The Prime Minister, Kevin Rudd, has effectively extended the Federal government’s three stage stimulus package by offering 50,000 new green jobs and training places.

That was done, with due ceremony, at the opening of the ALP’s National Conference in Sydney yesterday.

The announcement will inevitably be seen as a trade-off with the unions, after Mr Rudd’s blunt rejection of their earlier suggestion that his government should revive old-style “buy Australian” policies while the global economic crisis persists.

Mr Rudd said at the time that policies of that kind had produced the Great Depression of the 1930s’.

But he said the plan he announced yesterday would, instead, “build a stronger and greener Australian economy.”

The four part plan offers:-

• A 10,000 strong “National Green Corps” of long term unemployed youths, who will spend 26 weeks on projects like bush regeneration, walking track construction and restoration and similar projects.
• Green skills training, for 30,000 apprentices, on areas such as smart heating techniques and maintenance of advanced green motor engines
• Another 4,000 training places for insulation installers and
• Another 6,000 new local green jobs.

The Treasurer, Wayne Swan, who also addressed the conference said that Australia still has big challenges ahead, but the government’s stimulus packages had “made a difference.”

The best news, for the government, though, came late in the day, when the Roy Morgan organisation reported that, on its own measure, consumer confidence in Australia is now back at pre-crisis levels.

At 117.8 points, consumer confidence is now 25.8 points higher than it was in July last year – and at its highest level since January 2008.

Optus is facing court action over its prepaid phone cards.

These are sold by a wholly  Optus owned company called Prepaid Services Ltd.

The Australian Competition and Consumer Commission is alleging that this company had claimed that:-

• Certain cards would provide customers with a specified amount of call time when this is not so
• That there would be no other fees other than times call charges  when other fees were charged
• That particular call rates would be charged, even though they were unlikely to be achieved.

The ACCC will argue its case before the Federal Court in Perth.

It is making similar charges against another telephone company, B0ost Tel.

The latest action follows other cases the ACCC has taken over pre-paid phone cards, in relation to Tel.Pacific and Cardcall Pty. Ltd.

In the latest case, the commission is alleging that both Prepaid and Boost engaged in misleading conduct and made certain false or misleading claims.

Preliminary proceedings in the case are scheduled to start in Perth on September 4.

The Prime Minister, Kevin Rudd, isn’t answering questions yet, on reforms proposed for Australia’s health system.

But he is working to clarify the issues.

And, at this stage, even that’s a positive step.

Mr Rudd told an ABC radio interviewer in Melbourne yesterday that the reforms, proposed by the government’s own National Health and Hospitals’ Reform Commission, would have to be “integrated.”

“It needs to be an integrated set of reforms,” Mr Rudd said.

This is not just a big ticket item for nation.  It’s huge.

Australia already has a national health system that is the envy of many other countries, including the United States, where legislators are currently arguing bitterly over proposals for a much more basic system of universal health cover than Australia’s.

But Australia’s system, too, still has gaps.

There are big gaps, for eample, in preventative health measures.  And Australia’s present system does little to help the poor meet their  dentists’ bills.

And , as the old song says, the thigh bone’s connected to the kneebone.”

Mr Rudd acknowledged that.

“What we do in preventative health care relates to what we do in primary health care,” he said.

“That is with GP sand GP related services.”

And that, in turn, affects how Australia manages its overstretched public hospital system, the Prime Minister added.

The health industry, also, contains many deeply entrenched individual interests, that do not have a good record of co-operation.

The commission’s report does guarantee, though, that health will be a major issue at the next Federal election.

Especially as Mr Rudd has also made it clear that he will not be taking any major decisions on the report’s recommendations before the.

Australia’s shopkeepers have been gradually rebuilding their margins.

And they expect to keep doing so.

A business survey, conducted by the National Australia Bank, tracks both developments.

The survey showed both actual and expected retail margins plunged sharply after the global economic crisis struck last September. That gave many Australian shopkeepers a catastrophic Christmas.

But the Federal government’s stimulus package, which put extra money into many shoppers’ pockets and purses earlier this year, helped most shopkeepers recover at least some lost ground.

