Second are the plans for supporting growth in the real

economy. The Reserve Bank last week cut official interest rates by a full percentage point, from 7 per cent to 6 per cent. Changes to interest rates, however, take nine to 18 months to take full effect.

That's why Rudd and Wayne Swan stepped in yesterday with immediate stimulus. The spending is "targeted to the point where the economy will be at its weakest - the December quarter", as the ANZ Bank's Saul Eslake put it yesterday.

The third component of the survival plan is the preservation of confidence. For this, as the great American economist John Kenneth Galbraith emphasised, any government action needs to have three qualities - speed, clarity and boldness.

The Rudd package meets these criteria. That's why the Opposition Leader, Malcolm Turnbull, yesterday agreed to support the package and was left quibbling over only minor detail.

The size of the stimulus tells us the size of the slump that the Government is anticipating. The $10.4 billion package is the equivalent of 1 per cent of the total economy as measured by GDP.

By choosing this number, Rudd is telling us how big he expects the economic downturn to be - a slump of 1 per cent of GDP over the life of the package, which is about eight months.

Only five months ago, the Treasury forecast growth this budget year of 2.75 per cent. So Rudd and Swan anticipate that the coming slowdown will cut more than a third from forecast economic growth.

But what if Rudd and Swan are wrong? What if the downturn isn't so serious and they are goosing the economy too hard?

One of the clever features of the package is that all the measures are one-offs.

They will fade out of the system over the next months. So they will not stoke inflationary expectations.

And if they have not injected enough stimulus? There is plenty of scope to do more.

Yesterday's stimulus will consume about half the $21.7 billion surplus that the Government had projected for the year to June 30, 2009. Most of the rest will evaporate as the stock slump and economic slowdown erode tax revenues.

Indeed, it is now an open question whether there will be any surplus at all by the time the end of the financial year. Today may well presage the death of the surplus.

Even so, the Government still has the scope to go further and dip into deficit financing to keep the economy warm as the economies of the northern hemisphere enter bleak economic winter.

As Eslake puts it:"If the budget goes into deficit, so what? One of the reasons for running surpluses is so you can use it for these kinds of stimulus when you need it."

From here on, Rudd and Swan will operate a just-in-time approach to stimulus - adding more if and when the need emerges. They are ahead of the game and will need to stay there to hold the nation's confidence.