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Monday, 28 February 2011
Page: 599


Senator CASH (11:57 AM) —I rise 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. In considering the underlying public policy behind these two bills I think it is useful to recognise that there was a series of natural disasters that have caused havoc to the majority of Australian states, particularly in the last three months. In December 2010, the Carnarvon area in Western Australia and areas across New South Wales suffered major damage from flooding. During late 2010 and early January 2011, Queensland suffered major flooding that caused so much havoc that nearly three-quarters of the state was declared a natural disaster area. During January, parts of Victoria were subjected to major flooding and, in my home state of Western Australia, the Carnarvon region was again hit by severe flooding, which compounded the damage caused by the floods a month earlier.

Early last month, Cyclone Yasi devastated much of North Queensland, inflicting major damage to houses, public and private infrastructure and crops. Then, in mid-February, destructive winds from tropical Cyclone Carlos inflicted damage on Darwin and then proceeded down the west coast to lash Onslow, Exmouth and other areas down to Coral Bay. Then, in late-February, part of the Kelmscott and Roleystone residential areas, located about 30 kilometres east of Perth, lost 72 homes to a raging bushfire, with at least 30 more homes suffering damage. The damage was so significant that Premier Colin Barnett declared the area a disaster zone.

I provide this context of the damage caused by natural disasters in Australia over the past few months to illustrate that the damage was not confined to the east coast of Australia; there was major damage and financial loss in other parts of the continent—in particular, in Western Australia. There is no doubt that we as a nation have suffered severe economic loss and social upheaval as a consequence of the natural disasters. Current estimates put the cost of the damage suffered at around $5.6 billion; however, I think the actual cost will exceed this by several hundred million and may well reach $8 billion. There is no doubt that we have to offer major support to those who have been affected, and in many cases devastated, by these disasters and that the burden of the support must come from a national level.

In that regard, there are three main options to raise the required funding: raise taxes, temporarily increase the fiscal deficit or cut government spending. In political terms you can actually divide these three options into the categories of easy, less easy and downright lazy. Clearly, raising taxes or a temporarily increasing the fiscal deficit are the easy options. But I hasten to highlight that a government that takes these options is also taking the incredibly lazy option. Cutting government expenditure is the most economically responsible option, and that may well be why those opposite did not take that as the option of first choice—because that option requires a commitment to fiscal responsibility, political determination and skilled management of the economy, something that we know those on the other side are completely incapable of.

The bills that are before us today are not matters of good public policy; they are not bills that will better the nation. What we are debating here today are bills that are necessary for one reason and one reason only: the Gillard government’s first and only instinct when it comes to solving problems is to create a new tax. The imposition of this tax is one of political choice, not economic necessity. And the Prime Minister’s record to date in this regard is proof that, when it comes to making national economic decisions, the Gillard Labor government will always take the cheap political decision, to try and curry favour with its supporters, rather than take long-term economic decisions that are in the interests of this nation. Australians understand—they understand very well—that Prime Minister Gillard, consistent with left-wing ideology, has never seen a tax she does not like and has never seen a tax that, if it is in existence, she will not hike; such is the level of economic incompetence that engulfs the current Labor government.

This new flood tax may well go down in history as Labor’s laziest response to meeting the unanticipated costs associated with the repair and reconstruction of damaged public infrastructure. Labor’s default position is always to take the easy or lazy way out by failing to address its fiscal ineptitude and economic mismanagement. Labor has made a very deliberate choice to slug the mums and dads of Australia, because Gillard Labor, just like the Rudd Labor government, is addicted to increasing taxation. Why does it need to do this? Because it needs to satiate its appetite for its high-spending practices and its economic incompetence.

The inescapable reality in the debate before us is that, had there not been such a significant waste of taxpayers’ money on a number of the government’s poor-spending projects—and we can list them: the computers in schools program, the disastrous school halls program, the pink batts disaster, the Green Loans disasters, and the list goes on and on—we would actually not be standing here today; there would not be any need for the Labor government to bring these bills before the parliament. The entire budgeted revenue from this new flood tax is less than what has been wasted in the government’s Building the Education Revolution initiative alone. Think about that: had the government not wasted what is estimated to be $2.6 billion on its Building the Education Revolution program, there would be no need whatsoever to slug the mums and dads of Australia with this new tax.

The Prime Minister, in her second reading speech on this legislation, said:

I always expected Australians to ask all the hard questions about why they are being requested to step up and pay more. But at the same time, I always believed our community would understand that additional contributions are required to meet real additional needs.

Only a Prime Minister who is completely, totally and utterly out of her depth would seek to exploit people’s generosity to flood victims in an attempt to win acceptance for what is just yet another Labor Party tax. We all remember that, prior to the imposition of this flood tax, the Prime Minister called on Australians to donate their time, to donate their money, to help those who had been affected by the natural disasters—and, in typical Australian style, they did. We all saw it on the TV. With instantaneous communications it was beamed into our homes each night. Australians whose property was not directly affected by the cyclone or floods were moved to go out and help their fellow Australians. I remember the images and the efforts of these absolutely fantastic volunteers, who were often seen waist-deep in water and covered in mud, helping out those who had suffered so much loss as a consequence of the natural disasters. This really typified what Australian mateship was all about.

