Australia reveals funding plan for flood rebuilding

Faced with the daunting task of rebuilding essential infrastructure after unprecedented floods ravaged resource-rich Queensland province, the Australian government today outlined its funding strategy for raising the $5.6 billion required to restore the deluged regions.

As per Australian Prime Minister Julia Gillard’s plan, about two-thirds of the required amount with be delivered through spending cuts, while the remaining third will come through a one-off tax during the 2011-12 financial year that “wont’ be paid by people directly affected by the floods or by low-income earners.”

The floods, in all likelihood Australia’s biggest natural disaster in economic terms, began in December 2010 and continued into January this year, have all but crippled the country’s lucrative resource industry and may trim 0.5 per cent off Australia’s gross domestic product this financial year.

Incidentally, Australia is an important source of iron-ore and coal, of both the coking and thermal variety, for Indian firms. Also a number of domestic majors, including Tata and Adani, already have interests in mining industry there.

The Australian government intends to raise $2.8 billion by curbing industry assistances and cutting back on pro-environment schemes such as the Green Car Innovation Fund, a media release on Gillard’s website said.

Another $ 1 billion — as well crucially required skilled labour — will be freed up by delaying certain infrastructure projects. “The government will defer $1 billion worth of infrastructure projects, freeing up builders, carpenters, electricians and other skilled workers to rebuild essential infrastructure in flood-affected regions,” the release said.

In an effort to address the skilled manpower crunch, the government also announced that it was establishing a special team within its Immigration Department to provide employer-sponsored temporary visas within five days those involved in the reconstruction work.

More controversial, however, is the plan to raise $1.8 billion through the one-year levy, wherein only those earning upwards of $50,000 annually will have to pay between 0.5-1 per cent of taxable income.

Although the government has reiterated that flood-affected and lower income individuals are exempt, Australian media reported that the country’s Opposition treasury spokesman Joe Hockey, in response to the announcement of the levy, said: “All of those things on top of actual increases in prices of food and staple products for the family and then the government imposes a levy on top. It’s just plain stupid, dumb stuff”.