Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

I would draw the attention of members of the House to a statement overnight from the director of the International Monetary Fund, Dominique Strauss-Kahn, which reported the sobering news that the IMF is further revising down its global growth forecast for 2009. Mr Strauss-Kahn has said that growth in 2009 is now predicted to be less than zero for the first time in the IMF’s history. He said:

The IMF expects global growth to slow below zero this year, the worst performance in most of our lifetimes.

He goes on to note that the global financial crisis might now be called the great recession. This sobering report from the director of the IMF follows the report in the last 24 to 48 hours of the head of the World Bank and the World Bank itself also predicting that global economic growth in 2009 would, in fact, go below zero.

These two sobering reports on the state of the global economy remind us of the dimensions of the challenge with which Australia is presented by the global economic recession. Again, it is like a global economic cyclone approaching this country. It started in America. It has come through Europe and it is now affecting all economies around the world—a synchronised global economic downturn with all countries and all sectors within those economies being hit at the same time.

Those opposite may argue that it is within the power of any single national government to prevent a cyclone from crossing your shores. You cannot give that undertaking. What you can do, however, is take prudent action to reduce the damage, to reduce the impact of that cyclone on Australia. That is what we have done through the government’s economic stimulus strategy. The alternative, argued by those opposite, is to do nothing and therefore expose all Australian families to the full force of the storm. That is the difference. We say we can cushion the impact of the storm. Those opposite say: ‘You’re on your own. Look after yourselves. Look after your own circumstances. You’re on your own.’ In fact it entirely underlines their philosophy in industrial relations as well: go out there and fend for yourself. It is the law of the jungle.

The government’s Economic Security Strategy hinges on three core components. First is the stabilisation of financial markets, the cornerstone of which is the provision of a government guarantee for all Australian deposit holders for the first time in Australia’s history not just as a necessary ingredient for stability in financial markets but, on top of that, as a necessary ingredient for confidence in the economy as well. Then there is short-term stimulus, which has been the subject of questions already by the Leader of the Opposition—providing payments to families, payments to pensioners, payments to carers, payments to veterans, payments to farmers, payments in order to provide support to Australians who are under stress and challenge because of the impact of the global economic recession; but at the same time providing support to employment in the Australian economy in the consumption sector of the economy, in retail, which employs 1½ million Australians. Thirdly, there is long-term stimulus as well: Investing in our Schools, the biggest school modernisation program in Australia’s history; investing in 20,000 new units of social housing; and investing in energy efficiency to ensure over time that we have ceiling insulation in every single Australian owner-occupied home right across the country, bringing down greenhouse gas emissions but also stimulating the local economy. Together with investments in roads, rail and ports, this is long-term infrastructure which comes off the back of necessary stimulus also in the short term.

As part of the its economic stimulus strategy, the government today will start making the payments of $950 back-to-school bonuses and $900 single-income family bonuses to help support families through the global economic recession and at the same time support jobs in the Australian retail sector, a sector which employs 1½ million Australians. I note that a report today by Access Economics notes that 53c in the dollar of the stimulus will be outlayed in 2009, with 74 cents to be outlayed by mid-2010. Access goes on to say:

Australia’s stimulus may be a smaller share of our national income than the United States equivalent but it has the potential to do more in the short term.

Access goes on to say:

History may mark the first week of February in 2009 as an important building block in Australia’s eventual economic recovery. Tuesday, February 3 saw a big interest rate cut from the Reserve Bank and an even bigger stimulus package from the federal government. Both these measures will lift the spending power of households through 2009 providing important support for retailers against the tide of rising unemployment and consumer caution.

Those are comments from Access Economics in their report today.

It is not just institutions like Access which have spoken in support of the government’s economic stimulus strategy. We also have statements from other organisations, including the National Farmers Federation. The National Farmers Federation stated:

The government’s $950 tax-free bonus for all drought affected farmers—reaching some 21,500 farmers in need—will be a much-needed fillip to families and regional economies.

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