The federal government has decided Australia’s banks can survive on their own without taxpayer-funded guarantees.

Deposits of more than $1 million will no longer be guaranteed from the end of March, although bank accounts with less than $1 million will continue to be underwritten until late 2011.

The government is also phasing out its wholesale guarantee of bank borrowing on global money markets from the end of next month.

Canberra’s underwriting of state and territory government borrowing will be turned off from the end of December.

In October 2008, $600 billion to $700 billion of measures were unveiled as global turmoil jeopardised the stability of Australia’s financial system and the ability of banks to lend.
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Federal Treasurer Wayne Swan has given the government’s bond manager the nod to invest $8 billion in the Australian residential mortgage-backed securities market (RMBS).

Mr Swan on Monday said he had directed the Australian Office of Financial Management (AOFM) to implement this investment, announced last month. It will help put downward pressure on borrowing costs.

It will also allow for the remaining $246 million from a previous $8 billion initiative to be invested.

“This investment is an important part of the government’s commitment to strong and effective competition in Australia’s mortgage market,” Mr Swan said in a statement.

“By supporting smaller lenders and promoting competition in the Australian mortgage market, this investment is helping to put downward pressure on borrowing costs over time.”
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As Labor approaches the second anniversary of its election win, Treasurer Wayne Swan is talking about climate change as economic experts forecast another interest rate rise before Christmas.

Official business investment data due out this week is expected to show more signs of an economic comeback.

Westpac chief economist Bill Evans said positive news on the economy since the Reserve Bank’s last meeting on Melbourne Cup day made another rate rise in December more likely.

“We think the economics of the current situation will justify another move and the data developments since this meeting support that view,” he said.

Treasurer Wayne Swan made no mention of interest rates in his weekly economic note, preferring to focus on the government’s emissions trading scheme (ETS).
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Treasurer Wayne Swan says the decision by the central bank to raise its cash rate will make it tougher for families.

The Reserve Bank of Australia (RBA) on Tuesday raised the cash rate by 25 basis points to 3.25 per cent following its monthly board meeting.

A majority of economists had expected the RBA to leave the rate at its “emergency” level of 3.0 per cent for at least another month.

The RBA had cut the rate by 425 basis points between September 2008 and April 2009 in the heat of the global economic downturn.
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Federal Treasurer Wayne Swan is holding firm to the government’s economic stimulus timetable as a Senate committee prepares to quiz the nation’s central bank governor about the state of economy.

“It would be foolish and irresponsible to drop our guard,” Mr Swan said in his weekly economic note, released on Sunday.

Reserve Bank governor Glenn Stevens is scheduled to appear before the Senate’s economic references committee in Sydney on Monday, two days before new data on retail trade, building approvals and house prices are released.

He will face questions about the way the government and the bank have responded to the global recession and its impact on Australia.
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Treasurer Wayne Swan says he is encouraged by the US Federal Reserve chairman’s view of the US economy.

But it doesn’t mean that US stimulus is about to end, he told parliament on Wednesday.

Ben Bernanke said the US recession was “very likely over” but that the economy remained weak due to difficult credit conditions and high unemployment.

“Even though from a technical perspective, the recession is very likely over at this point, it’s still going to feel like a very weak economy for some time,” he said.
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Australia is in better shape than the rest of the world one year on from the collapse of Lehman Brothers, but rising unemployment remains a threat, Treasurer Wayne Swan has warned.

The demise of the US investment bank was the breaking point of a growing global financial crisis that triggered a $US30 trillion ($A35 trillion) slump in global share prices and caused debt markets to freeze.

So far some 12 million people have lost their job in the resulting global recession.

New data released on Monday showed that while lending in Australia remains erratic, it is performing better than a year ago.

“Australia through a combination of circumstances, including economic stimulus and fantastic community efforts, has come through this global recession in far better shape than the rest of the world,” Mr Swan told parliament.
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Treasurer Wayne Swan can afford to have a spring in his step when he meets his G20 counterparts in London this weekend.