The Federal government’s decision to guarantee bank deposits is also helping Australia’s big four banks repair some of the damage that they, too, suffered as a result of the crisis.

They have not fully passed on the interest rate cuts that the Reserve Bank has made, in its marker rate, over the first half of this year.

But there are still big doubts ahead.

No-one yet knows, for example, whether Australian shoppers will stay as bold as they have been over recent months, now that the help they got from the first stage of the Federal government’s stimulus package is fading.

There is certainly some reason to doubt that, as both government and private forecasts suggest that Australia’s unemployment is likely to keep rising in the months ahead.

Surprisingly, though, the NAB’s June quarter business survey showed a sharp rise in business confidence throughout Australia over recent months.

That, however, must be kept in perspective.

Although business confidence leapt by 20 points during the quarter, it still stuck  at  minus four points.

Business conditions rose by 11 points, but it, too, stayed below zero at minus 9 points.

The Reserve Bank Governor Glenn Stevens says its becoming “much easier” to imagine “upside risks” in Australia’s economic outlook.

As the bank is traditionally committed to keeping inflation firmly under control, this comment is being seen as an indication that further interest rate cuts, on the bank’s part, are unlikely.

But Mr Stevens, who was addressing business leaders at a lunch in Sydney yesterday, also said that Australia may now have an opporltunity to increase its housing stock, without increasing house prices.

He said it would be very disappointing if it did not do so.

However Mr Stevens said Australians should not look for “easy prosperity.”

That would  be a mistake.

He added, though, that confidence seemed to have regained ground in Australia.

“We cannot claim that Australia has avoided any downturn at all,” Mr Stevens said.

“It appears at this stage, however, that the downturn we are having may not turn out to be one of the more serious ones in the Post War era.”

Mr Stevens that contrasts with the experience of many other countries.

“It is becoming much more common for Australians to see the glass as half full than as half empty,” Mr Stevens said.

Mr Stevens predicted that the economic emergence of China and India would continue in the years ahead.

But he said that would present challenges as well as opportunities.

see the full speech at www.rba.gov.au

Your job – over the next year or so – may well depend on the Federal government’s stimulus package.

And there’s some good news.

Access Economics says the final – and  most important – stage of that  package is working.

That is government spending on infrastructure projects.

Access, which is sometimes called the Federal Treasury in exile, says these projects are now leading Australia’s investment growth.

But its assessment is still  sanguine.

“We don’t expect government projects will fully compensate for the fall in private investment over the next two years,” Access says.

“But it is providing a decent offset.”

Does this really matter to ordinary Australians?

Access has no doubt about that.

“…just as business investment drove the boom in Australia’s economy,” it says, “it now threatens to be central to the bust.”

So far, at least, Australia has managed to avoid a technical recession.  That is, two successive quarters of negative growth.

But falling export prices, weaker demand and tighter lending conditions have all combined to cut private investment.

And Access admits it is not optimistic about prospects for a recovery in this area in the immediate future.

It says it is “bearish” on the Australian business investment outlook.

“…the falls in croporate  profits and capacity utilisation are likely to be large enough to see the pipeline of projects still shrink notably in 2009-10,” Access said.

“I have nothing to offer but blood, toil, tears and sweat.”

Kevin Rudd didn’t revive this famous phrase Winston Churchill famously borrowed from Theodore Rooosevelt, during World War II.

But the idea was there, right through the 6,100 word essay on the Australian economy that the Prime Minister  wrote for the Sydney Morning Herald on Saturday.

“Unemployment will continue to rise even after growth returns,” Mr Rudd said.

But that was not his only warning, of tough times ahead.

“Over the next 18 months, rising growth will inevitably cause interest rates to rise,” he added.

“Third, as the global economy improves, demand for commodities will pick up, causing prices to rise.”

It is often useful, when assessing what a politician says, to ask why is he – or she – is saying that.

Is Mr Rudd, for example, copying the old-time doctor, who exagerates the patient’s illness, knowing that he can’t be blamed, whatever happens.  If the patient dies, well he was very sick, wasn’t he? And if the patient recovers, the doctor must be a genius.

Possibly.

Mr Rudd is already past the half-way mark, in his present term in office.

