By David Ingles and Richard Denniss / The Australia Institute

This report argues that we should be doing more to help the unemployed as part of any 'stimulus' packages targeted at propping up the economy.

Australia is experiencing a negative terms of trade shock with the price of exports falling relative to the price of imports. This shock is estimated to be minus 13 per cent in 2009–10 (Treasury 2009), which means that real incomes will either need to fall or, at best, rise less quickly than they otherwise might. The more evenly the shock is spread across the economy, the less painful will be the adjustment; in particular, we should not be designing policies aimed solely at assisting those who already have good jobs and secure incomes.

Instead, we should be doing more to help the unemployed who are discriminated against compared to pensioners, thus creating an escalating problem of financial hardship. This is especially important in the light of the expected addition of 300,000 people to the dole queues over the next 16 months. The unemployed are the missing people in the fiscal stimulus equation.

Download the full report from http://tinyurl.com/d778gy.

Source: Australian Policy Online