The Australian Government last week announced its response to the challenge of rebuilding flood-affected regions across Australia, with the cost expected to total $5.6 billion.

To fund the reconstruction, two-thirds of the required funding will be delivered through spending cuts and deferral of infrastructure projects, while the other third will be provided by a one-year levy payable by all tax payers, except low-income earners and those directly affected by the flooding.

Spending cuts will total $2.8 billion, with the removal and cutback of programs. For example, the Green Car Innovation Fund and the Cleaner Car Rebate Scheme will be abolished, while the National Rental Affordability Scheme dwelling target will be reduced.

Funds will also be redirected from the Priority Regional Infrastructure Program and Building Better Regional Cities Program and funding has been withdrawn from South Australia's O-Bahn City Access project.

Another $1 billion will be provided by delaying some infrastructure projects, with six having already been identified in Queensland.

The government said that it will "continue to work closely with State Governments to identify projects [for deferral], and will be announcing shortly those which are affected."

The levy, which will raise $1.8 billion, will apply to income above the $50,000 threshold. For example, someone earning $60,000 a year will pay less than a dollar a week.

The government said that every cent raised through these measures will go directly to flood-affected regions across Australia.

Spending cuts

The Government will make $2.8 billion in spending cuts, including:

• Not proceeding with the Cleaner Car Rebate Scheme;
• Abolishing the Green Car Innovation Fund;
• Reducing and deferring spending on the Carbon Capture and Storage Flagships and Solar Flagships programs and the Global Carbon Capture and Storage Institute;
• Abolishing the Capital Development Pool from 1 January 2012;
• Discontinuing funding for the Australian Learning and Teaching Council;
• Reducing the National Rent Affordability Scheme dwelling target;
• Redirecting funds from the Priority Regional Infrastructure Program and Building Better Regional Cities Program;
• Capping annual claims under the Liquefied Petroleum Gas (LPG) Vehicle Scheme;
• Capping funding for the Renewable Energy Bonus Scheme - Solar Hot Water Rebate;
• Not proceeding with Round 2 of the Green Start Program;
• Capping funding for the Solar Homes and Communities Plan; and
• Withdraw funding to the O-Bahn City Access project.

Infrastructure project deferrals

The Government will defer $1 billion worth of infrastructure projects. $325 million of deferred projects have already been agreed with the Queensland Government, with the remainder to be discussed with the relevant state and territory governments.

The deferred infrastructure projects identified in Queensland are:

• Duplication of the highway from Vantassel Street to Flinders Highway
• Alternate project arising from Herbert River floodplain study
• Realign the highway from Sandy Corner to Collinsons Lagoon
• Intersection upgrades along the Burdekin Road
• Upgrade of highway between Cabbage Tree Creek to Carman Road and Back Creek Range
• Upgrade of highway between Caboolture to Caloundra