The next scheduled election is  due late next year.

And every politician tries to work out what will happen, at that time.

At present, Mr Rudd is still riding high in the opinion polls.

The vigorous stimulus packages, that he ordered when the global economic crisis struck, have been popular.

It’s not hard, though, to see that changing, if unemployment keeps rising, inflation returns and interest rates start rising, uncomfortably, again.

And all that could happen.

As Chris Richardson, of Access Economics warns, markets change quickly, but economies move slowly.

Employers, faced with falling sales, won’t be eager to start hiring again.

The Reserve Bank has never really been comfortable, cutting interest rates.

It sees raising them as more virtuous.

Australia’s banks, too, have been eager to restore their profits, to protect their balance sheets against damage caused by rising levels of bad debt.

All this could well mean that economic recovery comes slowly.

Recovery will inevitably present the government, itself, with new problems, too.

The stimulus packages have been expensive.

The government will have to cut its spending, to repair its budgets, over the coming year or so.

That won’t be popular.

So it’s no wonder that Mr Rudd is  trying to get in early – to prepare voters for the times ahead.

His survival depends on his success, in all this.

Unlock your super?

That can seem like a great idea.

You are desperate, financially. And you have a big bill to pay.

And the nice man says he will fix it all up for you.

All he needs is your signature.

Then he will arrange to have that money that is tied up,  in your poorly performing super fund at work,  transferred to your own self managed super fund.

Then you can get immediate access to your money – and pay that nasty bill.

Sounds too good to be true, doesn’t it?

That’s probably because it is.

There are some things about this proposed deal that you might not have thought about.

The promoters, who deal with these schemes, have their own interests.

Typically, they charge a fee, which is often between 15 and 30 per cent of the sum that’s  transferred.

Either way, that’s a big slice out of your retirement savings.

That is the money you will need to live on, when you are too old to work.

Remember, too, that the Tax Office will regard any of your superannuation money, that you might access illegally, as taxable.

So you are likely, also, to be faced with a bigger tax bill if you go down this path.

Be carefiul.

Even if the promoter promises better returns than your superannuation fund has been chalking up lately.

Essential items like food, housing, health  and education costs are still taking big bites out of Australian family budgets.

The Australian Bureau of Statistics reports that these costs have all risen by about 5 per cent over the past year.

Those – very big – rises  were of course largely  offset  by falling interest rates and lower petrol prices.  These pushed transportation costs down by 5.9 per cent over the year, while the price of a sector the Statistician calls financial and insurance services fell by 6.6 per cent in that time.

These movements – both up and down – are all huge by common statistical standards.

They show, very clearly, why it would be a mistake to become complacent about Australia’s present – relatively moderate – inflation rates.

The bureau also reported that Australia’s prices, overall, rose by just 0.5 per cent in the June quarter of this year and by a mere 1.5 per cent, over the year as a whole.

However  this  apparent moderation, on the bureau’s Consumer Price Index figures, is a direct result of the global financial crisis. And the worst of that crisis may already be over, even though, as Wayne Swan warns, its effects will still  be with us for a long time yet.

The crisis sent world oil prices tumbling, from a peak of about $US140 a barrel, to a low point below the $US40 mark.

But oil is still a very scarce commodity. And oil prices have, more recently, been rising again. Indeed, the Statistician reported that Australia’s petrol prices rose by 3.6 per cent in the June quarter.

Australia’s interest rates will inevitably rise, too, as the recovery takes hold.

Good rains, over much of Australia, did help families in the June quarter, though.

As good crops of fruit and vegetables reached the nation’s markets, those prices fell in the nation’s supermarkets.  Vegetable prices dropped by 6.9 per cent while fruit prices fell by 7.6 per cent.

A strengthening Australian dollar also gave overseas travellers a break.  The bureau reported that the price of overseas travel and accommodation fell by 3.4 per cent during the quarter.

Is some of your money in the estimated $7 trillion, that is now held in offshore tax havens?

If so, beware.

The Federal government is taking a tough new approach to tax avoidance. That practice is now being called “tax crime.”

The Assistant Treasurer, Nick Sherry, warns that the government is putting a “significant amount” of money aside to fight tax abuse, with a whole of government approach.

