Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

On this day twelve months ago I announced the launch of an historic nation-building plan. The $42 billion Nation Building Economic Stimulus Plan represents the largest Commonwealth infrastructure project in our nation’s history. The government’s decisive action through our infrastructure stimulus plan is protecting jobs through over 28,000 individual projects nationwide. We are keeping the economy strong and we are supporting working families in the here and now.

The government introduced the plan with two key goals:

• to protect Australia from the worst global recession in three-quarters of a century, and
• to build Australia’s future with investment in long-term infrastructure.

At the time, I said that this plan would support jobs and small businesses in the short term and build schools, energy efficient housing and transport infrastructure in the long term. Today I am reporting back to the parliament and to the Australian people on the progress that we have realised in this plan.

During the past 12 months the Australian economy has received support from the Reserve Bank’s emergency low interest rates and from ongoing growth in the Chinese economy. But let me be absolutely clear. The difference between the strengthening growth in the Australian economy today—and being engulfed by the global recession like eight out of our top ten trading partners—is the government’s economic stimulus strategy. The difference between having generated 112,000 new jobs in the past year—and hundreds of thousands of Australians facing job losses—is the government’s economic stimulus plan. The difference between the increasingly confident business outlook—and small businesses going to the wall in communities across the nation—is the government’s economic stimulus plan.

The Nation Building Economic Stimulus Plan is delivering on what it promised. Jobs for today, and infrastructure for tomorrow.

• Half of the $42 billion stimulus has now been injected into the economy, through businesses, households, state and local government allocations and construction projects.
• Almost three-quarters (71 per cent) of almost 50,000 infrastructure projects have been completed or are underway.

The Nation Building Economic Stimulus Plan is transforming schools, community facilities and neighbourhoods across the nation. And it is building lasting foundations for Australia’s future growth and productivity.

One year ago Australia was facing the most hostile global economic conditions in three-quarters of a century. The collapse of Lehman Brothers in September 2008 and subsequent events on Wall Street had reshaped the landscape of American finance. What had begun as seemingly a patch of bad weather in American financial markets gathered force as the interbank lending markets that turn the wheels of the global financial system effectively shut down.

By the beginning of 2009 a cyclone was sweeping through the entire global economy.

• World trade collapsed by nearly 45 per cent (on an annual basis) in the last three months of 2008.
• Entire banking systems needed to be rescued, recapitalised and, in the case of individual banks in many countries, nationalised.
• Stock markets slumped, many losing more than half of their value.
• Financial institutions that had survived a combination of world wars and world depressions were swept aside.
• Even the finances of nations themselves were threatened—with one nation-state declaring itself to be officially bankrupt.

We were truly looking into the abyss of the total failure of the global financial system, the collapse of global economic growth and the real possibility of a global depression of indefinite severity and duration.

The jobs of hundreds of thousands of Australians were at risk. The Australian government faced a stark choice. Would we simply fold our arms and allow the free market to run its course. Or would we act decisively, by providing a major stimulus to the economy that could cushion Australia from the full force of the global economic recession. We had a very small window of opportunity within which to make that decision. The government weighed the arguments and the evidence of past global economic crises. And we concluded that we must do everything that we reasonably could to cushion Australians from the impact of the recession; to protect jobs, apprentices and businesses and to protect our economy from the full impact of a global economic cyclone, by saving and supporting the jobs of working families around Australia.

The government’s first urgent step was to guarantee deposits and to guarantee wholesale funding for APRA regulated banks, building societies, and credit unions. This was an essential move—without it, credit for major projects would have largely seized up and construction projects across the nation would have stopped in their tracks. In the months that followed, the government rolled out $77 billion in stimulus and investment packages to support the economy across the immediate, medium and long term. The centrepiece of this $77 billion stimulus and investment is the $42 billion Nation Building Economic Stimulus Plan.

The government’s strategy began with immediate stimulus through cash payments, support for first home owners and tax breaks to encourage investment by small business. Our rationale was that these measures would trigger key drivers of growth in the Australian economy, in particular household consumption, at a time when we faced the risk of a freefall in retail spending due to the collapse in consumer confidence. And we all in this place know the concentration of Australian jobs which lies in the retail sector—some 15 per cent of the entire Australian workforce.

The next stage of the strategy was to provide medium-term support for the economy by investing in school modernisation, energy efficiency and social housing. The third stage is investment in major, long-term infrastructure projects in rail, road, ports, education, research, clean energy, and broadband.

