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Floods: The fall-out

Nick Bryant | 12:10 UK time, Friday, 21 January 2011

Many foreigners with only a cursory understanding of this country might have been mightily impressed by the performance these past few weeks of Australia's new female prime minister. But those who follow events more closely will have realized they were watching Premier Anna Bligh rather than Prime Minister Julia Gillard - Queensland's Giuliani rather than Canberra's Julia.

Julia Gillard (rear) and Anna Bligh in Bundaberg on 31 December 2010

The crisis has illustrated how, more than six months after taking the top job, Gillard struggles still to find her prime ministerial voice. Throughout, her statements have sounded weirdly over-rehearsed and emotionally artificial when all that was required was authenticity.

Canberra insiders who have known Gillard for years say that the prime minister is almost unrecognisable from the fun-loving politician whose personal charm, combined with her factional smarts, helped explain her rapid rise through Labor's ranks. There is something unnatural and robotic about her public pronouncements right now - or, put another way, something Ruddesque - which again is fiercely at odds with the chirpy self-confidence of the pre-prime ministerial past. It has been rather like watching a Sheffield Shield cricketer, known for aggressive strokeplay and the occasional flamboyant shot, making a very uncomfortable test debut in which he struggles to hit the ball of the square and is interested only in dogged survival. Certainly, she has been scratching around for runs.

The paradox is that the floods crisis presented an opportunity for Julia Gillard to assert herself as a strong national leader, much like John Howard in the aftermath of the Port Arthur massacre in 1996. But she has been overshadowed by Anna Bligh, whose position as Queensland premier looked fragile before the waters started rising, and another Queenslander, Kevin Rudd, who has also been a high-profile presence in the low-lying suburbs of Brisbane.

The conventional wisdom is that Julia Gillard's prime ministership will now come to be made or broken by how she deals with the reconstruction of Queensland and the towns in Victoria which have also been hit by flooding.

Determined to meet her election commitment to balance the federal budget by the 2012-2013 fiscal year, Gillard has said that spending cuts are inevitable and that the imposition of a one-off flood levy to taxpayers is a real possibility. The conservative opposition is against a flood tax, and argues instead that the savings should come from scrapping the proposed national broadband network and replacing it with a much cheaper alternative.

Gillard's unswerving commitment to balancing the budget may well be based on politics rather than economics. To avoid the charge of being old-style tax and spenders, modern-day Labor Prime Ministers often like to present themselves as deficit hawks. Some economists claim, however, that Gillard is far too obsessed with the surplus and that the national priority should be rebuilding Queensland, even if it means maintaining a public debt for a few years longer. What do you think? If you are Australian, would you be prepared to pay a one-off flood tax?

Yesterday in the grocers, I had my first post-floods "goodness that's expensive moment", and we are starting to get a much clearer sense of the economic cost of the floods. The Australian Bureau of Agricultural and Resource Economics and Sciences reckons it will cost the agricultural sector A$500-600m, with consumers bearing some of the cost through inflated fruit and vegetable prices. Coal exports could be hit to the tune of $2.5bn, because of the inundation of mines and disruption of the rail services leading to Gladstone, Queensland's biggest coal port.

Meanwhile, economists from ANZ bank reckon the clean-up bill could top A$20bn, which equates to about 1.5% of national GDP. Some 28,000 homes will need to be reconstructed, which will cost some A$8bn alone. The figures, like the scale of the flooding, are staggering.

It may be that the economic effect is nowhere near as catastrophic as once feared. Indeed, some economists believe that the Australian could do with another stimulus package, which is essentially what the flood reconstruction programme will be. Again, I'd be intrigued to hear your thoughts.


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