Australia Plans Infrastructure Spending

123jump.com Staff
12 Dec, 2008
New York City

Australian Prime Minister Kevin Rudd today unveiled a $A4.7 billion infrastructure spending program on critical infrastructure in transport, rail, education to stimulate growth and create 32,000 jobs and boost economic growth between 0.25% and 0.50%.

[R]3:00AM New York, 7:00PM Sydney - Australian shares fall after the U.S. auto bailout bill languish in the Senate. Rudd unveils A$4.7 billion infrastructure spending program.[/R]

Australians stocks dropped after talks on the U.S. bailout package collapsed yesterday on the Senate Republicans insistence that the United Autoworkers union steeply cut their wages in 2009 and not from 2011.

Gold and energy stocks pared losses as oil and gold prices rallied.

In Sydney trading ASX 200 index fell 2.4% or 87.6 to 3,510.40. Of the ASX 200 index stocks 41 rose, 149 declined, and 10 were unchanged. Australian Agriculture led advancers in the index shares with a rise of 18.8%.

U.S. $14 billion Bailout Fails in Senate

The bipartisan talks on a $14 billion bailout failed after the Senate Republicans insisted that the Unites Auto Workers union agree on marked wage cuts in 2009 that will bring them in line with those paid to Japanese carmakers. UAW is willing to make wage cuts in 2011.

Talks centered on wage and benefit concessions from the UAW and on debt-restructuring by General Motors Corp., Ford Motor Co. and Chrysler LLC.

Senate Majority Leader Harry Reid said he hoped President George W. Bush will tap from the $700 billion Wall Street bailout fund for emergency aid to the ailing carmakers.

Australia Unveils A$4.7 Billion Infrastructure Program

Australian Prime Minister Kevin Rudd today unveiled a $A4.7 billion infrastructure spending program on critical infrastructure in transport, rail, education to stimulate growth and create 32,000 jobs.

Rudd said the program will boost 2009 gross domestic product between 0.25% and 0.5%.

A$1.5 billion of the package will be spent in the current financial year and $2.7 billion in next fiscal year ending in 2010.

Also, A$1.2 billion will be injected into the Australian Rail Track Corporation, while A$711 million in road spending will be spent between current financial year and next year while A$1.6 billion will be spent towards university infrastructure.

The government said tax changes and a 10% temporary investment allowance for small business will be implemented.

In addition, there will be a 20% cut in the next quarterly pay-as-you-go tax installment.

Commented Rudd, “What we''re trying to do with this infrastructure package is maximize local jobs, maximize early stimulus and maximize investment in infrastructure.”

Gainers and Losers

Australian Agriculture led advancers in the ASX 200 index shares with a rise of 18.8% followed by increases in ING Industrial of 15.8%, in Great Southern Lines of 14.3%, in Centro Retail Group of 10.9%, and Sino Gold of 9.3%.

Sino Gold rose after gold prices gained $17.80 to $826.6 per ounce. Lihir Gold jumped 4.3%.

Commodity stocks also increased as oil prices climbed $4.46 to $48 per barrel after Saudi Arabia announced that it will cut production.

Newscrest Mining fell 4.1% and Riversdale Mining shed 4.1%

Alesco Corp. led decliners in the ASX 200 index shares with a drop of 23.6% followed by losses in Energy World Corp. of 17.7%, in ING Office Fund of 12.7%, in Centennial Coal of 12.1%, and Fortescue Metals of 11%.