Rudd Government unveils $5 billion of new spending, sharemarket surges, car makers struggle: Economy roundup

The Federal Government has set its sights on boosting GDP, with Prime Minister Kevin Rudd introducing more than $5 billion for new infrastructure and energy projects over the weekend.

The Federal Government has set its sights on boosting GDP, with Prime Minister Kevin Rudd introducing more than $5 billion for new infrastructure and energy projects over the weekend.

Rudd unveiled a $4.7 billion national building package late on Friday, which will be used for improving rail and roads infrastructure, as well as fast-tracking university-based projects.

The package has been met with enthusiasm by industry leaders such as Australian Industry Group chief executive Heather Ridout.

“The Federal Government’s $4.7 billion national building package is spending on the right things at the right time.

“The package is well targeted, spending on important education, rail and road infrastructure projects and a significant down payment on the future. It will support business investment and boost cashflow. These are strong and absolutely appropriate measures in the current circumstances. They will also contribute to us coming out of the downturn stronger than when we went in.”

But Rudd also introduced an extra $500 million yesterday for a “solar revolution”, as part of the Government’s renewable energy fund. The fund is part of an effort to help reduce Australia’s carbon emission levels.

“It’s good for jobs. It’s good for stimulus. It’s good for acting on climate change. It’s time for Australia to begin a solar revolution, a renewable energy revolution and we’ve got to fund it for the future,” Rudd says.

Meanwhile, the Australian sharemarket has opened 2% higher after leads on Wall Street last week. The benchmark S&P/ASX200 index was up 153.7 or 4.38% to 3664.1 at 11.50 AEDT. The dollar has remained steady at $US66 cents.

BHP shares have jumped 7.5% to $30.97, while Rio Tinto has also seen a 10.46% rise to $40.00. AMP lifted 4.6% to $5.28 and ANZ also gained 3% to $14.99.

Telstra shares have plummeted 5.8% to $3.89 on the news its bid for the Government’s national broadband network has been excluded.

Rumours Toyota will suffer $1 billion in losses in the next six months has prompted its Australian division to say that it has no plans to cut jobs.

National secretary of the Australian Manufacturing Workers Union’s vehicle division, Ian Jones, says Toyota intends to maintain its workface “regardless of the downturn,” The Australian says.

Meanwhile there is still no resolution to talks regarding the bailout of the US auto industry. Attempts to pass legislation saving General Motors, Chrysler and Ford from collapsing have been blocked by both Republicans and Democrats.

“I don’t anticipate anything before we return… I just don’t expect anything for a while,” White House spokeswoman Dana Perino told reporters on Air Force One on the way to Baghdad.