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Tuesday, 22 February 2011
Page: 867


Mr HOCKEY (12:01 PM) —To all my colleagues I say that the flooding which occurred along the eastern coast of Australia at the end of last year through to January this year, followed by the destructive Cyclone Yasi in early February and a trail of pain and suffering, including in the electorate of my colleague here, the electorate of Canning, in recent times, has had a severe impact on the lives of many fellow Australians. It is a reminder to us that we live in a diverse nation and we often feel the full effects of Mother Nature at her most angry.

As communities are mourning the loss of the people who have died, many Australians have watched on in disbelief at the widespread devastation that has unleashed itself on us this summer. As time goes by, we are beginning to see affected communities rebuild their lives. The Commonwealth government is stepping in and helping with the repair and replacement of damaged infrastructure and with income support for households and businesses. This is appropriate and welcome. The coalition is not opposed in any way, shape or form to the rebuilding and repair of infrastructure. We want to see Australia get back on its feet as quickly as possible. In fact, we believe that the government must do whatever it takes and whatever is required to rebuild infrastructure, rebuild communities and rebuild families as quickly as possible.

What the coalition does oppose, however, is how this government plans to fund the commitment. We also have great concerns about the capacity of this government to administer large sums of money. There are 10 reasons why the coalition is opposing this Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 to impose a flood levy on the Australian people. No. 1: the government and the Prime Minister have already called on Australians to donate money and volunteer time. It is unprecedented in Australia’s modern history for us to have a government that begs Australians to donate generously with their time, with their volunteer effort, and then, after they have done so in an extraordinary way, to go and hit those very same people with a new tax, a specific tax to do exactly what they just did, to help those people most in need at this time. It is unprecedented.

In being unprecedented, this government has set a terrible agenda that is going to have an impact on generosity and philanthropy potentially for years to come. In the event of another horrible disaster—and, Lord forbid, but the truth is it will happen again—when the Prime Minister of the time comes out and asks Australians to donate, when the Prime Minister of the time comes out and says, ‘Please, travel from wherever you are to help to rebuild these communities,’ Australians, quite sadly, will think twice. They will think, ‘If it costs me $3,000 and I make sacrifices to help other people, what happens when they impose a levy?’

When I went down to help friends in Rochester, in Victoria, a town that was completely flooded, I did it because that is what mates do, as so many other Australians did. I am not saying anything other than that is what is appropriate. What I found hugely impressive when we were ripping the carpets out of a house on the Campaspe River that was totally flooded, when we were emptying the mud out of the pans and the plates in the kitchen, when, with total sadness, we were taking the drawers of the bedside table out and trying to wipe the mud off the family photos to try and save the photos, when we were emptying the fridges and freezers, there were people who were coming by the house to help who lived hundreds of kilometres away. In fact, I can say to you emphatically that there was a truckie who brought his tip truck from some kilometres away. The fuel cost a lot. He gave up the work that was still available in non-flood-affected areas. He just drove into Rochester to help those people most in need. He gave up days of work, drove outside all the houses and, when there was a pile of rubbish outside, tried to find a local farmer with a tractor who would be able to load up his tip truck so that he could take it to the tip. That volunteer effort cost those individuals a lot of money. They made sacrifices. I constantly think about that truckie, who now, I am absolutely sure, is going to be hit with a flood levy. After giving up days of work, after paying for a huge amount of diesel for his truck, he is now going to be hit with a new tax—a tax that, in our view, is immediately the wrong response to this issue.

The second reason why we are opposing this is the magnitude of the tax. This is a big tax. In fact, it raises on a yearly average more than three times the annual amount of any levy introduced under the previous coalition government. It is far bigger than the Ansett levy, the gun buyback levy and so on, none of which actually amounted to more than $500 million a year. This levy is $1.8 billion in one year. Apart from the Medicare levy, which was introduced by Labor, never before have we had a levy on this scale in one year—and that in itself is a very significant issue. If you look at the levies that had to be introduced under the previous coalition government, it was because we were in deficit—as this government is now. But this government is in deficit because of its own work, while we were in deficit because of the great work of the Labor Party! They know how to create deficits. We had to try and get the budget back to surplus. But even then, when we did have the money—for example, for the East Timor intervention—the levy was never imposed. A levy has to be the last response, not the first response. That is why we believe the magnitude of the levy makes it a very difficult proposal to support.

