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Tuesday, 22 February 2011
Page: 997

Mr STEPHEN JONES (9:42 PM) —I rise to speak on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and cognate bill. We are joined in this debate because of the staggering dimensions of the floods in Queensland, the floods affecting northern New South Wales, the floods affecting north-west Victoria, and Cyclone Yasi, events that occurred between November and January-early February this year. Combined they quite possibly represent our most extensive natural disaster. The way that we respond to a disaster defines us as individuals, but it also defines us as a nation. It also defines us here as a parliament: it defines our humanity, our capacity to manage the recovery and our capacity as leaders.

It is appropriate to start my contribution to this debate by expressing my condolences to the families and friends of the 35 people who lost their lives in the flooding that occurred of the Lockyer Creek and the Bremer and Brisbane rivers between 10 and 12 January; the unfortunate loss of one life in Cyclone Yasi; and the terrible destruction of properties and communities in northern Victoria. I can only imagine the trauma experienced by the people in each of these regions and everyone else who faced the full force of this unprecedented natural disaster.

Like everyone in this place, I was deeply moved by the stories of courage and endurance and also by the remarkable community spirit that many Australians showed in the aftermath of the floods and the cyclone by joining in the clean-up effort and generously donating money to the Premier’s flood appeal. Many thousands of dollars, goods and materials were donated by people from my electorate of Throsby, and I pay tribute to the generosity and the volunteering spirit of those people who donated their time, effort and money to the recovery effort. In this place, many fine, heartrending speeches were given by members on both sides of the House, and I pay tribute to the members who, through great difficulty, have attempted to represent the feelings, the emotions and the people of their region in this place.

The damage that has been caused by the recent flooding is unprecedented, and the task of rebuilding is indeed significant. While the damage to roads alone is yet to be precisely determined, local governments estimate that some 90,000 kilometres of roads have been damaged and will need to be repaired or rebuilt. This figure does not include federal highways, state roads or railways. These recent floods and the cyclone may well end up being the most costly disasters in Australia’s history. The Queensland Treasury told the recent inquiry that they estimate that economic growth in that state alone for 2010-11 will drop by 2.5 per cent to 1.25 per cent. Our own Treasury’s estimate is that the floods will take up half a per cent of growth from our 2010-11 estimates.

The reconstruction task is going to take a lot of time and a lot of money. Initial estimates put the cost to the Commonwealth budget at somewhere close to $5.6 billion and, as the Prime Minister and the Treasurer have told members in this place, the risks are on the upside. Our challenge is how we rebuild Queensland, Northern Victoria and New South Wales at the same time as ensuring the rest of the economy continues to recover from the global financial crisis, the worst crisis to grip our country in over 100 years and one that many parts of the world have yet to recover from. It is also to ensure how we rebuild these regions at the same time as we manage an economy which we are sometimes told is running at two speeds but which I believe is probably more accurately described as running at three or even four speeds—that is to say, the economic growth and the capacity constraints that we are feeling in some areas of our country are not evenly spread.

We have some capacity constraints on the economy; that is true. In the mining states, including flood affected Queensland, there is an unprecedented level of capital investment in mining and related infrastructure. This draws down on the limited pool of skilled labour that is available and capital equipment that is drawn to the task. Some areas of the economy, however, are still sluggish. Over the Christmas period we were reminded of that by the below average returns in the retail sector, and in some states housing itself has not yet recovered either. We also need to manage the rebuilding effort at the same time as we keep our faith as a government with our commitment to manage the budget back into surplus by 2012-13, consistent with our election commitments.

So we have three options. We can go into further debt, we can find all of the $5.8 billion or more from within the budget or we can find some savings from the budget and others by legislating for a modest and temporary levy. The bill, which would give force to the third of these options, the one the government has chosen, was referred to the Economics Committee, who heard evidence from two independent economists and also received evidence from others. Both gave evidence to suggest that the government should foot the bill by increasing debt. This is not an option preferred by either the government or the opposition. We do not agree with the proposition, and the reason is simple—that is, the debt is in effect a deferred tax. The money will have to be repaid at some point in time, and that money comes from tax revenue. Faced, quite simply, with the choice between paying the money now or paying the money later, we have opted for a very targeted, temporary levy which will enable us to pay the money now and, as the Prime Minister has said, pay as we go.

