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Monday, 28 February 2011
Page: 618


Senator HUMPHRIES (1:31 PM) —I rise in this debate on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and related bill to indicate that I think this legislation is a serious mistake and there are viable and appropriate alternatives. I want to start by comprehensively rejecting the assertion from Senator Polley, one made in this debate by other speakers from the other side of this chamber, that somehow opposing the government’s flood levy legislation is equivalent to saying that we are not in favour of assisting the disaster affected people of Queensland, Victoria and Western Australia. That is a false dichotomy. It is not sustainable and it says a lot about the weakness of the government’s case—that it needs to so comprehensively misrepresent what the coalition is saying about this and that it would simply parrot the line, ‘We’re doing something about the disasters in Queensland and elsewhere and the coalition is trying to stop us, and therefore the coalition does not support action to assist hard-hit communities’. That is, of course, untrue.

The point that the coalition makes in this debate is that assistance must be provided to people who have been hit hard and that those people deserve the compassion and support of the rest of the Australian community, compassion and support which was very much evident during the life of the previous government when natural disasters such as Cyclone Larry led to fulsome and very responsible measures to deal with the sorts of losses involved. But we do not believe that the response of this government is the appropriate one to take. Sometimes in these debates about millions if not billions of dollars, it is easy to lose some perspective. The government insists that this levy, to raise $1.8 billion, is absolutely necessary to fund the reconstruction of infrastructure in disaster affected areas. It insists that the particular balance which the government has achieved—that is, $1.8 billion in a new tax and the rest of the estimated $5.6 billion cost of reconstruction from cuts to or deferment of government programs—cannot come from anywhere else except from that which the government has proposed.

I want to put some perspective into this debate by reminding those opposite in particular of some of the other figures that are confronting the Australian community at the moment. There is $1 billion, not the cost of the Home Insulation Program but the cost of fixing the disaster which the Home Insulation Program has evolved into. The Home Insulation Program cost $2.45 billion all up and it still leaves thousands and thousands of Australian homeowners uncertain about whether their homes are safe after the government’s inept hand of interference. So there is a billion dollars wasted by this government. There is $2 billion at least—the figure could be as high as $8 billion—wasted under the government’s $16 billion failed school halls program, with much of that money yet to be rolled out and, presumably, more waste to be executed.

There is $672 million—over a third of the amount proposed to be raised by this flood levy—for the Strategic Indigenous Housing and Infrastructure Program, or SIHIP, a program that spent $45 million on consultants before any concrete was poured and has handed over to date only 134 houses over three years—a disaster of a program that continues to waste the money of Australian taxpayers. There is $275 million on the Green Loans Program—so badly managed that it has now been aborted by the Gillard government, in the process wrecking the careers of assessors who paid thousands of dollars to become accredited only to find they had no market to serve because of the government’s ineptitude.

This government has a seemingly endless capacity to waste enormous amounts of taxpayers’ money. It still has on its books huge amounts of spending which could be avoided or deferred in order to avoid placing a burden on the shoulders of Australian taxpayers. That is the point that the coalition is making in this debate. It is not that we wish to see any stinting in the level of support by the Australian community for those affected by disasters such as floods. We think that the burden placed on the Australian community should not be added to by the imposition of new taxes to deal with crises or problems that come along from time to time—because there will always be another good reason to put on another tax and, sadly, there will always be another disaster or natural problem and there will always be some sort of financial challenge. We know that these things are experienced by governments all the time everywhere in the world for all sorts of reasons.

On this side of the chamber, we believe that the best response to those crises is to have a well-managed budget, a budget that operates in surplus with minimal or no debt so that there is fat in the system to marshal resources to deal with problems as they arise. Given a Commonwealth budget of some $300 billion—a budget that the opposition have shown to be filled with wasteful programs and padded with fat—when the government gets handed a $5.6 billion bill, we say that it does not need to stick its hand in taxpayers’ pockets to deal with that problem. What makes the government’s claim that it needs this levy even more disingenuous is the fact that the government itself has admitted it does not need to raise all of this money through extra taxes. It admits that there are other amounts it can save within the budget. At the National Press Club when the Prime Minister announced her new flood tax, she was asked, ‘What if the bill is higher than $5.6 billion?’ The answer was: ‘We won’t impose a higher levy; we’ll find money elsewhere in the budget. We’ll make cuts.’

