2nd stimulus for Australia

The Straits Times
Nov 17, 2008 | 8:13 AM
2nd stimulus for Australia

CANBERRA - AUSTRALIA is open to a second round of spending to stimulate the economy and ward off recession as the global financial crisis continues, but its budget should remain in surplus, said Finance Minister Lindsay Tanner.

'We have projections that are put together by Treasury showing the budget remaining in surplus and we're certainly sticking to them,' Mr Tanner told Australian radio on Monday.

The centre-left government unveiled a A$10.4 billion (S$10.1 billion) stimulus plan last month in an effort to boost domestic spending, including one-off pre-Christmas payments for pensioners and poorer families.

Mr Tanner at the weekend said the government was keeping open the option of spending more from the estimated budget surplus this fiscal year of A$5.4 billion, or 0.4 per cent of GDP, revised down this month from A$21.7 billion amid global economic turmoil.

But any second-round stimulus would not necessarily be as large as the first, he said, while warning speculation of a deficit as the economic downturn cut growth to around 2 per cent was hurting confidence.

'The possibility of further spending stimulus really relates to the prospect of the news from the international economy getting even worse,' Mr Tanner said.

Prime Minister Kevin Rudd returns on Monday from a weekend Group of 20 countries meeting in Washington to meet local mayors from across Australia and was prepared to spend the budget surplus if required, the Australian newspaper reported.

Mr Rudd would announce spending on local infrastructure projects like road and port improvements at the Tuesday meeting, boosting local economies and helping lift national productivity, local radio and newspaper reports said.

The Labour government has promised A$20 billion for infrastructure and will release next month a priority list. A decision on extra stimulus spending would come before June next year after assessment of global conditions, the Australian said.

'I certainly hope there won't be a need for further major stimulatory action, but we can't rule that out because we are not clear about exactly how bad the recession internationally is going to end up being,' Mr Tanner said.

More popular now
Two new opinion polls on Monday showed Mr Rudd's Labour government was more popular now than when elected last November, sweeping aside almost 12 year of conservative rule.

When compulsory voting preferences were distributed to the two major parties, Labour support was at 55 per cent, up two points from a year ago, with the conservatives 10 points adrift.

Economic woes and rising unemployment had not dented Mr Rudd's record popularity, with a Nielsen poll in Fairfax newspapers showing 68 per cent support for the former diplomat. -- THOMSON REUTERS