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WORLD> Asia-Pacific
Australia to spend A$4.7 billion on major projects
(Agencies)
Updated: 2008-12-12 14:03

CANBERRA -- The Australian government will spend an extra A$4.7 billion ($3.15 billion) on major projects from 2009 under new stimulus measures to help the economy avoid recession, Prime Minister Kevin Rudd said on Friday.

Australian customers use the escalators at a shopping center in central Sydney December 8, 2008. The Australian government delivered more than A$8 billion ($5.2 billion) in cash payments to families and pensioners from Monday and urged people to spend the money to help the economy avoid recession. [Agencies]

The new money includes funds to increase rail capacity from coal mines in the Hunter Valley of New South Wales to the world's largest coal port of Newcastle, doubling the amount of coal transported to market to 200 million tonnes, Rudd said.

He said the spending would add 0.25 percent to 0.5 percent to gross domestic product, and comes after the government in October announced A$10.4 billion in stimulus payments to families, pensioners and first home buyers to protect the slowing economy from the global downturn.

"We believe it is the right level of stimulus that we need to inject at this time," Rudd said, adding the government would announce more infrastructure spending in 2009.

Australia's economy has been hit by the global financial crisis, with economic growth falling to 0.1 percent in the September quarter and with unemployment rising and consumer spending stalling.

The government has already announced an extra A$15 billion in funding over five years for state-run schools and hospitals, and a A$6.2 billion package to support struggling car manufacturers.

"These actions are all necessary in the face of the most uncertain period in the global economy in living memory," Treasurer Wayne Swan told reporters.

Despite the new spending, Swan said the Australian budget would remain in surplus.

"The package is affordable. The budget does remain in surplus over the forward estimates," he said.

The new spending, and money previously committed to infrastructure projects, will fund 46 projects in rail, roads, education, and with a A$1.6 billion business investment allowance.

About A$1.2 billion will be spend on rail projects to help fund A$1.6 billion in track upgrades and new rail lines, including several mail rail projects to boost the ability of coal mines to send coal to the port of Newcastle.

The government said it would introduce a new temporary 10 percent investment allowance, provided as an extra tax deduction for business investing in plant and equipment worth more than A$10,000.

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