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--------------- "I would have thought a delay of 72 hours isn't unreasonable when you consider the magnitude of what's at stake," he told reporters. The Senate would be condemned by Australians if it didn't scrutinise the legislation, he said.

"An inquiry would be a useful exercise to determine what the modelling is, what the alternatives are, and what the impact will be on the economy.'' Senator Xenophon said he expected the inquiry to hear from economists, the welfare sector and business.

"So we can actually get the full picture." Prime Minister Kevin Rudd has accused the Opposition of playing cheap politics by blocking his $42 billion nation building and jobs package. Mr Rudd angrily accused Opposition Leader Malcolm Turnbull of pursuing his ideology "to let the market rip".

"Mr Turnbull's Liberals in the Senate now stand in the way of the biggest school modernisation in history, financial support for Australian householders and support for up to 90,000 jobs," he said. Mr Turnbull dropped a bombshell this morning by announcing the Coalition would block the Government's plan.

After complaining that the deadline to have the legislation passed by tomorrow would not allow sufficient time for scrutiny, Mr Turnbull said the Coalition would oppose it in both houses. "We know that this is not going to be a popular decision but it's the right decision," he said. "Someone has to stand up for fiscal discipline."

He said the package was too big, adding that $15 to $20 billion should have been spent. Labor deliberately excluded tax cuts from the package because they impose a permanent cost on the budget bottom line and make it harder to restore the budget to surplus.

Furthermore, tax cuts are already scheduled for July 1, which will act as a further stimulus, which Mr Turnbull wants brought forward. He is also unhappy about the $12.7 billion in $950 bonuses to be given to millions of Australians. "We do not support a further round of cash handouts," he said.

He does not believe instant spending measures work to stimulate the economy and repeated his belief that the $10.4 billion in handouts given in December had failed. He also opposed the $14.7 billion to be spent in school infrastructure, saying it should be slashed to $3 billion.

The grants for insulating homes should be halved to $500 and means tested, he said. Mr Turnbull said the whole package was "not composed of sufficiently effective measures". Speaking in Parliament this morning, Mr Turnbull called Mr Rudd "arrogant" for not sitting down with his political opponents to discuss the package and the economic situation.

But he did not rule out supporting further stimulus measures down the track. He said Mr Rudd was "so arrogant" that "he alone is right", that he is not prepared to do any more to his political opponents than to "put a gun" to them and say "stand and deliver".

He said this was in contrast to Mr Rudd's "current hero", US President Barack Obama, who was prepared to sit down with his opponents. Liberal sources told smh.com.au this morning that the mood within the Coalition yesterday was to oppose the package and suggest alternative measures instead, including tax cuts. The Coalition has now cut itself out of the equation and forced the Government to rely on the Greens, Senator Xenophon and Steve Fielding in the Senate.

After going to ground last night and this morning, the position was reached after the shadow cabinet met twice last night and the party room met once. - with AAP



Phillip Coorey is the Herald's Chief Political Correspondent.