Middle income earners will contribute about $1 a week to a one-off levy on annual income with Julia Gillard today vowing Australia will “pay as we go” for urgent flood recovery work.
The Prime Minister announced a funding package of which two-thirds would come from spending cuts and one third from the levy of 0.5 per cent of taxable income for those earning more than $50,000 a year.
The Government will invest at least $5.6 billion in repairing damaged caused by floods in three states, with an immediate $2 billion going to Queensland, the worst hit state.
The levy would raise about $1.8 billion.
Ms Gillard told the National Press Club in Canberra an average income earner on around $60,000 a year would pay an extra $1 a week to the fund in the 2011-2012 tax year.
Someone on $100,000 a year would pay just under $5 a week extra. A $200,000 salary would see a $24 weekly contribution.
Ms Gillard pledged to also scrap a number of carbon-reduction programs and renewable energy projects, including the $430 million cash-for-clunkers scheme aimed at getting dirty vehicles off the road.
She said that for every $1 raised by the levy, a further $2 would come from savings.
But Ms Gillard made clear she would not sacrifice her policy priorities, such as the National Broadband Network, and the promise of a Budget surplus by 2013.
“In a growing economy, we pay as we go,” she said.
Ms Gillard said: “I see what needs to be done and I will do it. We will rebuild.”
The Government has used the flood crisis to dump a number of programs which threatened to cause more trouble than they were worth, the cash-for-clunkers scheme a prime example.
Other doomed programs include the Carbon Capture and Storage Flagships, the Solar Hot Water Rebate, and the Solar Homes and Communities Plan.
Ms Gillard said the Government’s priority was to put a price on carbon, and dismissed the programs as being “less efficient than a carbon price”.
The Government hopes to counter the shortage of skilled labour by encouraging the unemployed to go to flood-hit areas, and speeding up the arrival of skilled temporary migrants.
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