Australia weighs levy for flood damage

Rob Taylor -

Australia's government is reportedly considering a taxpayer levy to help pay for massive flood rebuilding, while preserving the budget's path back to surplus in 2012-13, as one major bank warned on Tuesday the damage bill could reach A$20 billion.

A levy could take the form of an addition to the 1.5 percent Medicare levy backing public health and hospitals, and which raises A$10 billion (£6.2 billion) a year, the Australian newspaper said, without naming sources.

Flooding blamed on rains triggered by a La Nina weather pattern in the Pacific has devastated huge areas of Australia's eastern seaboard, flooded parts of Brisbane, the nation's third-largest city, shut vital coal mines and rail lines, and destroyed crops.

Rebuilding estimates from banks and economists have mostly ranged from around A$3 billion to A$10 billion, but illustrating the uncertainty ANZ bank warned it could come in at close to double that when floodwaters subsided and the full scale of the devastation became clear.

"The Queensland Premier's statement that 28,000 homes will need to be rebuilt will alone come at a cost of around A$8bn on our estimates, suggesting the total rebuild effort could be in the order of A$20bn," the bank said in a research note.

A spokesman for Treasurer Wayne Swan said it was too early to speculate how the government would assist flood stricken communities, but Prime Minister Julia Gillard said the government's obligations to help Queensland would be part of the planning for the 2011-12 budget, to be unveiled on May 10.

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