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Tuesday, 22 February 2011
Page: 1004


Mr MURPHY (10:12 PM) —I join with my colleagues on this side of the House this evening to speak in support of the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011.

I begin by commenting on the contribution made earlier today in this debate by my colleague the member for Dobell. He made a very good point: while those opposite like to point the finger and argue that it is an unfair levy, he reminded them that the Howard government was the highest-taxing government for five consecutive years. While those opposite make claims that our government has mismanaged the Australian economy, again the truth is that our economy is one of the most advanced economies not to have suffered a recession during the worst global financial crisis since the Great Depression, and we still enjoy one of the lowest unemployment levels of all advanced economies.

That is the truth. And just as the Labor government acted decisively in the face of the worst global recession since the Great Depression and delivered one of the strongest economies in the developed world, again we are acting decisively in the face of what is likely to be the most costly natural disaster we have endured in Australia’s history. While the immediate beneficiaries of the recovery efforts will be the communities directly affected, including the 75 per cent of Queensland declared a disaster zone, the scale of the disaster is far reaching and has adverse impacts for all Australians—but I will come back to that point later.

Only in our last sitting week we remembered the victims of Queensland and Victorian floods, Cyclone Yasi and the more recent bushfires in Western Australia. There were sincere condolences from both the sides of the House, with some very personal stories and heartfelt reactions. There was, however, a very clear message from all our contributions that Australians all pull together in times of need. There can be no doubt that we all witnessed the full force of nature when nearly every state experienced flooding. After so many years of drought, it was a cruel blow for farmers who have already struggled with extreme climatic conditions. The footage we all witnessed on our televisions gave an extraordinary picture of havoc wreaked by the torrent of water flooding homes, farms and businesses. Initial estimates place the Commonwealth expenses of the damage at around $5.6 billion. That is a cost that we must all share.

As the bridges collapsed, the ports and rail lines closed, the markets flooded and the livestock drowned, many businesses were brought to an alarming halt. This of course has flow-on effects for the people unable to work and pay their mortgage and pay for food, with an incredible loss to small business and larger industries alike. The flow-on effect to our Australian economy will be significant, but it is the intention of the government to mitigate the effects through decisive action, which we are taking tonight. It is vital that we address this problem as soon as possible.

Today we are looking at the government’s plan for the recovery effort. Broken down, the government is tackling the issue with three main measures: (1) spending cuts to government initiatives, saving $2.8 billion; (2) delaying certain infrastructure projects, to a total of $1 billion; and (3) introducing a one-off progressive levy with contributions from taxpayers with taxable incomes over $50,000. In light of the immediate demands on the government to assist the recovery effort, these measures are very important to keep our excellent economy in good shape. While we acknowledge that our $2.8 billion worth of cuts to certain programs will disappoint some, these are the difficult decisions we face in the wake of possibly the worst natural disaster in economic terms that our country has ever experienced.

The second measure, to delay infrastructure projects, is made with the intention of freeing-up funds as well as skilled workers. The Prime Minister has expressed the difficulties Australia is already experiencing with skills shortages. With the additional capacity requirement we will see with the rebuilding effort in Queensland, the shortages may worsen. To alleviate the pressures on skilled labour, it is a sensible and economically responsible approach to reduce demand on both labour and materials by delaying a billion dollars worth of government infrastructure projects. The government does not wish to compete with or delay the recovery effort so urgently needed in Queensland. The Queensland government has already outlined its $325 million worth of infrastructure project delays, and other states and territories will outline their respective project delays. This is not to say, however, that the projects are shelved forever. On the contrary, it is important to stress that these projects have only been deferred, not abolished, and they will commence as soon as practicable.

It is the federal Labor government which understands the importance of infrastructure, more than doubling the Commonwealth investment in transport infrastructure compared with under the Howard government. Yet again, the opposition ignores these figures. However, in light of the changing circumstances we are very sensitive to the changing needs and priorities. In recognition of the additional pressures arising from skills shortages, the government is also proposing to establish a special team within the department of immigration to help deliver employer sponsored temporary visas, 457 visas. Mr Speaker, as you know, applications that are considered decision ready will be processed within five days for employers who are genuinely involved in the rebuilding effort. Due to the demand of the rebuilding effort, remembering the area affected is larger than the state of New South Wales, the government will double the number of places in the job seeker relocation pilot program to help job seekers fill the job opportunities.

