Rudd government (2007–2010)
The first Rudd government was the executive Government of Australia formed by the Australian Labor Party and led by Prime Minister Kevin Rudd. The Rudd government commenced on 3 December 2007, when Rudd was sworn in along with his ministry. This took place just nine days after the defeat of the Howard government, which was a Coalition of members of the Liberal and National parties, at the 2007 federal election. The Rudd government concluded on 24 June 2010 when Rudd, under pressure from an impending leadership caucus ballot, stepped down from the leadership of the ALP and was succeeded by his deputy, Julia Gillard. Rudd was re-elected leader of the Labor Party in 2013 and served a second term as prime minister.
Economy
The Rudd government issued its first budget in May 2008, which was initiated to fight inflation. The total expenditure, as a share of gross domestic product, was lower than any of the previous governments, despite including many of the expensive election promises for "working families". The projected surplus of 1.8% of GDP, or $21.7 billion, exceeded the 1.5% target set by the government in January. Labor supported improving the federal–state funding process through a reform of the Council of Australian Governments. Three nation-building investment funds were established - the infrastructure fund, "Building Australia", was designated $20 billion of federal funding. Education received $10 billion as part of Rudd's "education revolution", while health also received $10 billion.In the 2008–09 budget, the Rudd government cut $63.4 million over four years from the CSIRO, forcing the closure of two laboratories and the loss of 100 jobs. It also cut $20 million from the Australian Bureau of Statistics.
In response to the 2008 financial crisis, the Rudd government announced in October 2008 that it would guarantee all bank deposits. The government initially ignored Reserve Bank of Australia advice to cap the guarantee.
With the economy experiencing its biggest slowdown since the early 1990s and facing a recession, the government announced an economic stimulus package worth $10.4 billion. A second economic stimulus package worth $42 billion was announced in February 2009, consisting of an infrastructure program worth $26 billion, $2.7 billion in small-business tax breaks, and $12.7 billion for cash bonuses, including $950 for every Australian taxpayer who earned less than $80,000 during the 2007–08 financial year. At the same time, the RBA cut official interest rates by a percentage point, lowering them to 3.25%, the lowest since 1964.
The package was welcomed by state governments and many economists, as well as the OECD. The Malcolm Turnbull-led coalition opposed the package, stating that they believed additional tax cuts to those which had been planned the next few years was a better way to prevent a recession. The package was passed in the Senate on the 13 February with support from minor parties and independents, following amendments that reduced the cash bonuses in the package to fund investment in the environment and water supply.
National accounts released on 4 March 2009 showed that Australia's non-farm sector shrunk for the September and December 2008 quarters.
The 2009 Australian federal budget was released on the evening of 12 May 2009. Labor decided not to extend the investment allowance, and it was phased out by the end of the year. Other measures to support employment - augmenting a first-home buyer's scheme - were initiated.
During the March quarter, the Australian economy grew by 0.4%, a number not foreseen by many until the positive balance of trade statistics released the day before. The main contributors to this result were the large fall in the current account deficit and increasing household consumption. Apart from the manufacturing sector, the Australian economy avoided a technical recession. RBA economists endorsed the first two phases of stimulus a year later, saying that it was "undeniable" that government spending had supported the economy. RBA governor Glenn Stevens remained cautious of American-style fiscal policy, casting doubt on the idea that Australia should have a higher inflation target to repair its public accounts.
The Rudd government established a review of the tax system by the head of the Department of the Treasury, Ken Henry. Among other suggested reforms recommended by the Henry review and adopted by the Rudd government was a Resource Super Profits Tax on the extractive industry. The proposal met resistance from mining industry bodies and mining companies, and the proposal was later heavily modified when Julia Gillard replaced Rudd as prime minister.
