Bloomberg reported that Australia's government will spend AUD 42 billion on grants and infrastructure, doubling its rescue package as the global financial crisis drags the economy to the brink of recession.

Mr Wayne Swan Australian Treasurer announced a 4 year plan to distribute AUD 12.7 billion to families and low income earners and spend AUD 28.8 billion on schools, roads, hospitals and energy efficiency. He added that "The stimulus will help sustain economic growth this year and in 2010. The weight of the global recession is now bearing down on the Australian economy. It would be irresponsible not to act swiftly."

Mr Swan said that the extra spending will help send the nation’s budget into an AUD 22.5 billion deficit, the first shortfall since fiscal 2001-02. He added that "Even with this sobering prognosis, there remain significant downside risks. If the global recession is deeper and more protracted than expected, this would inevitably cause a more severe downturn in Australia."

The global crisis will see Australian government revenue come in AUD 115 billion lower than earlier forecast in the next four years as exports wane and the economy slows. Since September, the government announced AUD 44.72 billion in rescue spending and the central bank embarked on the biggest round of interest rate cuts in almost two decades to avoid the economy entering its first recession since 1991.

Mr Swan said that the stimulus should create 90,000 jobs by June 30th 2010. Employment will grow by 1% this year and shrink by 0.75% the following fiscal year.

(Sourced from www.bloomberg.net)