The multiplier works. Although many of the profits for products in retail go overseas heaps of money is still kept in. Most products in retail have a mark-up of 50% or greater - meaning a large portion of profits stay in Australia even if the products aren't made in Australia. That means people in retail stay in jobs which means they will continue to circulate money around the economy. Some will inevitably be lost in leakages but not before the economy is stimulated by about 250% of the injection.The stimulus package is aimed at stimulating what? Construction and retail???
Construction, well infrastructure would stimualte this sector...
But retail, who the hell stimulates retail consumption... This is idiotic, most of our products are produce internationally, and yet the economists sight the multiplier in confidence...
Okay so my perspective, direct spending into Australian economy will boost activity at the first instance, but as the money circulates the economy more will be lost in leakages...
Solution: Invest in R&D (targetted around universities and tafes (reskilling or extra skilling)) and investment in infrastructure. It won't stimualte the retail industry, but the retail industry won't stimuatle the economy.
Secondly whilst our banks are in good shape we still need to redesign our laws on private debt. We need to reduce debt-spending, i.e. money borrowed for consumption rather than investment as this will only damage our economy.
Perhaps the money could be better directed but stimulating retail keeps millions and millions of people directly and indirectly in jobs.