Sydney  - Prime Minister Kevin Rudd has promised "to move heaven and earth" to stop Australia falling into recession.

In October he spent 10.4 billion Australian dollars (6.7 billion US dollars) on cash payments to families and pensioners. This week he announced outlays of 42 billion Australian dollars on more hand-outs and on public works projects.

"There's no guarantee of success, but we'll throw everything at this," Rudd told the nation in a televised broadcast.

Since December, when Rudd was sworn in, his government has gone from being debt-free to the likelihood of owing a total of 118 billion dollars by 2012.

Businesses are happy. Katie Lahey, chief executive of the Business Council, said Rudd had "acted quickly and responsibly to limit the impact of the global recession."

But the opposition Liberal Party has baulked at the size, the timing and the composition of the second stimulus package. It has reminded Australians that paying off 118 billion Australian dollars will mean tax increases, spending cuts, or both.

"The problem with everybody getting a prize today is that the children, in the years to come, will be carrying a very heavy penalty," Liberal leader Malcolm Turnbull said.

Turnbull will try and block the package in the upper house of parliament, where Labor doesn't have a clear majority and requires votes from minor parties and independents to get draft legislation through.

He argues that Labor should wait until it sees the impact of the first stimulus bomb before letting off another. He also says a package worth 15 billion Australian dollars, or 2 per cent of gross domestic product, would be adequate. And he wants tax cuts rather than cash hand-outs.

Central to the debate is the extent to which Australia will be affected by the global downturn.

Its economy is still growing, unemployment remains under 5 per cent and its banking sector is still announcing big profits. There is little toxic debt in the financial system and the level of mortgage foreclosures is not a worry.

But, as OECD economist Aart de Geus warned in a speech in Sydney this week, commodities-dependent Australia could take a big hit.

"Not only does Australia suffer from the reverberations of the global economic downturn, it is also hit by a negative terms-of-trade shock due to the steep falls in the prices of its commodity exports," he said.

Coal and iron ore, the top exports, are now in the bargain basement. The stock market leader, miner BHP Billiton, has seen its profits cut in half.

If Rudd underestimates the depth of the recession, there'll be nothing left in the kitty to throw at it next year. If the recession is not as bad as he thinks, his money will have been wasted.

Stephen Kirchner, a researcher at Sydney's Centre for Independent Studies, argues that Rudd's spending spree, like other cash-splashes around the world, will not bring value for money.

"The failure of discretionary stimulus measures reflects a basic reality that governments cannot create economic activity, they can only redistribute the income and wealth created by the private sector," Kirchner said. He pointed to the failure of successive fiscal packages in shifting Japan out of lethargy in the 1990s.

Like Turnbull, Kirchner warns that Rudd is spending blind: He doesn't know his medicine is working because the patient is receiving all sorts of other remedies.

The easing of monetary policy - interest rates have been cut five times in as many months by the independent central bank - has increased disposable income by sharply reducing mortgage repayments and the interest on credit card debt. Also in the mix is the plunging price of petrol.

Economists admit that theirs is an imperfect science - a year ago de Geus and his OECD chums were predicting galloping growth and raging inflation for Australia - and they echo Rudd's admission that his billions are not guaranteed to stave off recession.

What is for sure is that there is a political cost to taking government finances from a big surplus to a big deficit. Rudd's record as a money manager will be front and centre when he takes on Turnbull in the 2010 general election campaign. (dpa)