Not every finance minister can brag that they are in charge of an economy that has grown for 18 consecutive years, let alone defied the worst global recession since World War II.

Still, neither can he dive into the nearest phone box to don his SuperSwan cape at the first sign of an economic problem arising from his London talks.

Australia’s economic performance since the early 1990s’ recession has been a collective effort of governments of both stripes and successive governors of the Reserve Bank of Australia.

It has been down to a series of reforms, difficult decisions and sometimes a dose of good fortune.
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Premature withdrawal of economic stimulus could derail a global recovery, Australian Treasurer Wayne Swan has warned on the eve of the G20 finance ministers’ meeting in London.

Swan said the meeting of finance ministers from the G20 group of developed and developing nations on Friday and Saturday would discuss exit strategies for economic stimulus.

But none of the leaders he had spoken to recently indicated they believed the time was near to begin withdrawing that support.

“I do agree with others when they say that a premature withdrawal of stimulus could certainly stall recovery,” Swan told reports in London on Thursday.
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Treasurer Wayne Swan has indicated more changes could be made to the federal government’s fiscal stimulus strategy only days before key economic growth numbers are due.

While Australia is expected to avoid recession, homeowners are unlikely to be celebrating as signs of recovery put pressure on interest rates ahead of a monthly Reserve Bank of Australia (RBA) board meeting this week.

Labor’s $42 billion stimulus package is also expected to come under review on Wednesday when national accounts data for the June quarter is released.

The government has rejected opposition calls for the overall size of the stimulus package to be wound back but Mr Swan has indicated more tweaking could be done to the funding mix.
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Federal Treasurer Wayne Swan has warned Australia could still face negative economic growth as the impact of the global recession washes through the economy.

In a ministerial statement on the return of parliament after the winter break, Mr Swan cautioned there was still some way to go before there could be confidence in a sustainable economic recovery, and that unemployment would continue to rise.

“Many could still lose their jobs or will enter the labour market but not be able to find work as a result of the global recession,” Mr Swan told parliament.

“Unemployment will rise.”
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The Rudd government is determined to maintain its stimulus programs after the central bank indicated for the second time this week that an interest rate rise is looking more likely.

The Reserve Bank of Australia (RBA) left the cash rate on hold in August at a 49-year low of three per cent, for the fourth month in a row.

But in announcing the decision on Tuesday, RBA governor Glenn Stevens said the risk of a recession had “abated”, and noted how economic conditions had improved.

The central bank went into more detail on Friday, predicting the Australian economy would grow by a half per cent in 2009.
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photo credit: Tony the MisfitTreasurer Wayne Swan has echoed the comments of US President Barack Obama, saying the tough times caused by the global economic downturn are not over.

Speaking ahead of the release of the latest US economic growth figures, Mr Obama said that the “huge volatility or panic” in the banking system and financial markets had “generally settled down”.

However, the US president said the gross domestic product figures were still expected to show the nation’s economy contracted and that job losses remained a huge problem.

Mr Swan said it was clear the “tough times aren’t yet over”.
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Treasurer Wayne Swan says he welcomes a report which shows signs of economic recovery, conceding the worst of the global downturn could be over.

The Access Economics business outlook report says the jobless rate could hit a ceiling of 7.5 per cent in 2010 - lower than the government’s prediction of 8.5 per cent.

But Mr Swan says it is still important to push ahead with stimulus measures to help slowing investment in private business and trade.

“It doesn’t show that we’re out of the downturn, it shows that the worst of the global economy may be behind us but that we will live with the consequences of the global recession for some time to come,” Mr Swan told reporters in Brisbane on Tuesday.
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Federal Treasurer Wayne Swan says he’s encouraged Australia remains one of the best performing economies in the world but there’s still no room for complacency.

In his latest economic update, Mr Swan used three reports - from the World Bank, International Monetary Fund (IMF) and Organisation for Economic Co-operation and Development (OECD) - to support the strategy the Rudd government had taken to deal with the global recession.

He took particular note of an IMF statement that budget deficits were appropriate in current circumstances.

“This is a big tick for our strategy,” he said.
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