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.

Government figures released on Thursday showed that the unemployment rate had risen to 4.4 percent in November from 4.3 percent in October.

The government is forecasting a jobless rate of 5.75 percent by mid-2010, but some market economists think it could be over 6 percent, throwing almost 200,000 more people out of the 11 million-strong work force.

In May when Swan released the government's AU$1.1 trillion annual budget, the surplus for the fiscal year was forecast to reach AU$21.7 billion ($14.5 billion).

In the Treasury Department's midyear review released last month, that figure was slashed to AU$5.4 billion ($3.6 billion) due to the economic slowdown plus new government spending aimed at staving off recession.

Swan said then that tax receipts would fall by around AU$40 billion ($26.7 billion) over the current year and the following two years.

The midyear review figures also showed that economic growth was expected to slow to 2.0 percent for the year. Growth of 2.75 percent had been predicted in May.