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Australia plans A$42 billion stimulus package to stave off recession
Source: Agencies |
February 3, 2009, Tuesday
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Online Edition
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AUSTRALIA'S leader unveiled a huge new stimulus package Tuesday to try to shield the economy from the global downturn, promising 42 billion Australian dollars (US$26 billion) in spending that will send the budget into the red for the first time in nearly a decade.
The package comes on top of one launched late last year worth A$10.4 billion and underscores the threat the downturn poses to Australia's resources-based economy, which has suffered a sharp turnaround since the worldwide financial turmoil began mid-last year.
The new initiatives include building thousands of new houses and school rooms, and environmentally friendly measures including providing householders with free home roof insulation.
The cash injection over four years will plunge the annual budget into a A$22.5 billion (US$14.2 billion) deficit -- 1.9 percent of gross domestic product -- for the current fiscal year ending June 30, Prime Minister Kevin Rudd said.
He said the plan aimed to support 90,000 jobs while boosting economic growth by half a percentage point to 1 percent in the current fiscal year. The plan also aims to turn an economic contraction in the following year to 0.75 percent growth, government documents said.
"To support jobs in the middle of a severe global recession, the government must stimulate the economy in the most immediate manner possible," Rudd said in a statement.
By providing free ceiling insulation to 2.7 million Australian homes, the government plans to reduce household power bills as well as Australia's greenhouse gas emissions.
The scheme would save 49.4 million metric tons (54.5 million US tons) of greenhouse gas emissions that are blamed for dangerous global warming by 2020, documents said. An existing subsidy to householders for installing solar hot water systems would also be increased.
The government plans to build 20,000 houses for military personnel and low-income earners and every one of Australia's 9,540 schools will get a new or upgraded building.
In a move aimed at getting Australians to spend some money, more than half Australia's population of 21 million will be eligible for A$950 (US$600) tax bonuses or grants.
The government will also spend on infrastructure, while also encouraging business to invest in expansion through an investment tax break.
The spending measures need parliament's approval. Supporting legislation will be introduced to the Parliament on Wednesday.
The government today raised its jobless forecast to 7 percent for the year ending June 30, 2010, from 5.75 forecast for this year.
Last November, the government said it planned a modest surplus of A$5.4 billion (US$3.4 billion) for the current fiscal year. Yesterday, Rudd said sinking tax revenue from the global slowdown will blow a A$115 billion (US$73 billion) hole in the Australian budget.
The government had already injected A$36 billion into the economy since September, including the A$10.4 billion package of cash bonuses in welfare checks, funds for residential mortgage backed securities, car industry assistance plus infrastructure projects.
Late last year, the International Monetary Fund predicted Australia would be one of the few developed countries to avoid recession in 2009, but on Saturday it said Australia's economy was likely to contract by 0.2 percent, delivering Australia's first recession since 1991.
The package comes on top of one launched late last year worth A$10.4 billion and underscores the threat the downturn poses to Australia's resources-based economy, which has suffered a sharp turnaround since the worldwide financial turmoil began mid-last year.
The new initiatives include building thousands of new houses and school rooms, and environmentally friendly measures including providing householders with free home roof insulation.
The cash injection over four years will plunge the annual budget into a A$22.5 billion (US$14.2 billion) deficit -- 1.9 percent of gross domestic product -- for the current fiscal year ending June 30, Prime Minister Kevin Rudd said.
He said the plan aimed to support 90,000 jobs while boosting economic growth by half a percentage point to 1 percent in the current fiscal year. The plan also aims to turn an economic contraction in the following year to 0.75 percent growth, government documents said.
"To support jobs in the middle of a severe global recession, the government must stimulate the economy in the most immediate manner possible," Rudd said in a statement.
By providing free ceiling insulation to 2.7 million Australian homes, the government plans to reduce household power bills as well as Australia's greenhouse gas emissions.
The scheme would save 49.4 million metric tons (54.5 million US tons) of greenhouse gas emissions that are blamed for dangerous global warming by 2020, documents said. An existing subsidy to householders for installing solar hot water systems would also be increased.
The government plans to build 20,000 houses for military personnel and low-income earners and every one of Australia's 9,540 schools will get a new or upgraded building.
In a move aimed at getting Australians to spend some money, more than half Australia's population of 21 million will be eligible for A$950 (US$600) tax bonuses or grants.
The government will also spend on infrastructure, while also encouraging business to invest in expansion through an investment tax break.
The spending measures need parliament's approval. Supporting legislation will be introduced to the Parliament on Wednesday.
The government today raised its jobless forecast to 7 percent for the year ending June 30, 2010, from 5.75 forecast for this year.
Last November, the government said it planned a modest surplus of A$5.4 billion (US$3.4 billion) for the current fiscal year. Yesterday, Rudd said sinking tax revenue from the global slowdown will blow a A$115 billion (US$73 billion) hole in the Australian budget.
The government had already injected A$36 billion into the economy since September, including the A$10.4 billion package of cash bonuses in welfare checks, funds for residential mortgage backed securities, car industry assistance plus infrastructure projects.
Late last year, the International Monetary Fund predicted Australia would be one of the few developed countries to avoid recession in 2009, but on Saturday it said Australia's economy was likely to contract by 0.2 percent, delivering Australia's first recession since 1991.
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