We won’t “pull the rug” from under the recovery:Swan

Stopping the Federal government’s stimulus measures now would have “a dramatic effect” on the Australian economy,  the Treasurer, Wayne Swan, warned yesterday.

Mr Swan said, though, that the government’s stimulus spending would be gradually withdrawn, as the Australian economy recovers.

He said that in fact, the stimulus measures had been specifically designed to do that.

However, Mr Swan told Parliament yesterday that simply stopping all stimulus measures immediately would “pull the rug from under the recovery.”

Another Minister, Anthony Albanese, said infrastructure spending on rail, road and port projects is providing jobs now and meeting “the needs of tomorrow.”

Both were defending the government’s stimulus packages against attacks by the opposition, which is arguing that the government’s stimulus spending  is piling up unmanageable levels of debt.

Mr Swan has said previously that the government’s stimulus spending has already passed its peak.

Spending in the third – and probably final – stage of the government’s stimulus measures is now concentrated heavily in the area of infrastructure projects.

The Deputy Prime Minister, Julia Gillard, said it must be remembered that more than 150,000 full time jobs have been lost in Australia over the past year.

And the number of young people, taken on as apprentices, had dropped by 20 per cent in that time.

Mr Swan said the government’s approach had been endorsed by the Reserve Bank governor, Glenn Stevens, and many leading economists, including those in Access Economics. However one economist, Professor Ross Garnaut, has warned that Australians be paying off stimulus debts, for many years.

The Prime Minister, Kevin Rudd,told parliament that the Australian economy had faced ” one of the most difficult challenges “of our lifetime” over the past year, as a result of the global economic crisis.

And he warned:”We still have great challenges ahead.”

Related stories:

1. Signs of a possible recovery emerge
2. Recovery:Swan sets his goal
3. Stimulus:the hidden risk