The question remains, a question completely unanswered in this debate by members on that side of the chamber: where exactly are those cuts and why are not they making them now as an alternative to raising that $1.8 billion levy on the Australian community?


Senator Lundy —Where will these cuts go?


Senator HUMPHRIES —You tell us. You have said the cuts are going to occur. You have said you have the money to make those cuts. If those cuts are a lower priority than meeting the needs of the people in the flood affected parts of Australia, why aren’t you implementing those cuts now? To respond to Senator Lundy’s interjection, we have not wiped our hands of the responsibility of determining what sorts of cuts ought to be made. The coalition have done quite an extraordinary thing from opposition. Not only have we rejected the government’s plans; we have actually said what we would do instead. We have said, ‘Here’s where we’d make cuts in order to achieve the same objective.’ As a responsible opposition, we believe that we should offer alternatives, and we have and we have generated some debate about that. Some people do not like the things that we have said we are going to do, but we have put our hands on our hearts and said, ‘We won’t just expect the government to achieve miracles; we’ll make our own alternative proposals.’

The Leader of the Opposition has made quite a extraordinary and, as far as I can recall, unprecedented commitment—that is, that he will sit down with the Prime Minister, if she is so minded, and work through bipartisan options for savings to avoid having to impose this tax. What more of a gift could the Prime Minister possibly ask for than an offer from the Leader of the Opposition to share the pain of making any particular decisions about cuts in spending in order to achieve the objective she says is most important? But this has been swept away in the government’s rhetoric that it is their way or the highway—only their levy and their spending cuts can work. Of course that is a nonsense.

The other important point is that this new tax does not fall equitably on the shoulders of the Australian community. The government say that it is exempting certain people—the people who are already disaster affected—from the imposition of the tax. They say that the definition of those people are those who have received the Australian government disaster recovery payment. But that is a most imperfect test of those who have been affected by the recent natural disasters. It is problematic because it applies to people who were affected in certain ways—they suffered injury, a family member was killed, they suffered loss of power to their homes for a certain period of time et cetera. They are exempted. But we know, and Senator Furner would know, that there are many, many people in Queensland who were directly affected by these floods, who do not fall within one of those categories, who are not entitled to receive the disaster recovery payment—for example, businesses that simply cannot operate any longer because their business lost their customer base, could not get their goods to market because of cut roads, experienced interruptions to their supply chain or lost productivity because people could not get to work. Some businesses are absolutely on their knees in places like Queensland, but they are not eligible either as a business or as individuals for the disaster recovery payment. Those struggling businesses and the families who depend on them will be paying this levy. They are meeting extra costs by virtue of what has occurred, they are struggling to meet the consequences of these disasters, yet they are being hit with a flood tax. That is not equitable. It would be avoided if the government found other ways of meeting this cost such as through cuts to spending.

It is bad enough that they impose further cost-of-living pressures on people who are struggling with rising fuel, food and power costs; it is worse to impose those costs on people who have been hit so hard by natural disasters. Of course, we know that these cost of living pressures are becoming very severe for many people in the Australian community—in fact, almost everybody. We have seen rising power prices made worse by the prospect of a carbon tax. We have seen rising fuel prices to be made worse by the imposition of a carbon tax on fuel. We have seen rising food prices to be made worse by a carbon tax. We have seen rising interest rates due to Labor’s wasteful spending. We see a rising margin between the RBA cash rate and the cost of borrowing for small business due to Labor’s wasteful spending. Now, on top of all this—on top of sharp increases in the cost of living—we see the real possibility of a flood tax hitting every dollar that many taxpayers earn. That is an unfair imposition in the current circumstances, particularly from a government that said in 2007, when it was campaigning for election, that it would do something about the cost-of-living pressures on Australians. I do not so much mind if the government have virtually given up on that promise and are now doing nothing to achieve that particular objective. Of course things like GROCERYchoice have gone out the window—another broken promise. They have done nothing to make that commitment real. That is bad enough. But, now, they are actually adding to cost-of-living pressures by imposing new taxes. This is the party that said that it would not increase the net tax burden on Australians, as I recall. That is two promises broken in one fell swoop. To do that to the Australian community is unconscionable.

