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Government considering tax cuts and helping t -

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Government considering tax cuts and helping the welfare sector

The World Today - Tuesday, 27 January , 2009 12:10:00

Reporter: Alexandra Kirk

ELEANOR HALL: The Federal Government is considering bringing forward its plans for tax cuts for low
income earners in an attempt to stimulate the economy, as some of the world's biggest companies
announced within hours of each other today that they will cut 70,000 jobs worldwide.

The Federal Government is also looking at policies to assist those people who've already been hit
by the crisis.

The Deputy Prime Minister Julia Gillard is meeting leaders of the welfare sector who are calling
for a better deal for the unemployed and more money for not-for-profit groups dealing with
homelessness, unemployment and financial stress.

In Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: As world leaders begin heading to the annual meeting of the Global Economic Forum
in the Swiss ski resort of Davos, the Federal Government is exploring all the options for another
economic stimulus package.

And bringing forward the next round of tax cuts, from July 2010, is on the table. It's something
the Opposition's been urging for some time.

Senior Minister Simon Crean says it's one idea.

SIMON CREAN: Well, tax cuts are one of the series of options that one would look at to stimulate
domestic activity.

ALEXANDRA KIRK: Economist Chris Richardson from Access Economics says tax cuts are a good idea,
particularly for low income earners.

CHRIS RICHARDSON: Low income earners are much more likely to spend, they simply don't have the
buffer that the well-off do. And that makes this proposal a sensible one. Late last year Federal
Treasury laid down the ground rules for good policy making in the downturn and it said that what
governments do to defend against the downturn should be timely, temporary and targeted. It
certainly has the potential to be timely, temporary and targeted and we need to do it.

ALEXANDRA KIRK: With the Prime Minister and Treasurer opting not to go to Davos, Mr Crean and the
Deputy Prime Minister Julia Gillard will go in their stead, rubbing shoulders with heads of state
as they ponder how bad the recession is likely to get and what growth is needed to turn it round.

Chris Richardson says the news from Davos will be bad, as the International Monetary Fund
recalculates its estimate of global growth in the light of China's latest growth figures.

CHRIS RICHARDSON: Chances are that the IMF forecast for growth in China will be somewhere around
six per cent. That will be disappointing good by the standards of most other nations but enough to
way on the wider global economy. And because most nations are now slowing relatively sharply its
forecast for the world economy is likely to be for very little growth at all or in other words
dropping us below the forecast it last had, which was somewhere around what the world achieved in
the recession of 1982. So, they will be looking for the worst global growth in decades.

ALEXANDRA KIRK: He says Davos won't be a policy making forum, but -

CHRIS RICHARDSON: There will be a great chance for people to pass around ideas or the equivalent of
war stories, basically of what's going on at the moment. And, however, there are too many
governments and too many individuals involved to expect to see anything concrete out of Davos
itself.

ALEXANDRA KIRK: So does it serve any purpose at all?

CHRIS RICHARDSON: It does, to go back to FDR, "We have nothing to fear but fear itself."

These sorts of problems gripping the global economy at the moment can be dealt with, and they are
dealt with best by coordinated action by governments and by central banks.

ALEXANDRA KIRK: Before flying to Switzerland, Julia Gillard's turning her attention to the plight
of the most vulnerable and disadvantaged. Today she's meeting not-for-profit, church and charity
groups, who are worried they won't be able to cope with the influx of people needing help.

Two months ago the welfare sector called for an extra $300-million a year for the next three years,
an immediate increase to unemployment benefits and for less punitive measures for jobseekers.

Frank Quinlan from Catholic Social Services Australia, who'll be at today's talks, says it's an
urgent plea for help.

FRANK QUINLAN: Well look, one of our counsellors described the situation well yesterday - he said
that in his financial counselling service he feels like there is a tsunami on the way. He said that
there's been some early tremors and we felt the early tremors and the seas have sort of drawn back
from the shore and he's waiting for a wave of demand to hit us.

So I think the signs are that it's early days yet but by every indication is that we're going to
facing a massive increase of demands over the next 12 months and that we need to be getting ready
for that.

ALEXANDRA KIRK: Mr Quinlan says since the problem was quantified for them last November the problem
has deepened.

FRANK QUINLAN: I think at that stage we were anticipating that something like 140,000 or 150,000
Australians could be facing unemployment. But every indication is that it could be even worse than
that. What's clear is that this economic downturn is going to be hitting people who haven't
traditionally been part of the welfare system.

So they'll be added to the numbers of people who are contacting us for our services and anything
that we can be doing to ensure those people are protected from becoming long term participants in
the welfare system is really what we should be doing now.

ELEANOR HALL: And that's one of those charity workers speaking to the Deputy Prime Minister today.
That's Frank Quinlan from Catholic Social Services Group of Australia.

Alexandra Kirk with that report.