Joe Hockey (North Sydney, Liberal Party, Shadow Treasurer) Share this | Hansard source

After the revelations of Treasury on banking overnight, mate, I can understand why you don’t want Treasury appearing before committees! I can understand that. They have just made a fool of you on banking. So it was a case of ‘No, no; we don’t want Treasury to get up and tell the truth at a committee—to tell Australians what the real deal is.’ But in evidence before the committee, Saul Eslake, who was a constant critic of Peter Costello as Treasurer, said that the introduction of the new flood tax was one of ‘political choices rather than economic imperatives’. He went on to say:

My point is simply that the decision to choose to fund a third of the cost through a levy is a political choice rather than an economic one.

Step 1: it is about politics. Warwick McKibbon, who was also a critic of us when we were in government from time to time—and in fact has criticised us recently—said in evidence before the committee:

Most economists who study public finance would support the view that taxation is not the optimum way to finance the reconstruction of infrastructure after a natural disaster. The argument has a long tradition in economics.

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I think that in the case of a disaster it is almost uniformly accepted by economists, in principle, that a tax is not the best way to fund it.

When you have Warwick McKibbin, Saul Eslake, the Business Council of Australia, consumer sentiment, Australian households, the Australian people more generally and the coalition all saying that this flood tax is bad policy, I would say to you, Mr Deputy Speaker: at some point this mob has to learn that you cannot keep going back to the well, because one day there will not be any water left.

If you want to keep the Australian economy strong, you have to create confidence. If at every point in the economic cycle the government comes along to introduce a new tax, and even when its proposal for a new tax has many forms, like the dreaded Hydra, and has many heads, like the old mining tax, with mining tax version 1 under Henry, version 2 under Kevin Rudd—you remember him, Swannie; you haven’t forgotten Kevin Rudd, have you? You haven’t forgotten him: white hair, a fellow Queenslander, used to be Prime Minister?

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