KEY POINTS:
The Australian economy will be primed with a A$10.4 billion ($11.8 billion) injection designed to boost spending in key housing and consumer sectors as part of a growing firewall against the global financial crisis.
The emergency package unveiled by Prime Minister Kevin Rudd and Treasurer Wayne Swan yesterday
follows this week's guaranteeing of bank deposits and major banks' foreign borrowings, and an earlier pledge to accelerate the start of a A$20 billion infrastructure programme.
It came as Ford prepared to shed as many as 500 jobs in Victoria, and new warnings were issued on the state of employment and the housing market.
Rudd was also under heavy political pressure to ease the pain of soaring costs on low-income families and pensioners, whose benefits even he has publicly accepted are woefully inadequate.
Announcing his new economic security strategy, Rudd said that while the Australian economy remained strong it was not immune from the worst global financial crisis since the Great Depression of the 1920s.
The crisis had entered a new, dangerous and damaging phase, he said. That's why the Government had decided to act decisively and early on the question of this economic security strategy for the future.
The strategy will pump money into housing through first-home buyers' grants, new payments for pensioners, extra support payments for low- and middle-income families, and create 56,000 new training places in the present financial year.
It was welcomed by the housing industry, which is expecting further clamps on profits and a tightening in the availability of credit over the next six months.
Kick-starting the housing sector was a proven success formula for stimulating economic growth because of the multiplier effect it had on the broader economy in terms of providing jobs as well as stimulating the manufacturing and retail sectors, Master Builders Australia chief executive Wilhelm Harnisch said.
The measures have also been applauded by pensioner and carers' organisations, and by Opposition Leader Malcolm Turnbull, who described it as a very significant economic stimulus.
But industry and welfare groups were more ambivalent, concerned that the heavy focus on short-term solutions and the lack of measures to boost productivity would divert attention from other pressing issues.
Australian Chamber of Commerce and Industry chief executive Peter Anderson said that, while business would be pleased the Government was taking action, most of the package was directed at households rather than measures to reduce direct cost pressures.
"Our best response to minimise job losses in an economic downturn is to take cost pressures off businesses including small businesses and increase national productivity," he said.
The welfare organisation Anglicare also questioned the wisdom of the package, saying the Government had been seduced by the short-term economic boost a lift in housing construction could offer.
But Rudd said his measures would support growth in the domestic economy while providing practical support for households.
He also said the package would be entirely funded from the budget, which would remain in surplus.
It provides what Rudd described as a A$4.8 billion down-payment to the nation's 4 million pensioners, carers and seniors, responding to an increasing political clamour for higher benefits.
This includes a lump-sum payment of A$1400 for single age, disability and other pensioners; carers, who will also receive an extra A$1000 for each eligible person in their care; and self-funded retirees holding federal health or gold cards.
Couples will receive A$2100.
About 2 million low- and middle-income families will also receive a total of A$3.9 billion, through one-off payments of A$1000 for each eligible child in their care.
First-home buyers who buy an established home will see exiting grants doubled from A$7000 to A$14,000, and those buying a newly built home will receive an additional A$14,000, taking their total grant to A$21,000.
Rudd will further spend A$187 million to create an extra 56,000 training places this financial year, doubling the existing productivity places programme and taking total spending on training since April to more than A$400 million.
Rudd also said the Government would accelerate its three nation-building funds, with work starting next year on their education and research, health and hospitals, and transport and communications programmes.
Legislation for the funds will be referred to the Senate this week.
BIG SPENDING
The five key measures of Rudd's new economic security strategy are:
* A$4.8 billion for pensioners.
* A$3.9 billion in support payments for low- and middle-income families.
* A$1.5 billion to help first-time buyers into a home.
* A$187 million to create an extra 56,000 training places this year.
* Accelerated implementation of three new nation-building finds, to start next year.