The third reason why we are opposing this flood levy is cost-of-living pressures. Australians are increasingly feeling the pain of the rising cost of living. If you want any evidence of that, you need look no further than the current debate in the New South Wales state election. Both the Labor Party and the coalition are making the point that the cost of living is the No. 1 issue for the people of New South Wales—and it is the No. 1 issue right across Australia. Why? The Australian Bureau of Statistics recently released information on the cost of living for various household types. This index, which is different from the CPI because it uses different formulas and takes housing costs into account, revealed that, for key groups, the cost of living is rising much more quickly than the official inflation rate. For families the cost of living increased by 4½ per cent over the year to December. That is nearly two full percentage points higher than the official CPI increase of 2.6 per cent. The largest rise was for financial and insurance services, which includes interest rates, with spending on this item alone rising by nearly 20 per cent during 2010. That is a very significant amount of money.

The cost of living for age pensioners rose by 3.1 per cent during the course of last year. Age pensioners lead a day-to-day existence. They do not go out and buy new computers that are cheaper because the Australian dollar is so strong. They do not go out and buy flat-screen TVs all the time because the Australian dollar is so strong and the price has come down. They can only afford the basics of life. Thanks to taxes from this mob, alcohol and tobacco rose by 11 per cent—and you would remember the increase in tobacco tax, which had such an impact. For welfare recipients the increase in the cost of living last year was 4.5 per cent, well above the official inflation figure of 2.6 per cent. Again, this was driven by a big increase in spending on alcohol and tobacco, but also by a rise in spending on bank fees and charges and interest rates.

If you do not have much money in your account, every time you take $50 out of the bank you are paying more. You cannot get any less out of an ATM these days; it is rare to get a $20 note out of an ATM. If you have $96 in your account you can only get $50 out of an ATM. That is very interesting—and, out of that, Australians are paying far more. Welfare recipients are paying 4.5 per cent more, which is well above the CPI. Australian families are struggling with rapid increases in the cost of living, rising interest rates—and they are going higher—and further upward pressure on inflation. As events unfolding in the Middle East start to push up oil prices, that too will flow through to everyday households. I say again that the cost of living is one of the reasons why we are opposing this bad legislation.

The fourth key reason is consumer sentiment. This new tax further erodes household budgets and consumer sentiment at a time when the retail industry is already struggling. This point was reinforced by Russell Zimmerman, from the Australian Retailers Association, who commented:

The flood levy is a tax, and any new tax results in less discretionary spend for consumers. Retailers, including those businesses who may have been affected by the floods, will be hit hard by this tax as consumers tighten their purse strings.

The economy cannot afford this new tax. You can have all the consumer sentiment models you want, but you need look no further than the fact that the new Top Ryde shopping centre, which the Prime Minister so proudly opened during the election campaign, has just fallen over—a brand-new $700 million shopping centre in the middle of Sydney. No-one can remember when that last happened in the middle of Sydney. And then, of course, we see the outcome for Angus and Robertson, Borders and a range of other people that are involved in the tougher end of retail. Yes, a new tax does have an impact on consumer confidence.

The fifth reason is that the coalition believe that this flood levy is poorly designed. Why? A household with two incomes of $80,000 per annum—a combined income of $160,000; it could be a couple of teachers—will pay a total of $300 under the levy. A single-income family on a salary of $120,000 a year will pay more. They will pay $450. So a school principal who earns $120,000 a year and has a partner who is a stay-at-home mum will now pay more in the levy than two working parents who have a combined income of $160,000. How is that fair? If you are a stay-at-home parent your household will pay more even though your household has a lesser income than the place next door.

We have already heard in this House that people who choose to retire in the 2011-12 financial year and receive superannuation payouts with components that are classified as taxable income will be faced with an additional tax burden as a result of the introduction of this tax. We heard the story about the copper—it was raised by one of my colleagues in this place—who is going to have to pay around $6,500 for the flood tax levy. The Prime Minister says it is just the cost of a cup of coffee each week. Well, let me tell you that only in downtown Yarralumla would you pay that much for a cup of coffee. Or only if you were living in an ivory tower close to a sacrosanct place would you be saying that it is only the cost of a cup of coffee. For that copper it is $6,500 out of his retirement income, and I would suggest that he is not a high-income earner.

Moving now to reason No. 6: why are we opposing this flood levy? It is because the government have admitted that further savings can be made. They can find them. So the flood levy was the first act and not the last act. That is the point. The first thing the government defaults to is to introduce a new tax. There was a problem with alcohol, so they introduced an alcopops tax. There was a problem with the sale of Australian cars, so they introduced a higher luxury car tax. There is a problem with people smoking, so they introduce higher tobacco taxes. There is a wane in the terms of trade benefits to Australia, so they slug the miners with a mining tax. We have got a problem with the climate, so they introduce a climate tax. And now Australia is hit with floods, so they introduce a flood tax. Go figure! Why is it Labor’s default to punish people by making them pay more?

Then, come election time in New South Wales, Kristina Keneally goes around and says, ‘Yeah, electricity is too expensive, so we’re going to give you a rebate.’ Hang on, it is Labor that increased the prices and then they come in like Santa Claus and say that they are doing you a favour with a rebate to make it easier. How absurd.

