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Wednesday, 23 February 2011
Page: 1229


Mr CIOBO (6:30 PM) —I am certainly pleased to speak on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011, which you could call ‘the flood tax bills’. For me, this is an important piece of legislation because I have had a unique insight, as a member and deputy chair of the House of Representatives Standing Committee on Economics, to actually hear all the evidence that was put to the committee by the various witnesses over the course of the single day of inquiry that the committee had. Really, the arguments against this new tax are compelling and overwhelming.

But personally I find that the single most compelling argument against the way in which Labor has conjured up this completely arbitrary flood tax has been one simple fact: the tax that the House is discussing this evening and that has been the subject of parliamentary debate for around one day—and it will no doubt go on into late this evening and possibly even tomorrow—raises for the Labor Party $1.8 billion. The estimated cost of repairs as a consequence of these awful natural disasters is around $5.6 billion. So they are raising $1.8 billion of the $5.6 billion, and the connection between the two numbers is completely arbitrary—there is none.

Most compelling of all is one simple fact: if it had not been for Building the Education Revolution, if it had not been for the failed pink batts scheme, if it had not been for the so-called green assessors scheme and if it were not for Fuelwatch or the money wasted on GroceryWatch or just about any other program you want to talk about, this government would have had $1.8 billion, plus some. There would have been absolutely no need whatsoever for the Australian people to reach into their pockets and pay another so-called mateship tax, as the Prime Minister quaintly likes to put it.

They are masters of spin on that side of the chamber, but they are not masters of finance. If they had any ability whatsoever to actually ensure that taxpayers got value for money and that their initiatives did not blow up into money pits, they would easily have been able to find $1.8 billion and avoid the necessity for the Australian people to pay a new tax. Typically of the Labor Party—consistent with Labor DNA and absolutely consistent with its past form—every time they get their hands on the Treasury benches this Labor Party does what just comes naturally to it: tax and spend.

It has always been a party of taxing and spending and it always will be a party of taxing and spending, because that is what the Labor Party does. It taxes when there is a problem and it hopes that by spending as much money as possible it will overcome the problem. Once again, we find ourselves with the Labor Party conveniently saying to all Australians, ‘Look, it’s not that we’re useless as a government; it’s just that we want to look after those Australians who have been adversely affected,’ and the way to do it is through a so-called mateship tax. There is no mateship involved in this tax; all there is is fiscal ineptitude.

I think it is a great shame that Australians are led down the garden path by this government. Australians do instinctively try to do the right thing. At this time of incredible tumult and tragedy—a time when so many Australians were truly suffering—we saw the resilience and the shine of community spirit as people rose up to lend a hand, to put their hands into their pockets and to help make a difference. And this completely fiscally reckless government has now tapped into that sentiment and said, ‘We need you to do it one more time; it is only for the cost of a cup of coffee’.

It may only be a cup of coffee a week that is at stake, but there is something much more fundamental at stake than that, and that is a principle: the principle that for the first time in recent memory that I am aware of—in fact, it may be ever—a government is responding with a new tax to help pay for a natural disaster. That is despite the fact that we also know that under the gaze of economic experts such as Mr Saul Eslake and Professor Warwick McKibbin the evidence is very clear. There is no economic rationale for this new tax. Not only could it have been funded by a government that was more in control of its spending but it could also have been done through other mechanisms.

Effectively, the economic experts who appeared before the committee outlined three pathways: debt financing, a new tax or cutting spending. But one thing that both Mr Eslake and Professor McKibbin were clear about was that the very worst of the three pathways was the approach the government was taking. It is not even a case of taking my word for it as a coalition member of parliament; you can rely on two of the foremost economic commentators in Australia, who are not members of the political process, who actually bring a level of objectivity to this debate and who made it clear that Labor’s approach is the worst approach to take.

There are other reasons why you would not support this tax. The reality is that there are also very significant risks—that there will be what is termed by Professor McKibbin and touched upon by a number of others as the unintended consequences of this new tax. There are two in particular that I would like to touch upon as part of the debate this evening.

The first is the unintended consequence that as a direct result of Labor imposing this new tax we will potentially create the situation that when there is a future natural disaster—and unfortunately this country has a long history of being prone to natural disasters—Australians will say, ‘Well, I’ll just hold off donating, because chances are that the government’s going to introduce a new tax.’ That does not sound that implausible. If we talk about a very significant natural disaster, something equal in terms of the magnitude of damage to what we have just seen off the back of Cyclone Yasi and the floods, then we know that it is not implausible in the slightest for Australians to say: ‘Last time this happened Labor introduced a new tax to help pay for it. Why wouldn’t they do it again?’


