Paving the way for crucial investment

Federal treasurer Wayne Swan, in delivering his second Budget, said Australia's deficit would reach $57.6bn in 2009/10.

It would take six years to pay off the debt.

Next year's deficit represents a record 4.9% of gross domestic product, but the Federal Government said it was unavoidable given the nation stands to lose $210bn in tax revenue as a result of the global economic crisis.

The government proposes to spend up big on infrastructure in a bid to stimulate the national economy, despite projections that net debt will balloon to $188bn by 2013.

Roads and passenger rail were the biggest winners in a flood of infrastructure commitments from the under-strength Building Australia Fund, which has less than half the $20bn it had been budgeted to allocate.

The government will spend $8.5bn on road, rail and port infrastructure, much of it already announced.

Some projects will be given only a minimal amount, with the states to make up the difference, while at least one other key freight rail project was put on the backburner.

About $4.6bn is to be spent on passenger rail projects alone and $3.4bn on the national road network which includes the Pacific, Hume and Bruce highways.

Mr Swan also outlined at least $389m in port-related spending targetting Darwin and the long-awaited iron ore port at Oakajee in Western Australia's Midwest region.

Gross domestic product is expected to fall by 0.5%, recovering in 2010/11 with the Budget expected to return to surplus in 2015/16.

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