I am sympathetic to Malcolm Turnbull's rejection of the Rudd stimulus package and to his proposed more modest alternative of bringing tax cuts forward. I think the recession does have a long way to go and that disposing of all available fiscal ammunition immediately is unwise - a conservative package of something less than half Labor's proposal makes more sense. Indeed Labor's moves show all the signs of panic as well as a simple-minded socialist justification for increasing the role of the state in the economy. Sound extreme? Rudd this afternoon was attacking Turnbull for not rebuilding schools. Rudd is a hypocrite and a liar. This was never the justification for the spending.
I don't want a repeat of the previous Labor Government's record $96 billion public debt that took 10 years to wind down. The Coalition's proposed job subsidies - by subsidising the superannuation costs of small firms for 2 years - makes sense. They are direct policies and directly address the excess supply of Labor.
The employment effects of Labor's package are, on the other hand, derisively small (70,000) and incredibly expensive (nearly $500,000 per saved job). The implied addition to debt is, however, huge. Is it foolish to be risk-averse in relation to this package. The debt will definitely arrive.
Rudd's immediate and insulting rejection of Turnbull's counter-package shows Australia what type of man Rudd is. His populism is obscene. Why no counterarguments Kevin? What not a willingness to discuss the issues? A $42 billion package without intellectual or other justification beyond 'let'd do something and let's make it big' and Rudd demands immediate acceptance without debate of a dubious package.
I am pleased too that Turnbull is displaying political courage despite the short-term flack his move is bound to have. The Coalition should have stuck to its guns in suppporting WorkChoices in the face of the job-destroying policies of Labor. It is inevitable that the Australian economy is in for a difficult few years - hundreds of thousands will have their lives damaged as they lose their jobs. We will all face much higher taxes to repay Labor's debt which, at current rates of growth, will amount to $200 billion or $9,500 per person within a few years.
Even if Turnbull cannot attract the votes of minor parties in the Senate to force a change it makes sense for Turnbull to stick to conservative principles as the ensuing recession and failed policy responses bury the Labor Party. Turnbull is doing his job as an opposition leader and a fiscal expansion of the type proposed by Rudd deserves scrutiny. He can't demand uncritical acceptance on the grounds of 'obviousness' or of 'crisis'.
The moronic left at LP debunk Turnbull not because of any perceived deficiency in his package but because voters will hammer him for not awarding them another handout. I don't think voters are as stupid as this lot - some will realise that they are paying for the handout now and in the future.
Update: Mark Crosby - level-headed macroeconomist newly arrived at CoreEcon - supports my skepticism toward the Rudd package. He also shares the Turnbull concern with the massive emerging debt that we know will stem from the Rudd package.