Live – Rudd meets with the Capitalists
By SmallStocks on Oct 17, 2008 in Business
Prime Minister Kevin Rudd is attending a business lunch today to speak about the state of the market and the overall economy.
Australian Industry Group AIG Business Lunch
Chris Rein @ 12:52: Business outlook turning for the worse. Hopes Government can get a feeling of how bad business are feeling it. Crapping on about his own company, Olsten, and how they are debt free. Introducing Kevin Rudd and Wayne Swan.
Kevin Rudd @ 12:55: Interesting week – space of 5 days, guaranteed all deposits and all depositors in Australia. Australian Government has provided a guarantee to wholesale funding arrangement to banks. $8 Billion increase in residential mortgage backed securities. $10.4 billion economic security strategy to assist growth into the future.
Intense period of government effort. Message:
- “Planning ahead and mindful of unfolding threats and acting ahead of the curve”
- Government in period ahead remains determined to take whatever action is necessary to ensure that economic growth and stability continues.
- Government, business and the unions and community are all in this together and we will “come through this thing”
Kevin Rudd @ 1:00: Government action in the year so far:
- Talking about United Nations and the IMF and the G20.
- All through this year been conscious of economic circumstances and today is “unnecessary to go to the causes” but rather “whats being done”
- Government has “acted in absolute close co-ordination with RBA and Economic Regulators”
- ASIC, APRA, RBA, Treasury all in constant communication with the Government.
- Government worked “Below the radar” with these organisations.
- RBA injecting more and more liquidity into markets
- Financial Claims Scheme, Increasing Bond Exposure – point is that regulators are hard at work and providing timely advice.
Kevin Rudd @ 1:05: Judgement Government took, based on regulation advice, is that banks are in first class order with strong balance sheets. 20 AA Rated banks, our 4 in this top 20. Real debate about future lines of credit which are secured – making sure their is enough credit to businesses out there to engage in now business. Foreign Governments have also acted in relation to deposits and a necessary secondary step. As bad news filtered through television screens, concern started about quality of financial system in Australia – Government tried to stop that. Credit markets and stock market impact on real economy. “Emerging Economic data” downward provisions in OECD and beyond are all looking shithouse. Industrial economies growth is around 0% – 0.5%.
Kevin Rudd @ 1:10: Major economies in the world are already in Recession – IMF – Rudd agrees. Conclusion Government reached – given that growth was being revised downwards, and that most recent downward revisions were prior to market collapse in USA – Australia needed a substantial stimulus package. On fiscal policy:
- Fiscal Policy – Go Hard, Go Early and go to Households
Kevin Rudd @ 1:15: Talking about steps Government took to ensure that had rescue measures were in place. Government is bringing forward is infrastructure agenda in December. 1st July next year more tax cuts and provide continued injections into the economy.
- On monetary policy, “dramatic action taken by RBA” and “material change in economic circumstances” and this is why RBA acted and Government acted to combine fiscal and monetary policy.
- Mindful of growth drivers in the economy and private consumption and this is why Government took steps to double home owner grant, and triple new built homes grant. Credit related measures include fixed capital investments and so forth.
Kevin Rudd @ 1:20:Â Global strategy:
- Third part – governments of the world and what they choose to do – regulation. Markets of the world saying to governments of the world – “get your shit together”. Markets need global response and not individual country plans (wow, I said this
… duh) - Releasing new proposal to Heads of government of the world about a long term support package.
Five points:
- Require full disclosure of balance sheets for financial organisations with world exposures (um everyone has these ?)
- Increasing capital adequacy requirements
- Clear internal incentives to promote internal efficiency – reduce short-term incentives
- Supervisory systems that are capable of looking at the real market
- IMF must be given a strengthened mandate for a economic analysis. “Early warning of vulnerabilities” of dodgy assets.
Kevin Rudd @ 1:25: Conclusion – actions by government is one part of the equation. Must ensure stability of the financial system and act as is necessary internally and externally for Australia.
- Until Global Markets stabilise continue to work with other governments.
- Important to maintain dialogue with business and community.
- Without business Australia doesn’t work. Productivity agenda is full steam ahead.
- Can’t push aside these policies and investment in Australia and infrastructure will continue. 27 Separate items of National Business Deregulation are being decided asap.
- Continue to support business and technology market.
Leadership is about pointing realistically to the challenges we face, but also to the positives about Australia. Stay positive, focused and continue building businesses.
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