The position of the coalition on this matter is at best confused and at worst plainly dishonest. They cannot have an in-principle objection to a levy because in government the coalition had no hesitation in raising a levy to support a whole range of measures. In all, there were six levies raised by the coalition on measures such as gun buybacks, the support of Ansett employees, the superannuation surcharge levy, the stevedoring levy, the sugar levy, the dairy industry restructuring levy—and others were proposed. The Leader of the Opposition is on the record as supporting all of these six levies, and what is remarkable about the coalition position on most of these levies is that they were imposed at a time when the economy was growing and the budget was in surplus. So the logic and the lesson we are supposed to draw from the coalition on this matter is that you tax us more when you have more, and you oppose the imposition of a modest, short-term levy when the budget is in deficit and we are recovering from the worst crisis to hit our economy in over 100 years—a perverse logic, which is disputed by most economists and, I suspect, even disputed by many on the opposition benches.

We have heard a number of times in this debate allegations raised about the level of taxation under the Gillard Labor government. I looked at this because it seems to have gained some currency amongst those on the benches opposite. The sad news for them is that taxation has actually dropped under the Labor government. In fact, if you look at the tax to GDP ratio, you will see it was highest under the Liberal government. It peaked at around 25.5 per cent of GDP in 2006-07 and dropped to 22.7 per cent of GDP in 2009-10. So when the member for Forrest is talking to those small businesses that she spoke of so passionately earlier she might care to remind them that it is this government that is committed to reducing the burden of taxation on small businesses. In fact, we went to the election with a proposal to cut the tax on small business, not to increase it, as was the proposal of the coalition. As a percentage of GDP, taxes are decreasing under this government.

We have also been treated to the wisdom of the members for Goldstein, Warringah and North Sydney claiming that flood reparations could be paid for out of cuts to the budget. Interestingly, this was a proposition rejected by all of the economists who appeared before the committee. They said that this is contrary to all orthodox economic thinking and that the government were on their own when it came to this proposition. It also sits very ill with the track record of the opposition. This is a coalition which had an $11 billion blow-out in its pre-election funding. This is a coalition which over the last week has operated like a bunch of fiscal vandals when it comes to the current budget. It has moved legislation in the upper house which would have the effect of punching a $400 million hole in the budget with absolutely no regard for the financial impact that that would have on the budget.

We do not take economic lessons from the coalition because, quite frankly, they are at best confused, at worst incompetent. If we were to have listened to the prescriptions of those opposite they would have had us running unemployment levels in excess of 10 per cent as we moved through the global financial crisis. They would have had us cut spending when every economist around the country and around the world was saying we needed to inject fiscal stimulus into the economy. They would have had us do nothing about the $46 billion deficit in infrastructure—and it is this $46 billion deficit in this country’s infrastructure which is the greatest problem we have in dealing with future inflationary pressures. If those opposite want to start pointing a finger at the inflationary pressures that are building up in the economy and the risks to future infrastructure rises, they should point a finger nowhere else than at the previous government’s frontbench that bequeathed Australians a $46 billion infrastructure deficit with the resultant skills deficit and bottlenecks which are increasing inflationary pressures and making it that much harder to deal with the crisis to rebuild Queensland in the wake of these floods.

It has been said that the government should find the money from savings. All I can say is that the opposition have zero credibility on this issue. They went to the last election proposing an increase in taxation, a new levy of their own to fund the opposition leader’s thought bubble on paid maternity leave. They were the only party going into the last election proposing to increase taxes on businesses when we were proposing to decrease taxes. They had an $11 billion blow-out in their funding proposals for their budget. They have a poor track record when it comes to dealing with unemployment and infrastructure. So we will have no truck with the economic lessons of those opposite.

We, in contradistinction, have a proposal to impose a very modest tax on those who have a taxable income of over $50,000 a year. It will result in a small contribution equivalent to around the cost of a cup of coffee per week for one year. It is a small contribution which is in line with the underlying values of the Australian community—that when one of our states is in trouble we should all pitch in to help. I commend the bill to the House.