From the beginning, the government recognized that if the plan was to be effective, timing was critical. To have the intended effect on the economy, it was essential that funds flowed quickly to support jobs and to support local communities. For this reason, in February 2009 the Council of Australian Governments agreed to ambitious delivery timeframes. This has been a herculean exercise, with Commonwealth, state and territory coordinators-general overseeing the development, approval, construction and completion of around 50,000 major construction projects across Australia. This is virtually unprecedented in our country’s history.

Now—one year since I announced our commitment to the plan—we are well into the delivery phase. The Commonwealth Coordinator-General has reported to me that significant progress has been made, with 71 per cent of the 50,000 approved projects already completed or under way. Half of the $42 billion stimulus has now been injected into the economy, through businesses, households, state and local government allocations and construction projects.

Of the major building and construction projects being rolled out:

• 49,179 projects have been approved;
• 34,853 projects have commenced; and
• 8,339 have been completed.

The rapid delivery of the plan has been critical to its effectiveness. By comparison with other nations, Australia acted early and decisively in implementing the stimulus measures. For example, the United States government currently estimates that only 34 per cent of the stimulus package announced by the US last year has been paid out—that is, $269 billion out of a total of $787 billion.

The Australian government was acutely aware of the need to bring forward the stimulus at the time when economic growth was under acute stress—mindful of the lesson that, in previous downturns, governments have often acted too late to prevent a downward spiral. Unlike other nations, Australia acted before our economy had plunged into the deep downward spiral and before a surge in unemployment. Early and decisive action was critical to the effectiveness of the stimulus plan. That is why the impact of the stimulus peaked in mid-2009, and will continue to phase down as the economy recovers.

I will now outline to the House progress in each component of the Nation Building Economic Stimulus Plan, as at 31 December 2009. The Building the Education Revolution Program represents the single largest school modernisation project in Australian history—and in this chamber I would acknowledge the central role of the Minister for Education and the Deputy Prime Minister of Australia in her oversight of this program:

• 12,467 National School Pride projects are underway and 4,435 have been completed.
• 503 science and language centres are underway and the first three are now finished.
• Of the 10,083 Primary Schools for the 21st Century projects, 5,334 are now at the onsite construction phase and 200 have been completed.

We have also introduced new flexibility into the timing for some P21 projects to help all schools achieve the best value for money. Importantly, these projects are making a difference in classrooms across the country—in classrooms in schools such as Halidon Primary School in the northern suburbs of Perth. The school received $125,000 for painting, replacement guttering, new carpets and vinyl flooring, whiteboards and electrical work. Principal Bill Hunt said he was thrilled with the work, completed in July last year. Bill said,

In terms of incorporating technology in the classroom, this work has lifted a last-century school into the 21st century.

When the school was built in 1986, one double plug was all a teacher needed in a classroom.

These days we run several computers, interactive whiteboards, gas heaters and audiovisual equipment in classrooms so we need many more power and data points.

The next element of the stimulus plan which we outlined concerned social housing, the Commonwealth’s largest ever investment in social housing. I would again acknowledge the critical role of the Minister for Housing for her oversight of this program. Delivery of the social housing initiative is on track.

• Work has been completed on 42,364 of the 70,000 dwellings approved for repairs and maintenance work.
• Some 19,344 dwellings have been approved for construction, with 6,675 underway and 309 completed.

We expect to have 75 per cent of these houses completed by 30 December this year. Further, the average cost per dwelling is now expected to be about $270,000, well under the $300,000 initial estimates. The government’s investment in housing is supporting the residential construction sector in the medium term, while providing long-term secure housing for some of the most disadvantaged Australian households.

I am pleased to report to the House that under this part of the plan 11 new affordable homes will be built in Marysville and Kinglake to help communities recovering from last year’s devastating bushfires.

I will mention to the House an example of one person who will be helped by this investment. Shane Hilder and his three children—Lachlan, 15, and 13 year-old twins Maddison and Kieran—lost their home and all their possessions in the Black Saturday bushfires one year ago. Since then the family have lived with relatives in temporary accommodation. Shane’s greatest wish came true recently when state housing minister Richard Wynne visited Marysville and introduced Shane and his family to members of the Dennis Family Corporation, who are to build a four-bedroom home to be ready for the family to occupy in April.

Work on the other 10 new affordable homes is already underway and residents will be able to move into houses that are fully compliant with the new building standards in Victoria. The homes will generate up to eight jobs in the local construction industry—work for local people in the area was another key element of the overall recovery process.

Our investment in social housing is critical to supporting businesses right across Australia. It is providing jobs for the hundreds and thousands of workers involved—the builders, plumbers, carpenters, electricians, brickies, carpet-layers, kitchen manufacturers and many more in the building and construction industry.

