Stimulus Package and what it actually involves

6 February 2009

The $42 billion stimulus package proposed by the Federal Government has be categorically broken and designed to ease the nations slide into recession. The stimulus package focuses on small business support, energy efficiency in homes community infrastructure and roads housing and schools.

This is the second stimulus package delivered by the Labor government and it maintains the party's balance of funds across investment in schools, families and infrastructure. The stimulus package will see the government invest over $2 in long term investments for future growth for every $1 spent immediately that will stimulate the economy.

According to Prime Minister Kevin Rudd, this stimulus package was created with the clear intention of protecting 90,000 jobs over the next two years.

The $42 billion stimulus package will include the following:

$2.7 billion for small business tax breaks

Businesses with a turnover of $2 million or less have been offered a temporary tax break. These businesses will be eligible to claim an additional 30 per cent in tax deduction. The tax breaks proposal is intended to create pressure for economic activity, jobs support and future investments.

$14.7 billion for Schools and the Building the Education Revolution package

Schools may receive funding for infrastructure construction such as libraries and halls. Every school across Australia would receive up to $200,000 for maintenance while those qualifying the criteria would also receive language learning centres and science laboratories.

$6.4 billion in housing package

The $6.4 billion housing package is expected to create over 35,000 jobs and will be spread across projects with multiple long term outcomes.

Firstly, 2.7 million homes will receive ceiling insulation for greater energy efficiency and to reduce Australia's overall carbon emissions over the long term. The package is extended to those homeowners who do not fall in the direct 2.7 million bracket with free product and installation available, with every house capped at $1,600 per house while renters are capped at $1,000.

There will also be the construction of 802 new houses and 20,000 new social housing dwellings through the package for Australian Defence Force personnel.

$12.7 billion in individual payments

Many Australians will receive up to $950 in a lump sum for those fitting criteria. Additionally, there is a proposed $950 Back to School bonus for low and middle income earners with a $950 Training and Learning bonus allocated to students and individuals studying outside the workforce.

Farm dependant small business owners, drought affected farmers and single income families will also receive a $950 payment.

Overall, 8.7 million Australians will receive some sort of financial support from these one-off payments.

The package is designed to stimulate the economy while financially assisting many individuals in the short term while the long term nation building initiatives have an impact.

$890 million in community infrastructure upgrades

Community infrastructure and country roads will receive $890 million for improvements and refurbishments.

The Federal Government stated that without a stimulus of this magnitude the future treasury prognosis is heading towards generating negative growth, meaning that the package had to promote positive growth for the upcoming period. The $42 billion stimulus package holds the overall aim of maximizing investment flow while stimulating consumer spending and jobs security.

In related news, US President Barack Obama announced the US economic stimulus package of US$819 billion.

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