It is important to note that the 457 visa program is demand driven. These measures simply make it faster for employers to get the workers they need to rebuild. All workers seeking a 457 will still be subject to strict skills tests. I note the Minister for Tertiary Education, Skills, Jobs and Workplace Relations, Senator the Hon. Chris Evans, made a statement last week concerning Australian jobs and foreign workers. He reiterated that the government will not tolerate Australians being forced out of work as a result of illegal and exploitative practices. Further, the minister noted that overseas workers play a critical role in meeting skills shortages but they cannot be used as a source of cheap labour and must not be paid less than an equivalent Australian worker. The minister also made it very clear that reports of exploitative practices will be properly investigated and we will not tolerate companies attempting to exploit foreign workers and undermine the conditions and wages of Australian workers. This, I feel, is important to clarify. The 457 visas are specifically to assist critical skills shortages where suitably skilled Australian workers are not available to fill those jobs. I know many people in the building and construction industry will understand the sense in these measures and I trust they will benefit value for money and timely rebuilding efforts.

Turning to the financial costs as the government seeks to raise two-thirds of the funds needed to rebuild flood affected Queensland, the other third will come from the proposed levy. Treasury estimates that $1.8 billion will be collected from taxpayers earning more than $50,000. It is a progressive levy based, as I said, on taxable incomes above $50,000. Firstly, it is important to stress that the levy will not affect low-income earners on $50,000 or less, pensioners, DSP recipients or carers. People who have claimed the flood recovery assistance payment will also not pay the levy. Those earning between $50,000 and $100,000 will pay 0.5 per cent. To give some idea of what that will mean in the hip pocket, a person earning $60,000 will pay 96c a week while a person earning $80,000 will pay $2.88 a week under the levy. The levy will increase to one per cent of taxable income over $100,000.

What is noteworthy about the proposed flood levy is the limited impact it will have on taxpayers. If you look at the raw figures, about 50 per cent of taxpayers will not pay anything, about 60 per cent of taxpayers will pay less than $1 a week and around 70 per cent of taxpayers will pay less than $2 a week under the levy. These figures are not as alarming as the opposition would have us believe. And if we take into consideration the three consecutive tax cuts that Australian taxpayers have received under our government, as other members have already pointed out, the figures clearly indicate that most taxpayers are still way ahead even after the levy. For example, people with taxable incomes of $60,000 will pay 96c a week for the levy for one financial year; however, after three consecutive tax cuts, delivered in 2008, 2009 and 2010, the same person has received a total of $25.96 per week in cumulative tax cuts. This means that they are $25 better off than before 2008 even after paying flood levy. The savings made by the three consecutive tax cuts far outweigh the cost of a one-off flood levy and I think we should bear this in mind.

Our challenge as a government is to provide further opportunities to help industry meet its needs and boost living standards for Australians. Queensland produces about one-third of all our fruit and vegetables and is also an important tourism hub as well as a major mining state. Due to the recent floods, the damage and restrictions across those sectors will indeed have a negative economic impact. That is why it is so important that such an important trading state is fully functional again as soon as possible.

One senior in my electorate told me that he could not understand why some people were opposed to the levy. He openly declared that the levy would not affect him, because he was a pensioner, but he would be willing to give up a cup of coffee a week for the victims and businesses in Queensland. Other constituents have even raised their concern that we do not have a natural disaster relief fund sufficient to deal with these extraordinary events. I note that, while these funds are set aside for emergencies, they do not have the capacity to cover events on the scale that we have just experienced.

After such events as the Queensland floods, we have to think about these measures as we look forward to an uncertain climatic future. Australians affected by the floods need to rebuild and move on from the floods, and the sooner the better. It is in times of disaster that a government must make the tough decisions in the best interest of the people, and that is exactly what we are doing. Not surprisingly, there are strong indicators that, despite the fear mongering of those opposite, most Australians support the flood levy.

In conclusion, we know that the Australian taxpayers expect value for money. We know that the taxpayers expect the job to be done properly and we are ensuring that we fulfil those expectations and take responsibility for appropriating taxpayers’ hard earned dollars very seriously. Right now, flood affected communities need our immediate assistance. Their homes, schools and businesses and lives will not rebuild themselves. It will be a group effort with individuals, businesses and each level of government providing the necessary assistance.

I believe the bills meet the needs of the recovery effort and the needs of the communities affected. I commend the bills to the House.