Australia floods: PM Julia Gillard unveils new tax

Australia’s Prime Minister Julia Gillard has announced a new tax to help pay for devastating floods that she says will cost A$5.6bn ($5.6bn; £3.5bn) in reconstruction. Ms Gillard said the 12-month tax, starting from 1 July, would be levied on those earning A$50,000 or more, and those affected by floods would not pay. “We should not put off to tomorrow what we are able to do today,” she said. More than 30 people have been killed since flooding began last month. “The Treasury’s preliminary estimates are that GDP growth in this financial year will be about half a percentage point less due to the floods,” Ms Gillard said. “The best preliminary estimate of the direct cost to the federal budget of the summer’s flood disaster is A$5.6bn.” As well as the tax, cuts to government spending will help meet the reconstruction bill.

The Reporter says Ms Gillard has faced criticism for her handling of the floods and has been overshadowed by Queensland’s Premier Anna Bligh. Ms Gillard will be hoping this reconstruction programme will also help rehabilitate her image, he says. The new tax will charge an extra 0.5% on those earning A$50,000-A$100,000 and 1% more on those earning more than A$100,000. It is expected to raise about A$1.8bn. Ms Gillard said that ”in a growing economy, we pay as we go” and said deferring the costs was a “soft option” she was not prepared to take. Large parts of Queensland, the eastern seaboard and Victoria have been inundated by flooding. Agriculture, mining and transport infrastructure have been badly hit, along with the massive damage to private homes.

In Victoria, a swathe of floodwater described as an inland sea is still creeping slowly across the south-east of the state, with several communities braced for flooding. ‘The great floods of this summer have been a national tragedy, not just a natural disaster because of the awful loss of human life,” Ms Gillard said. She said there would be an immediate payment from the federal government of A$2bn to Queensland, the worst-hit state. Unemployed Australians who wanted to relocate to reconstruction jobs there would also receive financial support, she said.

Ms Gillard is also delaying or cutting infrastructure projects to save about A$675m and cutting back on spending programmes to save further costs. These include a number of environmental programmes, including green car and energy initiatives. The prime minister must get the tax through parliament and as she relies on minor parties and independents in both houses, she faces a tough task given that the main opposition is opposed to the levy. The Greens said they supported the new tax but added that it “beggars belief that the government would choose to cut climate change” measures. Opposition leader Tony Abbott, meanwhile, said he opposed the tax and warned that victims of the floods would end up paying. “This is another government spending programme for which no-one is going to be held accountable if things go wrong,” he said. – BBC