An income tax holiday

The cost of Mr Rudd's stimulus package is expected to be $97 billion over four years. What could be achieved if a tax cut was offered instead. How about a one year tax holiday:

If the Rudd government had implemented a one-off income tax cut the average Australian taxpayer would have received a one-off tax cut of more than $8,200 in 2008-09, according to new research released today.

The total size of the Rudd government's fiscal policy decisions taken during 2008-09 is expected to be $97 billion over four years. If the government instead gave a one-off personal income tax cut equal in size to this, the average individual Australian taxpayer would have paid $8,228 less in tax last year.

Alternatively, for about the same total cost, the government could have cut income tax to zero for everyone, except the richest three per cent of taxpayers....

Off course there's one big problem with such a plan. The government wouldn't be able to pork barrel  marginal seats.

The IPA paper is here.

Our very own sub prime crisis

We will be paying for Kevin Rudd's stimulus in the most horrible way:

Meanwhile, the first-home buyer end of the market has been booming.

But economists fear this flurry of activity at the lower end has inflated prices to unsustainable levels.

In Sydney, the average property already costs nine times the average household income, while the UK and US reached a peak of only seven times average income before their markets crashed.

According to Professor Keen, the First Home Owner Grant has cost the government about $200million, but has inflated property prices by close to $3billion.

"This is all illusionary wealth that could disappear very quickly," he said.

"The additional $2.8billion or so has come from increased mortgage debt taken on by those most vulnerable to a serious economic downturn at a time when we can see very clearly that the global recession is coming our way."

The Government may well extend the first-homebuyer grant beyond its planned end-date of June 30, which Professor Keen says will end up pumping the market to even higher levels.

The University of Western Sydney professor said he had sold his Sydney house because he feared a property crash, but his gloomy view on the market has been backed by other experts.

Gerard Minack, chief economist at Morgan Stanley, said property prices were likely to fall by 20 per cent in some cities, while the value of houses on coastal strips such as the NSW mid-north coast and the Gold Coast could halve.....

"Traditionally what has hurt people has not been rising interest rates but rising unemployment. I don't care what rate you're paying, if you have a mortgage five times your income and you lose your job, you're toast."

In the 1990's I worked for Centrelink and remember how high interest rates destroyed families. Looks like we could be seeing a repeat. I'm going to use any stimulus handout to reduce my mortgage and hope I can hang on to my job for the next few years. On the brightside there should be some nice affordable Queensland properties coming on the market .

Palin reject 1/2 of Federal stimulus money

Governor Palin has rejected over $500 million of Obama's stimulus package. No Australian Premier would have the guts to do something similar with Rudd's money.

March 19, 2009, Juneau, Alaska - Governor Sarah Palin submitted her federal economic stimulus appropriation bill to legislators today to provide jobs and needed infrastructure improvements in Alaska under the American Recovery & Reinvestment Act (ARRA). Governor Palin is accepting just 55 percent of the available stimulus funds, all for capital projects. This amount includes the funds the state accepted last month for Department of Transportation projects.

"We will request federal stimulus funds for capital projects that will create new jobs and expand the economy," Governor Palin said. “We won’t be bound by federal strings in exchange for dollars, nor will we dig ourselves a deeper hole in two years when these federal funds are gone. For instance, in order to accept what look like attractive energy funds, our local communities would be required to adopt uniform building codes. Government would then be required to police those codes. These types of funds are not sensible for Alaska.”'...

Bailouts and Bull

John Stossel tries to apply some sense to the economic bailouts:



Thanks to Alex Hawke for the tip.

Thank you Mr Rudd

For saving the Liberal Party. Since the Prime Minister's essay in The Monthly and his 42 Billion dollar stimulus package we have had Malcolm Turnbull leading Liberals to complete opposition of the package and Peter Costello and Tony Abbott in the media tearing into Rudd. The difference between the two parties is now clear. Its between Rudd and his socialist Whitlamite agenda and the Coalition rapidly moving towards limited government and tax cuts. Thats exactly the direction the Libs should be going. Now can they please come out in opposition to internet censorship, limit or better still oppose ETS, and stand up against workplace restrictions so we can really have a party of liberty.

Costello hits back

Peter Costello responds to Rudd's stimulus package. He is devastating .