Australia flags taxpayer levy for floods

January 21, 2011 12:00 am

, SYDNEY, Jan 21 – Australian Prime Minister Julia Gillard raised the prospect of a one-off tax to pay for rebuilding after epic floods, as rising waters prompted more evacuations in the southeast.

Crops, roads and railway lines were washed away and thousands of homes destroyed by vast floods that swamped Queensland state this month in what the government has said could be the nation\’s most costly natural disaster.

The rolling disaster is now hitting the southeastern state of Victoria, where thousands have been urged to evacuate their homes in scores of towns as swollen rivers cut off entire communities.

Prime Minister Julia Gillard said Australians had pulled together to begin the massive recovery in worst-hit Queensland, as she said was considering a one-hit tax to help pay for the reconstruction.

"There there will be difficult decisions, there will be spending cutbacks, and there may also be a levy to support the rebuilding that we need to do," Gillard told reporters in Adelaide on Friday.

"When I make those decisions I fully expect there will be some criticism and there will be some complaint. But I am determined that we make the decisions that are right for the nation and right to rebuild the nation after the devastation that we have been through."

She did not give any details of the levy.

The previous conservative government of John Howard imposed a series of one-off levies, including a 0.2 percent hike to a tax paid by high income earners without private hospital cover to pay for a gun buy-back.

A Aus$10 ($10) levy was placed on plane tickets in 2001 to help recoup worker entitlements after Ansett airline collapsed.

Gillard said the challenge of the crisis was not yet over as the worst floods in recorded history threatened homes and farms in Victoria, prompting officials to warn the 200 residents of Beulah to evacuate.

Nearby Jeparit is also at risk, with river waters rising, while communities between Swan Hill and Kerang are in line for the moving floods which are expected to linger for up to 10 days.

The prime minister has committed herself to bringing the budget back into surplus in 2012-2013, despite the massive floods that wiped out crops and swamped coal mines in key producer Queensland.

Major bank ANZ has already warned that the floods could cost Aus$20 billion in rebuilding efforts while the national forecaster said they would wipe Aus$2.5 billion from coal exports and cut farm production by Aus$600 million.

The prime minister said while the deluge could result in higher food prices and hurt GDP, she insisted Australia\’s mining-driven economy was resilient.

"We\’ve got to remember our economy is strong with a large pipeline of investment coming through," she told ABC TV late Thursday.

"That means by 2012-13 our economy will be running hot and when your economy\’s running hot that\’s the right time to be having a budget surplus and saving for the future."

But the opposition attacked the idea of a flood levy, saying it was an unnecessary tax and called on Gillard to rein in "out-of-control government spending".

"There will have to be very substantial Commonwealth government spending as part of the recovery and reconstruction phase, but there\’s a right way and a wrong way to find that money," opposition leader Tony Abbott said.

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