Swan unveils $42bn stimulus package

The federal government will inject $42 billion into the national economy to help prevent the country from entering into a deep recession.

Prime Minister Kevin Rudd and Treasurer Wayne Swan today unveiled the country's second stimulus package that allocates spending on schools, housing, energy efficiency in homes, community infrastructure and roads, and small business support.

Mr Rudd said the package is designed to protect 90,000 jobs over the next two years.

"If you looked carefully at the treasury prognosis for the period ahead minus this stimulus package, it will be quite clear that the economy would run a grave risk of generating negative growth, most particularly in the (20)09-10 financial year," he told reporters.

"Therefore the challenge that we have faced is what measures assist in providing necessary fiscal stimulus to give us a much greater prospect of generating positive growth in that period.

"That's why we've embraced the measures we have in the magnitude that we have and in the construction we have put to maximise the flow through of investment in the year ahead and just beyond."

Included in the plan is a $2.7 billion business tax break designed to help boost the investment, economic activity and support jobs.

Under the temporary tax break, businesses with a turnover of $2 million or less can claim an additional 30 per cent tax deduction for eligible assets costing $1000 or more acquired from December 13 2008 to June 30 2009, and installed by June 30 2010.

"For eligible assets costing $1,000 or more that they acquire from 1 July 2009 to 31 December 2009, they can claim an additional 10 per cent deduction where they are installed by 31 December 2010," Treasurer Wayne Swan said.

Schools are one of the bigger winners in the stimulus package with $14.7 billion set aside for the Building the Education Revolution package.

The government also said it will build or upgrade large scale school infrastructure such as libraries and multipurpose halls in every primary and high school and in each special school.

The package also involves the construction of some 500 new science laboratories and language learning centres in high schools with a demonstrated need for upgraded facilities.

Also under the education package, the government will provide up to $200,000 to every Australia school for maintenance.

Meantime, 2.7 million homes will receive free ceiling insulation in a bid to make households energy efficient and set Australia up for a low carbon future.

Owner occupiers who do not have ceiling insulation will be eligible for the free product and installation, with costs to be capped at $1600 per house.

Renters will also benefit, with insulation costs capped at $1000.

The government will also construct 20,000 new social housing dwellings and 802 new houses for Australian Defence Force personnel.

Housing Industry Association managing director Ron Silberberg said the $6.4 billion housing package will create a demand for more than 35,000 jobs in the building and related industries.

Additionally, workers earning $100,000 or less will be eligible to receive a one-off lump sum payment of up to $950, in a handout valued at $12.7 billion.

Mr Swan said the one-off payments will support up to 8.7 million individuals.

"These cash bonuses will stimulate consumption quickly, supporting economic activity and jobs until our nation building initiatives have an impact," he said.

"This $12.7 billion package is a major economic initiative to deal with these extraordinary economic times and is in addition to the Economic Security Strategy that the Rudd Government delivered in December 2008."

Single income families will receive a $950 bonus, the same amount will also be given to drought affected farmers and farm dependant small business owners.

A $950 Back to School bonus will also be given to low and middle income earners and a $950 Training and Learning bonus will be paid to students and people outside of the workforce returning to study.

Meantime, the government will spend $890 million to improve community infrastructure and safety on the country's roads.