Prime Minister Kevin Rudd confirmed yesterday that the global economic recession had dragged Australia into recession and had also produced the single biggest collapse in tax revenues since World War 2.
Mr. Rudd told a business luncheon that we were in an exceptionally deep and widespread global recession, and that 28 out of 30 of the most developed economies in the world were already in recession or had experienced one quarter of negative economic growth. He further stated that seven of Australia's ten largest trading partners were already in recession.
Reserve Bank Governor Glenn Stevens stated earlier this week that the nation was probably already in recession.
Mr. Rudd stated that given the current economic crisis a temporary budget deficit was inevitable, and that in the current unprecedented global conditions a temporary deficit was not an option but that it was inevitable. He also stated that framing a budget in the current context was incredibly tough, and that framing the budget under these circumstances had never been framed at a more difficult time.
Mr. Rudd went on to say that temporary deficits and government borrowings were needed to support businesses and jobs until the private sector recovered.