Rudd unveils $10.8b stimulus
CANBERRA – THE Australian government unveiled an emergency A$10.4 billion (S$10.8 billion) stimulus package on Tuesday to guard the economy from a global slowdown, with one-off payments to help boost consumer confidence.
Prime Minister Kevin Rudd announced the package two days after the centre-left government guaranteed all bank deposits for three years, and wholesale funding to Australian banks, to protect the banks from fallout from the global credit crisis.
The package delivers cash payments to pensioners and low and middle income earners, and provides A$1.5 billion to further help Australians buy their first home.
‘The global financial crisis has entered into a new, dangerous and damaging phase, one which goes to the real economy, growth and jobs. That’s why the government has decided to act decisively and early,’ Rudd told reporters.
Rudd said the Australian economy remained strong and was better placed to than most nations, but could not be immune from the impact of the global credit crisis.
Mr David Spry, research manager at stockbroker FW Holst, said the stimulus package, along with government plans to speed up spending on major projects, was positive for the economy.
‘These are all positive things. If you’ve got a surplus there in these times, you’ve got to try and use it constructively to get the economy moving,’ Mr Spry said.
‘All the things Rudd’s done have been pretty effective in terms of shoring up a bit of confidence here.
‘Also the infrastructure spending the government has earmarked they’re going to expand is also a good move. That will give some encouragement to the economy and also to employment.’
Under the package, single pensioners will receive a lump-sum payment of A$1,400, while pensioners in a couple would receive A$2,100.
Low and middle income families will receive a one-off payment of A$1,000 for each child in their care. The family payments and pension payments will be made from Dec 8.
The government will also double the grant for first home buyers from A$7,000 to A$14,000, or an an extra A$14,000 for first home buyers who buy a newly-constructed house, taking their home buyers grant to A$21,000.
Australia has delivered surplus budgets in 10 of the past 11 years, and in its May budget forecast a surplus of A$21.7 billion for the 2008-09 financial year, with gross domestic product economic growth to be 2.75 per cent for the year.
Mr Rudd said the A$10.4 billion strategy would be fully funded from the budget. He gave no updated budget forecasts, but said the government would issue its mid-year budget update by mid-November.
The government has warned economic growth will slow and unemployment rise as the global slowdown hits Australia’s economy, which has been growing strongly for 16 years on the back of a resources boom fuelled by demand from China.
But Mr Rudd said Treasury officials believe Australia’s economy would continue to grow.
‘Treasury advises that the Budget will be in surplus after these measures. The Government will publish a full budget update in the Mid-Year Economic and Fiscal Outlook to be released within a month,’ Mr Rudd and Mr Swan said in a joint statement.
‘All advice currently available to the Rudd Government is that the Australian economy will continue to experience positive economic growth.’ — REUTERS