Taxpayers will pay for flood recovery


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27-01-2011 08:00 AM


ABC Canberra 666

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ABC Canberra 666


27-01-2011 08:00 AM



27-01-2011 08:35 AM

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2011-01-27 08:00:37

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CAVE, Peter



HAWLEY, Samantha


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Taxpayers will pay for flood recovery -

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PETER CAVE: The Federal Cabinet will meet this morning to sign off on the Government's response to
the flood disaster.

It's expected the Prime Minister and her colleagues will approve a temporary flood surcharge, which
could be collected through an increase to the Medicare levy, along with significant cuts to
Government spending.

One leading economists says much more than financial outlay is needed however, with the nation
desperate for a boost to skilled migration.

From Canberra, Samantha Hawley reports.

SAMANTHA HAWLEY: The price tag was always going to be big and the final cost isn't even known yet.
But AM understands initial Treasury estimates show the Federal Government will have to outlay well
over $5 billion to pay for the flood damage.

And that doesn't take into account the expected hit to Government revenue.

Most of the money will go to rebuilding vital infrastructure particularly in Queensland. At lunch
time the Prime Minister will outline how the Government's going to fund it. A flood levy is almost
a certainty.

And during a press club address Julia Gillard will reveal who'll have to pay for it and how much
it'll be.

But the levy won't raise all the money that's needed. There'll also be significant spending cuts.

CHRIS RICHARDSON: I wouldn't want to see a terribly large levy. The Government does need to act but
partly because the budget situation is difficult.

SAMANTHA HAWLEY: The head of Access Economics, Chris Richardson wants the Government to end
industry programs like the green car fund.

He says middle class welfare and high end tax breaks also need to be done away with.

But his greatest concern is the nation's workforce.

CHRIS RICHARDSON: We just don't have the people to readily supply the job growth that employers are
looking for.

SAMANTHA HAWLEY: An Access Economics report argues the Government has no choice but to boost
skilled migration levels.

Chris Richardson says that was needed even before the floods hit. He says if the Government doesn't
act Australians will have to pay via things like rising interest rates.

CHRIS RICHARDSON: Look Australia needs people power in the next couple of years.

SAMANTHA HAWLEY: How many more workers do you think we'll need?

CHRIS RICHARDSON: The numbers are in the hundreds of thousands over the next couple of years, and
if we don't feed that necessary people power into Australia's economic expansion you get the
negatives; including interest rate rises.

PETER CAVE: Chris Richardson from Access Economics ending Samantha Hawley's report.