Rudd unveils $10.4 billion package to boost economy,
Prime Minister Kevin Rudd has unveiled a $10.4 billion stimulus package to boost the Australian economy in face of the worst global financial crisis since the Great Depression.
Mr Rudd said the so-called economic security strategy, to be funded by the budget surplus, would include $4.8 billion for Australia's four million pensioners, $3.9 billion for middle and low-income families and $1.5 billion for first-home buyers, as well as $187 million to create new 56,000 more training places.
The measures were aimed at securing positive economic growth and to provide practical support for households, Mr Rudd said.
Mr Rudd said the global financial crisis was the equivalent of a national security crisis, wreaking havoc on both the stock market and real economy - jeopardising jobs growth - and the package was aimed at providing an extra buffer for the future.
"It's affecting the financial system; we're seeing the impacts around the world in terms of large banks collapsing or having to be bailed out; it's affecting stock markets - we're seeing the gyrations on stock markets in recent times; it's also affecting the real economy ... jobs growth, overseas and here in Australia," Mr Rudd told reporters in Canberra.
"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 on the question of this economic security strategy for the future."
Under the package, single pensioners will receive a lump-sum payment of $1,400, while pensioners in a couple would receive $2,100.
Low and middle income families will receive a one-off payment of $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 $7,000 to $14,000, or an an extra $14,000 for first home buyers who buy a newly-constructed house, taking their home buyers grant to $21,000.
Mr Rudd said the government was confident of delivering a comfortable surplus going forward, and a full budget update would be released within a month.
Australia has delivered surplus budgets in 10 of the past 11 years, and in its May budget forecast a surplus of $21.7 billion for the 2009 financial year, with gross domestic product economic growth to be 2.75 per cent for the year.
"The government prepared well ahead for this set of circumstances," Mr Rudd said.
Asked what effect the package was likely to have on inflation, Treasurer Wayne Swan said the risk of inflation was falling.
"The risk of inflation is now abating," Mr Swan said.
He said the Reserve Bank of Australia had begun to reduce its inflation forecasts.
"Circumstances have changed dramatically around the globe," Mr Swan said.
Mr Rudd unveiled the package two days after guaranteeing all bank deposits for three years, and wholesale funding to Australian banks, to protect the banks from fallout from the global credit crisis.
Australia's peak buiding body, the Housing Industry of Australia (HIA), said the housing measures would stimulate business activity and help address the severe housing shortage.
HIA managing director Ron Silberberg said the plans were expected to lead to a 15,000 boost to the production rate of new dwellings. “This measure will provide an immediate stimulus for new housing and help restore business confidence across the sector particularly in the building product manufacturing sector,” Dr Silderberg said.