In an economic note, Treasurer Wayne Swan confirmed that the Australian government’s fiscal stimulus will continue to wind down carefully as private demand recovers in the economy.
His comments came as he was able to report news of improvements in Australia’s economic situation. Due to the stimulus, he said, unemployment fell slightly to 5.5% in December 2009, lower than every major advanced economy except Japan.
Swan recalled, in the note, that “the stimulus program was specifically designed to have its maximum impact in the June quarter of last year and then gradually phase down.” Some of the measures have already been fully withdrawn, with the cash stimulus payments taking place at the end of 2008 and early in 2009, while the First Home Owners Boost and Small Business and General Business Tax Break were completely phased out on January 1, 2010.
He was of the opinion, however, that to “pull the plug overnight on our pipeline of investment in major highways, rail upgrades, ports, schools and social housing would hurt consumer and business confidence, push unemployment higher and hit small business for six.”
With regard to efforts to tackle climate change, he professed that the government is “determined to provide businesses with the investment certainty they need by introducing a price for carbon through our Carbon Pollution Reduction Scheme (CPRS).” The government will therefore be reintroducing its emissions trading scheme, which was rejected by the Australian Senate last month. Legislation for the CPRS will be re-presented as soon as Parliament resumes at the beginning of February.
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