11 May 2009

Rudd Money

Many of the poorest and most vulnerable will miss out on Rudd's $900 stimulus payments.

Rudd's stated aim in providing these payments is to stimulate the economy. Broadly, the poorer one is, the more likely one is to spend the payment, and the more likely one is to spend the payment on basic goods and services rather than luxuries. Any way you slice it, this exclusion of millions of the poor from the stimulus makes no economic sense.

What then is the logic? There are two possible ones: one moral-ideological, the other practical. I suppose both operate to some extent. Morally, the claim will be that only those who've paid tax 'deserve' a rebate, playing on the near-ubiquitous but baseless beliefs that earning money means that one deserves it, that money exists prior to and independently of the state and taxation, that money is real, etc.

Practically, the impetus is simply that it's middle-income earners that decide elections: the poor basically preference Labor; only those who are wealthier can be swayed, and I think many people come 2011 will still remember this bonus – they'll look at their new TV every day and remember Rudd's largesse.