HAVING inherited a booming economy when he led Australia's Labor Party to power in late 2007, Kevin Rudd predicted optimistically last October that his country would avoid a recession during the global downturn. Now he is sounding more worried, and acting more defensively. This week he announced a stimulus package worth A$42 billion ($27 billion), one of the biggest in the country's history. The government, he declared, would “move heaven and earth” to keep the economy growing. Barely a corner of Australian life will be untouched by the spending spree.

Yet there is no guarantee it will achieve its aim. The immediate trigger for the stimulus was a Treasury report that the global recession had slashed A$115 billion from forecast revenue up to 2012. While six of Australia's top ten export markets are already in recession, the chief impact has come from the slowdown in one that is not: China, its biggest trading partner, and the main driver of a minerals boom that has fed fat company-tax revenues. Such booms have worked magic to keep “the lucky country” out of trouble before. But not now. Lindsay Tanner, the finance minister, cites figures showing how much Australia had come to depend on such revenues, and the shock when they abruptly fade away: at the latest boom's peak, company taxes had grown to a quarter of federal revenue, from just 9% in the mid-1980s.

Growth forecasts for 2008-09 have now slid from 2.75% in last May's budget to 1%, and to just 0.75% for next year. Mr Tanner concedes such figures are a bit “anaemic”, but says the chances of staying out of recession are still “reasonable”. Some economists are less optimistic. The test will be whether Mr Rudd's stimulus has the right targets. About a third will go in cash handouts of almost A$1,000 each to encourage low- and middle-income workers, farmers and students to spend. A similar stimulus of A$10.4 billion late last year seems to have worked: after two months of weak demand, it helped push retail spending in December up by 3.8%.

But the bulk of Mr Rudd's stimulus, almost A$30 billion, will go on infrastructure: new school buildings, road repairs and house insulation. And more is on the way. A body Mr Rudd appointed under Sir Rod Eddington, a businessman, is due to report soon on much bigger demands for public cash, such as for railways, ports and energy grids. Already, the revenue slump and stimulus spending have ended more than a decade of budget surpluses; the latest estimates project combined deficits of A$118 billion over the next four years.

On January 31st Mr Rudd prepared the ideological ground for this shift with a much-discussed article in the Monthly, a magazine. He blamed the global crisis on neoliberalism, or “free-market fundamentalism—and excessive greed”. Social democracy, he wrote, must now “prevent liberal capitalism from cannibalising itself”. This was also about claiming the political high ground. Mr Rudd accused the Liberal Party, the main opposition party, which ruled for 11 years before the crisis, of being Australia's neoliberals. Malcolm Turnbull, the Liberal leader, wants tax cuts, not public spending, to boost the economy, and opposes the stimulus package.

The central bank cut interest rates by a percentage point to a cash rate of 3.25% on the day Mr Rudd announced his stimulus, the fifth cut since September. Glenn Stevens, the bank's governor, says the monetary and fiscal changes will help to “cushion” the economy. If Australia nonetheless goes into recession, Mr Rudd and Mr Turnbull will keep trading charges on who is to blame: neoliberals or big spenders.