New Rudd Stimulus Package
Posted: Tue Feb 03, 2009 1:35 pmGovernment unveils $42 billion stimulus plan
3/02/2009
By Emma Thelwell, ninemsn Money, with Reuters, 3 February 2009
Treasurer Wayne Swan has unveiled a $42 billion second stimulus package, aimed at propping up the job market and kick starting the doom-laden economy.
The new plan includes $12.7 billion in cash bonuses for low and mid-income earners. While the government does not plan to bring July's tax cuts forward, the cash bonuses for workers will arrive by post in April.
Workers earning up to $80,000 a year can expect a handout of $950, those on a salary of $80,000 to $90,000 will receive a $650, and $300 will be awarded to people earning between $90,000 and $100,000. Those on incomes above $100,000 will not receive a bonus.
Speaking in Canberra today, Prime Minister Kevin Rudd called the plan a "nation-building" stimulus that will address the key issues facing the Australian economy.
The government now expects the rate of unemployment to hit 7 percent in mid-2010, up from the previously forecast 5.75 percent, and the current rate of 4.5 percent. The predicted uptick will see 300,000 Australians out of work.
"The plan will help support and sustain up to 90,000 jobs over the next two years." said Rudd.
With regard to the remaining 210,000 jobs that are expected to be lost, the Prime Minister said: "The government will take further measures. We will add to this (stimulus) in the future and continue to support the economy and jobs."
The news comes as all eyes turn to the Reserve Bank of Australia, which is expected to slash interest rates by as much as 1 percent later this afternoon.
Pointing to the expected rate cut, Rudd urged banks to pass on any cut the RBA makes today to help cash-strapped consumers.
As economic growth grinds to a halt across the world, the government today halved its 2008/09 growth forecast to 1 percent - from a November forecast of 2 percent.
The International Monetary Fund (IMF) has a less rosy outlook, it expects the Australian economy to contract by 0.2 percent in 2009, and at its very best stall to zero growth.
Yesterday, Prime Minister Kevin Rudd admitted that the global financial crisis - in particularly the halving of economic growth in China - will blow a $115 billion hole in Australian tax revenues during the next four years, which will push the federal budget into a "temporary" deficit.
The government said today that it expects the deficit to run to $22.5 billion this year and $35 billion next.
Since October, the government has promised to spend more than $36 billion - eroding a budget surplus built up by its conservative predecessor.
Mr Rudd said the outlook released last November reflected a $40 billion downwards revision of revenue, but the Treasury has since advised of a further $75 billion fall in revenue over the next four years, making for a total loss of $115 billion.
The stimulus package includes:
$42 billion for infrastructure, housing and school improvements, including new buildings and insulation for 2.7 million homes. Around $12.7 billion will allow one-off payments to low and mid-income taxpayers.
$10.4 billion, mostly in pre-Christmas cash payments, to help the elderly, poorer families and first-home buyers. The October 14 announcement included $4.8 billion for 4 million elderly, $3.9 billion for family help and $1.5 billion to assist first-home buyers.
$8 billion to fund residential mortgage backed securities in Sept/Oct as global lines of credit dried up.
$6.2 billion in car industry assistance to help protect jobs and develop environmentally-friendly vehicles. The industry employs around 65,000 people and accounts for 6 percent of Australian manufacturing.
$4.7 billion to fund infrastructure improvements over 2008-09, including rail projects to speed up exports. Government said in December the projects will add 0.25-0.5 percent to GDP.
Government in September announces it will guarantee public bank deposits and wholesale funding to banks.
$2 billion, to be matched by major banks, to protect commercial property investments should foreign lenders refuse to roll over loans due to mature over the coming two years.
$300 million for local governments nationally to help with council infrastructure.
3/02/2009
By Emma Thelwell, ninemsn Money, with Reuters, 3 February 2009
Treasurer Wayne Swan has unveiled a $42 billion second stimulus package, aimed at propping up the job market and kick starting the doom-laden economy.
The new plan includes $12.7 billion in cash bonuses for low and mid-income earners. While the government does not plan to bring July's tax cuts forward, the cash bonuses for workers will arrive by post in April.
Workers earning up to $80,000 a year can expect a handout of $950, those on a salary of $80,000 to $90,000 will receive a $650, and $300 will be awarded to people earning between $90,000 and $100,000. Those on incomes above $100,000 will not receive a bonus.
Speaking in Canberra today, Prime Minister Kevin Rudd called the plan a "nation-building" stimulus that will address the key issues facing the Australian economy.
The government now expects the rate of unemployment to hit 7 percent in mid-2010, up from the previously forecast 5.75 percent, and the current rate of 4.5 percent. The predicted uptick will see 300,000 Australians out of work.
"The plan will help support and sustain up to 90,000 jobs over the next two years." said Rudd.
With regard to the remaining 210,000 jobs that are expected to be lost, the Prime Minister said: "The government will take further measures. We will add to this (stimulus) in the future and continue to support the economy and jobs."
The news comes as all eyes turn to the Reserve Bank of Australia, which is expected to slash interest rates by as much as 1 percent later this afternoon.
Pointing to the expected rate cut, Rudd urged banks to pass on any cut the RBA makes today to help cash-strapped consumers.
As economic growth grinds to a halt across the world, the government today halved its 2008/09 growth forecast to 1 percent - from a November forecast of 2 percent.
The International Monetary Fund (IMF) has a less rosy outlook, it expects the Australian economy to contract by 0.2 percent in 2009, and at its very best stall to zero growth.
Yesterday, Prime Minister Kevin Rudd admitted that the global financial crisis - in particularly the halving of economic growth in China - will blow a $115 billion hole in Australian tax revenues during the next four years, which will push the federal budget into a "temporary" deficit.
The government said today that it expects the deficit to run to $22.5 billion this year and $35 billion next.
Since October, the government has promised to spend more than $36 billion - eroding a budget surplus built up by its conservative predecessor.
Mr Rudd said the outlook released last November reflected a $40 billion downwards revision of revenue, but the Treasury has since advised of a further $75 billion fall in revenue over the next four years, making for a total loss of $115 billion.
The stimulus package includes:
$42 billion for infrastructure, housing and school improvements, including new buildings and insulation for 2.7 million homes. Around $12.7 billion will allow one-off payments to low and mid-income taxpayers.
$10.4 billion, mostly in pre-Christmas cash payments, to help the elderly, poorer families and first-home buyers. The October 14 announcement included $4.8 billion for 4 million elderly, $3.9 billion for family help and $1.5 billion to assist first-home buyers.
$8 billion to fund residential mortgage backed securities in Sept/Oct as global lines of credit dried up.
$6.2 billion in car industry assistance to help protect jobs and develop environmentally-friendly vehicles. The industry employs around 65,000 people and accounts for 6 percent of Australian manufacturing.
$4.7 billion to fund infrastructure improvements over 2008-09, including rail projects to speed up exports. Government said in December the projects will add 0.25-0.5 percent to GDP.
Government in September announces it will guarantee public bank deposits and wholesale funding to banks.
$2 billion, to be matched by major banks, to protect commercial property investments should foreign lenders refuse to roll over loans due to mature over the coming two years.
$300 million for local governments nationally to help with council infrastructure.
](./images/smilies/eusa_wall.gif "Brick wall")
