The Rudd Government is planning a multi-billion cash handout to consumers in a bid to lift consumer spending before Christmas and prevent Australia from sliding into recession.
The Rudd Government has announced $10.4 billion package of handouts in a bid to help boost consumer spending before Christmas and prevent Australia from sliding into recession.
“Decisive action, responsible action and timely action – all in Australia’s interest,” Prime Minister Kevin Rudd said this afternoon.
The package will contain five key planks:
- $4.8 billion in new support for pensioners and carers, to be paid in the form of lump sums later this year.
- $3.9 billion for low and middle income earners. Many families will receive a $1000 payment per child.
- $1.5 billion for first home buyers, with the first home buyer bonus to be doubled from $7000 to $14,000.
- $187 million to double the number of training places available to 56,000.
- Fast-tracking of the Government’s $20 billion infrastructure program.
The handouts will be funded using the $22 billion surplus from the 2008-09 budget. Rudd says that budget surplus money was intended to be put aside for tough times. “My message to the nation today is that those tough times have arrived.”
The Government’s announcement of the emergency measures came after the release of a number of pieces of economic data pointing to tough times ahead. Figures from the Australian Bureau of Statistics showed lending for housing in August plummeted 30.5% since 2007, while investment bank JPMorgan slashed its forecast for Australia’s GDP growth from 2.6% to 1.8%. In another worrying sign, job ads in September fell to a 17-month low.
Employment Minister Julia Gillard says the job outlook is tough. “A recession in the United States and a possible recession in Europe will impact on economic growth in this country, and unemployment in Australia will rise,” she says.
While the emergency spending measures have been welcomed by both sides of politics and most economists, it is worth considering what measures may need to be dropped or scaled back in next year’s budget.
One of the big focus points of the 2009-10 budget was supposed to be innovation, based on the results of the innovation review completed by Terry Cutler in September.
With the financial turmoil eating away at next year’s budget revenues (particularly as the tax take from company tax shrinks) and the Government planning to hand out cash before Christmas, the amount available for long-term measures such as improving Australia’s innovation system can only be shrinking.
The Government is in a spending mood, but we want to know what it should be splashing out on. Tax cuts? Higher welfare payments? More money for infrastructure? Or is there something else that needs urgent attention?
Send your thoughts to [email protected].