Former federal treasurer Peter Costello believes that the government has enough revenue bases and in-place taxes to fund its rehabilitation program for areas heavily damaged by the recent flooding, that imposing a flood levy may prove to be an overkill.

The Coalition readily agreed, with opposition treasury spokesman Joe Hockey describing the proposal as dumb, at the same time decrying the notion that "flood victims will have to pay this levy, they have been affected by the floods and then they are now going to have to pay the levy."

Prime Minister Julia Gillard is seriously considering the imposition of a temporary flood recovery levy aimed to raise some $3.5 billion to finance the government's rebuilding efforts. She met with senior minister yesterday to discuss the possibility of a levy as speculations abound that Ms Gillard may increase as well the Medicare levy by at least 1.5 percent.

However, all talks of the government scrambling to raise more money for its recovery tasks are unnecessary, according to Costello.

He said that the government has plenty of sources for funds such as the GST, income tax and excise, which are readily available "for the government to balance its budget and engage in infrastructure spending."

The Howard-era deputy prime minister added that tapping the Future Fund would be an unwise move as he stressed that the fund is "a way of investing for the future, particularly the ageing of the population when we are going to have much greater demands on health infrastructure than we have now."

Costello was reacting to suggestions made by Attorney-General Robert McClelland last week that the Future Fund could help ease the devastation wrought by the flooding that had hit most of New South Wales, Queensland and Victoria.

On Tuesday, current Federal Treasurer Wayne Swan painted a grim picture of the general situation left behind by the disaster to underscore his argument that "the only responsible thing to do is to have all options on the table."

Swan said that the situation at hand is enormous and calls for response of the same magnitude, asserting that in dealing with the crisis "we will have to make further savings, but I don't think the Australian people would want us to respond by hacking into essential expenditure in health or education, sacking teachers or nurses."