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Wednesday, 2 March 2011
Page: 902


Senator WONG (Minister for Finance and Deregulation) (10:55 AM) —Can I make clear at the outset that I am not summing up for the government yet. I understand Senator Sherry will do that on a later occasion, but I thought it was important that I take the opportunity to speak on these important pieces of legislation, the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and a related bill. I also take the opportunity to thank Senator Fielding for his contribution and for his responsible discussions with the government on this issue.

As the Senate would know, today is the second day of autumn. We saw a summer which was a difficult one for this country, a summer where natural disaster hit many corners of our nation. We saw floods of devastation in Queensland and Victoria, cyclones in Northern Queensland and the northern part of WA, as well as fires in Western Australia. As a nation we have lived through the enormous human tragedy that these disasters have regrettably brought to too many Australian families—people who are dealing with loved ones missing forever, and homes, businesses and livelihoods destroyed. But as Australians we have all risen to the multitude of challenges. We have given generously. We pitched in to help others get through the crisis—sometimes people we know, sometimes people we do not. As has been said by my colleague Mr Swan, this was demonstrated best by the fact that Queensland was running out of gumboots simply because too many people wanted to help. That is perhaps a great testament to the capacity of Australians to lend a helping hand. There was nothing more inspiring, I believe, than seeing so much of the true Australian community spirit—people, sometimes strangers, saving others, helping people, being prepared to work together to help their community and their neighbours.

We now face the bill for repairing the vital infrastructure. As we watched on our television screens or, for those communities who lived through these crises, as we saw firsthand, we saw the enormous destruction and devastation of so many of our communities and, as importantly, so much of the vital infrastructure which enables not only our economy but our community to continue to operate—the roads, rails, ports and bridges that keep this nation ticking. That is what is of importance as we debate this legislation. The Commonwealth government has an important responsibility to make sure the rebuilding occurs, and we know that ahead of us we have a huge task. In economic terms, the Queensland floods represent one of the most costly natural disasters in our history. My colleague the Treasurer has made clear that the floods are anticipated to take about half a percentage point off growth in the current financial year. That has been echoed in public statements by the Reserve Bank. In the short term, we are also likely to see a reduction in coal exports, crop damage of perhaps around a billion dollars, and a hit to our tourism industry and other industries.

The cost of the rebuild task pre-Cyclone Yasi, the government indicated, was in the order of $5.6 billion. The government have made clear that we will find the majority of this cost to the federal budget through spending cuts but that the remainder will be provided by this temporary levy which is before the parliament. The government are taking this approach because we were extremely mindful of the economic and fiscal circumstances the nation faces when we designed this response to this costly set of natural disasters. We are of the view that you have to think not only in the shorter term but also in the medium term. We know that the outlook for the Australian economy continues to be strong. Ours is an economy that is nearing full capacity, and in those circumstances it is economically and fiscally responsible for us to pay as we go.

The Prime Minister announced in late January her package for the rebuild. To meet the rebuild, the government has found cuts in the budget that will contribute around $2½ billion in saves with more to come in the budget process. We have also sought to delay some $1 billion of infrastructure projects. This is again a decision driven by a very keen understanding of the economic circumstances in which the nation finds itself. Where you do have a substantial amount of construction and an economy nearing capacity and where capacity constraints in terms of skilled labour and the availability of capital are present, the government has to be mindful of this when putting its reconstruction package together. We believe it is sensible to defer these infrastructure projects to ensure we give ourselves the room, the space and the capacity to do the rebuilding task. In addition, we propose to fund some $1.8 billion through a progressive levy applicable only to those people earning more than $50,000 a year and only on the income they earn over that amount.

It is true that Australians have already played their part and have given many dollars to help individuals. These are important and generous donations. They help families and individuals get back on their feet. They are about the short-term task of helping people rebuild homes, restart businesses and buy goods to replace those that have been damaged in order to get them through this crisis. This is a very different economic task to the task which is the subject of the legislation before the Senate, because this legislation is about rebuilding essential economic infrastructure—our roads, our rail, our ports. It is a different job. Those on the other side, who I notice have now gone significantly quieter on this issue, who have said it is not a good thing to have a levy to rebuild Queensland because people have already donated money to charities and so forth, are not really being upfront with the Australian people because they know two things: first, that money is for a different purpose and, second, the amount of money we have to find to do this rebuild is some 30 times what has been donated. There has been enormous destruction of infrastructure and that is why the government has announced these plans. That is why we are proposing a modest and progressive levy.

