Flat White

We need a new approach to saving and investment, not ScoMo’s Reno Rorts

10 June 2020

5:00 AM

10 June 2020

5:00 AM

Y’all remember back in the good old days when the Prime Minister said the government wasn’t going to pick winners. Well, within weeks the government is out and about picking winners: a renos for tradies scheme and a live music for the arts scheme. 

Let’s take a look at the program destined for the moniker ‘Reno Rorts. It’s a $688m scheme designed to encourage people to renovate their homes and drive new work to the construction industry It sounds simple enough until you peruse the conditions and you realise two things: first, if you’re confident enough to blow that sort of cash on a renovation at the moment, then you probably don’t need government assistance, and second, the eligibility criteria tacked onto this scheme turns it into a rolled gold bureaucrat’s wet dream. Surely, half of the money set aside for this program will evaporate in ‘government administration, destined to remain within Canberra city limits, helping a grand total of absolutely no one. It’s not hard to picture the shinybums taking personal pride in burning as much coin as humanly possible subjecting applicants to the hunger games of bureaucratic BS to determine whether they are actually eligible for the grant.  

And, God willing, you clear the federal government hurdle, you may then have the joy of applying for local government planning approval. If the federal government was hoping for a quick injection into the economy, it clearly neglected to consider the local government penchant for dragging their feet on everything except declaring climate emergencies 

Regardless, tradies across the country have already added a $25,000 shit-tax to every quote they issue. The outcome: more expensive renovations for homeowners and a boom in ute and jetski sales 

Forgive my cynicism, but I’m not sure how a few new toots and an Australian tour of feminist performative basket-weaving is going to save our economy. History shows that targeted stimulus schemes wind up being just sugar hits to the economy. It’s the usual story: the government gives money to people, to give to other people, to give that second group of people just enough hope to think that everything is going to get better, when in actuality, the government just puts off the inevitable and gets rorted in the process. What happens when the money runs out? Everything falls in a heap and the most instructive part of the whole saga becomes the Senate inquiry at the end. Pink batts anyone? 

Similarly, we know that arts and tourism have suffered greatly the last few months, but we need to consider that these industries, while they employ a lot of people, are maintained by highly discretionary spending and international tourism. Those are things we don’t have at the moment, nor are we going to see them return to pre-COVID levels for some time. Invariably, there will need to be consolidation within these industries to reflect the level of discretionary spending and international tourism in our economy now and going forward. In short, the government can’t outspend gravity. 

And while I don’t love the idea of JobKeeper, it was broad-based stimulus for employees of businesses which suffered a marked reduction in turnover. As far as government support goes in an economy-wide downturn, it should be as broad as possible or otherwise target large infrastructure and strategic industries with a view to long-term economic growth. I appreciate infrastructure projects take longer to get off the ground but they are, by their very nature, more likely to contribute to sustained economic growth, better endure economic downturns, and continually provide us with the things we really need. Cheap reliable energy, anyone? 

Ultimately, this all turns on the fact that Australia needs a cultural change when it comes to money. We need to disabuse ourselves of the notion that hot-shot spending produces economic growth. It doesn’t. It just produces bubbles and troughs. Rather, it’s savings and investment that creates fundamental long-term economic growth. And the reason we require so much foreign investment is because Australians are rubbish at saving money and using it effectively. Sure, we have superannuation funds, but they tend to spook at investing in actual infrastructure and much prefer buying established commercial property, corporate boxes, publishing The New Daily and donating to the ALP all of which produce precisely zero economic growth. 

We need to work, save and build. So we can all share in the winnings. And better weather the storms 

Caroline Di Russo is a lawyer, businesswomen and unrepentant nerd.

Illustration: Harvey Norman.

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