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Tuesday, 22 February 2011
Page: 1000


Ms LEY (9:58 PM) —I think it is important that we talk about what this debate is about and what it is not about. The Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 are about the government’s decision to impose a $1.8 billion tax on a portion of the country’s taxpayers to raise a third of what the government has articulated to be the $5.6 billion total cost of the flood reconstruction in Queensland and Victoria. On that note, it took the Prime Minister a while to bring Victoria in; in her first remarks at the Press Club, I do not believe she mentioned Victoria once. But it is to rebuild Queensland and Victoria following the devastating floods. Those with taxable incomes between $50,000 and $100,000 will pay a 0.5 per cent levy and those earning over $100,000 will pay a one per cent levy temporarily for 12 months.

This debate is not about the need to rebuild Queensland and Victoria. It is not about the level of sympathy or empathy that members of parliament supposedly do or do not have for those who have been affected. We all grieve for those who have lost loved ones, livelihoods, homes and businesses. We all care deeply when we hear those personal and heartbreaking stories. It is disingenuous at best and dishonest at worst for members opposite to suggest that opposing the levy is opposing the reconstruction and the recovery.

In managing or mismanaging this economy, this Labor government, like other Labor governments both state and federal, reaches for three things which are quick, easy and designed to manage a short-term fix to solve the problem of the 24-hour news cycle and present a happy face to the Australian people. The three tools are: tax, spend and interfere. The spending we certainly saw during the global financial crisis. The previous speaker said that we in the opposition did not support stimulus, and that is not correct. We supported the first stimulus package: a modest, careful approach and then stopping, listening and seeing where the world economy was going. We certainly did not support the ‘jump in boots and all’ excessive and reckless spending that followed. But we as a nation saw that excessive spending, and we are still seeing it.

The irony is that, well after the Reserve Bank and monetary authorities had declared that the crisis was over in Australia, at least half of the stimulus spending remained unspent. So we cannot even let the government off the hook by saying they did what they thought was best and it turned out that maybe we did not need that much, because at the point where it was obvious that that level of stimulus and spending was not required the government could have said, ‘Stop; we’ll reprioritise and we’ll take the spending away.’ But that would have been unpopular and politically difficult and it would have required some courage, and that was not evident. So it is ‘tax, spend and interfere’. The taxing we are seeing now. We will always see higher taxes under Labor governments. We are seeing this flood levy tax, which is an easy, quick fix. I mentioned that Labor governments interfere, and as an aside I will mention that there is no more classic example than the internet filter.

The important thing that we have to focus on here is how the money will be raised, how it will be spent and what it will achieve. The Prime Minister has called on well-known Liberal John Fahey to head an outfit that is being described as the reconstruction inspectorate. This, of course, will be a great big new bureaucracy. If we donate to charities, as we all do, we choose carefully, because we want to make sure that our money hits the ground. We do not like money being frittered away in administrivia. We know that it happens, but we would prefer that the help went to the people who need it. But we as taxpayers are being asked to contribute to the reconstruction inspectorate. What will be the running costs of this organisation? We do not know. How can we be confident about the distribution of this $5.6 billion levy when it arrives? How, in fact, do we know that $5.6 billion is the right figure? Cyclone Yasi—which was a terrible tragedy that will involve great capital and asset replacement—had not happened when the flood levy was announced. Presumably it will also be included. How do we know if $5.6 billion is too much or too little? How was the figure arrived at?

The Treasurer was asked in question time how many Australians would contribute to the levy. The answer was actually in the Australian newspaper that day, not that it was any big secret: 4.8 million Australians. The Treasurer could not answer the question in question time. He fluffed the answer, and I think he added to his answer later; perhaps somebody handed him a copy of the Australian newspaper. But he should have known that. Does, in fact, the Treasurer know where the money will go? It will go to consolidated revenue, where, as we know, it will be at the government’s disposal anywhere, anytime. So, if the Treasurer does not know how many Australians would pay the levy and he knows that it is all going into consolidated revenue, that gives you a flavour of the way this fund is going to be managed. We cannot be confident.

Psychologists will tell you that the best predictor of future behaviour is past behaviour. Do not expect this government to change; they have form. The form is their wasted stimulus payments, their roof insulation tragedies and disasters, their school building rip-offs, their Solar Flagships and Green Loans mistakes and their undelivered computers in schools.

Today I was drawn to perhaps the best example of why I do not believe in this flood levy. Of course it will raise the money. Governments can always raise taxes. As I said, it is easy and quick. But we have an example here of why this will not work. We look no further than Infrastructure Australia. I quote from an article by Richard Allsop in today’s Australian:

Set up, with great fanfare, to “develop a strategic blueprint for our nation’s infrastructure needs”, the whole rationale of Infrastructure Australia was that it would be national, scientific and impartial. A body of experts would weigh the merits of competing infrastructure proposals from across the nation and pick those that would deliver the greatest benefit for the taxpayer dollar.

