The global economic crisis and China's slowdown will punch a 115 billion Australian dollar (75 billion US) hole in Australia's budget over the next four years, Prime Minister Kevin Rudd said Monday.
But despite the budget being plunged into deficit, Rudd flagged more government spending in a new stimulus package, pledging "to move heaven and earth" to support growth in the economy.
"The truth is the global recession in general and the collapse in China's growth in particular has produced a 115 billion dollar fall in Australian tax receipts to the government," he told reporters in Canberra.
"That figure equals about half the government's total tax receipts in a given year, although of course that figure ... is spread across the forward estimates (covering four years)."
Last May the budget had been forecast to be 21.7 billion Australian dollars in surplus.
But the gravity of the global crisis provided the country with a stark choice of either acting to boost the economy or "allowing the jobless queue to grow even longer," he said.
"This government will intervene," he said, dismissing opposition objections to more spending. "We will do so decisively with further action to support jobs and growth."
The government, which pumped 10.4 billion Australian dollars into the economy in December to boost consumer spending, will announce a second stimulus package in the new parliamentary session beginning Tuesday, he said.
Rudd's announcement follows a prediction by the International Monetary Fund last week that the Australian economy would contract by 0.2 percent in 2009 if no further measures were taken.
Australia's central bank is expected to provide some stimulus of its own after its monthly board meeting on Tuesday, with analysts forecasting a 100 basis points cut in interest rates to 3.25 percent.
The projected tax receipt loss of 115 billion dollars is 75 billion dollars more than the shortfall estimated in the government's mid-year outlook three months ago.
The further drop includes 50 billion dollars in company tax receipts, 13 billion in income tax, 10 billion in sales tax and two billion in other assorted taxes.
Globally, six of Australia's top 10 trading partners are in recession and the halving of China's growth alone would result in a 15 billion dollar loss to Australia's economy in 2009/2010, Rudd said.
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.
No details of the new stimulus package have been released but analysts expect it to focus on infrastructure spending and tax cuts.
Treasurer Wayne Swan has rejected a trade union call for any infrastructure spending to be restricted to Australian goods and services.
"We can't as a globe and we can't as a nation return to those old protectionist practices which have the potential to make this global recession much worse," Swan told public radio Tuesday.
Alarm over the temptations of protectionism as the global crisis bites has been raised by a US Congress proposal that includes a "Buy American" provision barring the purchase of foreign steel for any publicly funded infrastructure project.
But despite the budget being plunged into deficit, Rudd flagged more government spending in a new stimulus package, pledging "to move heaven and earth" to support growth in the economy.
"The truth is the global recession in general and the collapse in China's growth in particular has produced a 115 billion dollar fall in Australian tax receipts to the government," he told reporters in Canberra.
"That figure equals about half the government's total tax receipts in a given year, although of course that figure ... is spread across the forward estimates (covering four years)."
Last May the budget had been forecast to be 21.7 billion Australian dollars in surplus.
But the gravity of the global crisis provided the country with a stark choice of either acting to boost the economy or "allowing the jobless queue to grow even longer," he said.
"This government will intervene," he said, dismissing opposition objections to more spending. "We will do so decisively with further action to support jobs and growth."
The government, which pumped 10.4 billion Australian dollars into the economy in December to boost consumer spending, will announce a second stimulus package in the new parliamentary session beginning Tuesday, he said.
Rudd's announcement follows a prediction by the International Monetary Fund last week that the Australian economy would contract by 0.2 percent in 2009 if no further measures were taken.
Australia's central bank is expected to provide some stimulus of its own after its monthly board meeting on Tuesday, with analysts forecasting a 100 basis points cut in interest rates to 3.25 percent.
The projected tax receipt loss of 115 billion dollars is 75 billion dollars more than the shortfall estimated in the government's mid-year outlook three months ago.
The further drop includes 50 billion dollars in company tax receipts, 13 billion in income tax, 10 billion in sales tax and two billion in other assorted taxes.
Globally, six of Australia's top 10 trading partners are in recession and the halving of China's growth alone would result in a 15 billion dollar loss to Australia's economy in 2009/2010, Rudd said.
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.
No details of the new stimulus package have been released but analysts expect it to focus on infrastructure spending and tax cuts.
Treasurer Wayne Swan has rejected a trade union call for any infrastructure spending to be restricted to Australian goods and services.
"We can't as a globe and we can't as a nation return to those old protectionist practices which have the potential to make this global recession much worse," Swan told public radio Tuesday.
Alarm over the temptations of protectionism as the global crisis bites has been raised by a US Congress proposal that includes a "Buy American" provision barring the purchase of foreign steel for any publicly funded infrastructure project.
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