The Australian government’s hopes of securing rapid parliamentary approval for its A$42bn fiscal stimulus package have been scuttled after the main opposition bloc said on Wednesday it would vote against the measures.

Kevin Rudd, prime minister, announced the package on Tuesday as the centrepiece of the government’s efforts to stave off Australia’s first potential recession in 17 years. Because his Labor party does not have a majority in the Senate, the country’s upper house, it is dependent on either Liberal-National support or backing from the Greens and two independent senators to pass legislation.

Malcolm Turnbull, the former investment banker who leads the Liberal-National party bloc, slammed the government package as “poorly targeted, ill-thought through and irresponsible” and said his coalition would oppose it.

The Labor government has conceded that the package, which includes A$12.7bn in cash payments to households and A$28.8bn for longer term investment in infrastructure, schools and housing, won’t necessarily stave off recession but projects it will boost growth in the year ending June 30 by 0.5 per cent. The government forecast that the new spending, combined with revenue shortfalls, would produce a budget deficit for the same period of A$22.3bn, the first in seven years.

Mr Rudd’s predicament, one of the most serious political battles he has faced since his election at the end of 2007, echoes the difficulties facing Barack Obama, US president, in persuading Republican senators to allow a vote on his near-$900bn stimulus package.

Mr Turnbull said his decision to oppose the fiscal stimulus would not be “popular” and sought to portray Mr Rudd as reckless and panicked. “He’s firing off all his ammunition at once,” he said. Australia’s finances “are not a magic pudding.” His coalition has argued for a smaller stimulus package.

Mr Rudd may be forced to make concessions to the Greens and independent senators to win their support.

Bob Brown, Greens senator, said that prudence was required when assessing the government’s latest plan. Nick Xenophon, an independent, and Steve Fielding, a senator from the conservative Family First party, have also baulked at rushing through the package and have called for a senate inquiry that would likely drag into next week.

The debate comes amid a concerted campaign by the government and central bank to prevent – or at least lessen the impact – of a recession. The central bank this week cut one percentage point off interest rates to 3.25 per cent, taking them to their lowest level since the 1960s.

Australia’s statistician on Wednesday reported some good news for the economy with retail sales recording a surprise 3.8 per cent bounce in December, the biggest monthly increase this decade. The figures were boosted by Mr Rudd’s maiden A$10.4bn fiscal stimulus package, announced in October, which was largely made up of pre-Christmas handouts to pensioners and low income earners.

The stronger-than-expected retail numbers are expected to make a noticeable contribution to Australia’s December quarter gross domestic product figures and buttress the government’s efforts to avoid even a single quarter of contraction.

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