High quality government spending

Written By: - Date published: 8:29 am, April 21st, 2009 - 4 comments
Categories: economy, employment, national/act government, wages, workers' rights - Tags:

I suppose the Herald means for us to recoil in horror at the headline “$325,000 bill to save 57 jobs” but I’m fine with it.

Look at the alternative – 57 families taking a major hit to their incomes, with all the consequences for health, education, crime, and family stability that we know unemployment brings.

Think about the cost to the government of 57 more people unemployed – all the lost income tax, about $7,000 a year on the average wage I think, and the expense of those that go on the dole cost at about $12,000 a year. The cost to the government alone of doing nothing was easily more than $325,000. That’s called efficient government spending.

If only the government was prepared to spend $325 million to save 57,000 jobs – we wouldn’t be facing an unemployment tsunami.

4 comments on “High quality government spending ”

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  1. Tigger 1
    21 April 2009 at 8:50 am

    I suspect the Herald should be more worried about keeping jobs for its own workers rather than slamming schemes to assist other workers keep their jobs. Print is dead after all…

  2. jarbury 2
    21 April 2009 at 11:01 am

    Excellent point Eddie. I would imagine that spending $325 million to save 57,000 jobs would have a hugely positive effect on the country as we try to recover from the recession. Unfortunately it seems like the government wants to take a leaf out of the Herbert Hoover book of how to turn a recession into a depression by cutting expenditure.

  3. Maynard J 3
    21 April 2009 at 11:02 am

    I get roughly $1M in direct costs (lost tax, plus benefits) for these 57 jobs.

    So they spend $385k and save a million benjamins. Has someone told Bill this?

  4. Kevyn Miller 4
    21 April 2009 at 11:51 am

    In the worst case the result is that the government saves more than $385k. But in my personal experience, having been made redundant from a Japanese owned sheepskin tannery six months ago, the worst case is the exception rather than the rule.

    Once you factor in the top tax rate being paid on these redundancy payouts right at the start of the tax year, the long UB standown period that applies when redundancy payouts are made and the reduction in WfF credits and that, in this particular case, the redundancies were voluntary and therefore less likely to lead to longterm unemployment the government may not save more than the $385k it is spending.

    I do concede, however, that my own taxable income has fallen dramaticly for the last six months but that’s as much because I have nno dependents and have generous family so I have able to have a ‘holiday’ working on the vineyards, in the sunshine and fresh air, for minimum wage.