UPDATE 1-Australian govt to accept changes to stimulus

CANBERRA, Feb 12 - Australia's government will lower cash payments to workers and families in its A$42 billion ($28 billion) stimulus plan in a compromise bid to get the package through parliament, a top minister said on Thursday.

Prime Minister Kevin Rudd announced the new spending on Feb. 3 to help the country avoid recession, but the plan has been stalled in the upper house senate, where the government needs the support of the Greens and two independents to pass the package.

Despite being popular with the public, Superannuation Minister Nick Sherry said the A$950 payments to eligible taxpayers and families would now be cut by A$50 to a maximum A$900, in line with can agreement worked out with the Greens.

"We do not reduce these payments lightly because we know they are essential to support growth and jobs in the near term," Sherry told parliament.

"But we have decided on this small reduction which maintains the overall effectiveness of the government's plan ... while taking into account the views of others."

The package included the cash handouts, which totalled some A$12.7 billion, to provide an immediate boost to the economy, as well as A$29 billion for longer-term infrastructure and building projects.

Greens leader Bob Brown said his party had reached a broad agreement with the government on key aspects of the deal, with fine details still being worked out.

Sherry said the government now urged the Greens and independent senators Nick Xenophon and Steve Fielding to pass the package.

"This is decision time," Sherry told parliament. "This is the hour. This is the decision making. Australia needs this stimulus package and I urge the senate to support it."

Sherry said the government has also agreed to Xenophon's call to bring forward some separate government spending to fix the ailing Murray-Darling river system, which supplies water to Australia's main food producing region.

Xenophon, however, said he had not yet held talks with Treasurer Wayne Swan about the government's offer.

"I don't believe that any credible stimulus package will work in the absence of fast-forwarding existing expenditure that has been targetted at the Murray-Darling basin," he said.

Sherry said the government would also work with Fielding, who wants money from the package diverted to community job creation programmes. ($1=A$1.52)