CANBERRA - AUSTRALIA paid cash bonuses to 16,000 dead people as part of a multi-billion dollar stimulus package designed to kickstart the economy, officials revealed on Thursday.

The Australian Tax Office said the 16,000 deceased - dubbed 'the grateful dead' by local media - received payments of up to A$900 (S$1,000) each earlier this year, costing an estimated A$14 million.

The payments were part of an A$42 billion stimulus package passed by Prime Minister Kevin Rudd's government in February that gave cash handouts to all eligible Australians who lodged a tax return last financial year.

The so-called 'manna from Kevin' aimed to get cash registers around the country ringing as a means of cushioning the economy from the impact of the global downturn.

However, thousands of the seven million-plus taxpayers who received the payments have died since lodging their returns, creating what the conservative opposition described as an embarrassment for the centre-left government.

Opposition leader Malcolm Turnbull, who has accused the government of reckless spending that will saddle future generations with huge debts, questioned how dead people could stimulate the economy.

'It just demonstrates the absurdity of this cash splash,' he told reporters.

Mr Rudd accused the opposition of exploiting dead people to make a political point.

Finance Minister Lindsay Tanner said anomalies such as paying the dead were unavoidable when implementing such a huge programme and it was 'ludicrous' to suggest authorities could have checked on the health of every recipient.

Ms Tanner also said the posthumous payments would not be wasted as they would eventually find their way into the economy. -- AFP