Australian Parliament rejects stimulus plan

Australia's Parliament rejected the government's A$42 billion (€21.8 billion) stimulus plan yesterday, dealing a major blow to Prime Minister Kevin Rudd and delaying cash payments to millions of workers and families.

The government was one vote short of passing the laws in the upper house Senate. The government reintroduced the Bills in the lower House of Representatives late yesterday, and urged the Senate to reconsider its stand as early as today.

Analysts said the measures were expected to pass eventually, but the delay in distributing cash handouts worth A$12.7 billion could add to the case for a further interest rate cut to stem the fallout in Australia from the global economic slowdown.

"These measures are urgent and in the national economic interest," Mr Rudd told Parliament, after suffering his biggest parliamentary setback since he won office in late 2007.

"This government will not be deterred from taking whatever action is necessary in the national economic interest to underpin this country's and our people's economic well-being."

The Australian dollar fell from €0.5140 to €0.5107 after the Senate vote, and later was below €0.51 cents in offshore trade. Government Senate Leader Chris Evans said the vote would hurt confidence in the Australian economy and put jobs at risk.