Spend RM673.5mil quickly – by order of PM

Sunday November 23, 2008
Spend RM673.5mil quickly – by order of PM
INSIGHT DOWN UNDERBy JEFFREY FRANCIS

The nation’s 400 mayors and 165 local council presidents received a windfall to keep local jobs going during the financial crisis. This is part of the PM’s next phase of stimulating Australia’s somewhat shaky economy.
SPEED is now the essence of survival in Australia. But this is a special kind of speed – spending quickly millions of dollars of taxpayers’ money – by order of Prime Minister Kevin Rudd who, only two hours earlier, had returned from the G20 summit in Washington.
He summoned the nation’s 400 mayors and 165 other local council presidents to Canberra for a special meeting last week. They thought it was only to discuss the improvement of working relationships with the federal government.
At first, they were surprised that the Prime Minister had wanted to see them personally. Even more surprising was his giving away of A$300mil (RM673.5mil) to spend immediately on building local infrastructure and help support the local economies and jobs in the wake of global recession following the US financial meltdown.
Rudd told them in no uncertain terms: “And by immediate, I mean immediate. It means now. It’s ready to go now.”
Stern as the language might sound, the mayors and presidents were smiling gleefully after the applause died down in Parliament House.
After all, the needs of the local councils had been ignored for years by previous governments,
Sudden windfall
Now they were suddenly receiving a windfall to keep the local jobs going during the financial crisis as many private firms, including the big banks and financial institutions, have begun to retrench their staff.
But it is not just maintaining the jobs that the councils have to do. They also have to create thousands of jobs such as tradespeople, engineers and administrators to take charge of rolling out new infrastructure or repairing existing ones.
This is part of the Prime Minister’s next phase of stimulating Australia’s somewhat shaky economy as a result of the fallout from the brutal financial crisis now gripping almost the entire world.
Although the US is not technically and officially in recession yet, its massive debts of several trillions of dollars and unemployment of about two million would soon show its severe economic contraction.
On the other hand, those in official recession include Japan and Germany – the world’s second and third biggest economies respectively, the entire Eurozone, Britain, Ireland, Hong Kong, Singapore and Australia’s closest southern neighbour New Zealand.
They are among the nations that import more than 60% of Australia’s trade.
And the economic slowdown in China is certainly having a flow-on adverse effect on the Australian economy.
That is why Rudd is seriously concerned about rising unemployment and financial hardship to families, and wants to ensure the nation, still financially sound overall, would not be the next victim of recession.
His concern is based on the fact that the G20 summit, which he described as an important milestone for the global economy, having brought together the leaders of the world’s 20 largest economies, reflects the size of the challenge they are now confronted with.
It is, as he points out, recognition of “the changing centre of gravity in the world economy”.
“Simply put, global economic growth won’t get back on track without the G20 economies of our region – China, India, Indonesia and South Korea – economies that now comprise a large share of global economic growth,” Rudd said.
“Where the private economy cannot fill the growth gap, let us be clear: government must step in.”
What Rudd is saying is that the governments in the region must chart a course of action to see through the great challenge that is now facing them.
For Australia’s part, his government has launched its economic security strategy, which includes a substantial fiscal stimulus of A$10.4bil (RMb23.3il) to underpin growth, A$6.2bil (RM13.9bil) new car plan to transform the nation’s automotive industry and A$47bil (RM105.5bil) tax cuts for families to help them in these difficult times.
‘A war against recession’
Rudd has declared “a war against global recession and global unemployment”, and he is determined to use every tool at his disposal to protect Australia’s economic growth and jobs for the people.
He reiterated that the government’s strong action will stabilise the Australian financial system, guarantee bank deposits to protect investors’ money, build confidence in the banks and guarantee the term wholesale funding of banks so that credit can continue to flow.
“You cannot have a strong Australian economy without a healthy global economy. Equally, you cannot have a strong national economy if you do not have strong local economies,” he declared.
But with Australian exports of commodities and resources to big buyers like China and India being curtailed and the collapse of some big companies, including the second biggest childcare centre last week after the billion-dollar deficit of ABC Learning, some businesspeople believe the country would have its first negative growth quarter this year.
A second negative quarter will put Australia in recession.
Whether Rudd could prevent this from happening with the billions he is spending in his self-declared war is difficult to ascertain at this stage – just as the Americans cannot say for sure that their President-elect Barack Obama would be able to find a magic wand to cure what must surely be the greatest symptomatic financial problem the world has ever known.
Jeffrey Francis is editorial consultant, Australasia-Pacific Media