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Monday, 28 February 2011
Page: 738

Senator BACK (8:55 PM) —The very fact that we are here debating the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 is a testament to the incompetence of this Labor government. We should not even be here debating it. If this government were competent, it would still have most, if not all, of the surplus funding of $22 billion which it inherited from the last Liberal coalition government led by Mr Howard. If it were competent to manage those funds, we would not even be having this discussion. Do we support Queenslanders, Victorians, New South Welshmen, Western Australians, Tasmanians and New Zealanders in their natural disasters? Of course we do. We always have and we always will, so do not hide behind that curtain of protection by appealing to the goodwill of Australians.

Why do we need a levy? As Dorothea Mackellar said in her poem a hundred years ago and others have said repeatedly, we are a land of drought and flooding rains. We always have been a land of natural disasters and we always will be. Some of them I will draw attention to this evening. What would any responsible family, any responsible household, any responsible business do? They would always save for a rainy day. Labor governments do not know how to save for rainy days, but they were handed a surplus of $22 billion when they came into government and one would have thought they would have been capable of keeping this budget in surplus for that purpose.

I have sat here this evening and today and listened to the nonsense that has been put forward about Howard-Costello governments always calling for levies when the need arose—a levy on gun control, a levy on dairying and a levy on Ansett. Why did the Howard-Costello government have to do that? There were two reasons. One was that that government inherited a $96 billion debt from the last Labor government and it spent through until 2007 repaying that debt. For those who are not aware, the average interest bill alone whilst they were paying down that principal was in excess of $5 billion a year. That was one of the two reasons they had to do it. The second reason was that they were very active in prudently managing the economy and in effecting cuts where it was necessary. It was only after their efforts to repay debt and after their efforts to prune the budget that they may have had to go to a levy. I will remind this chamber that it did not even go to a vote when Mr Howard called for the levy on guns as a result of those shocking events in 1996 in Tasmania. The circumstances here today could not be more profoundly different. Labor did not inherit a $96 billion debt; it inherited a $22 billion surplus. We have seen little if any evidence of this government being willing to cut its cloth so that it could make these savings on its own.

What are the funding alternatives in an event such as this? There are three: the first is to find alternative cuts or deferrals, the second is to add to loans and the third is a levy. Which one did the government rush to? I return to the alternative of funding cuts or deferrals and remind Senator Carol Brown, if I may—through you, Madam Acting Deputy President—that the coalition offered to work cooperatively with this Labor government to try and find those extra cuts in the budget. What was the reaction? As usual it was one of rejection.

If I could return for one moment to when the global financial crisis first hit, who was the person who first suggested that there be some limited level of underwriting of deposits by the banks? It was Malcolm Turnbull. The figure he suggested was $100,000. He was laughed at and was rejected by this Treasurer, who knows very little about economics, who only days later not only accepted—

Senator Farrell —You rejected him, too.

Senator BACK —We did not reject the man at all, Senator Farrell.

Senator Farrell —You did; he was your leader.

Senator BACK —We will have to have a conversation about that at another time. In fact, Treasurer Swan went beyond the $100,000 deposit guarantee and put in an unlimited deposit guarantee and, of course, we know the rest is history. The government had the opportunity and the offer of the coalition to work cooperatively to find some of those cuts or deferrals. For example, since we have had the floods down the Murray-Darling, we could defer a $600 million payment for water buybacks, which would appear to not be necessary in this or the next financial year, and defer the Australia-Indonesia education partnership of $450 million—not to stop it, not to completely remove it, but to defer it. At a time when Indonesia was in terrible straits as a result of the tsunami, the Howard government donated $1 billion when their own Muslim brothers in the United Arab Emirates, in Dubai, came up with the princely sum of $1 million to assist. This is a time when we need support and need to be able to wind back some of that $448 million.

Of course, we come to the famous automotive transformation scheme overseen by Senator Carr—Carr by name and car by nature. That was $500 million which could be either deferred or indeed cut.

