TV since the announcement of the payments to low- and middle- income Australians.

    Wouldn't this be the best way to cure "heartburn" for the economy?

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  5. I believe that people who have unfortunately died since lodging their last taxation return would still be able to qualify for the payment from the Australian Federal Government.

    This would also apply to people who now reside overseas.

    I wonder how they will spend their money and how much of this will actually stimulate the economy.

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  6. This forum should be named "Buy Australian or Bye Australian"

    More and more people are going to loose jobs and no amount of money from the government will fix it in the short term.

    My analogy is this - It is as if the world has had a heart attack. The money that governments are pumping in is the Morphine which simply takes the edge off the pain and after a long complicated opation, the recovery will be slow and long drawn. Then confidence to do the things we did in the past will take some time to regain and then remembering what caused the attack will be forgotten until next time it happens. This is where we reflect on past occurances and remember the pain we went through and tighten our belts to survive through it again.

    It boiled my blood to see the hypocrits on ACA last night, Harvey and Dicky, telling us all to buy Australian when they made millions from importing crap, and I seem to recall one of them selling out to a multinational.

    This government needs to recognise that most of the imports should be considered DUMPED. The customs handbook would, but it is up to the individual to proove it. We need an independant Union of Companies formed to enforce these rules, and then you will see, secure jobs, better wages and conditions, and greater investment within companies. I know I would.

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  7. This comment has been removed by the author.

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  8. Hi Shane,

    I love your forum heading....this is sad but true, however BUY AUSTRALIAN OR BYE AUSTRALIA is a real powerful statement on the situation.

    The leaders of this country need to stand up and take some accountability here.

    It is also disappointing that apparently anyone who has been jailed for a criminal offence since lodging their last taxation return is also eligible to receive the payment from the Federal Governement.

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  9. According to the latest Nielsen survey, 11 percent of Australians said they have no spare cash after their essentials have been purchased and their monthly bills have been paid. For those consumers who do have spare cash remaining, paying off credit cards and debt and putting money into savings were the main use of their cash (42% of all consumers).

    Does this mean that 42% of the $12.7 billion will therefore not be contributing towards the growth of any jobs in the Australian manufacturing industry?

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  10. The High Court has started to hear a challenge to the Federal Government's $12.7 billion economic stimulus package payment.

    Bryan Pape a Former National Party office-holder argues the case against the cash handout, saying it is a "gift" not a tax bonus, and therefore is not constitutional, whilst the Federal Government maintains it is allowed under its constitutional powers.

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  11. Hi Laurie,

    I am not a fan of the "bonus" due to the fact that it is unlikely to be fully utilised in the way in which it intended to be. However, it is important to note that the quicker people pay down debt, the quicker they'll start spending again. And the more they save now, the more they'll spend later.

    Looking at it from a different angle, a classic and basic economic model is: C(consumption) + I(investment) + G(government spending) + [X(exports) - M(imports)] = Y(economic ouput). C is currently down and it would seem that only around half of the $12.7b given to consumers will be used to improve this; businesses aren't doing much I; so in order to keep Y growing, either G must increase and/or 'X minus M' must increase. Buying more Australian made goods obviously decreases M and can therefore help with the X-M part of the model; and if the government spends the $12.7b itself, a greater increase in G would be expected.

    Therefore, if the government spends more of the $42b on various projects rather than giving $12.7b to non-spending consumers; and if we all buy more Australian made goods, we have a better chance of increasing - or at least mitigating the decline of - Y.

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