Australia’s stimulus package now approved after earlier rejection

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Australia’s AUS$42 billion (£19 billion) stimulus package designed to help the country weather the economic downturn has now been approved after it was blocked yesterday by the Australian Senate who called it “financially irresponsible”.

Kevin Rudd, Australia’s Prime Minister, vowed to fight for the package saying it is “crucial for the economy“.

In response to the rejection, the Australian Chamber of Commerce and Industry said “No other nation’s parliament has refused a major stimulus package in the current environment of unprecedented global economic downturn.”

However, the plan has now been approved after the Government reached a deal with independent senator, Nick Xenophon – the one remaining swing voter.

Nick Xenophon said “I’m pleased to say I believe we have been able to reach a compromise, which while not giving everybody what they want, may give everyone what they need.”

The plan involves for AUS28.8 billion to be set aside for schools, housing and roads, while the remaining funds will provide a cash boost to low and middle-income earners. It was also hoped the plan would help support and sustain up to 90,000 jobs over the next two years, said Mr Swan.

Australia is battling to prevent the country’s first recession in 18 years and the central bank has lowered interest rates to 3.25% – a level not seen since the early 1960s.

Earlier this month, the International Monetary Fund warned that Australia’s economy would contract 0.2% in 2009 and would join other major economies in recession.

However, while the Reserve Bank of Australia and Treasury are not predicting a recession, they have revised their growth forecasts lower.

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