Prime Minister Julia Gillard has introduced to parliament draft laws establishing a flood reconstruction levy, describing it as an expression of goodwill between Australians.
Taxpayers earning more than $50,000 will pay a progressive levy during 2011/12 the government estimates will raise $1.8 billion to help the Commonwealth pay its $5.6 billion share of the repair bill.
Rarely had the Australian government had to outlay such large funds in peacetime, Ms Gillard said.
No single level of government or sector of the community can do this alone," she told parliament on Thursday, after fighting back tears on Tuesday in expressing the nation's heartbreak.
"Today I express the nation's resolve" she said.
"I do so with great pride. This is not just a routine piece of legislation ... but an expression of goodwill between Australians."
Already more than $200 million had been donated to the Queensland premier's relief fund.
That money would go to helping families who were hit with little warning in the Lockyer Valley and those who had no insurance.
A package to deal with the damage caused by Cyclone Yasi was yet to be announced because the damage has not been totalled, Ms Gillard said.
Ms Gillard said the government would meet its obligations "to the last cent" and by "paying as we go".
"We will not delay the return to surplus for a single day," she said referring to the government's fiscal intent for 2012/13.
The demand for scarce labour and materials for flood reconstruction only heightened the need for fiscal moderation in the years ahead.
Spending cuts and deferrals would raise $3.8 billion and the proposed levy would raise $1.8 billion, Ms Gillard said.
"In other words two dollars will be saved for every dollar raised by the levy."
The PM acknowledged the levy was the aspect of the package that had attracted the most attention.
"I always expected Australians to ask all the hard questions about why they are being requested to step up and pay more," Ms Gillard said.
"But at the same time I always believed our community would understand that additional contributions are required to meet real additional needs."
Australians had supported levies on the gun buyback following the Port Arthur massacre, helping the diary industry, and for employees of the failed airline Ansett.
"They know what is right and they will do what is right," Ms Gillard said.
Taxpayers would still be ahead when the tax cuts of the past few years were taken into account, Ms Gillard said.
For most, the impost would cost "less than a cup of coffee".
Six road projects in Queensland worth $325 million would be delayed and projects of up to $675 million in NSW and Victoria would also be put on hold and redirected towards the flood recovery.
"This burden has been shared and indeed my own electorate is affected," Ms Gillard said.
"But it's the right thing to do."
The delayed projects would free up skilled workers and help avoid capacity restraints.
A number of programs aimed at reducing carbon emissions would be cut but they were only ever an "imperfect proxy" for a carbon price.
Ms Gillard said some of the policies were less efficient than a carbon price and had only every been indirect measures in the absence of a carbon price, which the government hopes to settle on in 2011.
Debate on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 was adjourned.
