Stimulus Package

Stimulus Package

OK time to talk money. The world economic crisis has stretched into the new year and doesn't even look close to being over. Many countries are suffering, including Australia. But the government has announced a pretty interesting way of helping us ride through this tough period. They're giving a lot of us a whole lot of cash... and they want us to spend up big! But is it as good as it sounds?

Plants can really suffer under the sweltering summer sun. Scorching heat and no rain can leave them looking, well, a little sad.

NATHAN BAZLEY, REPORTER: Unfortunately our economy is in a very similar shape. The global financial crisis has wilted our economy, leaving it looking pretty droopy. But a plan to give it a helping hand has been announced. It's called a 'stimulus package'.

A sick plant and a sick economy actually have a lot in common. Both need to be stimulated to grow. And what stimulates a plant? Well let's try water and fertiliser!

Just like this plant, the economy needs something similar to stimulate it. When an economy stops growing it's called a RECESSION and that's not a good thing! So what food will get the economy growing again?!

Well, we feed the economy cash, and lots of it! It all works on the theory that if we're given more money we'll go on a spending spree! That will increase sales for shops and other businesses, which will make more jobs, which will help the economy to grow.

The package is worth around 42 billion bucks and nearly 10 million Australians will get a slice. People earning under $100,000 a year will get as much as 900 bucks each! Some farmers, parents and students will also get a share. Even kids will benefit. Well kinda!

KEVIN RUDD: Here's a question for you guys. How many primary schools do you think there are in Australia? In the whole country?

STUDENT: 7,500.

Now the Prime Minister doesn't just go quizzing kids for no reason. He came to this school to announce that along with cash handouts, schools would receive 14.7 billion dollars for new buildings, libraries and other facilities. As well as that, heaps of housing will be built and lots of homes will get free insulation too.

NATHAN BAZLEY, REPORTER: All this free money and spending sounds really great, but there is a downside! If you keep giving out more and more and more and more money, you'll eventually go into debt!

And the government is estimating the package will push us into the red to the tune of 22 billion dollars! Ouch! It's for that reason that the opposition is against the idea. They say that it's too much debt for the country to handle, because the government and taxpayers will have to pay it back at some point! Also - some critics reckon the plan might not work because most people will just save the money instead of spending it right now.

The government has admitted that they're not even sure if this very expensive plan will work but they say this economic crisis is so bad that we have to do something. And we're not the only ones. England, USA and many other countries are all doing the same thing and holding their breath for the results.

So the lesson here? Stimulating a plant to grow is pretty easy. Stimulating a whole economy is a very different challenge.

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