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Tuesday, 22 February 2011
Page: 991


Ms OWENS (9:16 PM) —I rise to support the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011. There have been many speakers on this bill, with many more to come tonight, and many of the speakers have spoken of the devastation, the grief and the heartache of people who lost not only their possessions but also in some cases people they loved. I will not be focusing particularly on that tonight; I would rather leave the time in this debate for people who represent electorates where those losses were experienced. I represent the electorate of Parramatta. We are probably one of the few areas in the country that did not experience some of the extreme weather events or inundation that so much of the rest of the country experienced.

What we have to focus on now is the recovery, and I would urge those on the other side to focus very much on that. The Australian government is looking at an amount of $5.6 billion to pay for our share of the recovery. There are of course also contributions from the state governments and the local councils on top of that. There are the personal rebuilds—much of which will be paid for by insurance but much will not. There are businesses that are rebuilding. There are also community organisations that will make great contributions of time and energy in assisting people who suffer from some of those non-tangible tolls that such a tragedy takes on the spirit of victims and the emotional wellbeing of those who experience these kinds of tragedies. Many, many people in the community are contributing in many ways to help rebuild. We saw the armies of volunteers who turned up in the days following the flood and we all know that many, many people are still contributing their time.

I have been to a number of fundraisers in my electorate. A couple of weeks ago I attended a dinner for the Queensland flood relief held by the Pakistan Association of Australia. This Saturday I will attend one by the Burmese Medical Association Australia. At the Nan Tien Temple, where I went to celebrate Lunar New Year, they too were raising funds. In fact at the moment it is very rare that I go to an event in my community where they are not raising funds. The Sri Lankan community held a walking event at Lake Parramatta to raise funds for the flood victims.

There are also of course other ways that people will contribute in supporting local businesses to a greater extent—for example, going to North Queensland instead of Bali for our next holiday and even small things like buying fruit that is less than perfect in support of our farmers. As well as the costs themselves, there are losses in revenue that are not included in these figures. There are losses from mining, from tourism, from agriculture, from many small businesses that were out of action for periods of time and from workers on casual wages who lost work hours. There are many, many ways that people have lost revenue as a result of this catastrophe.

What we are in here arguing about today is how to fund just the federal government’s component—the $5.6 billion—of the rebuild. Essentially, there are three ways to fund that: cuts to expenditure, debt or some sort of levy. To assume that we can experience tragedy and loss on this scale without some sort of cost is absurd. There is a cost when tragedies like this happen, and it is our duty here in this place to find a way to cover that federal government cost. We have as a government chosen what I think is quite a balanced approach. There is $3.8 billion of that $5.6 billion being found in cuts or deferrals of expenditure and $1.8 billion is being found by the levy.

The opposition’s approach is to fund the entire amount by cuts to expenditure. Rather than looking for $3.8 billion in cuts to expenditure, they are looking for $5.6 billion, and I point out that they found it quite difficult to agree among themselves on how that additional $1.8 billion might be found. The opposition make an interesting argument that cuts to expenditure are always a good thing. They have argued ad nauseam, for example, for cuts to the Building the Education Revolution program. In my electorate of Parramatta, shortly before the election last year, and even as the Building the Education Revolution program was winding down, there were 1,800 construction workers working on Building the Education Revolution projects. We got that figure by phoning the construction companies that were handling the projects. The figure was probably slightly higher in my community, because we have some very large construction companies based in Parramatta that were employing off-site staff.

Those branches of the construction industry that were not involved in Building the Education Revolution at the time were already on four-day weeks and heading down to three-day weeks, so it is extremely unlikely that, if Building the Education Revolution had been scrapped—if the opposition had had that power—1,800 workers would have been absorbed by what was still a very stagnant construction market. There were another 300 workers on public housing projects and about 500 apprentices. If you add those up, you get three per cent of my workforce. Three per cent of the workforce in Parramatta just six months ago was still working on Building the Education Revolution and social housing stimulus projects and for the local council. If that three per cent of workers were taken off those projects and put on unemployment benefits, unemployment in Parramatta would have risen to around 10 per cent. That is before you take into account that those workers would not have been spending their wages in local businesses. So I am sure we would have seen that 10 per cent rise even further.

