The Rudd Government is acting decisively to strengthen growth and support Australian jobs in the face of the deepest global recession since World War II.
The global financial crisis has driven almost all major advanced economies into recession. The key emerging economies of China and India are now also slowing sharply.
The global commodity boom which has provided significant stimulus to the Australian economy over recent years has come to an end.
No country will escape the impacts of the global recession, which is causing falls in growth, job losses and budget deficits right across the world.
The weight of the global recession is now bearing down on the Australian economy. Economic growth is slowing and employment will weaken.
That’s why the Rudd Government is implementing a $42 billion Nation Building and Jobs Plan to provide immediate support for jobs and growth. The Plan will add around ½ of one per cent to GDP growth in 2008-09 and around ¾ to 1 per cent to GDP growth in 2009-10, and support up to 90,000 jobs over the next 2 years.
In the midst of this global recession it would be irresponsible not to act swiftly and decisively to support jobs and invest in nation building.
The Nation Building and Jobs Plan has been crafted to strike the right balance between supporting growth and jobs now, and delivering the lasting investments needed to strengthen the economy for the future.
The global recession, dramatic slowing in China and unwinding of the commodity boom has now wiped a total of $115 billion from budget revenues and pushed the budget into deficit.
A budget deficit is now forecast for 2008-09 of $22.5 billion (1.9 per cent of GDP).
The global recession has hit budgets hard all around the world, with the IMF now forecasting a collective budget deficit of 7 per cent of GDP for advanced economies.
The Government reaffirms its commitment to deliver budget surpluses, on average, over the course of the economic cycle.
As the economy recovers, and grows above trend, the Government will take action to return the budget to surplus by:
In the face of these extraordinary global conditions, the immediate and overriding priority for fiscal policy must be to support growth and jobs.
There will be no quick fix to this global recession and many of its effects are still to be felt – but the Rudd Government is taking the necessary and responsible action to help see Australia through this global crisis.
3 February 2009