Australia infrastructure plan to add 32,000 jobs

Prime Minister Kevin Rudd said the government's coffers would remain in surplus despite the spending over two years. He declined to say how large the surplus would be for the current fiscal year which ends on June 30, 2009.

About half the money would go to newly announced projects while the rest would be spent on previously announced projects which were being fast-tracked, Rudd said.

He said AU$1.2 billion ($798 million) would be spent on rail alone, doubling the coal export capacity at the east coast port city of Newcastle.

"This represents the single biggest Australian government investment in rail in the history of the Commonwealth," Rudd told reporters, referring to the federal government which has existed for 107 years.

"We believe in nation building because it provides stimulus to the economy now at a time of great stress coming off the back of the global financial crisis," he said. More spending announcements would be made in early 2009, Rudd said.

Treasurer Wayne Swan said he expected the spending would boost economic growth by up to half a percentage point.

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

The big spending initiatives come in a week when the government began funding a pre-Christmas spending spree by injecting an extra AU$8.7 billion ($5.8 billion) into the welfare checks of 8 millions pensioners and low-income parents over 10 days.

The government remains hopeful that Australia will remain one of the few countries that avoids recession despite worsening global economic conditions.