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Wednesday, 23 February 2011
Page: 1246


Mr NEVILLE (7:46 PM) —Despite the very engaging title of this bill, Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011, it is plainly and simply a flood tax. It does not meet the standards of former levies on several fronts. Before I outline where it fails, let me first say this: I have no objection to paying levies that are just, necessary and uniformly applied—note ‘uniformly applied’. Here again, this particular tax, or levy, if you want to call it that, does not meet those requirements.

The first thing is its size: $1.8 billion. Medicare aside, that is 3½ times the size of the previous largest levies, such as the dairy levy and the gun buyback levy. The second thing is the precedent. We have never before in Australia’s history, certainly not in recent memory, used levies for natural disasters. They have always been funded through consolidated revenue. You can look back at precedents such as Cyclone Tracy and the 1974 floods in Brisbane and come all the way through to Cyclone Larry and the Victorian bushfires and you will find that levies have not been imposed. They have always been funded from consolidated revenue. The third thing is its application. Is it applied uniformly across the country to all people according to their means? No. People who have already received various forms of flood payment will not be required to pay the levy. There is an unintended downstream consequence of that. The member for Page proudly told us that this would only be applied to 50 per cent of the population, as if there were some virtue in that. There is no virtue in that. She mentioned that one of the more recent levies, the gun buyback levy, was applied to 80 per cent of people—and so it should have been. If we have a levy it should be applied according to means, uniformly across the spectrum to all Australians.

The fourth thing is how it was imposed and how it was characterised. It was imposed after the Premier’s appeal in Queensland began. The Premier’s Disaster Relief Appeal, which to this point has received about $220 million, was at about $180 million to $200 million before the Prime Minister announced this levy. In my view, that was cynical. If you had intended to impose the levy, why would you have not imposed it earlier? I will tell you why: because a lot of people would not have donated. One of the downstream effects of this is going to be the impact on philanthropy. Will people be as willing as they were literally in their tens of thousands to sweep streets, wash down houses and help people? Will they donate generously if they know there is going to be a tax imposed to do that sort of work? It is creating a precedent for a disaster tax. Once you have done this once you can always go back a few years later and say, ‘Oh, well, we had to do it for the Queensland floods; I suppose we can do it now.’ Then, as I said, the effect on philanthropy could have long-term impacts that you cannot foresee at this stage.

Then there is its credibility. Hardly an economist in Australia said it was a good idea. People like Saul Eslake and Professor McKibbin said that it was not necessary—it was one, but the least favourable, of the alternatives that the government could have chosen. It was, might I say, the easy way out. As the member for Higgins characterised it, it is the makings of a disaster tax.

There is plenty of scope for the government to be able to handle about $5½ billion worth of debt. If you have a look at the direct tax income in the budget papers—things like income tax, super tax, company tax and GST—from about 2009 through to 2014, you will find that from 2009-10 through to 2010-11 there was a growth in income of $28½ billion. The next year, 2011-12, there was another $28½ billion. The year after that, in the forward estimates for 2012-13, there is $22 billion. In 2013-14, there is $20 billion. In total, that is near enough to $100 billion. Are you seriously telling me that a government that is concerned with people’s futures and believes all its own rhetoric, which we have heard today, about the poor people of Queensland, Victoria and Western Australia could not find $5½ billion out of $100 billion in the four years from last year onwards? What sort of managers do we have here?

Have a look at some of the things that were cut to make up that amorphous $5.6 billion. Quite apart from the $1.8 billion, $1 billion is going to come out of infrastructure works across Australia. But the greatest irony of all, if Queensland is the great concern of this government, is that the government has taken $325 billion—nearly a third of the money—out of the very state that needs it most, and it has largely taken it out of roadworks and floodplains. The greatest systemic failure during the flood crisis, and to some extent during the cyclone crisis that followed, was the Bruce Highway. My colleagues here from North Queensland and from the Riverina, on the border with Victoria, know all about this. The Herbert River flood mitigation plan cost $40 million and it was deferred.

I might be a cynic, but I would like to think that when these things are imposed, if the government is going to cut or defer six infrastructure projects, it would try to do it fairly. But—surprise, surprise!—five of the six projects are in coalition seats. Even more surprisingly, three of those five were firm, hand-on-heart promises of sitting Labor members who have since been defeated. I might be cynical, but why would you cut those projects? I add that the sixth project is in the seat of the Independent member for Kennedy.

The other thing I put to the government about management and the question of why it could not find $5.6 billion is that one of the things that we did was to create the Future Fund of $70 billion. We created a communications fund, which has been raided, of $2½ billion. We had $6.5 billion in an education endowment fund for our university research into the future. The Future Fund was going to be able to fund the long-term superannuation needs of the Public Service. In all, we had put aside about $100 billion by the time Labor came to power.


Mr McCormack —Where is it now?


Mr NEVILLE —My colleague the member for Riverina says, ‘Where is it now?’ It has gone, and in its place is a debt of $79 billion. So we have gone from $100 billion in reserves to $79 billion in debt. That is truly extraordinary. I stand to be corrected, but I think that would amount to about $4½ billion of interest—that is, twice what the levy is going to raise.

You can look at this from any angle, but I think the worst thing of the lot is that the Prime Minister tried to characterise this as ‘mates looking after mates’. It is nothing of the sort; it is pure, unadulterated spin by a government that cannot manage and did not want to delve into its reserves properly or plan over a period of three or four years to put sufficient funds aside to look after eventualities like this. Where flooding has occurred, even some of the $1,000 community grants have been badly administered. In fact, the Treasurer said that anybody who applied for one of those and did not need it was ‘low-life’. Even if you met the guidelines, you were still ‘low-life’. But the only low-life are the people who make rules that cannot be adhered to properly or who are cavalier and then try to pull the thing back when it gets out of control. That is where the low-life lies. This is a bad tax. It could have been funded much more easily from another source. It is a disgrace and it is an insult to impose it in the name of mateship on the backs of people who have suffered tragedy.

Debate adjourned.