But what these volunteers did not know when they were called upon by the Prime Minister of Australia to donate their time and to so generously donate their money was that she would then slug those same generous people with this flood tax. That is exactly what the Gillard Labor government have done. That is their way of saying ‘thankyou’ to the people of Australia: slug them with a tax.

Australians are entitled to feel betrayed and duped by Prime Minister Gillard. The Prime Minister promised Australians—as she has done time and time again—that this year would be a year of delivery. But what the Prime Minister forgot to tell the people of Australia is that the year of delivery will come at their financial expense. Ms Gillard pitches this new tax as a mateship tax. But what the Prime Minister forgets is that mateship is all about helping people; it is not about taxing them. The Prime Minister and the Labor Party treat the people of Australia as if they are a never-ending pot of money in which the Labor Party can put their grubby little hands to take out money and spend and waste it with no form of accountability whatsoever. They forget that governments do not spend their own money; they spend taxpayers’ money. Taxpayers are entitled to demand that government will spend their money wisely. In doing so, a government’s first option should never, ever be to tax them. Its first option should always be to cut back on additional spending when additional funds need to be found for disasters such as these ones.

In her second reading speech, the Prime Minister also said that this was a one-off, temporary levy and when the clock hits midnight on 30 June 2012 the levy will end—the bill ensures it. I can only assume by that statement that the Prime Minister is living in a self-delusional reality, because there is going to be nothing temporary about this legislation. The pain that is going to be felt by the mums and dads of Australia as a result of Labor’s economic incompetence will well and truly be felt after the clock hits midnight on 30 June 2012. Why? Because the people of Australia know that this tax is but one of a suite of taxes that the Prime Minister of Australia has pledged to slug the Australian people with during her time in office.

Has the Prime Minister of Australia already forgotten her recent announcement regarding her conviction to slug the mums and dads with a carbon tax—an announcement that is a complete, total and utter betrayal of the Australian people? We all remember prior to the 2010 election the Prime Minister making the solemn commitment to the Australian people: ‘There will be no carbon tax under a government I lead.’ She also said, ‘I rule out a carbon tax.’ Then, having categorically ruled out the carbon tax before the election, she has categorically ruled it in after the election. When the Prime Minister says, in relation to the flood levy, that it is a one-off, temporary levy and that when the clock hits midnight on 30 June 2012 the levy will end, she conveniently forgets the ongoing pain that is going to be felt by the mums and dads of Australia as a result of her betrayal when it comes to implementing the carbon tax that she said prior to the election her government would never, ever implement.

The price of this betrayal will be paid by the mums and dads of Australia, long after the flood levy has ceased, every time they pay their electricity bill. It is estimated that the carbon tax will add $300 a year to the average family’s power bill. It will also add 6.5c to the price of a litre of petrol. So, long after the clock has ticked over on 30 June 2012, every time you flick on your electricity you will pay Labor’s carbon tax. Every time you put petrol into your car at the bowser you will be paying Labor’s carbon tax.

Long after the flood levy ceases on 30 June 2012, there is another tax that Australians will be feeling the pain of, and that is the minerals resource rent tax. Again, it is nothing more and nothing less than a sham. This is a bad tax that will have a destructive impact on our mining industry and our energy sector. Again, is it good public policy? No, because this tax, like the carbon tax and the flood tax, exists for one reason and one reason alone: to bail the Labor government out of a financial black hole. It seems that the only plan of this Labor government is to continue in the high-taxing, high-spending style of previous Labor governments.

I say to the people of Australia: if you think that it is bad now, just wait until 1 July, when the Greens take control of the Senate. What other taxes will the Labor government impose on the people of Australia? Will we have an inheritance tax? Should Australians pay death duties? That is a favourite of Senator Bob Brown. Should high-income-earning Australians be slugged with a special tax surcharge without there being a definition of what a high-income earner is? Nothing can be ruled out under this Labor government and everything must be ruled in.

Some time ago, the Prime Minister claimed that this new tax would not be imposed on those affected by the floods. But, as usual, in making this statement there was a broad and sweeping claim made to try and curry political favour with those affected. It was a broad statement with no specifics about who would be exempted. If you go to clause 4-10 of the bill, which deals with the temporary flood reconstruction levy, there is an interesting provision. It gives the relevant minister the discretion to determine if a person is to be regarded as a member of a class of individuals who will be exempted from this tax. There will be many people who have been affected by our recent natural disaster who would be very concerned about the political implications of this discretion and the fact that any decisions are going to be made on the basis of an undrafted legislative instrument which gives the government power to do something or to not do something.

I am also very concerned that there is no guarantee in this legislation that people outside the flood and cyclone damaged areas of Queensland will benefit from the funds that are being raised by this tax. Where is the statutory guarantee that people in Carnarvon in Western Australia or the people in Victoria who have lost their homes and life savings as a consequence of the floods and the bushfires will be recipients of this tax?

The coalition, despite the protestations of those on the other side, has set out an economically responsible way to find the $1.8 billion for the reconstruction. There is plenty of scope in the budget to cut, reprioritise and defer spending in order to find the $1.8 billion that the government plans to raise through this new tax. This is a fundamentally unfair tax. It is wrong in principle. It is bad public policy. The legislation should be opposed.