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Gillard 'shocked' by Libs flood levy email

Emailed signed off with "Click to donate to help our campaign against Labor's flood tax" link.

The coalition's attack on the flood levy has come unstuck over a party fundraising email described by Prime Minister Julia Gillard as "shocking".

Debate over the email came as Gillard revealed the government would need to find more budget cuts to fund the recovery from Cyclone Yasi which lashed far north Queensland overnight.

Opposition Leader Tony Abbott defended the email sent in his name which criticised the recovery levy and ended with a link: "Click to donate to help our campaign against Labor's flood tax".

Abbott said the donations call was standard practice.

"The donation information was added by the Liberal Party and it's quite standard practice for political parties to add this sort of information to their communications with supporters," he said.

Gillard, who is negotiating with cross-benchers ahead of the levy legislation being debated in parliament next week, said it was inappropriate.

"Personally I was pretty shocked by that," she said.

Abbott said Labor also had donations information on a flood-related email it sent out to its own supporters last week.

Clicking on one of three links on the Labor Connect email takes you to the ALP website, which has a "donate" link.

The prime minister said the government would need to make further budget cuts to cover the cyclone damage.

"It will require cutbacks in other areas, there is no point sugar coating that," she said.

"We will rebuild from this cyclone and we will arrange the federal budget in order to do that."

Abbott said the coalition had identified $50 billion in savings before the last federal election.

The prime minister and Attorney-General Robert McClelland held discussions with Queensland Premier Anna Bligh and the commander of Operation Yasi Assist Brigadier Stuart Smith on Thursday.

She said tasks for defence personnel were likely to include search and rescue, cleaning and provision of bottled water, food and electricity generators.

The government will exempt victims of the cyclone from the planned flood levy.

One of the independents yet to make up their mind on the levy, Senator Nick Xenophon, said the federal government should do more to encourage natural disaster-prone states to insure for damage to roads, bridges and rail lines.

Assistant Treasurer Bill Shorten said it was up to each state to determine its own insurance, but the government was committed - under an agreement - to fund 75 per cent of the rebuilding bill in Queensland.

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