A spending recovery !

Kevin Rudd's government shocked the nation yesterday when it revealed an ambitious plan to drag Australia back from the brink of recession.

The idea is to spend our way out of trouble. Just over ten billion dollars of the budget surplus will be distributed to pensioners, first home buyers - and families with children on the basis that this injection of cash will jump start the economy.

Single pensioners will get a lump sum payment of $ 1,400, couples $ 2,100 and families with children will get a payment of $ 1,000 per child - and this will be in their bank accounts before Christmas.

There is an incentive to get first home buyers moving again. The first home buyers grant has been doubled - from $ 7,000 to $ 14,000 - and for those buying a newly built home it will increase to $ 21,000.

The strategy is simple - and it will probably work ! Put money in the hands of the people - and they will spend. The spending cycle keeps people in jobs and keeps shops and manufacturing busy - and profitable business reflects the standing of share prices.

The first home buyers grant should re-energise the home market - and the bonus for those buying a newly built home will spur building activity and it's flow-on effect to the component industry.

This is a bold and imaginative plan and it deserves applause. Hopefully it may be copied by other countries - but the fate of the Australian economy will not be decided by events in this country.

We are facing a world wide meltdown - and the prospect of a depression similar to the 1930's is real. What transpires in the United States - and in the major countries of Europe will be the deciding factor of whether the world economy sinks - or swims.

The Australian government deserves praise for a bold plan to get the local economy moving. It can only be hoped that world leaders show similar imagination - and have the courage to implement strategies far outside the orbit of usual government thinking !