The Federal Government today unveiled a mini-budget to spend $42 billion on "nation building and jobs'' as it revealed there had been an incredible $200 billion turnaround in the budget bottom-line over the next four years.
In a fresh bid to spend its way out of recession, the Government announced five one-off cash bonuses worth up to $950 will be paid to middle and low-income workers and families, children going back-to-school, farmers in hardship and people undertaking training.
The package also gives $200,000 to every school for maintenance, spends $890 million on regional roads and black spots, will build 20,000 new homes, boosts rebates for solar hot water and gives tax breaks to small business.
The Treasurer, Wayne Swan, claimed 90,000 jobs would be created by the package over the next two years, but despite this the unemployment rate was predicted to jump to 7 per cent by next year.
The budget will be $22.5 billion in deficit for this financial year _ a $44 billion turnaround from the $21.7 billion surplus predicted in Mr Swan's first budget last May.
Despite the Prime Minister, Kevin Rudd, saying it would be a "temporary deficit'', today's mini-budget reveals the nation's finances will be in the red for at least the next four years with the accumulated deficit of $118 billion (almost identical to the $115 billion that has been wiped from expected tax collections from companies, individuals and the GST).
This compares to $79 billion worth of surpluses predicted for the same period just nine months ago _ a $197 billion slump.
Mr Swan said decline had been caused by the severity and speed of the global recession.
The government brushed off predictions by the International Monetary Fund and other leading experts that Australia will record negative growth and slide into recession, and continues to predict positive, albeit flat, growth.
The cash splash in the mini-budget is predicted to add 0.5 per cent to GDP in 2008-09 and 0.75 to 1 per cent in 2009-10.
With the boost, economic growth is expected to still be 1 per ent in 2008-09 and 0.75 per ent in 2009-10.
The government did not bring forward the personal income tax cuts scheduled for July 1, as called for by the Opposition.
Mr Swan said there were five planks to today's mini-budget.
Every one of the nation's 9540 schools will get up to $200,000 for maintenance and minor building works as part of a $14.7 billion scheme that will also provide money for 500 schools to build new science labs and language learning centres in needy high schools while primary and special schools may get new or refurbished libraries and multipurpose halls.
About $6.6 billion will be spent on building 20,000 new "social housing dwellings'' and 802 new homes for defence personnel.
There will also be urgent maintenance to upgrade 2500 vacant houses so they can be used for social housing.
Mr Rudd said this project would provide a "massive and immediate'' boost for the housing and construction industry.
A new scheme to make homes more energy efficient will cost $3.9 billion with the government promising to install free ceiling insulation in 2.7 million homes.
The government claims this will cut household erergy bills by $200 a year and the overall project will reduce greenhouse gas emissions by 2020 by the equivalent to taking one million cars off the road.
The government also increased the solar hot water rebate from $1000 to $1600, effective from today until June 30, 2012.
The scheme is not means tested. It also doubled the low emissions plan for renters rebate to $1000.
About $890 million will be spent on fixing road accident black spots and regional roads and projects.
Mr Rudd said $90 million would be spent giving 350 accident black spots a safety upgrade and the government would spend $150 million installing 200 new boom gates at high-risk rail crossings.
The roads package includes $150 million to help the states fund a backlog of maintenance projects on the nation's highways with the remaining $500 million to help pay for community infrastructure projects such as town halls, libraries, sports centres and community venues.
Small business gets a $2.7 billion package of tax breaks that includes an extra $600 tax deduction for any small business that buys and installs a $2000 computer before the end of June.
Those small firms that buy and take possession of a $60,000 backhoe by the end of June can claim an extra $18,000 tax deduction.
Small businesses with a turnover of less than $2 million a year, can also claim an extra 30 per cent tax deduction for assets costing more than $1000 or more that they buy and between December 13, 2008 and June 30, 2009 and install by June 30, 2010.
The cash bonuses announced today will be paid in March and April.
About 8.7 million workers will get a lump sum tax-free bonus, depending on their annual income.
Those earning up to $80,000 a year will receive $950, those earning between $80,000 and $90,000 will get $650 and those earning between $90,000 and $100,000 get a $300 bonus.
Single-income families who receive the Family Tax Benefit Part B - about 1.5 million families - will get $950 on March 11. It will only be paid to those who were eligible for Family Tax Benefit Part B on February 3.
Those receiving Family Tax Benefit Part A with a child aged between 4 and 18 years will get a $950 back to school bonus.
The government expects 2.76 million children in 1.5 million families will share $2.6 billion.
About $511 million will fund a $950 training and learning bonus for 440,000 students and those returning to study such as those on youth allowance, Austudy and related payments (but not those who get the back to school bonus).
Farmers will also benefit with a hardship bonus of $950 for those receiving exceptional circumstances related income support in a package worth $20.4 million.
Mr Rudd said the spending was aimed at boosting economic activity and jobs and combating the global recession.
"There will be no quick fix to this global recession and many of its effects are still to be felt,'' he said. ``But the government is taking the necessary and responsible action to help see Australia through this global crisis.''