I sat down and worked out once what it might have cost us in unemployment benefits not to spend the $120 million that we spent on Building the Education Revolution. I worked out that on unemployment benefits alone we would have spent about half of that $120 million. So, while we spent $120 million on building school halls, we would have had to spend at least half that on unemployment benefits over that two-year period. Also, of course, the workers would not have been paying tax, they would not have been spending and we would have seen a flowthrough. Sometimes, cutting expenditure is not necessarily a good thing, and I would say the same thing about the proposal of the opposition to cut funding to Indonesian schools.

The funding of Indonesian schools was a project started by the Howard government. I was lucky enough to be on a few delegations in the region last year, and a number of governments talked to me about how extraordinary that Indonesian schools program is. Cutting the money from it might give a better snapshot, but sometimes value is not in the snapshot. If you do not fix your leaky roof or decide not to go to university, your bottom line might look a bit better for the snapshot on that day, but over time you will not get the benefit of that investment. Cutting an investment does not necessarily make you better off, but I am yet to see evidence that the opposition understand that. They seem to be quite fixated on the snapshot, but most of us who actually live in the world know that most things of value unfold over time. Decisions to invest or not invest today impact positively or negatively in the future.

Some people in my community and in my electorate want to talk about longer term solutions at this point. There are debates going on in the community now at both government and personal levels about insurance—about the effectiveness of insurance et cetera. There are people talking now about whether or not we need to have longer term funds to deal with natural disasters. They are all extremely valuable discussions that we need to have at some point. There are also people already looking for someone to blame, but our job at this point is to rebuild. There are those who want to step over the recovery and start focusing on what might have been done better or how we might prevent our being in this situation again in the future, but that is a luxury that only those of us who are not personally affected have. People who have been personally affected by this appalling summer that we have just lived through need to focus on one thing at the moment—that is, the recovery.

Every day that we do not start building is a day on which those losses continue to grow. The physical damage might be done, but the loss of income, the loss of revenue and the loss of capacity in communities continue to grow for every day that we do not focus on the recovery. So again I urge everybody out there who has a view on what we should do in the long term or what we might have done differently to put it aside for a little while—I put mine aside in what I call my ‘ideas file’, which I can pull out at any moment—and to focus on the job of getting some of these communities up and running. Let us focus on those other issues later on.

I also want to deal specifically with one issue that comes from my community. Contrary to the opposition’s focus on cutting spending, a small number of people who believe that we should increase the debt to cover the rebuilding have contacted my office. A number of other people have also expressed this view, including one economist that addressed the House of Representatives Standing Committee on Economics into the flood levy bills. In fact, a number of witnesses suggested that we should increase the debt. At the moment, Australia has a very small public debt relative to other countries in the world. Most people do not know that we have actually had very small public debt relative to other countries in the world for about the last 30 years. We had 120 per cent of GDP debt in World War II. Most countries in the world had massive debt at the end of World War II, and most of them proceeded to pay it off over the next 20 to 30 years. A lot of the countries in the world stopped paying their debt off when they got to about 20 per cent; Australia did not. Our debt kept getting smaller so that by the time we hit 1970 we had one of the smallest debts to GDP nations in the world.

Our debt level went up and down; I think it averaged around five per cent. There was a period in the 1980s when there was a bit of a global crisis and governments again started going into debt. But in the late 1980s, when that crisis started to soften, the government of the day paid back six per cent of GDP in debt in just three years. So we have had this habit over the last 30 years of going into debt when we need to and then proceeding to pay it back. Australia has been, I think, among the eight countries in the OECD with the lowest debt for the last 30 years. It is one of the things that makes us strong, and it is one of the reasons that we as a nation are able to respond to crises like we faced with the global financial crisis a couple of years ago. It is very important, but it is also important for a government to stick to a fiscal strategy when it commits to one. It is incredibly important that we do that. Commitment in strategy is an important signal that we send out. Our commitment is incredibly important as well.

Personally I am getting a little bit risk averse. We have been in government for 3½ years and we have had the global financial crisis, the bushfires in Victoria and then the floods, and then there were more floods, and then there were more floods. I was trying to camp around Australia at the time. I was heading up to Carnarvon Gorge, just inland from Rockhampton. We had been completely out of circulation in the national park. Actually, I am running out of time so I will not tell that story. Essentially this levy, as a combination of levy and cutting of expenditure, is a very valid and balanced approach. I commend the bills to the House.