In Tasmania, for example, the state’s largest project for repairs and maintenance of social housing is now nearing completion. Repairs are being made to a 62-unit social housing complex in Bedford Street, New Town, one of Tasmania’s oldest social housing complexes. This complex had been built in the 1970s and was in need of major renovations. Spotless Pty Ltd’s project manager Gary Dwyer says the repairs and maintenance package has been great for the local building and construction workforce. The local Spotless workforce had been able to increase their numbers with, all up, 37 tradespersons and five apprentices engaged for this project. Gary has said: ‘The economic stimulus plan has helped us to provide a new career opportunity for a couple of people and ensure job security for the others.’

Defence Housing Australia is well ahead of schedule against its planned project milestones. Major site works have commenced on 669 houses and 303 houses have been completed. The rest will be completed by 30 June 2011.

The government’s investment in the Energy Efficient Homes package focused on cost-effective measures that households can take to help reduce their greenhouse gas emissions. Over 92,000 homes have claimed solar hot water rebates, and over $146 million has been paid under the program.

The Homeowner Insulation Program has been very successful with more than 915,000 homes insulated, and over $1.2 billion has been paid under the Program. I would acknowledge publicly the role of the Minister for the Environment, Heritage and the Arts in this important program for the government and for the economy and for working families.

We have also recently announced improvements to the insulation program to improve consumer protections, strengthen safety measures and improve value for money. In addition, Australian manufacturers have added shifts to operate around the clock, generating further job opportunities.

The government’s investment in roads, rail and community infrastructure is generating business and employment opportunities now, while building infrastructure for a more productive economy in the future.

• I can report to the House that all 14 major road projects under the plan are now approved and are scheduled to be completed by 30 June 2014.
• Black spots projects are under construction and are on track to be completed by 30 June this year, with 607 projects approved, 480 commenced and 349 of those already completed.
• Of the 17 major ARTC rail projects, 10 projects are underway and three are completed.
• Of the 292 boom gate projects, which include a range of safety measures at rail level crossings around the nation, 155 are underway and 73 projects have already been completed. All projects are on track to be completed by 30 June 2010.

Under the government’s Regional and Local Community Infrastructure Program, we are providing new and upgraded facilities to address the different needs of communities across the nation.

In some places, this means something as simple as upgrading footpaths.

• All of the 3,220 approved projects are under way, with an impressive 2,654 projects completed.
• Of the larger strategic projects, 102 of 137 are underway.

These have provided work for building and construction businesses during the downturn, and they will leave a lasting benefit for communities across the nation.

Taken as a whole, all of these measures constitute the most ambitious nation-building recovery plan in Australian history. Without the stimulus package, Australia would have plunged into a technical recession. Australia’s growth would have been minus two per cent over the year to the September quarter. Instead, Australia now has a stronger rate of economic growth than any of the major advanced economies, growing by 0.6 per cent over the year to September 2009.

The International Monetary Fund (IMF) is now forecasting that the Australian economy will grow faster than it initially expected this year—predicting that the Australian economy will grow by 2.5 per cent this year, up from the two per cent the IMF forecast in October. The IMF says Australia’s economic growth will reach three per cent next year. The latest official forecasts suggest a peak in the unemployment rate of 6.75 per cent in the June quarter 2010, around 1.5 percentage points lower than in the absence of the stimulus. In fact, Australia’s unemployment rate—5.5 per cent in December—is lower than any of the major advanced economies except Japan.

Industry groups such as the Master Builders Association Australia have acknowledged the key role that the stimulus package has played in turning around the economic outlook. Specifically, the MBA has estimated that the stimulus measures are helping to maintain up to 50,000 jobs in non-residential building that would otherwise have been lost. Those 50,000 jobs in turn support hundreds of thousands of Australians in small businesses and working families across the nation.

I want to express my thanks to the Commonwealth Coordinator-General, Commonwealth agencies, state and territory coordinators and the more than 600 local government authorities who have been so committed to delivering these projects on time. The unique coordinator-general delivery model established during the initial phase will be maintained throughout delivery, to ensure consistent reporting and ongoing commitment to driving delivery. There is still a long way to go in the full delivery of the plan.

The economy is still in need of support as we move into economic recovery, as the focus of the stimulus plan shifts to long-term infrastructure projects. Those projects are critical to lifting productivity growth and tackling the long-term economic challenge of an ageing population outlined in the third Intergenerational report released this week. The Nation Building Economic Stimulus Plan has laid a strong foundation for tackling those long-term challenges. And it has cushioned Australia from the greatest economic threat we have faced in our lifetimes. I commend the Coordinator-General’s report to the parliament.

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