If you would like to know more, go to www.ato.gov.au and look up a new Tax Office e-magazine, called “Targetting tax crime.”

In the first issue of this 30 page magazine, the Tax Commissioner, Michael D’Ascenzo, warns bluntly that tax crime is not victimless.

“It’s an offence that costs the entire community money,” Mr D’Ascenzo says.

And he says that money could be used to provide community infrastructure, services and welfare support.

“If individuals don’t pay their fair share of tax, this places an unfair burden on honest taxpayers and puts businesses under a competitive disadvantage.”

It’s a message we have all heard before.  More eloquently, perhaps, from Mr D’Ascenzo’s predecessor, Michael Carmody.

Mr D’Ascenzo, though, leaves no room for anyone to misunderstand his message.

“Our objective is simple,”  he says in his foreword in the new magazine.

“We want to maintain community trust and confidence by coming down hard on tax crime.”

Don’t say you weren’t warned.

You have a nice, secure job in the Federal public service.

And the bargains have never been better.

So why not get that new car?

What’s the global financial crisis got to do with me, anyway?

New figures, published by the Australian Bureau of Statistics, suggest that this is pretty much how thousands of lucky Australians have been thinking, over recent weeks.

They show that Australians bought 80,330 new vehicles, on seasonally adjusted figures  in June, despite the global economic crisis.

That was a rise of 5.7 per cent, over sales in May.

But it was also 7.2 per cent below sales in June last year.

As always, though, the real story is in the detail.

On a seasonally adjusted basis, new car sales in Canberra leapt by 12.8 per cent in June, to a level 6.3 per cent above that of June last year.

These were the biggest rises recorded anywhere in Australia.

The Whitlam government’s Labour Minister, Clyde Cameron, regularly infuriated Canberra’s Federal public servants, by calling  them “fat cats.”

These figures suggest, though, that he might have been right.

A new car is usually the second biggest purchase Australian families make, after their houses.

And lashing out, on a new car – in an economic downturn – can be risky – especially for people who might  lose their jobs.

But those offers, at the car yards, were attractive.

And people in other parts of Australia were tempted as well.

The biggest monthly rises, of  7.7 and 7.6 per cent respectively, occurred in the mining States of Queensland and Western Australia.

But new vehicle sales also rose, in June, in other places as well.  There was a 4 per cent rise in NSW, a 5.3 per cent rise in Victoria, a 4.3 per cent rise in South Australia and a 5.6 per cent rise in Tasmania.

The only fall recorded anwhere in Austrralia was in the Northern Territory, where sales eased by 2 per cent in June.

The ACT, though, was the only place in  Australia to chalk up significantly higher sales in June this year, than in the same month last year.

Canberra has been a baragain hunters’ paradise, for Clyde Cameron’s fat cats.

The Reserve Bank believes the world economy is stabilizing.

It says that output in the world’s major economies seems to have contracted by significantly smaller amounts in in the June quarter than had previously been expected.

The bank made this observation in the minutes of its meeting on July 7.

It  published those minutes earlier today.

The bank’s board noted, particularly, that the rate of deterioration in the US economy had slowed significantly.

It said the US might now be approaching a turning point.

Recent data from Japan had also been more encouraging than it had previously been for some time, the bank said.

It said Australia’s growth in the March quarter had also been “surprisingly strong.”

Australia’s export performance, over the December and March quarters had been “remarkably strong” too, the bank said.

It noted that, in volume terms, Australia’s exports had risen by 2 per cent over that time, while exports, on the same measure, had typically fallen by 10-20 per cent in other countries.

It said China’s strong performance had been particularly helpful in this respect.

“Importantly, for Australia, the Chinese economy was growing quite robustly,” the bank said.

Its analysis suggest that the bank is likely to keep Australia’s interest rates on hold, over coming months, just as it did earlier this month.

A late surge saw the Dow Jones index close   104.21  points higher, on the fifth straight day of consecutive rises.

The latest  surge, which took the Dow Jones index to  8,848.15  points, was led by financial stocks.

This followed a report of a likely private sector bail out for the troubled CIT group.

