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UK: Australian stimulus backed by G20 agreement, Swan says

By Valkerie Baynes
Sun Sep 6 04:52:26 EST 2009
Sat Sep 5 18:52:26 UTC 2009

LONDON, Sept 5 AAP - Australia's approach to economic stimulus has been supported by a renewed commitment from G20 nations to carry on with measures to boost the global economy despite signs of a recovery, Treasurer Wayne Swan says.

Speaking after a meeting of finance ministers from the G20 group of developed and developing countries in London on Saturday, Swan said Opposition calls to rein in stimulus spending are out of touch.

"They simply don't understand the nature of the global recession, its impact on Australian households," Swan told reporters.

"It's pleasing to see that the IMF (International Monetary Fund), the G20, the business community across the board in Australia, the Liberal Treasurer of Western Australia, Troy Buswell, all understand the importance of economic stimulus and what it has done to support the Australian economy in its hour of need."

Swan reiterated that Australia's annual gross domestic product (GDP) would have dropped by 1.3 per cent instead of growing at an annual pace of 0.6 per cent, as figures last week showed, had it not been for the government's stimulus package.

"I'm really proud of what our nation has achieved by all working together, employees and employers," Swan said.

"Economic stimulus has been boosted by the fact that there was a very determined mood in Australia for people to come together and to work hard through these difficult times.

"The combination of that national spirit with the economic stimulus put in place by the government has produced a powerful result."

But he warned that there's a long way to go and that Australia is not immune to the global impact of the world's worst financial crisis since World War II.

In a joint communique, the G20 finance ministers said they would "continue to implement decisively our necessary financial support measures and expansionary monetary and fiscal policies ... until recovery is secured".

They also promised a crackdown on bankers' pay and committed to giving developing countries a greater say in international financial regulation.

While agreeing to impose tighter control on bankers' salaries, officials were forced to compromise after Britain and the US deemed French and German calls for a cap on bonuses unworkable.

Swan said the need for co-ordinated withdrawal of economic stimulus was spoken about, but there was caution about timing.

He also repeated that Australia's stimulus package was designed to be wound down gradually from the December quarter this year, through 2010, as the global economy recovers, and that remains the case.

"We had a discussion about the need for co-ordinated exit strategies when the time is right and of course ministers believe the time is not right yet," Swan said.

"These are matters that you keep a very close eye on, but what we do know is there has been a very substantial drop in global demand and of course that is not going to come back quickly.

"What ministers in the room today felt was that when we see a sustained return of private demand, that will be the time to begin winding back these global measures."