Greg Ansley: Gillard's flood rebuilding levy plan meets hurdles at every turn

Gillard told ABC radio that Australians needed to pull together to recover from a disaster of unprecedented economic proportions. Photo / Getty Images

Prime Minister Julia Gillard's political year has started with what is shaping up to be a battle to push her plan to finance flood recovery through Parliament.

Gillard intends charging taxpayers earning above A$50,000 ($61,300) a year and not affected by flooding a special one-off levy to help fund rebuilding, estimated at A$5.6 billion.

She also plans to cut Government spending - including the axing or capping of a range of climate-related programmes - and to defer infrastructure projects to release capital and skills for reconstruction.

But the plan has been rejected by the Opposition and has yet to win the approval of the independent MPs Gillard will need to push it through the Lower House.

She has also yet to convince the Greens, whose support will be needed in the Senate, and who have been angered by the impact of spending cuts on programmes aimed at reducing carbon emissions.

These include the "cash-for-clunkers" scheme to take old cars off the road, the green car innovation fund, the LPG vehicle conversions, and solar hot water rebates.

And early measurements of taxpayer reaction have not been encouraging for the Government: polls on breakfast TV and the internet yesterday overwhelmingly rejected the levy.

Gillard and her senior ministers hit TV and radio, trying to sell the plan as the best, fairest and most efficient way to raise the cash.

Gillard told ABC radio that Australians needed to pull together to recover from a disaster of unprecedented economic proportions.

The floods inundated most of Queensland, covered vast tracts of New South Wales and Victoria, and submerged smaller areas of South Australia, Western Australia and Tasmania.

In addition to federal funds, the Queensland government yesterday budgeted another A$1.5 billion for flood recovery, to be raised by selling the lease on a coal port, delaying other projects and offering voluntary redundancy to about 3500 public servants.

Opposition leader Tony Abbott has attacked the levy plan and said the Government should instead raise the money by making even deeper spending cuts.

But Gillard said there was no pile of idle cash: "This is not a magic pot of money that can be rolled out in the face of an unprecedented natural disaster."

The independent MPs who will be the key to the plan's passage when Parliament resumes next month have yet to be convinced.

Tony Windsor, Rob Oakeshott and Bob Katter want a permanent disaster fund to be created, and Katter has said he will not support Gillard unless a new fund goes ahead.

The remaining independent, Tasmanian Andrew Wilkie, has not yet indicated his position.

In the Senate, independent Nick Xenophon has yet to speak to Gillard, while the Greens do not object to the levy but will demand negotiations over the cuts proposed for carbon reduction programmes. Without the support of the Greens in the Upper House, Gillard's plan would collapse.

Reactions have varied in the states. Western Australia's Liberal Premier, Colin Barnett, and Queensland Labor Premier Anna Bligh support the plan, but Victorian Liberal Ted Ballieu has reservations and NSW Labor's Kristina Keneally wants special dispensations for Sydneysiders.

Business groups and a number of leading economists have argued against a levy and for more spending cuts.