I am delighted to be here today to address you at these prestigious annual awards.
These are the Academy Awards of the housing industry.
Congratulations to the Housing Industry Association, whose Australian Home of the Year Award is now in its 20th year.
The Australian Government strongly values the relationship it has built with the HIA.
We have worked together in developing and implementing the First Home Owners' Grant for new houses, the Housing Affordability Fund and First Home Saver Accounts.
Our close working relationship is due in no small part to the leadership and vision of Ron Silberberg.
I salute Ron, who is retiring in November, and thank him for his dedication and enthusiasm over the past 30 years with the HIA.
And the Government looks forward to working with Shane Goodwin when he moves up from Deputy Managing Director role in November.
Ron's efforts have helped build the HIA's respect and influence in government and in the wider business community.
Ron has done a great deal to keep alive the vision for mass home ownership communicated by Randal Dossetor when he founded the Association.
The Government shares that vision.
In my D. R. Dossetor lecture last year, I said our ambition is for Australia to be a home-owning society.
To extend the opportunity of home ownership to as many people as possible, and to provide high-quality, secure, safe homes for those who aren't yet in a position to own their own home.
The global economy is experiencing the worst global economic collapse in three quarters of a century.
It is important to note from the chart that the global outlook we currently face is significantly worse than in the previous two recessions in Australia:
* During the early 1990s recession, world growth fell to around 1.5 per cent in 1991.
* During the early 1980s recession, world growth fell to 0.9 per cent in 1982.
By contrast, the global economy is currently forecast to contract by 1.4 per cent in 2009.
This will be the first global contraction since IMF records began.
Growth rates in virtually every country have collapsed.
The average contraction in growth in the March quarter across the OECD economies was -2.1 per cent.
And falling growth has been particularly pronounced among Australia's trade partners.
Eight out of our top 10 trading partners are in recession.
And growth in the remaining two countries, India and China has fallen dramatically over the last year.
Across the developed world, only three of 33 advanced economies recorded positive growth in the March quarter.
Australia was one of those countries - growing at 0.4 per cent in the first quarter.
In the March quarter Australia was the fastest growing economy in the OECD group of developed countries.
And we are the only major advanced economy not to have fallen into recession at this point.
But Australia is not out of the woods just because we have so far avoided a technical recession.
But Australia has fared better than most - in part because we took early and decisive action.
The Government acted early and decisively to support the economy - to step in while the private sector was in retreat.
When the global financial crisis intensified in September last year, the Government recognised the severity of the crisis and formulated a comprehensive economic strategy to support the economy.
The government moved quickly to respond to the immediate crisis in the banking sector.
Our first priority was to ensure that the flow of credit to Australian businesses and mortgagees didn't evaporate as global financial markets collapsed.
Builders and business people all around Australia know better than most that credit is the lifeblood of the economy.
Without credit, businesses do not have the cash they need to support their operations and grow their business.
During the financial crisis the global financial system went into meltdown and interbank lending ground to a halt.
That is why the Government took a historic decision in October to guarantee term wholesale funding for APRA regulated banks, building societies, and credit unions.
The guarantee had an immediate effect.
By December - with the help of the guarantee - offshore markets had opened to Australian banks which raised more than $15.4 billion in guaranteed funds that month.
In January, banks raised more than $20 billion offshore.
With the guarantee, domestic banks could access much-needed funds to support lending in Australia.
In addition to help stabilise the financial system, the Government has also acted to support activity in the real economy.
Our plan was simple: nation building for recovery - supporting jobs, businesses and apprenticeships today by building the nation building infrastructure for tomorrow.
Our approach to stimulating the economy was to start with the components of aggregate demand and then identify policy levers that could be used to support activity in each area:
The key components of Gross Domestic Product are:
* Consumption - about 54 per cent of GDP
* Dwelling construction - about 6 per cent of GDP
* Private Business Investment - 17 per cent of GDP
* Public Final Demand - 22 per cent of GDP
In each of these key areas, we sought to identify measures to support the economy.
And we looked for measures that would support the economy right through the global recession - from immediate support, to the medium-term, right through to the long-term.
As the chart indicates, the $77 billion nation-building for recovery plan includes a wide range of measures phased from today through to the long term:
* immediate stimulus of $27 billion, including cash payments, the trebling of the first home owners' boost and small business tax break for investment;
* medium-term stimulus of $35 billion, including local community infrastructure, the largest school modernisation in Australia's history, social housing and shovel-ready infrastructure projects;
* long-term stimulus including major rail, road, port, education, clean-energy, and broadband.
Our first measures were designed to provide immediate short term support to the Australian economy as the global economy deteriorated rapidly.
