Australian gov't attempts to sell its controversial flood levy plan

11:51, January 28, 2011      

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The Australian federal government on Friday attempted to sell its controversial flood levy proposal to both the Australian public and independent Members of Parliament, with no certainty it will get through parliament.

Prime Minister Julia Gillard on Thursday said the total cost of the disaster to the federal budget would be 5.6 billion U.S. dollars, and the cost would be met by a levy and by cuts to government spending.

Flood victims and anyone earning less than 50,000 U.S. dollars are exempted from the levy, which will apply only in the 2011/12 financial year and raise 1.78 billion U.S. dollars for the federal government.

Gillard also flagged cuts to spending greens programs and caps on others to deliver the billions needed for the rebuilding effort.

Soon after the announcement, the flood levy proposal has received wide-spread criticisms from politicians and communities.

Opposition Leader Tony Abbott said he believes the federal government's floods levy could easily become permanent.

"This is just the beginning," Abbott told the Nine Network on Friday.

"This is also the year when the government is going to hit us with the mining tax. This is the year when they're going to hit us with a carbon tax.

"This is a government that sees a problem and thinks tax and it just never stops."

However, Gillard urged Australians to "pull together" and given a guarantee that the floods levy will not be extended beyond a year.

She gave an assurance that every dollar would be used for flood rebuilding, but admitted that there was a risk that the flood recovery bill would be more than the estimated 5.6 billion U.S. dollars.

Shadow Treasurer Joe Hockey said the Opposition would outline how it would cut 1.8 billion U.S. dollars from government spending in the coming days, in order to show that the levy is unnecessary.

The Greens' approval of the flood package is vital in the Senate.

They are unhappy with spending cuts which have hit environmental projects hard, but they agree with a levy and say they are willing to negotiate.

Source: Xinhua

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