Opposition leader Turnbull has decided to go to the wall in opposing the $42 billion package. In particular, they want tax cuts rather than the $12.7 billion in cash handouts. He said they will not be provide economic stimulus and that December’s $10.4 billion in handouts had not worked. Soon after Turnbull provided these conclusions the ABS released the latest retail trade figures which showed that consumer spending shot up by 3.8 per cent in December, the highest monthly increase since August 2000 (since the GST came in).
Things are going crazy with the climate these days and certain animals are coming up with new coping strategies. I was sent some photos yesterday about a Koala that got hot and thirsty in South Australia during its current record heat wave.
Yesterday the Government announced its latest fiscal response to the rapidly worsening economic situation. They will spend $42 billion (mostly in 2009 and into 2010 to shore up aggregate demand. They estimate this will underwrite 90,000 jobs in the economy. That is not new jobs but existing jobs. They also estimate that the unemployment rate will rise to 7 per cent over the coming year which is around 300,000 people extra who will be without work. That will take unemployment towards 850,000 and underemployment will certainly rise in lock-step (already around 600,000) so you see the scale of the deterioration.
However, while I think the package is a step in the right direction, the Government has failed to really target jobs. If the Government had have introduced a Job Guarantee and paid the workers the current national minimum wage (with holiday pay etc) it could have hired 557,000 full-time equivalent workers for around $8.3 billion per year. Where does this figure come from?
Various estimates about the size of the federal budget deficit are starting to emerge. The Government has acknowledged that the data shows that tax receipts have fallen dramatically and now their budget is in deficit. For me that is a time of national rejoicing … finally … the federal government is doing what it should … resuming its crucial role in financing non-government (in this case) domestic private savings. Finally, there is a net injection of financial assets coming from the excess spending over receipts. Finally, the drain on private wealth that the creation of budget surpluses requires is at an end.
On Monday I saw Jeff Beck at the Palais Theatre in Melbourne. Here is what I thought. Last night (Saturday, January 31) I saw Leonard Cohen at an open air concert in a Hunter Valley vineyard. It is not often that you get to see two masters in one week. I gave last night’s concert a score of 8.5/10.
Australian Prime Minister Kevin Rudd has written an essay extolling the virtues of a new era in public policy which he calls “social capitalism” which is based on a strong guiding role for government and an abandonment of self-regulation by corporate interests which was the hallmark of the neo-liberal era. He sources the current global economic meltdown to the neo-liberal takeover which began more or less in the mid 1970s after the first OPEC oil price rise. The problem is that his new vision is still tainted with the worst elements of the neo-liberal era.
The government (Department of Education, Employment and Workplace Relations) released the January Vacancy report today which provides some information about the demand-side of the labour market. The Skilled Vacancy Index (SVI) is published monthly by the DEEWR and is based on the number of skilled vacancy advertisements in major newspapers . I have written a fair bit about the so-called skills shortage and have concluded that the SVI data does not support a case that a large skills gap has developed in aggregate terms in the last several years as the boom peaked. There has not been a sharp rise in the demand for skills in Australia in the last several years. The latest data is particularly alarming though.
Today in the Fairfax press, economics writer Ross Gittins in an article entitled No good reason to feel depression claims that we should not be too worried about the looming recession because after all things aren’t likely to be that bad. Well from my perspective recessions are episodes that wreak havoc on the most disadvantaged citizens in our society and should never occur.
On Monday I was doing some work in Melbourne and took advantage of the location to see Jeff Beck at the old Palais Theatre in St Kilda on Monday night. I love the Palais and have seen some great things there. This was the first time I had seen Jeff Beck live and only the second time he has been to Australia. He is a masterful player of the instrument that has defined our generation of music. He played a white (could be cream) stratocaster through what looked liked a 50w single stack Marshall and another Fender blackface twin amp (I wasn’t close enough to see which type). He use an octave divider and some overdrive (pedals were obscured behind foldback) but not much else.