Early and decisive stimulus is cushioning the blow

Maintaining stability in the financial system

In response to the serious deterioration in global financial markets, the Government took early and decisive action to provide certainty that bank deposits are safe and to ensure that the financial sector could continue to lend.

Since its introduction, the Government's guarantee of wholesale borrowing has supported a significant increase in the issuance of bank bonds. Over $100 billion in debt has been issued under the guarantee up to the end of April.

This has enabled banks to continue lending to households and businesses, providing vital support to our economy.

Supporting activity and jobs

The Government's early and decisive fiscal stimulus packages have helped to cushion Australia's economy from the worst impacts of the global recession.

Without this action the forecast contraction in the economy in 2009‑10 would have been four times larger.

The stimulus packages are expected to raise the level of GDP by 2¾ per cent in 2009‑10 and 1½ per cent in 2010‑11, supporting up to 210,000 jobs.

In the absence of policy action, the forecast for unemployment would have peaked 1½ percentage points higher at around 10 per cent.

Fiscal stimulus has supported the strong and decisive monetary policy response from the Reserve Bank of Australia, which has seen mortgage interest rates fall to their lowest levels in more than 40 years.

By taking measures to support the financial system and bolster growth, the Government's actions are working in the same direction as monetary policy to support jobs and economic activity.

Economic Security Strategy

The one‑off cash payments and the First Home Owners Boost (FHOB) in the $10.4 billion Economic Security Strategy (ESS) were designed to be implemented quickly,