The Schoolkids Bonus Is Stimulus, But You Can’t Call It That

8:47 May 10th, 2012 | 0 notes

‘Australia is a patchwork economy.’

It is a much abused phrase, but an accurate one nonetheless. You know the deal: the mining sector is driving the Australian dollar higher, making the rest of our export base less competitive with the rest of the world. What this doesn’t explain is the state of our retail sector. With imports being cheaper, you’d think that Australians would be flooding into their local shops. They are not.

Australians are having paradoxical thoughts. Low consumer sentiment appears to be linked with shoppers conflating the state of the global economy with the state of the Australian economy. This simply is not the case. 

We know mean gross incomes in Australia rose by 50% in the last half of the 2000s, and we also know that household spending only increased 38% over the same period. So the economy is chugging along nicely, but people don’t feel like it is. More importantly, they’re scared about what is happening in the rest of the world. As a result, Australians aren’t spending the money we know they have. 

This goes a long way to explains the lousy performance of the retail sector. Retail trade rose by a meager 0.9% in March, the latest month for which statistics are available. This follows on from the low retail growth we’ve seen for the past year now.

Framing the Schoolkids Bonus

When viewing the Schoolkids Bonus from this angle, it seems very obvious to me that this handout is akin to a second round of stimulus. The Government clearly wishes for people to spend it just as they did the $900 handouts during the financial crisis, albeit with less urgency this time around. If past experience is anything to go buy, much of the $820 bonuses will be spent quite quickly. The OECD found that forty percent of the $900 cheques were spent within three months. Assuming a similar pattern, the Schoolkids Bonus will get $840 million into the economy by September.

Here is where messaging matters a great deal. Openly calling the Bonus a stimulus package is bound to have the opposite of the desired effect. When consumers are already being overly-thrifty with their cash, reaffirming their unfounded fears about the economy by telling them the economy needs stimulus will only drive sentiment (and spending) even lower.

The aim is clear: the Government wants to provide extra support to sectors of the economy not benefitting from the commodities boom. Given the success of the previous fiscal transfer package, another round looks like a good way to achieve this aim. It also appears to be a measure that has very little downside political risk for the Gillard Government, unlike everything else it does.

Compared to the rest of the Western world, our economy is going gangbusters—most of it. It is no surprise that the Government would want to help along parts of the economy not doing so well. 

The Schoolkids Bonus is most certainly targeted stimulus at these parts of the economy, especially retail. 

Just don’t tell anyone that.

Interesting Fact

11:14 Apr 12th, 2012 | 2 notes

  • US economy added 120,000 jobs in March (BLS.gov)
  • Australian economy added 44,000 jobs in march (ABS.gov.au)

Australia’s population is 7% of that of the United States. Yet in Australia we created 44,000 jobs last month—equal to more than one-third of the jobs the US created in the same time period.

Where would you prefer to live?

Average Weekly Earnings: Australia and US

11:48 Dec 8th, 2011 | 132 notes

US: $795.42 - BLS.gov

Australia: $1,050.16 - ABS.gov.au

Figures are seasonally adjusted, $USD, all employees

12:59 Nov 26th, 2011 | 162 notes

99% vs 1%

7:23 Mar 18th, 2010 | 0 notes

Internet, Ubiquity and Crossing Borders The Australian Human Rights Commission has threatened legal action against a widely read but controversial US-based website over an article that encourages racial hatred against Aborigines. -SMH.com.au, 18/3/10 The website referred to is encyclopediadramatica.com. Widely regarded by some in my generation as hilarious. It is filled with tasteless black humor, satirical racism and the like. For me, the content of the website is not the issue, which is mostly in good humor, but under who’s law does it fall when legal action is taken against it? TV, book, newspaper and magazine publishers are all easy to sue. They are published or broadcast in Australia, therefore they fall under Australian law. US media and entertainment fall under US law. Additionally, they are all regulated media. Simple. But the internet is ubiquitous, omnipresent, pervasive and unregulated. No matter where you are, a website will always be available. However, the website is always stored in the same place regardless of where you access it from. A website is stored on a server, in a physical box, in a physical building, in a town, in a state, in a country. Websites are just like newspapers, magazines, TV and books in that they are created and sent out for consumption from exactly the same place every time. The difference lies in that websites obviously are not regulated as they cross international boundaries. Common sense would tell us that just because a website is available worldwide does not mean it must adhere to the laws of every single one of the world’s 194 countries (195 if you count Taipei). Doing so would be ridiculous. It would be like the Australian Government suing a US book publisher after a tourist brought a defamatory book from the US into Australia. You wouldn’t dream of it because the book was published in the US, under US law. From this, the next logical conclusion you can make is that just because a website is available in your country, it doesn’t mean it is published there or that it has to abide by your laws. For example, the website ratemyteachers.com was the subject of legal action from the New South Wales Department of Education and Training a few years ago. The Department wanted the site taken down because it allow student to defame teachers anonymously, and of course defamation is against Australian law. The website, hosted in the US, claimed first amendment rights and the DET had to back down, even though they could claim defamation. Encyclopediadramatica.com may be morally abhorrent and the like, but it’s a US website, published under US law, and they have the right to say what they like. I thought we had the same right here, but that’s a different matter. The legal system needs to get its act together and understand that the internet is different from the precedence set by every form of media that has come before it. Without doing so, we will increasingly see international legal action moving around the world with the same ease as a website or a naked photo of Lindsay Lohan.

Internet, Ubiquity and Crossing Borders

The Australian Human Rights Commission has threatened legal action against a widely read but controversial US-based website over an article that encourages racial hatred against Aborigines.

-SMH.com.au, 18/3/10

The website referred to is encyclopediadramatica.com. Widely regarded by some in my generation as hilarious. It is filled with tasteless black humor, satirical racism and the like. For me, the content of the website is not the issue, which is mostly in good humor, but under who’s law does it fall when legal action is taken against it?

TV, book, newspaper and magazine publishers are all easy to sue. They are published or broadcast in Australia, therefore they fall under Australian law. US media and entertainment fall under US law. Additionally, they are all regulated media. Simple. But the internet is ubiquitous, omnipresent, pervasive and unregulated. No matter where you are, a website will always be available. However, the website is always stored in the same place regardless of where you access it from. A website is stored on a server, in a physical box, in a physical building, in a town, in a state, in a country. Websites are just like newspapers, magazines, TV and books in that they are created and sent out for consumption from exactly the same place every time. The difference lies in that websites obviously are not regulated as they cross international boundaries.

Common sense would tell us that just because a website is available worldwide does not mean it must adhere to the laws of every single one of the world’s 194 countries (195 if you count Taipei). Doing so would be ridiculous. It would be like the Australian Government suing a US book publisher after a tourist brought a defamatory book from the US into Australia. You wouldn’t dream of it because the book was published in the US, under US law. From this, the next logical conclusion you can make is that just because a website is available in your country, it doesn’t mean it is published there or that it has to abide by your laws.

For example, the website ratemyteachers.com was the subject of legal action from the New South Wales Department of Education and Training a few years ago. The Department wanted the site taken down because it allow student to defame teachers anonymously, and of course defamation is against Australian law. The website, hosted in the US, claimed first amendment rights and the DET had to back down, even though they could claim defamation.

Encyclopediadramatica.com may be morally abhorrent and the like, but it’s a US website, published under US law, and they have the right to say what they like. I thought we had the same right here, but that’s a different matter. The legal system needs to get its act together and understand that the internet is different from the precedence set by every form of media that has come before it. Without doing so, we will increasingly see international legal action moving around the world with the same ease as a website or a naked photo of Lindsay Lohan.