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Actions to stimulate the economy in 2009 and beyond.

December 16th, 2008 · Greg Atkinson · 7 Comments

It seems that almost everyday we hear about another government plan aimed to stimulate the economy. Finally it seems the government has stopped blaming the previous government for inflation (and a large budget surplus) and is now blaming the world for the slow down in the Australian economy.

However as I have mentioned in other blogs much of the damage done to the Australian economy has been self inflicted, and so the best way for our nation to bounce back in 2009 and beyond is via some self help programs. Australia cannot wait for the global economy to come along and somehow save us,  nor can we expect a return to business as usual.

The Roman Emperors attempted to keep the masses happy by providing spectacular games in the Colosseum and handing out free bread. World leader’s today try to host major events (Olympics, APEC meetings etc) and hand out government bonuses, tax cuts and one-off payments.  However although games, free bread and cash handouts might be popular, they basically do nothing to help a nation’s economy over the longer term.

So what can the Government do in the face of a global downturn you might say? Well the answer is actually quite simple…support businesses. After all businesses put money into people’s pockets (via salaries) as opposed to governments which take your money, spend it,often give it to other people and sometimes generously give some back to you. (and then want to be thanked for doing so!)

So let’s look at some measures that I believe would help the economy and businesses.

  • Forget the emissions trading tax..oops I meant scheme. We are the not the worlds biggest polluters by a long way and if you take into account the size of Australia versus our CO2 footprint then I cannot see what we are supposed to be doing. Let’s stop clearing trees, plant a few million more and just encourage low polluting industries. (maybe we need economists to play SimCity?)
  • Go nuclear. Yes my friends there is a source of energy out there that will reduce our CO2 emissions, create jobs (actually create a whole new industry) and best of all we have all the raw materials needed to generate power (i.e. uranium) sitting in our own backyard. We do not need to locate the nuclear plants near coastal cities, just spend a bit extra and locate them in remote locations near water. If needed why not create a few massive inland lakes? If you wish to solve big problems then you need to think big. I wonder what ever happened to big projects like the Snowy Mountains Scheme?
  • Cut the corporate tax rate. There is no doubt that companies would benefit from a tax cut so let’s do it. Who cares what the average OECD corporate tax rate is unless we want to be an average OECD country. I am not sure by how much the rate should be cut, but let’s say around 5% and make sure we encourage companies to invest serious money in R&D so we do not become the thickheads of Asia.  In addition if a company meets certain “green” criteria such as reducing pollution and recycling water, then they should be entitled to an additional reduction in tax.
  • Invest in public transport. I read recently where Sydney was judged to have one of the worst public transport systems in the world and this is no surprise I guess to anyone who lives in Sydney. Personally I dread flying back to Sydney as I know the horror of getting around town will start from the moment I clear quarantine. (after a lengthy wait of course) One can only wonder how much the productivity of Sydney is adversely impacted by train and traffic delays and I suspect there are problems brewing in other major Australian cities as well. So let’s have a truly national urban public transport plan that would not only look at getting people moving around our cities in a more efficient manner but would also reduce our dependence on imported oil.
  • Simplify the tax system. You know you have a problem when you need a mountain of people to administer the tax system and also a small army of accountants to help people fill out their tax returns. It reminds me of my days working in the telecoms industry where you had people everywhere working on technical specifications, but the mobile phone industry as a whole was unable to develop the iPhone.  In regards to tax we seem to have thousands of people involved but although there is often talk of making improvements the system seems to become more complicated each year. Perhaps we need an “Apple” like entity to come in and turn the tax system on it’s head?
  • Become a global health care centre of excellence.  As I mentioned briefly in The car industry, six billion dollars and another blunder Australia should become a world leader in medical research and we should aim to have the best hospital system in the world. Australia could export expertise in medical research and health care across the globe and this could be our first knowledge based mega industry. A curious aspect about Australia is that we aim for gold at the Olympics but  seem prepared to tolerate a very average health system.  (I am being generous when I use the term “average”)
  • Consider a space industry. Okay I am on shaky ground with this one but what the heck I will slide it onto my list anyway. My reasoning is that there seems to be a lot of things heading up into space these days and I suspect the pace will quicken during the course of this century. We already have some facilities in places like  Woomera in South Australia, so perhaps we can get a little more involved in the development, manufacturing and launching of satellites?
  • Maybe my list of actions is a little ambitious, but wouldn’t it be good for Australia to wish for more than a return to higher commodities prices? Perhaps we could use this current global slowdown as a time to reorganise and refocus so that we come out the other side in better shape, ready to face the challenges of the next few decades.

    7 responses so far ↓

    • 1 Pete // Mar 23, 2009 at 6:40 am

      I generally like this list – good job.

      I don’t totally agree with “Become a global health care centre of excellence.”. It sounds lovely, but doesn’t necessarily work in a flagging economy. Health care costs a government a LOT.

      Maybe if they banned smoking and trans-fats first… 😉

      Oh and as for Uranium, I am in total agreement, except for being able to put the stations wherever you like. I believe that one of the problems associated with generating electricity is the requirement that it must be located near an electricity grid (ie, a major city). The reason for this is that transporting electricity over large expanses is wasteful (you lose bits on the way).

      That said, it just occurred to me that our Snowy Mountains Hydro-Electric Scheme must be a tad wasteful in that sense. I’ve seen the powerlines for that (huge).

