Sunday, November 16, 2008

Australia: Billions more to fight crisis

AUSTRALIA will join the other G20 countries in a new round of stimulatory spending after the world's 20 largest economies vowed to work together to tackle the worst global economic crisis since the Great Depression.

The emergency meeting of world leaders in Washington has agreed to take immediate co-ordinated action on fiscal and monetary policy as well as a series of reforms over the next four months.

These include making markets for complex financial instruments more transparent, reforming each country's prudential regulations and accounting standards, tackling excessive executive pay and restarting global trade talks.

Speaking after the meeting, the Prime Minister, Kevin Rudd, flagged spending more of the budget surplus than the $10.4 billion already promised.

However, this would not take place until next year when the effect of the multi-billion rescue package was known.

In the interim, the Government will use tomorrow's local government summit in Canberra to unveil more than $100 million in spending on council projects. Small projects such as footpaths and bridges that are approved and only awaiting funding that would be spent this financial year have been given priority.

Mr Rudd said the next big step would be the announcement next month of the first projects to be paid for from the $12.6 billion Building Australia Fund. Similar infrastructure funds will pay for health and education projects.

The process was brought forward by about three months to get the money into the economy as soon as possible. This "will add to the dimensions of our overall stimulus package" before Christmas, Mr Rudd said. He was determined "to take whatever additional action is necessary to support growth and jobs in what will be a very difficult year for the global economy in 2009".

The Finance Minister, Lindsay Tanner, said the Government would know by June whether it needed to spend the remaining $5.4 billion of this year's surplus.

"Clearly one of the options that we've got is to spend some of the remaining surplus for additional stimulatory activity."

The Government is prepared to go into deficit but will not countenance it publicly because it would fuel speculation and erode confidence. The other G20 countries are expected to unveil stimulus packages, although no details were revealed immediately after the Washington summit.

Mr Rudd said all nations must make good on their pledge.

Billions more to fight crisis
Sydney Morning Herald