MAKE AUSTRALIA WORK: Retail therapy isn't helping

Our bloggers have already set clear guidelines for the government in any future economic stimulus package – focus on the longer term. In my view, the one-off tax cuts are a waste of money and I see that Heather Ridout instead advocates long-term tax cuts. They will not drive consumer expenditure immediately, but will drive it over time. Bob Murphy and Paul Gilding are suggesting that the way forward is not to hand big money to consumers to buy TVs from China but rather to improve our infrastructure. Gilding says we should aim to reduce carbon and Murphy says we should make the transport industry more productive with better roads etc. Interestingly, if transport is more productive it will emit less carbon.

The December $10 billion stimulus package with its one-off payments may have helped our Christmas spending levels but there was huge wastage. Future stimulus packages need to be much more targeted. If consumer's know that their income has been permanently increased with long-term tax cuts they may change their spending over time – if they think their jobs are safe. If we spend money on infrastructure, not only are jobs are created immediately, but we will have something to show for what we have done and we will improve productivity, either in cost terms or in carbon terms.

Our retail sector has a bag full of problems, so it may press the government to repeat the stimulus package. The latest Westfield reverse shows the retail property sector is under extreme stress. Westfield is no Centro, but in the UK and the US its centres tend to sell high value merchandise and they are going to have a very hard time.

Another retailer that would like consumers spending freely is Coles – its parent Wesfarmers has greatly improved its balance sheet, but it is still too highly leveraged for this environment. However, despite the needs of such retailers, there are better ways of improving the economy than handing lump sums to consumers.

When you drive down the great Ocean Road in Victoria you are reminded that this was constructed during the Depression. Something worthwhile remained after such a terrible event. Let's turn this downturn into moves that will have lasting community benefit. That's exactly what the Chinese are now doing and in the process they will help Australia by buying more of our mineral resources. We should follow them.