Defence
In December 2007, the Minister for Defence, Joel Fitzgibbon, ordered the Department of Defence to develop a new white paper to guide Australia's defense policy. While the white paper was originally due to be completed in December 2008, it was delayed until 2009 due to the volume of work required. The white paper, entitled Defending Australia in the Asia Pacific Century: Force 2030, was released on 2 May 2009 and outlines a significant expansion to the Australian Defence Force, intended to maximize the military's capacity to act independently in Australia's region.Other defence policies enacted by the Rudd government include cancelling the contract to purchase 11 Seasprite helicopters in March 2008, and beginning the process of planning the replacement for the Navy's Collins-class submarines.
The Rudd government altered the number of Australian troops deployed to Afghanistan and Iraq. The 550 combat troops deployed on an overwatch mission in central-southern Iraq were withdrawn in mid-June 2008, fulfilling an election promise. This reduced the Australian Defence Force presence in the region to 800–900 support personnel, including 440 either on the ground in Iraq or patrolling the coastline. As of early 2009, around 150 support personnel remained in Iraq. In contrast, the Australian force in Afghanistan was expanded, with Rudd announcing in April 2009 an increase from 1,100 to 1,550 personnel.
Fitzgibbon became the first Rudd government minister to resign, on 4 June 2009. He quit after admitting that meetings concerning business opportunities held between defence officials and his brother, the head of nib Health Funds, had breached the Ministerial Code of Conduct. John Faulkner was appointed to succeed in the Defence portfolio.
Education
One of the Rudd government's key proposals in the 2007 election campaign was the implementation of an "education revolution". This was to include the provision of computers for every school student in years 9–12 and the implementation of a national curriculum.Scholarship for disadvantaged students
In 2010, a new suite of scholarships was developed; the Student Start-Up Scholarship and the Relocation Scholarship. These scholarships were developed as part of the Rudd government's response to the Bradley Review of Higher Education, and its recommendation to tighten eligibility for Youth Allowance by reforming the 'work test' coupled with a loosening of the parental income test. The government abolished the old scholarship system, which helped about 21,000 students per year, due to concerns that it was not adequately means tested and that many scholarships were not allocated as a result of being administered by the universities. However, the new system was stalled in the Senate as a result of opposition by the Liberal-National Opposition and Senator Fielding. This left an estimated 150,000 students waiting for the changes to pass parliament two weeks before the start of the academic year in March. The new scholarship system was a massive extension of the system of support, provided as an entitlement, based on parental income and administered by Centrelink. Criticism of the new system centred on claims that it would disadvantage regional students. One university in Queensland topped up its food bank, anticipating that the number of students regularly going without food would increase.In 2009, the Coalition and Senator Fielding had blocked changes to the Youth Allowance and Austudy system, stating they were unfair to rural and regional students and would leave 26,000 students worse off. The bill would have tightened regulations around the work requirements these students needed to fulfill to be considered independent of their parents. However, the two country independents in the House of Representatives, Tony Windsor and Rob Oakeshott, supported the changes. The Bradley Review had found that the old system had been accessed disproportionally by students from high-income families despite being intended to support those from disadvantaged backgrounds.
To win the support of the Greens and Senator Nick Xenophon and to mitigate the opposition of the Liberals and secure passage of the bill, Education Minister Julia Gillard loosened some aspects of the changes to rural arrangements. This allowed students from remote areas to access the workforce test with the additional requirement that their parents earned less than $150,000. The Student Start-Up Scholarship was cut to just above $2000 to pay for these changes. However, the impasse meant that, in mid-February, an estimated 150,000 students were waiting for the bill to pass in time for the start of the Australian academic year. Ultimately, the government secured passage as a result of the changes and the new scholarship was provided in the first semester of this year. In 2013, the Labor government proposed a cut to the value of the Student Start-Up Scholarship, to turn it into a loan which would fund the Gonski Reforms. However, after losing the election and forming the opposition, Labor changed its position and opposed these cuts which became supported by the Liberal government. These changes are yet to pass the Senate.