• We shall not take from the mouth of labour, the bread which it has earned. - Thomas Jefferson

Gillard's cash-for-relocation policy

If re-elected, the Labor Gov't will attempt to entice unemployed people to relocate elsewhere in the country by offering them varying sums of money to cover their moving expenses. Up to $6000 for regional areas and up to $3000 for metropolitan areas. Employers who take these people on will also receive an incentive of $2500.

Gillard justifies this policy by saying that:

"There are parts of the country that are experiencing rapid growth and crying out for more workers...We want Australians to get the benefit of those opportunities."

You've got to wonder, though, how good these opportunities really are if both the employer and the employee need to be given thousands of dollars to strike a deal. If both parties expect to benefit from such an exchange (a certain amount of money as payment for a certain number of labour hours) then why would they not enter into an employment contract voluntarily? Why the need for a taxpayer subsidy?

Obviously, either one or both of the parties perceive the costs as being greater than the benefits. By offering these subsidies, though, the gov't wants to alter this equation by making the benefits outweigh the costs. 

But it shouldn't be too difficult to see the sleight of hand here. The money for this subsidy has to come from somewhere. All the gov't is doing is shifting the burden onto other Australians.

Yet again, we have an illustration of the Broken Window Fallacy. With an estimated cost of $14.8 million, Gillard is only looking at the 'benefits' of this proposal. But what would those Australians who earned this cumulative total of $14.8 million otherwise have spent the money on? We won't know. These are the real opportunities but they'll remain hidden as they will never come into existence.