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Australian senators heard both sides of the economic divide at an inquiry on Monday to determine whether the federal government's economic stimulus has worked and whether it should continue.
Quizzing several academic economists, the inquiry heard that the stimulus was a waste of money, that the recession was a normal part of the business cycle and should have been left for the free market to resolve.
It was also argued that the human tragedy would have been far worse without the billions of dollars stimulus, regardless of whether it results in higher interest rates and higher taxes.
Indeed, one economist believed more money should be spent on lifting the unemployment benefit to stimulate the economy further.
Prime Minister Kevin Rudd told CNN from New York where he is attending the United Nations General Assembly, before heading to G20 Leaders Meeting Pittsburgh later this week, that calls for an immediate withdrawal of stimulus from the global economy were "misplaced".
The Australian Greens had called for the inquiry to take a sounding on the impact of the stimulus measures, that continue to pump money into the economy through infrastructure spending.
Greens leader Bob Brown said the Senate economics references committee had made a "mistake" by not having Treasury secretary Ken Henry and Reserve Bank of Australia (RBA) governor Glenn Stevens front the committee until next week in Sydney.
"We should be hearing them first and then getting the economists to comment on them afterwards," he told reporters in Canberra.
Senator Brown was also "surprised" by one economist's observation that the market should have been left to work through the recession, which was just part of the normal business cycle.
"It's the failure of the market that has led to the necessity for a stimulus package," Senator Brown said.
Executive director of the independent think tank, the Australia
Institute, Richard Denniss, told the hearing the government should
be commended for its stimulus initiatives, and that while it was
unfortunate that some money might have been mis-spent, it was
"probably unavoidable".
He argued there was a case for "more stimulus, not less" that
should be aimed at raising unemployment benefit that would be
quickly spent.
Andrew Leigh of the Australian National University believes the stimulus should continue given the great deal of uncertainty over the unemployment outlook, describing fiscal policy as an "ocean liner which takes a lot of time to turn".
Professor Tony Makin of the Griffith University said the stimulus may have helped the retail sector, but interest rates will rise which will hit private investment and be a negative for growth.
A rising Australian dollar because of rising interest rates will also hurt jobs in the manufacturing sector.
Two economists from the Royal Melbourne Institute of Technology (RMIT) believed the stimulus had been a waste of money.
Sinclair Davidson believed the reason that the Australian economy had fared better than others was more to do with economic reforms undertaken over the past 25 years.
Steven Kates said interest rates should have been lowered further and taxes cut rather than spending "an unbelievable amount of money".
He calculated that the government had spent $AU1.5 million of taxpayers money saving each job.