Since infrastructure investment has long lead times, the Government decided to introduce fast-acting measures to directly stimulate consumer demand.
To achieve this we invested $21 billion to provide immediate support to the economy - through cash payments to families, pensioners, veterans, and low income earners.
As the chart shows, those payments have boosted the Australian retail sector.
While in the major advanced economies, retail sales have fallen on average by 1.1 per cent since November, in Australia retail sales have grown 4.8 per cent during this time.
In the March quarter, the consumption component of GDP contributed positive 0.3 per cent to growth.
There is no doubt that without the economic stimulus, we would not have seen the positive numbers in last quarter's National Accounts.
Of course there are other factors at play, but without the stimulus measures we would clearly have fallen into a technical recession.
Second, we introduced another measure to stimulate the housing sector.
The Government introduced a $2 billion First Home Owners Boost to support the housing and construction industry.
The Government recognised that home building is critical to the Australian economy and must be supported.
Today I am pleased to announce that since its introduction, the First Home Owner's Boost has helped 118,150 first home buyers get into the market.
The month of June saw more than 20,000 grants delivered - this is the largest number since the Boost was introduced.
First Home Owners have come into the market like never before.
Loans to first home owners have doubled since the Boost was introduced.
This has been a significant boost to construction activity.
Housing finance commitments have increased substantially, particularly the number of loans for the construction of new houses, which has increased by 42.6 per cent since the FHOB was introduced in October 2008.
The recent trend in building approvals has also been upward, following the sharp falls in 2008. Compared to the same time last year, before the onset of the global recession, building approvals are down by only 16 per cent in Australia.
That compares to falls of 38 per cent in Canada, 50 per cent in the US and 57 per cent in New Zealand.
In the March National Accounts, private dwelling construction contributed minus 0.3 to growth - a solid result for a cyclical industry in the context of a global recession that has seen construction grind to a halt in most advanced economies.
To support business investment we have taken decisive action to strengthen incentives for businesses to make capital investments, by introducing the 30 per cent Business Tax break for capital investment and a 50 per cent break for Small Business.
This is a major new incentive for businesses that many HIA members will have already taken advantage of to increase their capital investment.
As the chart indicates, Australian business investment through the year to March was positive at 1.1 per cent - and much stronger than business investment in our peer countries.
In aggregate, the national accounts figures last week proved that these short term measures have worked to support the economy until our infrastructure investment comes online.
As the chart indicates, without the short term economic cash stimulus payments, Australian growth would have been minus 0.2 per cent in the March quarter - pushing Australia into a technical recession and many businesses would not be keeping their heads above water through this global economic storm.
Beyond the immediate term the government also acted early to support the economy in the medium term.
Again, a major component of our medium-term stimulus is housing - supporting jobs for sparkies, chippies and brickies.
We're investing $6.4 billion over the next three and a half years into the construction of 20,000 new social homes.
This is an unprecedented commitment to increasing the availability of affordable housing.
Our investment will also allow the repair of more than 45,000 dwellings, including around 10,000 dwellings that would have become uninhabitable without additional work.
In the past there has been a shortage of Defence personnel homes.
The Government's $252 million investment will be provided for the construction of more than 800 houses for our Defence personnel.
I can report that Defence Housing Australia is well ahead of schedule on its building program with contracts finalised for more than 502 of the planned houses.
18 of these defence are have already been completed.
We're sending HIA members into our schools as well.
Under the Building the Education Revolution Package, the Government is investing a total of $14.7 billion over three years to fund the building and rebuilding of primary and secondary school infrastructure as well as maintenance in Australia's schools.
The program will also provide funding to build around 537 new science laboratories and language centres in secondary schools.
Through our $4 billion Energy Efficient Homes package ceiling insulation will be installed in up to 2.9 million Australian homes.
And we are paying the installers directly.
It means tradespeople around the country are in work installing and manufacturing insulation while reducing household energy bills and carbon emissions.
The Insulation Council of Australia and New Zealand estimates that 4,000 jobs will be created directly from the insulation package.
The Housing Industry Association is a key partner in the delivery of many of the key elements of our medium term infrastructure projects - especially homes, schools, insulation, and community infrastructure.
The Government is sponsoring HIA trade information nights that highlight the opportunities available under the Package.
All of these targeted support measures are vital, but it's just one facet of our economic recovery strategy that is making the difference for HIA members.
Over the longer term, the Government's strategy is nation-building for recovery.
We are supporting jobs today by investing in the nation-building infrastructure Australia needs for tomorrow.
* We are investing in major rail, road and port projects.
* We'll be investing in major clean energy projects, including what will become the largest solar energy project anywhere in the world.
