It might be hard to recall now, but back in 2008, Kevin Rudd and Wayne Swan claimed the biggest economic challenge Australia faced was the now long-forgotten ‘inflation genie’ and the economy growing too quickly.
Labor finally realised after months of warnings that the Global Financial Crisis was going to impact Australia. Of course, this was the excuse for old Labor to re-emerge – with debts and deficits as far as the eye could see.
Whether these borrowed billions will actually add to Australia’s future wealth or simply be a debt burden on future generations is a matter of real concern.
I am a member of the Senate inquiry into Kevin Rudd’s cash splash, AKA the stimulus package, and despite Labor’s spin, the news from the inquiry is not good.
On Monday we heard from RBA Governor Glenn Stevens that interest rates are going to be higher than they need to be.
Professor Steven Kates of RMIT testified last week that each and every job created by the $42 billion cash splash cost taxpayers $1.5 million. He also said that the stimulus “will not create growth and in fact wastes resources so comprehensively in ways that are destroying our savings.”
Professor Sinclair Davidson of RMIT and the Institute of Public Affairs confirmed these fears, outlining just how the stimulus is failing while others argued that the stimulus has actually been very bad for the manufacturing sector.
Professor Tony Makin of Griffith University said that there is a serious threat of stagflation – the economic disaster of rising unemployment and inflation together that last occurred in the 1970s.
In short, very serious claims were made that the stimulus is not good value for money – particularly because it is all borrowed.
Glenn Stevens also made it clear that the Liberal legacy of budget surpluses protected the economy from the full force of the financial crisis.
Ironically, while Labor is spending this legacy on signs outside schools, the children at these schools will have to pay off Labor’s debt. And as I outlined in the last issue of On the Agenda, funding for some of these schools programs is not being distributed equally or fairly.
Personally, I can imagine better ways to spend billions of dollars improving education than building hundreds of one-size-fits-all school halls.
Last week I addressed the Institute of Public Affairs as part of their Liberty Sessions: Great Books at the IPA project. I spoke about The Federalist Papers – if you want to watch the video click here.