Government senators interjecting—

Senator BACK —There are plenty of opportunities, Senator Brown and Senator Farrell, to be able to avoid that levy. The second option is to increase loans. But what has this Labor government been doing since the middle of 2009? It has been borrowing in excess of $100 million a day, seven days of every week. They have been borrowing $700 million a week. Of course, they have the great big excuse that they want to return the budget to surplus.

Senator Carol Brown interjecting—

Senator BACK —Do not worry about it, Senator Brown—you have never returned a surplus budget. Labor would not know what it was to return a surplus budget. Nevertheless, why is the loan option not attractive? Because they are embarrassed by the amount they are borrowing at this moment. We know, of course, the response of the banks to that.

We turn then to some of the advice the government received in an inquiry recently. Mr Eslake said:

I would be concerned if every time a significant or expensive natural disaster or indeed any other exigency fell to the Australian government the response was to slug the 40 per cent of the population who are considered rich enough to bear an additional tax burden.

Professor McKibbin said:

My view is that we should always, where possible, establish good principles for economic management because when the big decisions have to be made we have a framework in which to act, whereas if we continue to do what we have always done we end up becoming a banana republic.

Where have we heard the term ‘banana republic’ before? I think it was from a previous Labor Prime Minister.

So we look then at this flood levy, the third option, that we say is totally unnecessary. What about the bureaucracy that is going to be put into place to administer it? What about the fact that the levy was called down before Cyclone Yasi hit the North Queensland coast? What do we do now? Do we increase the levy, do we increase borrowings or do we dig a bit further into cuts? What do we do when we have another natural disaster? Is the $1.8 billion cast in stone? I doubt it. And of course, as Senator Carol Brown said, there will be some in the salary brackets who will be exempted, and I intend to come back to that. Isn’t the brilliant management of this particular government wonderful?

In some of the deferrals the government have decided to defer flood mitigation work on the Bruce Highway and the Herbert River floodplain. I do not know those areas all that well but I would have thought that the highest priority should be protecting the Bruce Highway through keeping the channel of logistics and transport open and doing something about flood mitigation on the Herbert River floodplain. They ought to be highest on the priority list to do, not to cut. But, of course, that is what we see the government doing.

To secure the support of Mr Wilkie, in this case, we saw that they had already reversed one of the earlier decisions, which was about the Australian learning and teaching program. They also reversed a $365 million solar flagship and the NRAS program. And it is my understanding that Mr Katter was able to get $650 million for North Queensland flood mitigation as a result of Cyclone Yasi. At least he got something for his vote. Our good member for O’Connor, Mr Crook, got absolutely nothing. Not only did Western Australia get nothing—and I do not intend dwelling on WA, much to your surprise, Madam Acting Deputy President Kroger—but the good member got nothing for his electorate of O’Connor in giving away his vote.

This government has lost the confidence of the Australian people. We saw its waste in the Gillard memorial halls exercise. Some of us in this chamber sat and watched and wept as we learnt about the waste. In three states only—the states of Queensland, New South Wales and Victoria—when you took the figures per square metre for the building construction in the state schools as opposed to the independent schools, the dollars per square metre differential equated to more than $2 billion. There alone, in one project, in three states, is the equivalent of the levy that this government so shamelessly wants to visit upon some within the Australian community. In the pink batts program, magically and mystically, there was another $2 billion of waste. There were the green loans—one could go on and on. There is no confidence in this government left in the Australian people.

How then do we prioritise these projects? If there is $5.6 billion and if $1.8 billion is the levy, there is $3.8 billion left to get underway with the reconstruction programs. We have seen that the Prime Minister has gone through and made savage cuts so heroically to the budget. What are they? Cash for clunkers is one that she was ashamed of to start with. Everything that she has cut is from projects that she knows very well were dear to the heart of her predecessor, the person she knifed and deposed but also the person of whose gang of four she was a member. The government has discontinued bad policies, bad funding and bad projects.

