The Australian government will spend an extra A$15 billion ($9.8 billion) over five years on hospitals and schools, Prime Minister Kevin Rudd said on Saturday, in a new step to prop up the slowing economy.
Rudd said the extra money, worth about 0.3 percent of gross domestic product a year for five years, would create 133,000 jobs in Australia and would be delivered to state governments from January 2009, to help guard Australia from the global slowdown.
The spending comes on top of the A$10.4 billion stimulus package announced on October 14, which delivers cash payments to pensioners and families from December 8 and provides extra money for people who build or buy their first home. "It will be a tough year, 2009, for all of us," Rudd told reporters after a meeting with the government leaders of Australia's six states and two territories.
The latest package comes after Rudd said he would be prepared to allow the national budget to slip into deficit if more spending was needed to protect jobs and economic growth, although he said he expected the budget to remain in surplus.
"In terms of our ability to fund this, we can do so still while maintaining a modest surplus," Rudd said. The government dramatically downgraded its budget forecasts on November 5 due to the global financial crisis, with economic growth set to slow to 2 percent in 2008/09, down from the May budget forecast of 2.75 percent, and with unemployment to rise.
The government also slashed its budget surplus forecasts to A$5.4 billion for 2008/09 from A$21.7 billion in May. Over the coming four years, the surplus will total A$18.3 billion compared to A$79.3 billion forecast in May. The new money will be delivered through Australia's six states and two territories, with the bulk going to hospitals to pay for more doctors and nurses. The package includes an annual 7 percent increase in health funding to the state governments.
More than A$2 billion will also be given to the states to help the national government deliver on its 2007 election promise to give all high school students access to a laptop computer.