* We will also be investing up to $43 billion in a partnership with the private sector to build a high-speed National Broadband Network to finally bring Australia into the global digital economy of the 21st century.
In total $49 billion - or around 70 per cent - of our stimulus is directed to nation building infrastructure over the medium to longer term.
By the end of the year we'll have more than 35,000 construction projects underway around the country.
This strategy of short-term, medium-term and long-term stimulus is providing a critical boost to confidence.
As the chart indicates, Australia's stimulus is phased over time to ensure it is timely, temporary and targeted.
This strategy of short, medium, and long term support for the economy during the global recession has helped to cushion Australia from the worst impacts of the global recession.
Overall the government's stimulus will have a significant impact on growth.
In 2009-10, Treasury estimates that growth will be increased by 2.75 per cent as a result of the stimulus.
And in 2010-11 growth will be increased by 1.5 per cent.
In aggregate, Treasury has estimated that without our nation building plan around 200,000 more Australians would be out of work in each of the next two years.
Without government action, unemployment would peak at over 10 per cent.
This month we saw an increase in unemployment to 5.8 per cent.
This data confirms the global recession is continuing to have a direct impact on the Australian economy and on Australian jobs.
No-one likes to see unemployment rise as a result of a global recession.
But Australia's unemployment rate is lower than all the major advanced economies except Japan.
While there is a tough road ahead, Australia is weathering the storm better than most economies in the rest of the advanced world.
While the nation building and jobs plan will support hundreds of thousands of jobs that would have been otherwise lost to the global recession, we cannot stop jobs being lost.
That is why the government is acting to support those people who lose their jobs and young people who cannot find jobs as a result of the global crisis.
The Government is deploying 712,000 productivity training places to support those who have lost their jobs or cannot enter the labour market on the other hand.
The Government has done so with what it describes as a Jobs and Training Compact with Australia. A Compact with Young Australians so that anyone under the age of 25 must be earning or learning; a Compact with Retrenched Australians which provides training places for retrenched workers to gain new skills during the downtime in preparation for the recovery; and a Compact with Local Communities, driven in turn by a $650 million local jobs funds and priority employment coordinators in the twenty most acute unemployment regions in the country.
The aggregation of these measures is aimed at reducing job losses to an absolute minimum while at the same time doing everything possible to avoid the so-called ‘lost generation' of Australians who failed to re-enter the labour market after previous recessions by deploying a more comprehensive and aggressive training strategy for those affected by the current recession.
The global recession has of course had a significant impact on the budget's bottom line in Australia, as it has around the world.
The Australian budget has been hit with a $210 billon collapse in Australian tax revenues caused by the global recession.
This is the greatest collapse in tax revenues in our nation's history and has made a budget deficit necessary in Australia until the economy recovers.
But despite the revenue collapse and our stimulus measures, Australia's AAA credit rating has been reaffirmed since the budget.
And Australia's net debt is lower than any of any major advanced economies.
Government net debt as a share of GDP is expected to rise to 75 per cent in the Euro area, 83 per cent in the UK, 83 per cent in the US, and 136 per cent in Japan.
By contrast, Australia's net debt is projected to peak at 13.8 per cent of GDP in 2013-14, before it starts to fall again as our economy moves into a strong period of growth.
And Australia's deficit of 4.9 per cent of GDP is among the lowest in the advanced economies - lower than the average budget deficit of all the major advanced economies.
The Budget deficit in the US is 13.6 per cent of GDP, in Japan the deficit is 9.9 per cent of GDP, and in the UK the deficit is 9.8 per cent of GDP in 2009.
This rise in global public debt has been a necessary consequence of the responsible global response to the economic crisis.
The fiscal stimulus that has been put in place around the world - some $5 trillion or 8 per cent of global GDP - combined with monetary policy and financial sector interventions are an unprecedented global policy response.
While these policies have been necessary, they cannot be permanent and must be withdrawn when the time is right.
As I recently outlined in an address in Berlin, global coordination will be crucial to an orderly and successful exit from the fiscal and financial market interventions that governments have embraced.
There is therefore a strong rationale for the G20 to play a leading role. We must begin establishing a process to coordinate exit as the global recovery gains pace.
The second new challenge we face is to build the foundations of sustainable global growth and Australian growth for the future.
This challenge begins with the recognition that the source of our future growth cannot simply be the same as the source of our past growth.
We must build future growth from productivity gains rather than from a mining boom and an endless rise in consumer debt.
I am confident that Australians will pull together - workers, employers, unions, community organisations and governments to ensure that we pull through this crisis, and the tough recovery phase to emerge with a stronger more prosperous economy for the future.
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