In the lead-up to the 2010 election we on the coalition side outlined $50 billion worth of spending cuts and revenue measures over the forward estimates period. That was a tough thing to do, but we did it because we actually have political ticker. We know how hard it is to run a strong economy. We announced a further $2 billion in spending cuts to show how the levy should be replaced. We have shown the way: $52 billion in cuts out of a total budget spend of $350 billion a year, or $1,400 billion over the forward estimates. They are hard yards, but they have to be done because that is what every Australian household is doing. And do you know what? People agree with us. Commentators agree with us—third parties who have not always agreed with us. They have been coming out of the woodwork to endorse our view that it is so imperative that the government not introduce this tax but in fact cut its own cloth. I refer to the Business Council of Australia, which said:

Options to increase taxes, even temporarily, should only be considered after an exhaustive examination of potential savings on government spending.

In an address to the National Press Club on 27 January the Prime Minister freely admitted that if further funds were needed to pay for the repair bill she would find those funds in the government’s spending. It has been confirmed by the Treasurer, who said that he will find further savings if necessary. So they do a little deal with the Greens and, whoops, there goes a few hundred million dollars. They do a little deal with someone else and, whoops, there goes another $100 million. And all of a sudden the $1.8 billion levy is only going to raise $1.4 billion. And, well, the Treasurer is going to find further savings. But, if it was good enough for them to identify savings on 27 January, why aren’t they identifying those savings now? The Treasurer says that he wants to wait till the May budget. It must be the same May budget that Julia Gillard is already speaking to Peter Costello about delivering! She’s tough on you, Swannie! You deserve better than her. So it is patently clear that a new tax to pay for the floods was the first resort and not the last resort.

Reason No. 7: why are we opposing this levy? Simply because it is yet another Labor tax. The Rudd and Gillard governments have been on a tax binge since they came to government. We have had tobacco taxes, alcohol taxes, car taxes and this year we are going to have mining taxes—and how many different versions of that have we had? It is a bit like the Bible. There are so many different versions for each church. Within the Labor Party there are a thousand versions, but we know that in the original one they gave away $60 billion. Remember that? Were you part of that, Swannie? In order to stop a mining advertising campaign, they gave away $60 billion of revenue. That is the greatest sell-out I have heard of. The scale of it is fantastic. They went all the way.

Moving to reason No. 8, there is one thing we know about Labor: they cannot be trusted to spend the money wisely. Why would you give this mob even more tax when they cannot spend wisely the money they have? Kerry Packer said that. Do you remember that famous House of Representatives inquiry into communications some years ago where a rather youthful looking Peter Costello asked some questions. They asked Kerry Packer about tax and he said: ‘Why would I give the government more tax than I should, given that the money I give them is not spent well as it stands?’ He is absolutely right.

Of all the governments in Australia, you look at this mob and ask: why would you give them more money, following the computers in schools program, which had a $1.2 billion blow-out; or the ‘Building the Education Revolution’ school halls program? Now that the leadership of Libya is in a bit of trouble, where are you going to get all these revolutionary terms from? The ‘Building the Education Revolution’ school halls program. You’d better hope that Castro doesn’t die; otherwise you won’t have anywhere to get your vernacular! The revolution must live! And it lives in Julia Gillard’s world in relation to school halls.


Mr Randall —Che Guevara!


Mr HOCKEY —Che Guevara; that’s right! And who could forget the $2.5 billion on pink batts? What a fiasco that was. How can you trust them with money? There was the Green Loans program: $300 million wasted—a program finally cancelled with allegations of corruption. How can you trust Labor with money? Remember how they promised 36 GP superclinics in 2007-08? There are only eight currently in operation, and we do not even know if they have GPs in them. And this mob are now asking the Australian people for more money, whereas the money they have already been given they cannot spend properly. If the government had not wasted money on those school halls, on those pink batts, on the Green Loans program—had they not wasted money on a scale never seen before in Australia—the money would be in the budget to repair Queensland time and time again, without yet another levy being imposed on the Australian people. It is not just us who is saying this. Someone who has been critical of me, Henry Ergas, observed in the Australian:

… additional taxation allows the government to call itself fiscally conservative without seriously reviewing the efficiency of existing spending programs.

At the same time, by relaxing the government’s spending constraint, the levy reduces the pressure to ensure reconstruction resources are used wisely.

So that is just eight points. Hang onto your seat, Swannie: there are two more to come.

Point 9: Labor could have already paid this levy simply through the interest on its own debt. It will intrigue the Australian people to know the net interest bill on the Rudd-Gillard Labor government debt of $4.4 billion this financial year alone would have paid the flood levy two and a half times over. That is just the interest that this man has managed to accumulate in three short years. The interest payable this year would have paid this levy two and a half times over. It is outrageous. In the 2012-13 and 2013-14 financial years the net interest bill will be $5.9 billion. That amount could rebuild Queensland.

