Professor Niall Ferguson - Gillard did not save 200,000 jobs by blowing our billions

A Reserve Bank governor denounces the lie the Gillard Government uses to justify its monumental waste: RESERVE Bank director Warwick McKibbin has directly contradicted Labor’s claim that its rescue packages saved 200,000 jobs. More evidence has emerged that delays to stimulus spending risked increased demand in the economy at a time when it was not needed… (A)n Australian National Audit Office report reveals just 19 per cent of Building the Education Revolution projects started on time, and in June the program was more than $1 billion behind schedule. A separate ANAO report on the government’s $550 million “strategic projects” community infrastructure program, released late last month, reveals that in June councils had spent just $142m, or a quarter of the money due to have been paid to them for construction “milestones” under their funding contracts… Professor McKibbin, an economist from the Australian National University, said the continuing rollout of stimulus spending was fuelling demand in the economy at a time when it was unnecessary… Professor McKibbin, the third-longest serving RBA current director having joined in 2001, said there were many forces supporting the economy as financial crisis hit in 2008-09, including the fall in interest rates, the fall in the value of the dollar and the resilience of Australia’s banks. “The role of fiscal policy was relatively small; that doesn’t mean it wasn’t important, but it could not have been responsible for creating 200,000 jobs,” he said. “It was never going to be spent very effectively and the nature of the spending was not such that it could be rolled out quickly. Nor could it be changed if the forecasts were wrong, which they were.” Michael Stuchbury: WE’LL say it again. Labor’s capital works stimulus spending could not have “saved” Australia from recession, as Julia Gillard claims. This is because the crisis had passed by the time the hard hats got on to the school building sites. Professor Niall Ferguson is scathing of Gillard’s claim - and of the billions wasted on Labor’s “stimulus”:: There’s no denying the magnitude of the Australian handouts. If you rank developed countries’ fiscal packages for the period 2008-2010, Australia’s ranks third as a percentage of GDP, behind only the US and South Korea. So why did Australia’s stimulus work so much better than America’s? Spare us the fable that it was better designed. After the home insulation fiasco and the now-proven waste on new school halls, that can’t withstand serious scrutiny. Which brings me to problem two with the argument Labor saved Oz. (It overlooks) the other, more plausible explanations for Australia’s relative outperformance. Step forward five candidates with a better claim to the credit: 1. Lady Luck 2. The Howard government 3. The RBA 4. China 5. The mining industry. Andrew Bolt

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