Page last updated at 10:15 GMT, Thursday, 12 February 2009

Australian stimulus plan blocked

Australian prime minister Kevin Rudd
Mr Rudd insists the stimulus plan is vital for Australia

The Australian Senate has rejected the Labor government's 42bn Australian dollar ($27bn; 19bn) stimulus plan.

The bill was voted down after an independent senator joined the Liberal Party-led opposition coalition.

Prime Minister Kevin Rudd has vowed to reintroduce the legislation, but as Labor does not have a majority in the Senate, some compromise is expected.

While Mr Rudd says the bill is vital for the economy, the opposition has called it financially irresponsible.

'Contempt'

The bill has already passed through the House of Representatives, the Senate's lower chamber, where Labor has a large majority.

The outcome reflects poorly on the capacity of our parliament to respond quickly to a global and national economic crisis
Australian Chamber of Commerce and Industry

It currently proposes spending A$28.8bn on schools, housing and roads over four years.

In addition, it wants to dedicate A$12.7bn on tax breaks for small firms, and cash handouts for eligible workers and students.

Opposition leader Malcolm Turnball said the government had treated parliament with "disingenuous contempt", accusing it of refusing to negotiate a less expensive package.

He [Mr Rudd] has said there is no alternative to this proposal, and yet we all know not one of us is the repository of all wisdom on this or any other issue," said Mr Turnbull.

Business leaders have expressed their disappointment at the Senate vote.

"No other nation's parliament has refused a major stimulus package in the current environment of unprecedented global economic downturn," said the Australian Chamber of Commerce and Industry.

"While proper scrutiny and parliamentary debate on major spending measures is appropriate, the outcome reflects poorly on the capacity of our parliament to respond quickly to a global and national economic crisis."

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