      But if nuclear being near cities is such an issue, I am sure that the electricity loss compromise vs. keeping people happy compromise could be made, so perhaps your point stands.

      The ‘distance to grid’ problem is just one reason we can’t (erm, shouldn’t) build giant solar power stations in the middle of Australia. Well, solar stations is another topic altogether (fraught with problems).

      Love the last paragraph though – right on!

    • 2 Greg Atkinson // Mar 23, 2009 at 9:38 am

      Hi Pete, glad you liked the list. In regards to health care I really think we could earn big export dollars with this. I am not talking about just pouring more money into public hospitals but rather stimulating excellence in private hospitals, aged care and advanced medical treatments etc. so that these competencies can be exported. As for nuclear plants I think they can be a fair way from the major cities. Here in Japan there are around 55 nuclear power plants and most of them are fair way from the big cities. They even manage to operate these plants in a country rattled by frequent earthquakes so I would say if Australia got serious about nuclear power that we could overcome some of our local challenges.

    • 3 Pete // Mar 23, 2009 at 10:29 am

      I agree with the health care thing now that you have explained it. And yes, we could make some big money.

    • 4 Pete // Mar 23, 2009 at 10:37 am

      As for the nuclear thing, perhaps the distance thing is 1000’s of KM’s rather than 100’s that becomes a problem? I confess I don’t know too much on the topic but I do know that electricity loss is a problem.

      However, of course, if you have a huge energy supply, perhaps a little bit of loss isn’t so much of a worry?

    • 5 Hotchillilover // Apr 17, 2009 at 12:38 pm

      Given that your political leanings are conservative (judging by your comments and viewpoints) I find it incongruous that none of the actions you’ve suggested never happened under John Howard.

      Your lot had their chance to do something positive and failed to do so. I’m not talking about budgets and surpluses even though they are important. I’m talking about the kind of initiatives that establish new areas of opportunity and revenue. Solar energy, IT etc. These things could’ve got some attention from Howard and Costello but didn’t. Australia lead the world in solar energy research at one point but has now lost that lead. Where was the investment in tertiary education to turn out the graduates who could work in these areas? I’m sure you are familiar with what’s happened in India, why we couldn’t adopt the same approach here?

      What were you doing in the Howard years? Cheerleading while the Australian markets went ever upwards on the back of the resources boom? It’s ironic how those who worship at the alter of the free market complain about government intervention when the free market collapses. I’ll bet two years ago you had no idea of the impending meltdown or the reasons why.

      Similarly you have no idea about the NBN and what it might achieve, do you really think that high speed FTTH networks are just about faster downloading? You should have a chat to your mates in any of the media and telecommunication companies. They’ll tell you the proposed FTTH infrastructure provides a capability to deliver a completely new set of products and services that businesses and individuals will use and pay for.

      I’ll bet that Rupert Murdoch is salivating at the prospect of reaching a whole new set of customers for Foxtel and new ways of delivering specific content. Sure the business case looks bad if you only think in terms of present day usage but ten years from now it’ll look completely different.

      At least Kevin Rudd has a vision and is prepared to act on it. If the best the Liberals could come up with was the lame half-hearted attempt launched by Helen Coonan then it’s no wonder you’re incapable of understanding the implications of FTTH.

    • 6 Greg Atkinson // Apr 17, 2009 at 1:40 pm

      Hi Hotchillilover, thanks for your comment.

      Firstly Howard is not “my lot” and if he were still in power today then he would be getting the same treatment as Rudd and Co. receive. Secondly what Howard did when he was in power was pay down government debt, build up a surplus and set up a future fund to cover government pensions so to be fair it isn’t like they did nothing during the boom years. I am sure if he plunged the country into debt and spent billions more he could have done more, it is just that he chose to balance the books in the good times instead.

      Having said that I would certainly say that the Howard years did not do enough to diversify the Australian economy and our universities churned out far too many banker and lawyer types as opposed to engineers and scientists. But I am not sure where the blame lies for that although Howard and Co. would have to take some of the heat.

      As for the NBN let me just say that as a person with a degree in Electrical Engineering (Telecommunications) and having worked in telecoms for many years that I actually do know a few things about broadband. I also currently have a home 100 Mbps connection (here in Japan) and thus would be one of the few Australians who actually has any idea of what it means to have such a connection. The fact is around 20 Mbps would be satisfy most users and yes 100 Mbps is great for some people, but is not something you need across urban Australia at this stage and certainly not something the government should be deploying. I know many telecommunications and media companies love to talk up broadband, but do you think they are being driven by national interest or profits? In any case you seem to be suggesting it is okay for the government to foot the majority of the bill to roll out a network that private companies can then use to shove products into our homes. (no wonder News Ltd would be happy!)

      You fail to mention however that during the Howard years that 3G mobile networks were rolled out, broadband speeds of up to 20 Mbps were made available and that high speed wireless networks become a reality, so I wonder how people can say nothing was happening before Rudd came to power? And by the way the private sector built these networks at their own risk and the government actually made money from the 3G deployments by selling off spectrum.

      Finally I have never suggested that we do not need a modern communications network in Australia. I am simply suggesting that the proposal by the Rudd Government is the wrong way to go.

    • 7 Greg Atkinson // Feb 17, 2010 at 10:42 am

      Well it seems Australia is going to be one of the few modern nations that does not embrace nuclear power. Even Obama thinks it is a good idea now: Obama backs new US nuclear plants

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