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Tuesday, 14 October 2008
Page: 8953

Ms CAMPBELL (2:02 PM) —My question is to the Prime Minister. How will the Rudd government’s Economic Security Strategy help see Australia through the global financial crisis?

Mr RUDD (Prime Minister) —The global financial crisis, as I have said before, is the economic equivalent of a rolling national security crisis. Its impact is being felt across the global economy in credit markets, stock markets and the real economy in growth and jobs, and we in this country are not immune to it. Events overnight underscore the importance of decisive action in responding to these events. The governments of France, Germany, the Netherlands, Spain and Austria formally committed overnight to guarantee interbank loans. Furthermore, they undertook to take equity stakes in banks. The government of the United Kingdom acted to take a majority stake in HBOS and in the Royal Bank of Scotland. These are extraordinary moves in meeting extraordinary challenges in these extraordinary times.

This global financial crisis has now entered a new and dangerous phase for us all. The IMF—the International Monetary Fund—has already indicated that if the major economies in the world are not already in recession they are on the cusp of recession. The IMF is now forecasting the slowest growth in the advanced economies for over a quarter of a century.

The government has resolved to take necessary early and decisive action to secure Australia’s long-term economic future. Today, on behalf of the government, I have announced a $10.4 billion Economic Security Strategy to strengthen the Australian economy during the global financial crisis. The government has resolved not to sit idly by while Australian households suffer the worst effects of the global crisis, a crisis which our households did not create. The government will not stand idly by while we need to take decisive action to support the long- and medium-term growth of the Australian economy and to support the household economy on the way through. It was for these reasons that I announced today this $10.4 billion Economic Security Strategy.

The first part of it goes to pensions. To boost household consumption and to assist older Australians and carers the government will provide $4.8 billion to fund a one-off payment of $1,400 to single pensioners and $2,100 to couples. This payment will also be made to Commonwealth seniors card holders. This measure will benefit around four million pensioners, seniors and carers. We will also provide a one-off payment of $1,000 to carer allowance recipients. This will be a down payment on the long-term pension reform that the government is currently working on through the Harmer review. This amount over a nine-month period, that is, from now until 30 June next year, represents the equivalent of some $35 per week for single pensioners and some $24 per week for members of a married couple. As I said before, this $4.9 billion package goes to all pensioners, not some pensioners.

The second part of the government’s Economic Security Strategy is as follows. I announce today that those families currently in receipt of family tax benefit A will receive a further payment of $1,000 per child. This payment will also be made to each dependent child who attracts youth allowance, Abstudy or Veterans’ Children Education Scheme entitlements. This measure will benefit around 3.9 million Australian kids. These payments will be delivered by December at a cost of around $3.9 billion. This $3.9 billion commitment will benefit some two million Australian families and, like the pensions measure I referred to before, will be delivered in December.

The third part of the government’s Economic Security Strategy for the future goes to housing. The construction sector and private dwellings investment are important generators of economic activity in this country. They are also important for the wellbeing and the living standards of Australians. To strengthen this important sector of the economy, the government has resolved to introduce a new first home owners boost. This measure will cost around $1.5 billion in 2008-09 and around $350 million in the following financial year. This measure will benefit around 150,000 first home buyers.

The fourth measure I have announced today is a $190 million program over two years to provide enhanced training support for the workforce. This will be delivered through an additional 56,000 places for the 2008-09 Productivity Places Program. Finally, the government will also accelerate our historic nation-building program. We will bring forward the consideration and implementation of projects under our various future investment funds. I have asked ministers to bring forward interim lists of proposals, as we have done already with Infrastructure Australia, for funding through the Building Australia Fund. This will allow implementation following appropriate and rigorous evaluation with initial work on projects commencing in the year 2009.

The government has built a strong surplus over the last year. That surplus was a prudent and appropriate measure to build up as a precaution against tough times ahead. Those tough times have now arrived, and the government is now deploying the surplus for the benefit of the nation and for the benefit of the Australian people. The total cost of the Economic Security Strategy is $10.4 billion. This, we believe, is large enough to make a significant contribution to strengthen the Australian economy into the future. The reason we have been able to move quickly and so decisively lies in the strength of the budget the Treasurer delivered in May this year. We believe this is the right course of action. It is an early course of action. It is a decisive course of action. It is a responsible course of action to underpin positive growth for the Australian economy in these difficult times brought about by the global financial crisis and to support the interests of households as well.