The troubled commercial finance company, which was facing bankruptcy, agreed to $US3 billion loan for 2.5 years.

The company’s bondholders have already committed $US2 billion to the rescue and the plan.  The rest will be raised from existing bondholders

Energy stocks also rose as oil prices rose, reaching almost $US64 a barrel.

This sector was 2.5 points higher, just minutes before the market closed.

The S&P500 index closed at 951.13, its highest level since November last year.

CIT’s fate has been a major worry for US investors.

The 101 year old giant has almost $US76 billion in assets.

If it had failed, its bankruptcy would have been the biggest US bank collapse since regulators seized Washington Mutual last September.

CIT itself said its bankruptcy would have put 760 of its manufacturing  clients at risk.

Insurance companies are among CIT’s biggest investors.

Australia’s small business owners are not well prepared to meet  new obligations that they will face under a plan the  Federal government’ is preparing to deal with climate change.

A new survey, commissioned by the Australian Chamber of Commerce and Industry, put that beyond doubt.

There  are signs, too,  that the Opposition, which has a vital  vote on the issue, might split.

That became clear when sharp differences, emerged yesterday between the Opposition Leader, Malcolm Turnbull, and a key National Party Senator, Ron Boswell.

Mr Turnbull told reporters that business leaders want changes made to the government’s plan.  This was taken as a sign that the Federal Opposition might approve it later this year, if  acceptable changes are made.

However Senator Boswell, who is close to Queensland’s coal industry, scotched that idea.

He said Opposition members had decided, at a joint party room meeting, that they would oppose the government’s proposed legislation in both the House of Representatives and the Senate.

“Any decision to change that policy must be taken by the Joint Party room..,” Senator Boswell declared.

That was a clear challenge to Mr Turnbull’s authority.

The new survey, conducted by the accountancy firm KPMG, also showed  that more than 30 per cent of the 400 businesses which responded admitted that they had no knowledge of the Federal Government’s carbon pollution reduction scheme.

The chamber said small business operators were four times as likely  to make that admission as people in big business.

The survey also showed  that more than 55 per cent of those who responded,  also said they are not yet taking any steps to become better informed.

The government wants its new scheme in place before global climate change talks that are to be held in Copenhagen in December.

It is now before the Senate, which is currently in recess.

The proposed emissions trading scheme is the centrepiece of the government’s plan to meet the challenges of climate change.

Mr  Turnbull is also arguing that the government’s timetable is too rushed.

The chamber’s chief executive, Heather Ridout, described the survey results as “mixed.”

And she said there is much more to be done before business can be assumed to be ready for the government’s scheme and its impacts.

Is economic sentiment finally moving in the right direction?

That’s the critical question this week, following a rare string of rises last week, which saw the Dow Jones index gain 7.3 per cent,, over the week, despite some profit taking on Friday, New York time.

At present,  prospects appear  bright.

GE, the Bank of America and Citigroup all reported better than expected results last week.

Other big US corporations may well do the same this week.

There have been significant developments in Australia, too.

A new stage of the Federal government’s stimulus plan, directed mainly to infrastructure in now getting into into full swing.

Your correspondent, who travelled along much of the Hume Highway, over the weekend, can also report that the $800 million project, that is creating new sections of dual carriageway, between Australia’s two biggest cities, is now well underway.

That trip also confirmed that the farm and pasture land, along that route, is in splendid condition, with sheep, on at least one section, up to their haunches in fresh, green grasses.

All this, along with last week’s news that China had chalked up 7.9 per cent growth over the past year, despite the global financial crisis, has lifted spirits in Australia.

However Wayne Swan is urging caution, saying there are  still serious challenges ahead.

In his weekly ecoonomic note, the Treasurer warned that the prices Australia is receiving for its exports have “tumbled” from the very high levels of last year’s boom.

He noted that the Statistician had reported last week that Australia’s export prices had fallen by 20.6 per cent in the June quarter.

“That was the largest quarterly decrease in the 35 year history of the series,” Mr Swan said.

“The fall in our terms of trade alone is expected to cut our natiobnal income by 3 per cent this financial year,” Mr Swan added.

That’s about twice the amount the Federal government spent last year on defence.