RICHMOND, VIC.—It was a quiet day at the Reserve Bank of Australia as it prepared to release the latest edition of its annual stimulus package, and there was no shortage of buzz as it began the process of rolling out the details of the package.
The Federal Government has been clear it is willing to commit to spending $15 billion a year to boost the economy in a wide range of areas, including infrastructure, education and employment, as well as help with the “debt to GDP” issue.
The $15bn a year figure was initially announced in a February report, but was later reduced to $10bn a month over a two-year period as the package was rolled out.
It has now been reduced to the $10.5bn a day it was originally announced.
As of the last update on Thursday, $10 billion a day had been spent, the lowest number of days spent on stimulus in the last three years.
The package includes the $15.5 billion a month increase to the existing infrastructure funding fund, $5.5b a month for a range of other infrastructure investments, and $4.5bc a month to help households and businesses cope with the fallout from the carbon tax.
While that is a significant increase in infrastructure spending, it does not come close to meeting the $1.5 trillion a year stimulus the Government has already committed to spending through the 2020s.
The plan also includes $500m a year for a “sustainable and transparent” carbon tax that will be implemented by 2020.
That will be a massive increase in the price of carbon, which has not been a subject of the stimulus package.
Instead, the Government wants to raise taxes on other industries to pay for the plan, including the tobacco industry.
While the tobacco tax will not go into effect until 2021, it will be an important part of the plan to raise revenue for the Federal Government.
The government is also set to increase funding for local governments to spend on the NBN, and to pay down the $500 million debt to the Federal Treasury.
While there was some speculation on Thursday that some of the $5bn for the NBN would be used to repay the debt to finance the stimulus, that was not the case.
The stimulus package also includes a $1 billion funding boost for community health centres, $1bn for schools, $2bn for health-care services, and more than $1billion for the National Disability Insurance Scheme.
The Government is also aiming to spend $1 trillion a week through the “smart growth” package to boost infrastructure spending.
This will include $1tn over 10 years for a national broadband network and $1tr for the $2tn broadband rollout.
The new package will be released on Thursday morning and will be rolled out by the bank on Friday.