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Chapter 2

Spending initiatives

Australian stimulus measures since the global financial crisis

2.1        The Government has undertaken various fiscal initiatives since the collapse of Lehman Brothers in September 2008 sparked the global financial crisis.

2.2        The first package to be described as a stimulus measure was the Economic Security Strategy (ESS) in October 2008. This package included combined expenditure of $10.4 billion through various cash payments, a boost to the First Home Owners grant and further investment through the Nation Building Funds.[1]

2.3        In November 2008, the Council of Australian Governments (COAG) announced a $15.2 billion COAG funding package which included measures to address housing, hospitals and education.

2.4        A further $4.7 billion in stimulus expenditure was announced in December 2008 through the Nation Building Plan, which included investment in road, rail and the higher education sector.

2.5        A much larger stimulus package, the Nation Building and Jobs Plan, was announced in February 2009, adding approximately $42 billion worth of stimulus expenditure.

2.6        There were further measures announced in the May 2009 Budget which included $8.5 billion for investment in road, rail and port infrastructure, an initial investment of $4.7 billion in the National Broadband Network, $3.6 billion for development of clean energy technologies and $5.8 billion for various investments in the health, tertiary education and research sectors.

2.7        Summing up all these announced measures gives a total of more than $90 billion over five years (Table 2.2). Treasury itself indicated in the 2009–10 Budget Paper No. 1 that the scale of fiscal stimulus over four years would be almost $90 billion (Table 2.1).

Table 2.1 Composition of Fiscal Stimulus

2.8        The Treasury Secretary's tally was that:

...around $79 billion of what may broadly be characterised as fiscal stimulus measures are expected to impact on the economy over three years from 2008-09 through to 2010-11.[2]

2.9        However, other Treasury forward estimates[3] operate through to 2011-12.

2.10      From Table 2.1, it would appear that there is at least $31 billion of discretionary stimulatory spending out of the remaining $45 billion over the forward estimates unspent. This discretionary stimulatory spending comes from the construction of the building and infrastructure elements of the stimulus package to ensure stimulus projects and funding will impact in the 2009-10 to 2011-12 financial years.[4]

2.11      Appendix 3 outlines the composition of the ESS, the COAG Funding Package, the December Nation Building Package and the Nation Building and Jobs Plan.

2.12      Chart 2.1 shows the projected contribution of the pre-budget packages over time, while Table 2.2 provides an itemised breakdown of the five packages.

Chart 2.1: Fiscal stimulus packages delivered by the Australian Government 

Table 2.2: Itemised Expenditure by Package

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