Mr Craig Thomson interjecting


Mr CIOBO —I will come to that point. It is a very interesting point that the member opposite raises, and I am going to go to it very shortly. So stay in the chamber and we will discuss precisely that point. Stay right there; I have lots of good information for you. The interesting thing is that we will have this issue of unintended consequences, and I might point out that there might be some unintended consequences over on the other side too, and we will go into my website poll in just a moment. The issue is that understandably, if in future we had a similar magnitude-sized natural disaster, Australians would very reasonably say, ‘I won’t donate because I will have to pay a tax to help cover it.’ That is the first of the unintended consequences that are quite foreseeable as a direct result of this precedent-setting new tax by the Labor Party.

There is another unintended consequence. Witnesses before the House of Representatives economics committee told us that Queensland took a different decision to other state governments insofar as Queensland chose not to seek reinsurance on public assets. What is interesting about that is that in other states—and many of them have state Labor governments—we have the governments choosing to take out reinsurance on public assets, but the Queensland government did not. When I questioned the Queensland Under Treasurer, Mr Bradley, about why that was, he made it clear that as a consequence of the long-term arrangements under the Natural Disaster Relief and Recovery Arrangements they did not believe it was worthwhile. He actually said it was not commercially feasible, or words to that effect. I am not claiming that to be a direct quote but it is a paraphrase of what he said. So the Queensland government effectively decided not to seek reinsurance with the full knowledge that their liabilities were underwritten by the Commonwealth government. The only reason there are potentially some checks and balances on that is that there is some political pressure associated with that cost: political pressure as it does not look good and the people of Queensland in this particular case—and who knows which other jurisdictions it might be in future—might scratch their heads and say, ‘That wasn’t a wise decision.’ As a direct consequence of this precedent-establishing new tax we know that in future the state government will simply be able to wash their hands of responsibility. They will wash their hands of responsibility because they will say, ‘The Commonwealth is introducing a new tax on this; it’s the Commonwealth’s problem.’ So the moral hazard for the Commonwealth as a direct consequence of the exposure of the Commonwealth to liabilities that may arise at a state government level because of damage to public infrastructure is very real and made even more prominent as a consequence of this new tax.

Those reasons alone provide a very compelling argument as to why this new tax should not be passed by the Houses. Of course, there is a more fundamental issue as well, and that is one of economic management. There is one inescapable reality—that is, with competent economic management there would have been enough fat built up in the federal budget for there to be no need for a new tax. Had the Howard government been in place—or, indeed, its successor, with Tony Abbott as Prime Minister—it would have been able to competently manage Australia’s economy and I have no doubt that we would not find ourselves nearly $100 billion in debt. We would have been able to accommodate the costs associated with this natural disaster out of existing government revenue. The reality is that this has happened many, many times previously. There were the unfortunate and tragic fires in Victoria. The consequence was the loss of so many homes and so many lives, and an economic cost that was estimated at around $4.4 billion. The recovery effort for that natural disaster was funded out of existing government revenue. There was no new tax. There was no need, because the previous government were competent managers.

What is interesting is that I have been running a website poll on my website on this issue. The member opposite, the member for Dobell, and earlier the member for McEwen made comments about the website poll, suggesting that in some way, shape or form my views in this chamber are inconsistent with the views of my electorate. What members opposite do not seem to get is that because it is a poll on my website I have all sorts of diagnostic tools available to me to find out where votes are coming from. Members opposite came and made a big deal about this poll in the 90-second statements before question time, and now the chairman of the economics committee is in here, trying to make a big deal out of it. Interestingly, there were 42 responses to the question on my website poll. Of the 42 responses, there were only 30 unique IP addresses. Two IP addresses which were responsible for multiple votes on my website happened to belong to the Australian Parliament House network. Who’d have thunk it? We have Labor members making a big deal about how a poll on my website does not seem to reflect the community mood, and yet so many of the multiple votes came from the Australian Parliament House network. It is almost as if you can see Labor members opposite clearing their cache, voting on the poll, clearing their cache, voting on the poll—and then coming in here and making a big song and dance about how the results of the poll were in some way inconsistent with the views of this side of the House. In fact, one of the votes even came from the United Kingdom, so at best there were 27 votes from one parliamentarian, originating in Australia. We are going to be running an audit on those 27 votes, but what we know is that the Labor Party has been caught out rigging a poll and coming in here to try to make a song and dance about it. We have the IP addresses. We know the Labor Party is skewing the results of this as it skews the results of everything. Not surprisingly, the old Labor adage is, ‘Vote often, vote early and try to make a big deal of it.’ (Time expired)