Prime Minister Julia Gillard has warned that the economic impact from the flooding in Queensland could result in both spending cutbacks and a flood levy.
"This is going to require some difficult decisions, spending cutbacks and there may even a levy," Ms Gillard said on ABC's 7.30 Report.
"We are obviously working on those decisions now as we work with our Queensland colleagues to clarify the bill for infrastructure rebuilding.
"At the same time we're seeing floodwaters in Victoria. They're right in the midst of battling those floodwaters and there may well be infrastructure rebuilding that needs to be done after those floodwaters recede."
The prime minister also said there was a significant difference between the impact of the current Queensland floods and those of 1974.
"What we've got to remember is that in 1974 Queensland was a far smaller part of our national economy than it is now - around 14 per cent then, around 19 per cent now," she said.
"And Queensland contributes about 25 per cent of our exports, so a flood crisis in Queensland has major economic impacts around the nation."
Ms Gillard said the damage bill for rebuilding infrastructure would not be known until the floodwaters subside and the full impact was revealed.
She also defended the decision for a planned budget surplus in 2012-13, saying the economy would be "running hot" then and it's the right time to save for the future.
"We've got to remember our economy is strong with a large pipeline of investment coming though," Ms Gillard said.
"It's the right way to have our budget position given where our economy will be at that time.
"Let's remember, we came out of the global financial crisis strong - an economy that was running or tending to run close to full capacity - that the right thing to be doing in those circumstances is to have a budget surplus. That's why we had determined to bring the budget to surplus in 2012-13."
The prime minister also defended her decision not to scrap the national broadband network, explaining that it would be "an investment which will end up earning interest money for the taxpayers".
Ms Gillard also said that she, Treasurer Wayne Swan and Assistant Treasurer Bill Shorten had been meeting with representatives from the insurance industry, asking them to show the same "spirit of generosity" in this flood crisis that they had seen from the Australian people.
"Our economy is strong and we will get through this by pulling together, the same way we got through the global financial crisis - by pulling together," she said.
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