Major Goals of the 2009-10 Federal Budget

Goal 1: Boost the level of aggregate demand

• Economic Security Strategy and Nation Building and Jobs Plan

• Cash hand outs +public investment (encourage consumption and investment)

Goal 2: Minimise the increase in unemployment • A recession generally prompts a rise in

unemployment levels loss of job related skills for the unemployed rise in structural unemployment hysteresis (the lagging of an effect behind its cause) suggesting today’s cyclical unemployment will result in a higher rate of natural unemployment

• government stimulates the economy in order to decrease cyclical unemployment rates

Statistics• Unemployment is forecast to rise to 8.25%

by 2009-10 and peak at 8.5% by 2010-11 • Without any economic stimulus, the

economy would have experienced unemployment at 10% by 2010-11

• 2011-12: domestic economy is forecast to grow at a robust 4.5%, whilst maintaining an inflation rate of 2% and 1% fall in unemployment

Goal 3: Boost productivity capacity

• Increased spending on infrastructure projects and education

• Improved infrastructure= capacity constraints in the economy

• Improved skill level= improved productivity levels

• government expenditure government ensuring a stronger rate of economic growth, withdrawn by supply constraints, can take hold as the recession eventually fades

Statistics• $22 billion for infrastructure projects

+ $43 billion on the develop of National Broadband Network

• $539 million, First Home Owners Boost ( $7000 to purchase existing home or $14 for a new home, until 30/9/09)

Goal 4: Increased spending priority

• Infrastructure, education and pension support

• National Broadband Network • Building Australia Fund, investment in

roads, rail and ports • Increased weekly pensions of $32.49 to

single pensioners and $10.13 to couple pensioners

• Pensioners= MPC consumptionaggregate demandeconomic growth

Statistics• Government spending $324.4

billion 2008-9 to $338.2 billion 2009-10

• $16 billion pension entitlements (single pensioners now earn up to $1 689 per year)

• $731 Paid Parental Leave, in effect from 1/1/11 . In use for 18 weeks