The levy is proposed to apply in 2011-12 for a finite period ending in June 2012. It is a levy proposed to deal with a significant one-off cost to the federal budget and it is a levy that recognises the capacity to pay. As I said, it applies only to people with an income over $50,000. For those on $60,000 a year, the levy will mean they pay less than a dollar a week. If you are earning $80,000 a year, the cost of the levy is less than a cup of coffee a week. The government has also put in place arrangements to ensure that those who were affected by the floods and who receive federal government assistance will not pay this levy. The government is making around $2 in savings for every dollar raised by the levy. We have made a range of tough decisions, some of which have caused some concern in some sectors. We have made some tough decisions and some tough calls to fund some two-thirds of this rebuild, but we think the right thing to do is to take a fiscally and responsible approach to what is a national challenge of rebuilding Queensland and other flood affected areas.

It is disappointing in these circumstances, in the face of these disasters, that the opposition is still clinging to its only strategy, which is to oppose everything. It seems that no is the only word that the opposition understands. Even in this time when one would have hoped the national interest would be put ahead of political interest, we see again the opposition putting politics, or its perceived political advantage, ahead of the national interest—their self-interest ahead of the national interest. We saw a remarkable approach where Mr Abbott beat his chest over a number of weeks about how savings were so easy to find but then had to be dragged unwillingly to the point of announcing those savings. What did we get? We got a series of deferrals, a lot of double-counting and a whole range of backflips. Perhaps the most important point to make is that the opposition has double-counted some $700 million in its savings—$700 million double-counted by an opposition that asserts that it is fiscally responsible. It has claimed savings that it has previously claimed to fund other spending priorities, so essentially it is trying to count savings and spending it twice. You cannot do that in the federal budget, and no responsible opposition should be putting that forward.

The opposition have also taken an interesting position on foreign aid. We know what Mr Downer thinks of that, but interestingly we also know what Mr Briggs and even Mr Abbott’s deputy, Ms Julie Bishop, think of that. There has been much discussion in this place and in the other chamber about the similarity between what the opposition has proposed and some One Nation ideas that were made public. The other aspect of the opposition savings, which I am sure you will not hear Senator Joyce talking about, is that it is quite clear that Mr Truss has been rolled, because a range of the infrastructure saves that Mr Truss opposed are now being supported by Mr Abbott.

Perhaps the most unseemly aspect of the discussion about the levy and the way to fund the floods was seeing Mr Abbott’s emails on this issue in which he sought contributions from Australians to the Liberal Party. At a time when Cyclone Yasi was bearing down and Queenslanders were trying to start the rebuild after the enormous natural disaster, we saw the Leader of the Opposition seeking to use the opportunity to ask people to donate to the Liberal Party. It was really quite an extraordinary act.

The opposition have again said that they are going to oppose this. I think the question the opposition have never answered is why they believe that the levies that they initiated were somehow okay but the levy the government is putting forward to rebuild Queensland is not. Let us remind ourselves of the levies which were initiated under the Howard government: the gun buyback levy, the superannuation surcharge levy, the stevedoring levy, the milk levy, the sugar levy, the Ansett Airlines levy and the proposed East Timor levy. There was also a proposed cleaner fuels levy. And of course Mr Abbott himself during the last election proposed another levy to fund a scheme to see women on high incomes receive their full wage while on leave. So a levy is good enough for Mr Abbott when he wants to buy back guns or help the sugar industry, but it is not good enough to rebuild after the most costly natural disaster that we have seen. The reality is that any analysis of the opposition’s position on this issue would show that they put their political interests above the national interests.

As the Prime Minister said, there was a lot of scepticism from commentators when the government first put forward this package. There were those on the other side who said that no-one would accept it, no-one would ever pay it and it was the wrong thing to do. Over the last weeks what we have seen is the soundness of the argument for the government’s package becoming much clearer in people’s minds. We are pleased that some of the Independents in the House have seen fit to support this legislation and that this has received good consideration by the crossbenchers in this Senate.

It has been an interesting debate. We have heard a lot of rhetoric and fierce opposition from the coalition senators. I notice that the sting has gone out of that now. But I think the political question which really arises in the context of this debate is on Mr Abbott’s fitness to lead the Liberal Party, let alone to put himself forward as the alternative Prime Minister. I am interested to know whether senators on the other side from Queensland are really going to step up and say, ‘We oppose a levy to help rebuild our communities. We oppose a levy that is about providing the support necessary to deliver critical infrastructure and to help our fellow Australians.’ This has been a summer full of tragedy; it is time for us to work together with those communities who have been so badly affected to rebuild their homes, their communities and their lives. I commend this legislation to the Senate.

Debate (on motion by Senator Wong) adjourned.