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Second stimulus package to be unveiled by Fed -

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Second stimulus package to be unveiled by Federal Government

The World Today - Tuesday, 3 February , 2009 12:10:00

Reporter: Hayden Cooper

BRENDAN TREMBATH: It's the first parliamentary sitting day of the year and there's a lot of money
at stake.

The Federal Government is announcing a big spending package to help soften the blows of the global
financial crisis. The Prime Minister's announcement is expected to focus on infrastructure.

The Government will also reveal Australia's current Budget position. New figures are expected to
confirm a descent into deficit.

From Canberra Hayden Cooper reports.

HAYDEN COOPER: At St Pauls Anglican Church in Canberra, politicians gathered to usher in the new
political year with a prayer.

And mingling outside after the service the Prime Minister revealed his preferred reading to match
the financial times.

KEVIN RUDD: I'm reading a biography of Keynes at the moment by Skidelsky.

HAYDEN COOPER: The John Maynard Keynes biography has clearly shaped his thinking, for today Kevin
Rudd will apply the most fundamental of Keynesian principles, spending his way through the storm.

WAYNE SWAN: (to reporters) Ready to go?

HAYDEN COOPER: Up at the House, his Treasurer was foreshadowing a day to remember.

WAYNE SWAN: Well today the Rudd Government will announce a nation-building and jobs plan to support
Australian jobs. But most importantly to invest in future economic growth.

HAYDEN COOPER: The nation-building and jobs plan, as the Government has labelled it, will cost
billions. It'll include spending on infrastructure, and help for business and households.

The Treasurer again:

WAYNE SWAN: This plan will strike the right balance between supporting jobs now and investing in
critical nation-building projects for the future.

HAYDEN COOPER: Nothing, just yet, is guaranteed to get Opposition support.

The only element confirmed is a plan for free insulation for more than two million Australian
homes. And that's already attracting criticism from the Opposition's Housing Spokesman Scott
Morrison.

SCOTT MORRISON: Well, this is a program which the Government in Opposition promised to introduce
when they came to government, so you know we're now more than 12 months into that government, and
what they've done is not introduced yet and now they're saying they're going to take it for $500 to
$1,000. Now, the initiative on its own is worthy of consideration and Malcolm Turnbull has been
talking about green depreciation and retro-fitting buildings and providing accelerated
depreciation. So I think it's very much on the same theme.

But I think the Government's playing catch up on its own policy. And they've dressed it up as a
stimulus package it would seem today. But with the whole stimulus package, which I understand will
be announced today, we need to look at it in its entirety. And as I say every dollar is a dollar
extra in debt.

HAYDEN COOPER: The Finance Spokesman Joe Hockey isn't expecting much either.

JOE HOCKEY: Of course there's a global financial crisis, but the message today has to be hope. Hope
that we can get out of this, hope that there is a way, that there is a solution. There has to be a
plan. But instead, today we'll see a stimulus package that rolls together all of Kevin Rudd's old
initiatives and takes a few of Malcolm Turnbull's as well. He'll roll them all together and he'll
claim that they are going to stimulate the economy; they're going to create jobs. Well, you know,
it's all spin.

HAYDEN COOPER: While there will be a splurge designed to save jobs and get Australians spending
again, the Government's also taking the unusual step of releasing updated Budget figures.

And it's here that the negative context will shine through as the size of the budget deficit is
revealed, along with new growth and unemployment figures.

These will finally confirm whether the Government believes Australia is destined for recession.

WAYNE SWAN: Well a temporary deficit has been imposed on Australia by the rest of the world. And
what you saw yesterday is the magnitude of that in terms of the revenue downgrades. Today we will
provide a full update of all of that. So all of the figures will be there for everybody to see.

HAYDEN COOPER: Today's stimulus announcement is carefully timed to coincide with the expected
interest rate cut from the Reserve Bank, allowing the Treasurer to craft his argument of policy
harmony.

WAYNE SWAN: The most important thing for Australia is that we have both fiscal policy and monetary
policy working together to strengthen growth and to support jobs in the face of a global economic
recession.

HAYDEN COOPER: Joe Hockey says it'll have a far more damaging impact.

JOE HOCKEY: It may well turn out to be more of a shock to the Australian economy if the Reserve
Bank goes large and the Government goes large and it could have the effect of scaring people into
further belief that the Government is panicking. So these things need to be very carefully managed.

BRENDAN TREMBATH: The Opposition's Joe Hockey ending that report by Hayden Cooper.