The Australian government launched a 42 billion dollar (26 billion US dollar) stimulus package Tuesday as the global financial crisis dragged the economy towards recession.
Prime Minister Kevin Rudd said the package was aimed at nation building and supporting 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 stimulus package includes spending of 28.8 billion Australian dollars on schools, housing and roads, tax breaks for small business and cash handouts of 12.7 billion dollars to low and middle-income earners, farmers and students.
"No country will escape the impacts of the global recession, which is causing falls in growth, job losses and budget deficits right across the world," Treasurer Wayne Swan said in a statement.
"The weight of the global recession is now bearing down on the Australian economy. Economic growth is slowing and employment will weaken."
The government slashed its economic growth forecast by half for the current financial year and upped its estimate of job losses while warning that the budget would plunge 22.5 billion dollars into deficit.
Last May the budget had been forecast to be 21.7 billion dollars in surplus.
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.
The unemployment rate is expected to surge to 7.0 per cent in 2009/10 from 4.5 per cent in December, the government said, in what amounted to a mini-budget announcement ahead of the full budget due in May.
The latest move follows a stimulus package which pumped 10.4 billion dollars into the economy in December to boost consumer spending.
The International Monetary Fund predicted last week that the Australian economy would contract by 0.2 percent in 2009 if no further measures were taken.
Preparing the way for the budget deficit announcement, Rudd on Monday said the global economic crisis and China's slowdown would punch a 115 billion dollar hole in tax receipts over the next four years.
Demand in China and other Asian countries for Australian resources such as coal and iron ore had underpinned an economic boom for a decade, allowing a long series of budget surpluses.
Further stimulus for the economy was expected to come in the form of an interest rate cut later Tuesday by the central bank after its monthly board meeting.
The Reserve Bank of Australia is widely expected to slash rates by up to 100 basis points, taking rates to a 45-year low of 3.25 per cent.
Prime Minister Kevin Rudd said the package was aimed at nation building and supporting 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 stimulus package includes spending of 28.8 billion Australian dollars on schools, housing and roads, tax breaks for small business and cash handouts of 12.7 billion dollars to low and middle-income earners, farmers and students.
"No country will escape the impacts of the global recession, which is causing falls in growth, job losses and budget deficits right across the world," Treasurer Wayne Swan said in a statement.
"The weight of the global recession is now bearing down on the Australian economy. Economic growth is slowing and employment will weaken."
The government slashed its economic growth forecast by half for the current financial year and upped its estimate of job losses while warning that the budget would plunge 22.5 billion dollars into deficit.
Last May the budget had been forecast to be 21.7 billion dollars in surplus.
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.
The unemployment rate is expected to surge to 7.0 per cent in 2009/10 from 4.5 per cent in December, the government said, in what amounted to a mini-budget announcement ahead of the full budget due in May.
The latest move follows a stimulus package which pumped 10.4 billion dollars into the economy in December to boost consumer spending.
The International Monetary Fund predicted last week that the Australian economy would contract by 0.2 percent in 2009 if no further measures were taken.
Preparing the way for the budget deficit announcement, Rudd on Monday said the global economic crisis and China's slowdown would punch a 115 billion dollar hole in tax receipts over the next four years.
Demand in China and other Asian countries for Australian resources such as coal and iron ore had underpinned an economic boom for a decade, allowing a long series of budget surpluses.
Further stimulus for the economy was expected to come in the form of an interest rate cut later Tuesday by the central bank after its monthly board meeting.
The Reserve Bank of Australia is widely expected to slash rates by up to 100 basis points, taking rates to a 45-year low of 3.25 per cent.
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