CANBERRA (Dow Jones)--The Australian government Tuesday unveiled additional stimulus measures worth A$41.5 billion over the next four years in a bid to protect jobs and promote long-term economic growth in response to the global economic crisis.
The package - which includes A$12.7 billion in cash bonuses for low-to middle-income taxpayers, single-income families, farmers, and students to be paid out from March - won't fully offset the impact of the global crisis, with the government Tuesday halving its growth forecast for the current fiscal year ending June 30, 2009.
The cost of the latest stimulus package, combined with a massive slump in government tax revenue, also led the government to sharply lower its budget forecasts.
The government is now forecasting an underlying budget deficit of A$22.5 billion in the fiscal year that began July 1, down from a forecast in a November economic and fiscal update for a A$5.4 billion surplus.
Tuesday's Treasury forecasts indicate that Australia's A$1 trillion economy will face the harshest set of economic circumstances in decades in the coming period.
The government forecasts economic growth will slow to 1.0% in 2008-09, from a previous estimate of 2.0%. Growth will slow even further in 2009-10, to just 0.75%, from the 2.25% gross domestic product forecast previously.
Unemployment in the second quarter of 2009 will rise to 5.5% from an estimate of 5.0% in the November economic and fiscal update, and to 7.0% in the second quarter of 2010 from 5.75% previously. Actual unemployment was 4.5% in December.
Tuesday's package, which also includes a plan to spend A$28.8 billion on "nation-building" infrastructure, tax breaks for small business, and job creation projects over the next four years, comes as Australia's once robust economy is unwinding rapidly amid slumping demand for the nation's key commodities exports.
Prime Minister Kevin Rudd said Monday the world economic slowdown could wipe A$115 billion from government tax receipts in the next four years.
The massive writedown in tax revenues cemented expectations of another big rate cut from the Reserve Bank of Australia later Tuesday as the government's ability to stimulate the economy through big spending packages is set to be curtailed as official debt levels swell.
The central bank is widely expected to lower its cash rate target another 100 basis points to 3.25% in a decision due 0330 GMT.