Point 10—and this is perhaps the most significant of all: this government should lead by example. I would not take this government as an example on anything, other than the ability to waste money. But I believe the government should look within their own budget, as they have asked 4.66 million Australians to do—as 4.66 million Australians will have to do. As those Australians seek to try and reduce their household expenditure to save the money to pay for this flood levy, so too must this government have the ticker to start looking within their own ranks to find the money. But every time there is a bit of pushback, be it from the member for Melbourne, the member for Denison or anyone else, they fall over. They are men of straw; they fall over. In a little bit of wind, away she goes—flies out. And why? Because they do not have the ticker to stick with their decisions. That has been in the DNA of this mob for the last four years: no ticker.

How intriguing it was to witness the hearings of the House Standing Committee on Economics inquiry into this flood levy. I remember being here for the introduction of A New Tax System. I think the Labor Party held six different inquiries in the Senate into the GST and into A New Tax System. They went for months and months, and they were crying about the fact that in this place they were not allowed to speak, they did not get the chance to have hearings and so on. Well, because of a screw-up by the Treasurer’s office—


Mr Anthony Smith —No! What?


Mr HOCKEY —I know: it is hard to believe! I could not believe it myself! But because of the screw-up by the Treasurer’s office, it was referred to a House of Representatives committee—the House of Representatives economics committee—and they gave it just one day. For a $1.8 billion levy they gave the committee a one-day hearing here in Canberra to hear evidence. And they had 45 minutes with the Treasury!


Mr Ciobo interjecting


Mr HOCKEY —The member for Moncrieff did an excellent job as the deputy chair of that committee, fighting against the forces of evil who were trying to close him down. He did a fantastic job in seeking to question—


Mr Swan —He had Tony Abbott trying to close him down!


Mr HOCKEY —You’ll get your chance in a sec, old son. Ease up, china! My colleague tried to ask questions of Treasury, and of course they shut Treasury down. It would not be a surprise about closing Treasury down—


Mr Swan interjecting


Mr HOCKEY —After the revelations of Treasury on banking overnight, mate, I can understand why you don’t want Treasury appearing before committees! I can understand that. They have just made a fool of you on banking. So it was a case of ‘No, no; we don’t want Treasury to get up and tell the truth at a committee—to tell Australians what the real deal is.’ But in evidence before the committee, Saul Eslake, who was a constant critic of Peter Costello as Treasurer, said that the introduction of the new flood tax was one of ‘political choices rather than economic imperatives’. He went on to say:

My point is simply that the decision to choose to fund a third of the cost through a levy is a political choice rather than an economic one.

Step 1: it is about politics. Warwick McKibbon, who was also a critic of us when we were in government from time to time—and in fact has criticised us recently—said in evidence before the committee:

Most economists who study public finance would support the view that taxation is not the optimum way to finance the reconstruction of infrastructure after a natural disaster. The argument has a long tradition in economics.

…       …            …

I think that in the case of a disaster it is almost uniformly accepted by economists, in principle, that a tax is not the best way to fund it.

When you have Warwick McKibbin, Saul Eslake, the Business Council of Australia, consumer sentiment, Australian households, the Australian people more generally and the coalition all saying that this flood tax is bad policy, I would say to you, Mr Deputy Speaker: at some point this mob has to learn that you cannot keep going back to the well, because one day there will not be any water left.

If you want to keep the Australian economy strong, you have to create confidence. If at every point in the economic cycle the government comes along to introduce a new tax, and even when its proposal for a new tax has many forms, like the dreaded Hydra, and has many heads, like the old mining tax, with mining tax version 1 under Henry, version 2 under Kevin Rudd—you remember him, Swannie; you haven’t forgotten Kevin Rudd, have you? You haven’t forgotten him: white hair, a fellow Queenslander, used to be Prime Minister?


Mr Anthony Smith —Went to school together!


Mr HOCKEY —School together—Nambour high!

An honourable member—They won’t get you to organise their class reunion!


Mr HOCKEY —That’s right; no class reunion at Nambour. That is it. You would need to have it in the convention centre with Swannie at one end and Ruddie at the other, because you would not want to have them in a room that is any smaller than Parliament House, would you?

But I say to you, Mr Deputy Speaker: the coalition will not support bad policy. The coalition will not support another slug on Australian households. The coalition will not support any attempt to increase the cost of prices for Australians or any attempt to increase the pain associated with an incompetent government, and that is why the coalition will not support yet another bad Labor tax.


The DEPUTY SPEAKER (Hon. Peter Slipper)—Before calling the Treasurer, I remind the member for North Sydney of the provisions of standing order 64.