Tax revenue from the jobs saved by the federal government's economic stimulus will help pay down government debt at a greater rate, a study shows.
Each dollar from the roughly $30 billion of cash handouts given to taxpayers at the height of the global financial crisis, generated 75¢ in additional gross domestic product (GDP), Lateral Economics' Repaying the Fiscal Stimulus study estimated.
"As our economy turned down in late 2008, Australians' spending kept other Australians in work," Lateral Economics chief executive Nicholas Gruen said in a statement.
"And those kept in work repaid the favour by continuing to pay their taxes."
Also $26.5 billion was budgeted for additional infrastructure as a stimulus measure and generated an extra 36 cents of income tax for each dollar spent.
The study has been released a week after 50 academic economists published an open letter in support of the government's fiscal stimulus measures.
Australia currently has one of the lowest government debt ratios of its western peers, at less than six per cent of gross domestic product (GDP).
A major political theme of Australia's economic recovery from the global financial crisis has been the low unemployment rate, which the government says is a result of the stimulus spending.
The jobless rate was at 5.3 per cent in July, up from June's 5.1 per cent.
The figure is far below Treasury estimates for the jobless rate of 6.75 per cent by the end of 2010. It also compares to jobless rates in the US at 9.6 and 7.8 per cent in Britain.
But the government has come under criticism for its mishandling of some components of the stimulus, in particular the pink batts insulation scheme and the building the education revolution (BER) school halls program.
Dr Gruen, a former employee of Keating-era Labor treasurer John Dawkins, defended the implementation of the stimulus.
"Of course, being rushed, there were inefficiencies in building the infrastructure," he said.
"Those inefficiencies cost around $1.5 billion compared with the tax windfall of $9.5 billion from tax collected from who would not otherwise have been employed.
"The net result leaves Australians better off by around $8 billion."
The insulation scheme was linked with the deaths of four installers, 120 house fires, and quality and safety problems potentially affecting hundreds of thousands of homes.
A government-appointed Orgill taskforce earlier this month released its interim report on the BER scheme, recommending that any projects not slated for completion by March 30, 2011 be removed from the program.
It found the program had inflated building costs and that schools got better value for money when they used standard capital works procedures.
Reserve Bank of Australia (RBA) board member Warwick McKibbin at the time told News Ltd publications that the government's role in supporting the Australian economy was "relatively small".
"It could not have been responsible for creating 200,000 jobs," he was reported to have said.
He had previously described the stimulus as "a panicky move".
Professor McKibbin said other forces, including falling interest rates, a drop in the value of the Australian dollar during the GFC and the strong balance sheets of Australian banks, helped cushion the domestic economy from the global shock.