where is money going to

Where is the money going to?

By GEORGIA BURNS

If you’ve driven past the ABC building on Northbourne Avenue recently (15 October 2008), you’ve probably noticed an eccentric, white-haired man brandishing a cardboard sign, “Mr Rudd, please don’t spend our money”. The old man’s name is Roger Mallison and he has been protesting against the Rudd Government’s plan to inject $10.4 billion into the economy, predominantly through “bonus” welfare payments.

Roger claims to have lost $10,000 from his superannuation becaue of the ongoing financial crisis but is sceptical about the Government’s plan. A disabled pensioner, Roger says if he receives the bonus, he will be giving it to charity. Roger’s pale blue eyes dart around sporadically but his disability is not all that apparent until he answers a matter-of-factly, “I’m mad… I have schizo-effective disorder”. But maybe crazy, ol’ Rog’ might not be so crazy after all.

What do we really know about this massive economic injection? Prime Minister Kevin Rudd and Treasurer Wayne Swan have declined to comment on what extent the injection will have on stimulating the economy. Sure, there certainly seems to be a bit of light-hearted jealousy amongst those who are missing out and a bit of “Well it’s about time” kind of discourse floating around. But for Rudd, who has exercised relative, fiscal caution thus far, the quick action announcement certainly came a surprise to some. Rudd, who initially claimed that the Australian economy was relatively safe from the crisis, certainly appears to have panicked and dug into the budget pocket. But what will a one-time hand out do for the recipients?

The cash bonus going to lower to middle range households appears to have at least pleased its lucky beneficiaries. Brenda Scott, a part-time retail manager and mother of three from Giralang goes as far as saying “It’s the first good thing this government’s done”. The government’s bonus is said to stimulate economic growth by encouraging retail spending and heightening consumer confidence. The Scott’s are no exception.

“We’ll be getting the kids’ chrissy pressies,” she says. “I’m not sure there’ll be much left over after that.”

Families like the Scotts will receive an additional $1,000 per child, so when they receive their bonus on December 8, it looks to be a very merry Christmas.

Brenda’s husband, Terry, 46, is the family’s primary breadwinner. Terry has been a plumber for more than 20 years and whilst he says the hand-out will give his family a “hand-up” he believes the opening of training positions is the important aspect of the boost. He believes the government’s $187 million plan to open 56,000 training places is an unambiguous and positive move.

“It’s all well and good to be giving out the cash,” he says “But opening up more job places will probably have a better effect down the road”. Terry also adds with an air of hopefulness that that he would also like to use some of the money towards their mortgage, which they have been striving to pay for 15 years. But with Christmas coming up, “There’s gonna be a lot of asking [from the children] and probably a lot of giving”. Terry sighs and adds that a holiday to visit family in Noosa could also be on the cards.

Jack Simpson, 77, Ainslie, is a retired pensioner who, like many others has been angered by the government’s lack of action towards increasing pension payments. Jack and his wife, Margaret live off just $238 per week between the two of them. But Mr Simpson is probably one of the luckier ones, having owned his own home for decades. Still fighting fit at 77, Mr Simpson worries that if his health were to deteriorate in the coming years, that he would have no option but to sell the house to fund medical costs.

Mr Simpson believes there is a certain stigma attached to welfare recipients, and the recent bonus only exaggerates the financial divide between the ‘haves and the have-nots’. “If Mr Rudd thinks I’m just going to rush off to the shops, then he’s laughing”, adding that although he doesn’t “have much” that he’s “no idiot”. Mr Simpson concedes that he will have to spend a certain amount of the couple’s $2,100 bonus on utility costs which he says they struggle to pay. However, Mr Simpson will not be crowding the malls buying his grandchildren expensive gifts. “I would have really liked to see an increase in the fortnightly [pension] payments but I think desperate times call for desperate measures”. However, good news may be around the corner with Mr Rudd hinting that permanent pension increases may occur before the years end.

The government’s boost has been widely applauded by financial commentators who predict the injection will stimulate Australia’s economy, although the full extent of the boost’s effects remain unclear. The government prediction that giving the cash to lower-income households and pensioners will increase spending is logical and pretty clear cut. Recipients will quickly spend the money because in many cases, they won’t have any other choice. It is a smart move but not a particularly kind one because the boost should not be viewed as some kind of altruistic financial hand-out. Wherever possible, recipients should attempt to invest a proportion of the money on long-term initiatives like paying off a mortgage or contributing to superannuation.

But where will they be left when the money’s gone? Is their desperation in these desperate times merely being exploited? After the elaborate Christmas presents have been unwrapped and the big turkey is devoured, it is unlikely that people like the Scotts and in particular, the Simpsons will be any better off without permanent changes. Optimistic predictions will see the financial injection preventing the Reserve Bank increasing interest rates in the coming months. If this is the case, then many Australians including the Scotts will see the benefits. But by the time the Simpsons’ next utility bill arrives, they may be just as desperate as they were before.