Gillard, who has been prime minister for seven months, has ordered a levy on middle and high-earning tax payers to help fund the recovery after deadly floods that devastated the northeast state of Queensland.

Conservatives have criticised the plan, with opposition leader Tony Abbott warning the levy could become permanent and accusing the government of being irresponsible with its spending.

But on Friday Gillard said she could not dip into a government contingency fund, held to cover unexpected blowouts, or extend a budget deficit to pay for the unprecedented deluge, which wiped out farms and flooded mines.

"It is not true to say to Australians that there is a big pile of money there that somehow I could just go and use," Gillard told the Seven Network.

"It doesn't just sit there, this is not a magic pot of money that can be rolled out in the face of an unprecedented natural disaster."

Gillard said the contingency reserve was designed to keep the budget on track and was only dipped into if funded programmes, such as demand-driven ones such as subsidised doctors appointments, needed to be topped up.

The prime minister said she believed Australians wanted want to make a contribution to Queensland's recovery.

"And let's remember more is being done in budget cuts than is being asked for from Australians in a levy," she said.

The one-off tax announced Thursday aims to raise about Aus$1.8 billion ($1.8 billion) to help meet the Aus$5.6 billion cost of the La Nina-triggered floods which have also hit the southeastern states of Victoria and Tasmania.

The levy is weighted to earnings, meaning 60 percent of taxpayers will pay less than Aus$1 a week.

Gillard has stressed the revenue was needed to ensure the budget is back in surplus by 2012-2013 when the economy is expected to be running at full capacity.

"I think Australians around the country realise this is a time where we need to pull together," she told ABC Radio earlier Friday.

"We are seeing a natural disaster of unprecedented economic proportions still unfolding in our country."

Treasurer Wayne Swan backed the levy as he outlined the economic impact of the floods that swamped Queensland, turning 75 percent of the state into a disaster zone and killing at least 35 people over the past two months.

Swan said lost coal production would be about 15 million tonnes and the worst affected mines would be disrupted for months while crop losses would be about Aus$1 billion, and tourism would suffer to the tune of Aus$300 million.

The floods are also expected to increase inflation by about 0.25 percentage points in the March quarter, he said, but added that the spike would only be temporary. The government has already said the floods will shave 0.50 points off GDP in fiscal 2010.

Gillard, who holds a wafer-thin majority in parliament, will require the support of independents to pass legislation to impose the tax after Abbott said his conservative bloc would vote against it.

"My view is there should not be a new tax. We do not need new taxes to cope," he said.

Gillard was Friday set to visit northwest Victoria where slow moving floodwaters have inundated rural areas, destroying crops and killing livestock, with up to 30 percent of the state and some 4,500 people affected.

Queensland Premier Anna Bligh warned the state could be hit by two cyclones next week, even before the flood waters have fully receded.

"We're battening down the hatches once more, but we hope both these weather formations disappear out at sea somewhere," she said.

del.icio.us	Digg	Reddit
YahooMyWeb	Google	Facebook

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News