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CANBERRA - Prime Minister Kevin Rudd is feeling the bite of the global financial crisis as waning confidence begins to erode support for his leadership and his 14-month-old Labor Government.
Unemployment is rising and is expected to worsen further, with the axe falling hardest on women, the young, the low-paid and the unskilled.
Despite calls by Rudd for companies to keep staff and for workers to forgo wage claims, neither appears likely to listen.
Retirees whose incomes have been devastated by free-falling shares and asset values are flooding Canberra with applications for a pension that even the Government concedes is woefully inadequate.
Families are increasingly forgoing holidays and the small luxuries of life to pay school fees that even at Government schools reach up to almost A$6000 ($7462) a year.
"This is a difficult time and in the short term there is no quick fix," Rudd said in an address to launch a series of speeches across the nation outlining the immediate future facing Australia.
"Things will get worse before they get better."
Australians are now getting this message, to Rudd's discomfort.
Late last year he had almost single-handedly reversed mounting gloom with a A$10.4 billion handout to pensioners, carers and families that handed them extra money for a huge Christmas splurge.
A resurgence of confidence strengthened the Government's standing, with the first Morgan poll of the New Year giving Labor 60 per cent of the two-party preferred vote that decides Australian elections.
But the pall of reality has settled across the nation's suburbs.
A Newspoll in the Australian yesterday said that the 59 per cent for Labor it had recorded just before the holiday break had fallen to 54 per cent, pruning the Government's 18-point two-party lead over the Opposition to 8 points.
The poll further found that voter satisfaction at the way Rudd is doing his job had fallen by seven points to 63 per cent.
Although Rudd is still ahead of Opposition Leader Malcolm Turnbull, whose satisfaction rating is 45 per cent, Newspoll found that one in four voters is now unhappy at the Prime Minister's performance.
Rudd is not trying to disguise the magnitude of the problems facing Australia.
"The current economic turmoil is unlike any we have seen in our lifetime, and unlike any since the Great Depression of 1931," he said in a speech at an Australia Day reception in Sydney.
"It is not a crisis of Australia's making, but it will hurt Australia as it is hurting every other country ... The impact will be big."
Ahead of Rudd's speech, the latest in a long series of grim forecasts bluntly summed up the job facing Rudd.
"The budget is buggered," economic forecaster Access Economics said in its latest Business Outlook.
"Batten the hatches - this is not just a recession.
"This is the sharpest deceleration Australia's economy has ever seen."
Access said that the Government had relied too much on company taxes and royalties that had soared for years on the back of an apparently never-ending boom.
The global collapse - and the sudden contraction in China that has hammered Australia's vast mining industry - has choked off that golden flow.
"The glory days of big budget surpluses are over, and the feds are now staring down the barrel of deficits as far as the eye can see," Access said.
In the suburbs, tens of thousands of families are staring down another barrel - unemployment.
The unemployment rate nudged up to 4.4 per cent, below expectations.
But a rise in part-time jobs disguised the impact of the loss of more than 40,000 full-time positions, confirming earlier findings of a Morgan poll.
Morgan reported that "pockets of pain" had pushed the number of Australians either out of work or under-employed to 1.5 million.
Less than half the female workforce is working full-time, and one-in-10 working women is looking for more work.
One-third of workers under 24, more than 20 per cent of high-school dropouts and 30 per cent of the unskilled are either jobless or under-employed.
Most analysts expect this to worsen, pushing the overall jobless rate to above 6 per cent - some forecasts predict double-digit unemployment, Access expecting companies to shed another 300,000 workers this year.
Yesterday Master Builders Australia added to the gloom, suggesting that as many as 50,000 jobs would go in the embattled housing industry.
And while companies have warned that if their workers demand higher pay even more jobs will be lost, unions have refused to accept that wages should fall below rises in the cost of living. While 650 Alcoa workers in Western Australia have agreed to defer a 4 per cent wage rise due this week, and another scheduled in six months' time, Australian Council of Trade Unions president Shane Burrow said business needed to accept its fair share of the pain.
"We will be responsible and flexible, but we will not accept wage freezes that actually cut the real incomes of Australian workers," she said.
As the crisis deepens, Rudd has indicated that more help may be on the way, adding to a total of A$36 billion already spread across the economy in a bid to avoid recession.
He said the Government's response would be "big", and Treasurer Wayne Swan said he was prepared to send the budget into deficit if he had to.
As gloom deepens over Australia:
* Prime Minister Kevin Rudd loses popularity as he warns the nation is facing its toughest time since the 1931 Great Depression.
* The Government is likely to pump even more money into the economy, adding to the A$36 billion already earmarked to head off recession.
* Higher spending and falling revenue will plunge the May budget into the red, with Access Economics tipping a current account deficit of more than A$100 billion.
* Companies continue to shed jobs, with the housing industry expected to axe 50,000 workers and forecasts of a further 300,000 job losses across the economy.
* Industrial tensions are rising, with Rudd's urgings for companies to keep workers and unions to defer wage claims appearing to fall on deaf ears.
* Social costs continue to rise, as the jobs crisis hits the most vulnerable the hardest, and tens of thousands of self-funded retirees are forced to apply for poverty-line pensions.
