Although ambigious or atleast not definitive what your trying to say here I basically interprit this to mean not waste money. Here is the problem a stimulus is infact a wasted investment if measured against an investment made with the benefit of time but a crisis removes time so the investment cannt be ports, roads or any other grand productivity improving effort.
Keynes own works on the subject explains while building pyramids or burying money only to dig it up again does increase employment surely in our modern society (in his case the 1930s 40s) we can come up with better than this. Come 2008 and we can think of nothing better than handing cash out and one size fits all school halls... The closest thing to real keynesian stimulous in that first round of stimulous was the few hundred million to local councils.
Frankly at least building a pyramid leaves us with something for our investment. (Edit: I need to stress just reading this again keynes said don't build pyramids, though the subtlety is so often lost on people!) At least a massive pyramid could serve as some metaphorical statement as to where the Labor party might spend the next few millenia and how long perhaps that the Labor party will spend in the political wilderness after the next election.
As you say / agree stimulous expenditure should not reduce the productivity of the nation and further that capacity to pay is critical.
Well also as you say we were never going to have an issue with capacity to pay even if we literally pissed 60bn up against the wall around federal government spending.
I would go further around your thoughts that running an economy is in some ways similar to running a business in that in part deciding where to invest in the two are similar with a few additional criteria for governments.
Like a business the best place to expend the money should be decided upon initially based on how that expenditure will increase the productivity, competitiveness and by extension just for governments tax revenues in future years. It is based on the value added to the economy / business of the investment.
The only additional consideration for stiumulous expenditure is how that expenditure will affect aggregate demand. This clearly is not a consideration for a company no matter how large only for governments spending during slumps in demand and using keynesian stimulous.
While Keynes was considered a bit of a lefty, IMO he would have been turning in his grave to hear his name associated with Australias stimulous spending. That a $1000.00 cash handout or building many school halls / canteens etc just because it was a fast way to translate money into activity is a cop out and we could have done more to meet future demand his other criteria for good spending.
Putting it into the analogy / situation of a business what labor did would be like BHP on the cusp of a major slow down / fall in mineral prices with a billion of capex left in the budget, rather than buying a new rail line to ensure they are the lowest cost producer in NW Western Australia throughout this impending slow down giving all their employees a $25,000 bonus.
It made no sense under the circumstances when for all money we were entering something supposedly akin to the great depression.
Then returning to the specific question of why could we not build something more substantial? I am sure we could have. If that money had been given to state roads / rail or other authorities they have lists of projects that are in the pipeline. Many only thwarted due to budgetary constraints. Give them 20bn indeed only a few billion a pop. They will spend it and while some may be considered "wastefull mitigations" as keynes would call them at least some of it would increase our future productivity.