I remember Mr Rudd’s assurances in 2007 that he was a ‘fiscal conservative’ and that he wore that badge with pride. Yet in four years Labor have taken a budget position that was $20 billion in surplus with cash in the bank and turned it into a budget that is $41 billion in deficit with net debt of over $100 billion—to the point where when disaster hits this nation they do not have the resources to pay the debt back without going back to the Australian people and reaching into their pockets yet again.

This week we have been reminded that the latest Prime Minister made the election eve commitment that there would be no carbon tax under the government she led, yet now this parliament is facing the prospect of debating just such a tax in the coming weeks and months. The fact is that in the imposition of this new flood tax we see a pattern of behaviour of Labor governments over decades reinforced. They are not able to manage spending, they are not able to reduce debt and deliver surpluses and, when pressure comes along, as it inevitably does, the first thing they look to is to increase the level of taxation on the Australian people.

I want to make a couple of comments about other contributions to this debate. Senator Ludlam in his speech suggested that climate change is loading the dice in favour of more frequent natural disasters and that therefore a levy like this is an appropriate way of responding to it. Assuming that we accept his logic, what Senator Ludlam was arguing for in that circumstance was not a one-off, temporary levy but a permanent levy. Again, on this side of the chamber we would say the best permanent response to natural disasters is to have a strong budget in surplus with minimal or no debt.

Senator Polly told us that not one person had complained to her about the flood levy. I would respectfully invite Senator Polly to come around to my office and have a look at my inbox—and, I am sure, the inbox of most senators on this side of the chamber—and she will see a very different picture of what the Australian community is going through as it contemplates this tax.


Senator Bushby —She needs to get out and talk to her constituents.


Senator HUMPHRIES —I think getting out and talking to people might be a very good idea for Senator Polley and I suspect that a more—


Senator Furner —You should have got out and talked to some of the people affected by the Queensland floods. Maybe you would have a different picture.


Senator HUMPHRIES —I have been to Queensland twice in the last two weeks, Senator Furner. I have spoken to people directly affected and I am very well aware of what they think about these issues, and I do not think the Australian people, whether directly affected or not, welcome the prospect of an increased burden on their standard of living. It may be in fact that many Australian people have given up talking to those people who constantly talk about new taxes rather than talking about taking off cost-of-living and other pressures on Australian families.

Senator Polly raised the question of the other levies that were imposed during the life of the Howard government. That is a fair argument to raise: why did we support levies then when we do not support a levy in this case? Senator Polly raised, for example, the gun buyback levy and the stevedoring levy. I ask those of you who were interested in politics a decade ago to think back to those days and to what was happening in Australian politics at that time. The early years of the Howard government were characterised by very determined, serious cutting of government spending. I know, because I lived in the city where many of those spending cuts were falling. They were very serious cuts. There were no hollow logs left, there were no stones unturned, when it came to examining ways to reduce government spending. Representatives of those opposite were attacking us because we were cutting so deeply into government spending programs.

When we talked about having to impose a levy to buy back guns from the Australian community you did not argue that that was not an appropriate thing to do because you knew that there were no alternatives to cutting spending. You argued that we had already cut far too seriously at that stage. We did what we had to do because we had comprehensively addressed the question of government spending. We turned to raising a temporary levy—and it was temporary—to deal with the immediate challenge to the Australian taxpayer.

That is not the situation we find ourselves in today. You have demonstrated yet again your inability to address wasteful government spending. We on this side of the chamber have said: ‘We’ve got experience in this. We will help you deal with the problem of government spending. Come and talk to us. We will show you what to do and we will wear the political burden of dealing with wasteful spending with you. If we say this can be cut, we’ll stand beside you and take the heat for making the cuts that we recommend.’ But you cannot do that because you do not like to face up to the reality—a blindingly obvious reality, I would have thought, after three years of Labor—that your ability to spend wisely, judiciously and only as necessary to deal with the problems of the Australian community simply is not there.

So I will not today rise in this place to vote for a new tax on the Australian community. I will not increase the burden on Australians who are struggling with higher prices for power, fuel and groceries. That is not why I was elected to the Senate. There are alternatives. We have supported those alternatives, we stand by those alternatives and, until the government addresses those alternatives seriously, we on this side of the chamber will oppose new taxes on the backs of Australian people.