Morgan BellGood news for the Australian Economy
October 14th 2008 07:09
Today Australian Prime Minister Kevin Rudd announced an emergency $10.4 billion Stimulus Package to guard the economy from a global slowdown and boost consumer confidence. The package is worth about 1% of Australia's GDP.
The decision has come hot on the heals of Rudd's guarentee of all Australian bank deposits for 3 years. Previously only a maximum of $20,000 per person was guarenteed. An increase to $100,00 was proposed by opposition leader Malcolm Turnbull but Kevin Rudd trumped that figure by offering "unlimited" security of domestic savings.
Deposits in Australia tally between $600 billion and $700 billion. The guarentee includes all Australian banks, building societies and credit unions. In return for the guarantees, banks will pay an insurance premium at a rate which will be determined by the treasury.
The government would also guarantee term wholesale funding to local banks until global financial markets stabilised. This means anyone lending money to an Australian bank has an assurance their money is safe.
Australian will also double the funds available for mortgage-backed securities to $8 billion to help maintain liquidity for non-bank lenders.
The Australian Stimulus Package delivers pre-Christmas cash payments to pensioners and low and middle income earners to help fight sagging consumer confidence in Australia, and provides $1.5 billion to bolster the country's housing and home building markets.
Under the Stimulus Package, single pensioners will receive a lump-sum payment of $1,400, while pensioners couples 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, and in time to help bolster pre-Christmas sales.
The government will also double the grant for first home buyers from $7,000 to $14,000, and tripling the grant to $21,000 for first home buyers who newly-constructed a house.
The stimulus package is being funded out of the projected $21.7 billion surplus.
Australia is in its 17th year of economic growth and has delivered surplus budgets for 10 of the last 11 years. Economic growth for the 2008-09 financial year has been forecast at 2.75% growth.
The Stimulus Package primarily aims to prevent or delay further interest rate cuts from the Reserve Bank.
These measures have been surprising strong, timely, and decisive for Prime Minister Rudd. Hopefully this action will restore the confidence of consumers and lenders who are currently spooked by the current Global Financial Crisis.
References:
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The decision has come hot on the heals of Rudd's guarentee of all Australian bank deposits for 3 years. Previously only a maximum of $20,000 per person was guarenteed. An increase to $100,00 was proposed by opposition leader Malcolm Turnbull but Kevin Rudd trumped that figure by offering "unlimited" security of domestic savings.
Deposits in Australia tally between $600 billion and $700 billion. The guarentee includes all Australian banks, building societies and credit unions. In return for the guarantees, banks will pay an insurance premium at a rate which will be determined by the treasury.
The government would also guarantee term wholesale funding to local banks until global financial markets stabilised. This means anyone lending money to an Australian bank has an assurance their money is safe.
Australian will also double the funds available for mortgage-backed securities to $8 billion to help maintain liquidity for non-bank lenders.
The Australian Stimulus Package delivers pre-Christmas cash payments to pensioners and low and middle income earners to help fight sagging consumer confidence in Australia, and provides $1.5 billion to bolster the country's housing and home building markets.
Under the Stimulus Package, single pensioners will receive a lump-sum payment of $1,400, while pensioners couples 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, and in time to help bolster pre-Christmas sales.
The government will also double the grant for first home buyers from $7,000 to $14,000, and tripling the grant to $21,000 for first home buyers who newly-constructed a house.
The stimulus package is being funded out of the projected $21.7 billion surplus.
Australia is in its 17th year of economic growth and has delivered surplus budgets for 10 of the last 11 years. Economic growth for the 2008-09 financial year has been forecast at 2.75% growth.
The Stimulus Package primarily aims to prevent or delay further interest rate cuts from the Reserve Bank.
These measures have been surprising strong, timely, and decisive for Prime Minister Rudd. Hopefully this action will restore the confidence of consumers and lenders who are currently spooked by the current Global Financial Crisis.
References:
Really Long Link
Really Long Link
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Comment by Morgan Bell
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yes i was pretty skeptical myself, historically the Liberals tend to be much more sensible economists, and for a while it seemed that Rudd intended to spend his entire term just campaigning for the next one without acting upon anything
i think this is a good move on Rudds part, and i like this side of him much more than the never-ending parade of committees and commissions
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haha i dont know if that was an intentional typo or a freudian slip about the man with the very precise hair style!
hi alt_ed,
well its entirely possible people may buy some tiny pieces of luggage with their Stimulus Package lump sums!
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But it seems like Rudd is doing better than what the Brits are doing.
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yeah its interesting to see the different approach each country is taking to the Economic Crisis . . . its a shame the world cant take some money directly out of the pockets of the millionaire CEOs who busted the banks and insurance companies
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i noticed Turnbull came out today complaining that the government hasnt acted quick enough - i was impressed they acted at all! haha
it certainly is interesting times ahead . . .