Australia launched a 42 billion dollar ($26 billion) stimulus package on Tuesday and slashed interest rates to a 45-year low in a bid to battle the global economic crisis, which has choked growth.
Prime Minister Kevin Rudd said the massive stimulus package was aimed at nation building and supporting up to 90,000 jobs “in the face of the unfolding national and international economic emergency.”
The government faced a “stark choice -- to act or fold its arms and let the free market rip,” the centre-left Labor Party leader said. “The government has resolved to act and will continue to act.”
The package includes spending of 28.8 billion Australian dollars on schools, housing and roads over four years, tax breaks for small businesses and cash handouts of 12.7 billion dollars to eligible workers, farmers and students.
Up to 950 dollars would be paid to workers earning 100,000 dollars or less, supporting up to 8.7 million individuals, the government said in a statement.
Similar amounts would be paid to single-income families, drought-affected farmers and others in need from March.
The government slashed its economic growth forecast by half, upped its estimate of job losses and warned the budget would plunge 22.5 billion dollars into deficit instead of achieving the 21.7 billion surplus predicted last May.
Gross domestic product growth is now expected to be 1.0 per cent in 2008/09 and 0.75 per cent the following year, compared with respective forecasts of 2.0 per cent and 2.25 per cent made just three months ago.