- Date published:
9:45 am, December 14th, 2009 - 8 comments
Categories: labour, national, unemployment - Tags: new jobs, stimulus
“Govt stimulus creates 2300 jobs” reads the headline! It’s a bit misleading though. A more accurate headline would have been – “Labour Govt stimulus creates 2300 jobs”. How’s that, I hear you cry? Follow the money:
The Government estimates its economic stimulus package has created about 2300 jobs through increased infrastructure spending of more than $500 million. Last February the Government announced it was increasing or bringing forward planned spending on housing, roading and education infrastructure.
These jobs are attributed to National “increasing or bringing forward planned spending”, or in other words tinkering with the infrastructure plan of the last Labour government. Well at least National increased spending? They’d certainly like you to think so, but thanks to some real reporting by Tim Watkin we know otherwise:
The truth about National’s so-called stimulus: not a penny more
Pundit has finally received answers from Bill English’s office about the government’s stimulus package. Contrary to the spin, the government is re-announcing already promised money, it has not added a cent to its spending since December, and while the rest of the world ups the ante, New Zealand is sitting on its hands
Last December the government confirmed that its new spending combined with Labour’s already committed spending would total $9b over the next three years. Every spending announcement since the business tax reform, the new bridges and schools hasn’t been about new money, it’s merely been telling us how that $9b would be spent. While the economy tanks and the rest of the world commits hundreds of billions in new spending, New Zealand hasn’t changed its fiscal plans one iota.
The tragedy is that 2,300 jobs, however they were created, are just a drop in the bucket. There are almost 60,000 on the dole, and as Marty recently pointed out there are many more without work or enough work. National has done nothing about this rising tide (except hold a useless talkfest “Jobs Summit” of course).
Had Labour won the election the existing infrastructure programme would have been extended. Facts were easily lost in the hurly burly of the election campaign, but the fact was that unlike National, Labour had a real plan:
Key’s … speech at National’s campaign opening in Auckland’s SkyCity Convention Centre said nothing new on economic policy. In fact, it said nothing new about anything. … Helen Clark trumped Key by delivering the recovery package he had been demanding, including contingency plans to save jobs and the promise of a mini-budget in December.
Instead of 2,300 – how many new jobs would we be celebrating today if Labour had been able to put this plan in place?
Apart from the short-term thinking of the governments response. The media are hilarious.
It should read “Govt stimulus only creates 2300 jobs”
It was clear from the end of last year that the recession would be deeper and longer than the budget expected in March 2008. It was clear early this year that it would be deeper and long than expected in December.
I think that it is optimistic to think that this is going to all be over before 2011 at the earliest. The lack of response from the government defending their unsustainable tax cuts, will make it deeper and long than it should be. Reminds me of 1990/1
Thats funny because Paula Slapper Bennett keeps saying its 4000 jobs. Surely Bennett’s not lying or spinning the good people of New Zealand a line?
LOL $500 mil/2300 jobs = >$200k per job
You’ve got to remember about the velocity of money. Those who get jobs directly from the stimulus spend the money and thus spin it through the economy creating more jobs along the way.
I heard English talking on the radio this morning commenting that the government was still intending to carry on and spend the rest of the stimulus money on roading projects etc that have been brought forward.
I am all for not borrowing more money if we don’t need to. We are already having to fund substantial deficits just to meet running costs. We are going to be competing in the market for funds, especially so when the U.S. et.al. stop their quantitative easing programs and start funding their deficits more from borrowing. So, the chances are that the cost of funding is going to increase markedly in the not too distant future.
We are not the basket-case type of economy that the US and a number of European states are. Also, Australia is rocketing ahead with growth with obvious spin-offs for NZ exports to Australia. Also, the higher interest rates in Australia will drive down our currency with respect to Australia, thus making our exports much more competitive there. Also, we are feeding into the fast-growing Asian economies.
I think we are going to do just fine without too much more help from the government.
you’re talking spending multipliers, not the velocity of money.
The velocity of money is the rate at which it is re-spent after each transaction. It’s assumed to be constant over the short-term for most purposes.
You’re also treating unemployment as if it is costless, which it clearly isn’t.
Because of the spending multiplier, there are plenty of jobs that the government could create with spending which would, in fact, end up improving the govt’s balance sheet with more tax and lower benefit payments.
Quarter of a million Kiwis out of work and another 125,000 or so underemployed is not ‘doing fine’ by my count.
Why then do you think roads are a better spend than say schools and higher education? Or perhaps Agricultural Research?
Simply resorting to spending on easy to see hard infrastructure like ashphalt and praying that external conditions ate going save us – doesn’t that strike you as slightly naieve?
Would you have any comment on Joyce’s Holiday Highway or which a couple of $mill has already been spent before ANY cost-benefit studies have been sighted?