As was said earlier this evening, all this is is a tax on generosity. We are per capita the most generous country in the world when it comes to responding to natural disasters. I spoke earlier about the overwhelming response by Australians to the tsunamis that afflicted those to the north. We have seen it with Christchurch. We saw it with these floods. I would be very interested to know what the change in donations to the Queensland Premier’s flood appeal has been since 27 January, when this Prime Minister shamelessly announced the introduction of the levy.

Senator Boyce interjecting—

Senator BACK —It is a secret, apparently, Senator Boyce tells me. They are so ashamed of the cut-off of funds in those donations that they will not even come out—well, it certainly did not cause much difficulty for that Premier to be in front of the cameras when there was a story to be told. I want her to tell us: what was the cessation of donations once it became known that people who had donated generously will now, in fact, be levied? As has been said by the government’s own advisers, this has not been an economic decision; this has been a political decision—a poor political decision, a disincentive to donate.

It is interesting, isn’t it? Just today we see that, because Queensland, of all the mainland states, has been alone in not insuring against disasters, we find ourselves now in the circumstance of having to grant further support. Whilst there will be an outpouring of support, assistance, time and effort, it behoves the Queensland government to do as the other mainland states do—that is, to take out that disaster insurance—as indeed it behoves people in fire prone areas and flood prone areas to insure. It is simply not good enough. We now see, with the current break-up of the GST as recommended by the Grants Commission, that Queensland will save $15 a head, Victorians will save 50c a head, and it will be the other states that bear that burden.

Speaking of Victoria for a moment, it is only two years ago that we regrettably had the Black Saturday fires, with in excess of $4½ billion worth of damage. If you think back to that time, the world was in the global financial crisis. At that time there was no need, despite the economic circumstances we found ourselves in, to go to the Australian people with a levy. Here we are now, where the government is calling for this levy. I ask why. I ask why the inconsistency, and I ask why the incompetence of this government.

Finally, in this contribution I wish to speak about the poor management of disasters at the financial level by the Attorney-General’s Department and Emergency Management Australia under the Australian government response and recovery arrangements. The Gascoyne River floods in December, the worst in WA’s history, afflicted that entire area and destroyed the town of Gascoyne Junction and the pastoral properties down the Gascoyne. All of the plantations in Carnarvon were destroyed. Caravan parks and houses were washed away. In accordance with the disaster response agreement, the Premier wrote to the Prime Minister on 31 December, declaring it a category C natural disaster. In her defence, the Prime Minister wrote back to the Premier on 5 or 6 January with a copy to the Attorney-General, agreeing with the Premier, and she went to visit the Gascoyne.

No-one got the $1,000 per head or $400 per child under the response and recovery arrangements. Not a single person received those payments from Centrelink until I asked the question, here in the chamber, of Senator Ludwig, representing the Attorney-General. I got absolutely no answer because he did not know the answer. Only then did we find out that a government bureaucracy here in Canberra had made its decision that people of the Gascoyne were not entitled because not very much had happened. It was then, 24 hours later, that the Prime Minister, to her credit, put out a requirement that they were to be paid those funds.

I will refer very briefly to the squandering that went on in Queensland as a result of those floods. People north of Brisbane, some 1,170 kilometres, at the Yarrabah community, ended up getting flood relief funding—1,700 kilometres away! People in Laura, halfway up Cape York, ended up getting funding as a result of Cyclone Yasi, when they suffered no damage at all. To answer Senator Brown’s comment about the Prime Minister waiving any costs for people who have drawn down these funds: in Queensland, I understand, there were plenty who availed themselves of the $1,000, donated it back to flood relief but of course, as a result of being recipients, are now themselves exempted from paying that particular levy.

We have seen throughout this exercise a complete and utter disregard for the generosity of Australians; we have seen a disregard for what I would regard as an acceptance and an understanding of the fact that we live in a country of droughts and flooding rains. It is time this government acted responsibly—and, if they cannot, for them to stand to one side for a government that has and will again.