The Australian government on Saturday unveiled a four billion dollar (2.6 billion US) stimulus plan for the nation's building industry, taking its total spend to combat the global economic crisis to 40 billion dollars. Prime Minister Kevin Rudd said the global credit crunch meant some foreign banks would withdraw their support for existing Australian projects, placing up to 50,000 construction jobs in jeopardy.
"The Government will not sit idly by and watch these jobs and small and medium size businesses be wiped out by fluctuations in global credit markets," Rudd said in a statement. "To help support Australian jobs the Rudd Government will establish a four billion Australian business investment partnership. The prime minister stressed that the initiative did not reflect the health of Australia's banking system.
"The banking sector remains well capitalised and Australia has withstood the impact of the global crisis better than many of its international counterparts," he said. "However, Australia is not immune from the global crisis and the actions being announced today will help shore up our system against ongoing uncertainty. "Disruption in the commercial property sector credit market could have a devastating impact on Australian jobs, which is why the Government is determined to act."
Under the plan, the government would contribute two billion dollars to a temporary contingency fund, designed to ensure cash flow for major commercial property projects. The nation's four major banks would match the contribution, Rudd said, taking the total funds available to four billion dollars. The initial investment could be extended via government-guaranteed debt to boost the fund to as much as 30 billion, he said.
The announcement - which follows Rudd's cancellation late Friday of his scheduled trip to the World Economic Forum in Switzerland - has intensified local speculation he will set out a second major stimulus package before the end of the month. Rudd said he would miss the Davos summit in order to focus on his government's response to the credit crisis.