May 28 (Bloomberg) -- Prime Minister Kevin Rudd’s government today defended paying tax bonuses to almost 16,000 dead Australians under a package aimed at boosting the economy, as the opposition accused it of reckless spending.

The payments are part of a A$42 billion ($32 billion) stimulus plan announced in February to reinvigorate the economy as Australia’s first recession in almost two decades drives up unemployment. Thousands of payments are also being made to Australians living overseas, the tax office said.

Small Business Minister Craig Emerson rejected opposition criticism of the payments, saying “99.5 percent of the stimulus money went exactly” where it was intended to go. It was critical to make the payments quickly to “support Australian jobs,” he told Australian Broadcasting Corp. television.

The payments were made to people who died during or after the 2007-2008 income year, if a tax return was lodged by them or on their behalf and they met the criteria, the Australian Taxation Office said.

Opposition treasury spokesman Joe Hockey said the stimulus package was “poorly targeted and a waste of taxpayer money.”

The payments to “dead people and people living overseas do nothing to stimulate the Australian economy,” Hockey said in an e-mailed statement. “This goes to show that the Rudd government lacks any economic credibility.”

The government, leading opinions polls, is seeking to prove it can manage the economy amid the global crisis before an election in the next 18 months.

Stimulus Package

Rudd’s government announced in February it would spend A$42 billion over four years to stimulate the economy, including A$12.72 billion for families and low-income earners and A$28.8 billion on roads, ports, schools and hospitals.

Australia is embarking on the biggest building program in its history in an effort to counter the recession. The budget deficit will be A$32.1 billion in the year ending June 30, rising to A$57.6 billion in fiscal 2009-10, Treasurer Wayne Swan said in his annual budget released earlier this month.

The tax bonus, a payment of as much as A$900 to people with a taxable income of less than A$100,000, was announced as a measure to stimulate demand and support jobs, according to the taxation office. The first batch of payments began in early April.

The ATO, in a submission to a parliamentary committee, said to date it had made 15,934 payments to deceased estates. The office said it would be up to the executor of the estate to determine how such payments would be distributed.

More than 27,000 people who reported an overseas postal or residential address in their 2007-2008 income tax returns or subsequently are eligible for the bonus, according to the ATO. Twenty percent of the checks being posted overseas are going to the U.K. and 19 percent to New Zealand, with people in France, the U.S., Japan, Brazil and Germany also benefiting.

To contact the reporter on this story: Ed Johnson in Sydney at ejohnson28@bloomberg.net.

Last Updated: May 28, 2009 00:50 EDT