The Federal Government should wind back its stimulus spending as the point at which it was most effective has passed, Reserve Bank governor Glenn Stevens said in a Senate inquiry today.
“The peak effect of these measures on the rate of growth of demand has probably already passed,” Stevens said. “The extent of support will tend to tail off further over the next year.”
He also said the economic activity of the country was “quite subdued” during the second half of 2008 and the beginning of 2009.
“By the standards of past recessions, however, this was a mild downturn. Although the evidence is as yet incomplete, this episode has been much less serious than those in the mid-1970s, the early 1980s and the early 1990s.”
Get daily business news.
The latest stories, funding information, and expert advice. Free to sign up.
“So I think it is reasonable to conclude, against the benchmarks of historical and international experience, that Australia has done quite well on this occasion.”
David Moffat resigns from Telstra
Elsewhere, Telstra’s managing director of the group’s consumer division, David Moffat, has stepped down after nearly 10 years with the company. He said in a statement it was time for a new group of leaders to take the company forward.
“I would like to personally thank David for his contribution and unwavering commitment to Telstra and I look forward to working with him as we manage this transition,” chief executive David Thodey said.
Meanwhile, agricultural chemicals company Nufarm said in a statement it has signed an agreement with Chinese firm Sinochem for a $2.8 billion takeover, following a 42.1% decline in full-year profit.
The company recorded net profit of $79.9 million in the year to 31 July, due to declines in the company’s glyphosate business.
“Seasonal conditions in key markets such as Australia and the US saw reduced demand for crop protection products in the 2009 period. If seasonal influences return to more average conditions in 2010, grower demand is expected to improve,” managing director Doug Rathbone said in a statement to the ASX.
Sharemarket falls after negative Wall Street results
The Australian sharemarket has opened lower today due to negative results last Friday on Wall Street, which has now recorded three consecutive days of losses.
The benchmark S&P/ASX200 index was down 64.5 points or 1.37% to 4648.8 at 12:00 AEST. The Australian dollar also lost ground to US86c.
Commonwealth Bank shares lost 1.9% to $50.33, while NAB shares fell 1.3% to $30.02. Westpac shares fell 1.8% to $25.70, as AMP declined 0.6% to $6.14.
ANZ shares gained 0.2% to $23.83 after a report in The Australian newspaper claimed the bank could look to the market for another $2 billion after buying the remaining 51% share in ING for $1.8 billion.
“People thought we were last out of the blocks, but really we were first in terms of adding quite a bit more capital than we needed,” chief executive Mike Smith said in the report.
“We could go into the market with quite a big hybrid offer, and even after this deal we are still looking very strong,” he said.
Meanwhile, David Jones chief executive Mark McInnes has said he is looking forward to the Myer IPO because it will mean the company will come under greater scrutiny.
“We can’t wait because for the last six years we have been open to investor, analysts’ and media scrutiny, where you get to see everything that we do at the lowest level of detail,” he said.
“For the first time in my time at David Jones our competitor is going to be subject to the same thing. I think they will learn things from us and I think we will learn things from them,” he said.