Stimulus Package
The Global Financial Crisis (GFC), a crisis that started in August 2007 and continued through to 2008, saw many countries around the world enter a recession. In response to the crisis, Australia, along with the G20 member countries, made a commitment to provide timely stimulus to domestic demand while maintaining a sustainable medium-term fiscal strategy (Swan & Tanner, Updated Economic and Fiscal Outlook, 2009, p. 35).
In December 2008 the government introduced a $10.4 billion stimulus package; the Economic Security Strategy, and in February 2009 the $42 billion National Building and Jobs plan was introduced (see Appendix A for details of the Stimulus). The aim of both stimulus packages was to stimulate the economy as well as support economic growth and jobs, targeting two components of the GDP; investment and consumption (Guay C. Lim, Chew Lian Chua, Edda Claus, & Sarantis Tsiaplias, Review of the Australian Economy 2009-10: On the Road to Recovery, 2010).
The Australian government believed that a fiscal stimulus was the solution to protect the Australian economy from the GFC, a crisis that was over hyped and over emphasised by the media. There is little evidence, however, to show that any positive changes in the Australian economy, to date, were a direct result of the fiscal stimulus.
Lim et al (2010) discuss the fiscal stimulus and the impact it had on consumption and investment, stating “it is doubtful that the stimulus significantly affected actual consumption as the stimulus of $21.3 billion was only about 3 per cent of actual annual household consumption … investment … and its effect was probably delayed as these activities are unlikely to have significant immediate positive impact.” Tatom (2006) argues that one-off payments tend to be saved because consumers do not see them as an addition to their permanent income.
Valentine, discussing the fiscal stimulus in an interview states the fiscal stimulus was “un-necessary and wasteful ... didn’t create
In December 2008 the government introduced a $10.4 billion stimulus package; the Economic Security Strategy, and in February 2009 the $42 billion National Building and Jobs plan was introduced (see Appendix A for details of the Stimulus). The aim of both stimulus packages was to stimulate the economy as well as support economic growth and jobs, targeting two components of the GDP; investment and consumption (Guay C. Lim, Chew Lian Chua, Edda Claus, & Sarantis Tsiaplias, Review of the Australian Economy 2009-10: On the Road to Recovery, 2010).
The Australian government believed that a fiscal stimulus was the solution to protect the Australian economy from the GFC, a crisis that was over hyped and over emphasised by the media. There is little evidence, however, to show that any positive changes in the Australian economy, to date, were a direct result of the fiscal stimulus.
Lim et al (2010) discuss the fiscal stimulus and the impact it had on consumption and investment, stating “it is doubtful that the stimulus significantly affected actual consumption as the stimulus of $21.3 billion was only about 3 per cent of actual annual household consumption … investment … and its effect was probably delayed as these activities are unlikely to have significant immediate positive impact.” Tatom (2006) argues that one-off payments tend to be saved because consumers do not see them as an addition to their permanent income.
Valentine, discussing the fiscal stimulus in an interview states the fiscal stimulus was “un-necessary and wasteful ... didn’t create