Unafraid of being accused of rank political opportunism, the Leader of the Opposition Tony Abbott today urged PM Julia Gillard not to impose a “great big new tax” – i.e. the floods levy – to fund the Queensland reconstruction and to instead cut some of the “enormous amount of fat” in the Commonwealth budget:

Coalition revives ‘great big new tax’ slogan as it urges Gillard not to impose floods levy

Mr Abbott is right there is a lot of fat in the Commonwealth Budget, and the Government would do well to look at cutting the fat first before imposing a levy. The Government need look no further than the Productivity Commission’s forensic review of the almost $8 billion of corporate welfare the Government provides each year. For further information and discussion, see:

Productivity Commission Trade and Assistance Review

Gillard says no more corporate welfare – good because we’re already spending $7.7bn p.a.

Depending on how the economy performs, however, getting back to surplus may not be as difficult as commentators imagine, even after meeting the costs of reconstruction. Treasury’s track record at revenue forecasting isn’t spectacular – as Treasury, being conservative, generally under-forecasts future revenue – and it’s possible the Government will have a sizable pool of new revenue to play with for the 2012-13 budget. This is a very real possibility given the large amount of mining sector investment in the pipeline (see Mining sector investment to soar to $55 billion in 2010-11). Hence debating the merits of a floods levy at this time is pretty pointless.