It sounds good. It would have been good. But, three years after its establishment, this body has demonstrated irrelevance and incompetence. We probably should not blame it or the good chairman, Sir Rod Eddington, because today the minister stepped in once again, usurped the entire process—his process—and declared that Infrastructure Australia would fund the Epping-Parramatta railway line. It is a project that has not even been identified by Infrastructure Australia as recommended for funding and had not even been considered a strong enough proposal to form part of the New South Wales government’s submission seeking federal funding. So that is one example of how the minister stepped in and simply said, ‘This is where we’re going to allocate infrastructure funding for political purposes and political gain; never mind that we set up these bodies and they are all over the place’—because the previous Prime Minister set them up and the current Prime Minister has continued them. They cost a lot of money and they are there for appearances, but they are not delivering the goods.

The other thing I want to say about the levy is: if it is so important, why has $450 million of it already been spent just on securing its own existence—if you like, a 25 per cent commission? I can remember the Prime Minister saying:

The Government will make $2.8 billion in spending cuts, with the funding to go towards the recovery and reconstruction effort, including:

…            …            …

  • Reducing and deferring spending on the …Solar Flagships programs …

…            …            …

  • Discontinuing funding for the Australian Learning and Teaching Council
  • Reducing the National Rent Affordability Scheme dwelling target …

But on Wednesday the Prime Minister had to pay the Greens for their vote: $100 million to restore the cuts that had just been announced to the Solar Flagships program. There was another $264 million for the National Rental Affordability Scheme that the Prime Minister had just said she would cut, and the member for Denison, who shares the balance of power in this House, demanded his piece of the action. That was another $88 million for the Australian Learning and Teaching Fund. That is a total of $452 million already spent just to win the votes for a levy to raise $1.8 billion.

So 25 per cent of this money has already gone to secure the existence of the fund in the first place. We have no confidence that when this fund exists that it will be administered in a way that delivers the best value for taxpayers or that the best cost-benefit analysis will be applied to it. We can all talk about good projects and the need to rebuild, and from this distance it is fine. But when it comes down to where the rubber hits the road it is about what everything we do is about: the allocation of scarce resources according to cost-benefit analysis. I have no confidence that that will be done in a way that makes sense to the people of Australia.

I turn to my own electorate of Farrer and the circumstances we face. I do represent one of the forgotten flood regions of Australia—we are not Queensland and we are not Victoria. But for us in the electorate of Farrer, through the south-west and far west of New South Wales, these weather events have provided an enormous challenge for hundreds of local farmers and property owners.

Between Broken Hill and Wilcannia local stations had walls of water sweeping through homes, outbuildings, sheds and paddocks. There were reports of decaying wildlife stuck in tree branches metres off the ground. Some of these properties are still cut off by road more than a month later. In the Riverina, record rainfall since the latter part of last year has made it near impossible to complete or even contemplate a harvest. Home owners flooded out in October last year are still waiting to get back into their houses four months on. Along the Murray Valley many vignerons and fruit growers have had their entire season decimated by continued and unrelenting water coming from both the sky and swollen rivers.

Just last week on a visit to the northern end of my electorate in and around the Broken Hill area, drought- and now flood-weary constituents came up to me on the street asking about a continuation of exceptional circumstances funding to help them get through this period. What can I tell them? I can tell them the truth: I am sorry, but the government has run out of money. They might ask where it has all gone, and I can tell them: the Building the Education Revolution, the pink batts fiasco, the cash for clunkers exercise that never actually eventuated and fancy new websites—the list goes on and on. But my people in New South Wales are being further disadvantaged by this deficient Labor Party.

New South Wales Labor is not even prepared to pay its fair share of the fifty-fifty natural disaster relief arrangements. In Queensland and Victoria, eligible recipients can be given up to $25,000 in order to rebuild—and, gosh, $25,000 does not go very far, but it is something when your livelihood is destroyed or on the line. But the limit in New South Wales is only $15,000. There is actually no reason for the $10,000 discrepancy; there is no reason why it should not also be $25,000 in New South Wales other than New South Wales does not have the money, which is a bit of a familiar refrain. But in upping the amount that New South Wales says that it could pay, they only actually have to pay half that amount; the other half is matched by the federal government. It is pretty stingy of them, and I have been calling on them for a while now to increase their cash payments to flood affected small businesses and farmers from $15,000 to $25,000.

It demonstrates again a basic incapacity of government to effectively manage the needs of the people that they claim to represent. That has a knock-on effect on many other hard-working people and taxpayers from my region: retailers, manufacturers and service industries who derive an income from a flood affected area. Their own home may not have been directly flooded and their property may not have lost stock and fences, but they are affected and will continue to be affected by a downturn in rural customers and income. And what does the government do in acknowledging their circumstances? It tosses on a brand new tax. These same agricultural communities, so recently afflicted by drought and now devastated by floods, will again be forced to dig into overdrafts and debt to restore and recover. After factoring in their flatlining budget, rising costs of living, rising prices for basic commodities and rising interest rates, now there is a flood tax—yet another impact onto their quality of life because the Rudd and Gillard administrations continue to fail the most basic of tests for credible financial management.