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Global recession to dominate Rudd's US talks -

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Reporter: Kirrin McKechnie

TONY JONES, PRESENTER: In the United States the Obama administration is acting to absorb toxic

It's spending $500-billion to help rid the banks of their bad assets in a bid to get the world
economy back on track.

The global recession will be the focus of talks between the Prime Minister Kevin Rudd and the US
President when the pair meet in Washington this week.

Mr Rudd's left his treasurer at home to continue Budget preparations in an economic climate both
now concede is set to slip into recession.

Kirrin McKechnie reports from Canberra.

KIRRIN MCKECHNIE: It's become the new economic indicator: the grey test.

WAYNE SWAN, TREASURER: When I got home on the Friday night I hadn't seen my number two daughter for
a couple of weeks and she said, "Dad, every time you come home, your hair just gets greyer and

KIRRIN MCKECHNIE: The Treasurer's got plenty weighing on his mind. Just yesterday the Prime
Minister warned there's almost no way Australia can avoid plunging into recession.

WAYNE SWAN: I do agree with him that it will be virtually impossible to avoid a period of negative
growth. That's the consequence of the global recession.

MALCOLM TURNBULL, OPPOSITION LEADER: So $23 billion of debt. $23 billion of cash splashes, no
positive economic consequence at all. He's conceded that his economic strategy has been a flop.

KIRRIN MCKECHNIE: The Prime Minister's looking abroad to help fix Australia's finances. The global
recession will top the agenda when Kevin Rudd meets Barack Obama in Washington this week.

BARACK OBAMA, US PRESIDENT (archival footage, '60 Minutes'): Well, we're already starting to see
flickers of hope out there. Refinancings have significantly increased, interest rates have never
been lower. That promises the possibility, at least, the housing market bottoming out and

KIRRIN MCKECHNIE: But the promise of further recovery can only be achieved when the US repairs its
troubled banking sector.

The Treasury Secretary is set to unveil his latest rescue plan to absorb $500-billion worth of
so-called toxic assets.

CHRISTINE ROMER, WHITE HOUSE ECONOMIC ADVISER: Now the crucial thing, it's being designed precisely
so it is going to be safe. We very much have the taxpayers' interests in mind. But we also have the
interest of the whole economy in mind, right. The crucial thing is getting lending going again.

WAYNE SWAN: If credit can flow again, then fiscal stimulus and economic stimulus put in place by
many countries around the world can become even more effective than it is at the moment.

KIRRIN MCKECHNIE: Back home, stimulating the economy is being used as justification to boost the
minimum wage. The ACTU's submitted its plea to the Fair Pay Commission, a $21 a week pay rise.

JEFF LAWRENCE, ACTU SECRETARY: It's an appropriate increase and its one that'll at least maintain
the purchasing power for those that are the least well-off in the community.

KIRRIN MCKECHNIE: But the Federal Government warns an excessive minimum wage rise could have an
adverse impact on jobs, particularly for the low-skilled. While it supports what it calls a
considered rise, it won't say whether it thinks the union's bid is too much.

Business is not so reserved.

PETER ANDERSON, ACCI: The responsible thing to do in 2009 with the current wage review is to pause,
to recognise the severe economic downturn that Australian industry is facing and to delay any
increase to across the board wages. To do otherwise would be to play with fire.

KIRRIN MCKECHNIE: And it'd be the Government that would feel the heat.

Kirrin McKechnie, Lateline