Page last updated at 11:53 GMT, Tuesday, 3 February 2009

Australia unveils economic boost

Kevin Rudd says the stimulus measures will result in a 'temporary budget deficit'

Australia's government has announced a 42bn Australian dollar ($26.5bn; 19bn) stimulus plan, as it seeks to shield the country from the global downturn.

The country's Treasurer, Wayne Swan, said that A$28.8bn would be invested in schools, housing and roads.

Another A$12.7bn will provide cash support for lower-income families, to be paid next month.

The country's central bank also cut interest rates to 3.25% - the lowest level in 45 years.

'No guarantee of success'

"This government will never haul up the white flag on the inevitability of recession," said Prime Minister Kevin Rudd.

LNG gas storage tank in Australia
Australia's economy is heavily resources based

"There is no guarantee of success, but we will throw everything at this because we believe it is important for confidence and jobs that we do so."

Australia's resources-based economy has struggled since the worldwide financial turmoil began in the middle of 2008.

The country's mining firms are cutting back on capital spending, cutting staff numbers, and mothballing projects.

The government has halved its economic growth forecast for 2008/09 to 1% from an earlier prediction of 2%.

The latest package comes on top of one announced late last year which was worth A$10.4bn.

'Measures necessary'

"To support jobs in the middle of a severe global recession, the government must stimulate the economy in the most immediate manner possible," said Mr Rudd.

"The government remains determined to take whatever further measures are necessary," he added.

However, the cost of the measures - to be implemented over four years - will create a A$22.5bn deficit in the current fiscal year.

"The plan will help support and sustain up to 90,000 jobs over the next two years," said Mr Swan.

Every school in the country will have a new or renovated building.

In addition, ceiling insulation, to be provided free to 2.7 million homes, will help Australia to cut its greenhouse gas emissions.

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