Don Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | Link to this | Hansard source

I table a revised explanatory memorandum relating to the bills and I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

On Tuesday I expressed the nation’s heartbreak. Today I express the nation’s resolve. To rebuild. To get back up. To rise from the mud and debris. I therefore introduce the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill. And I do so with great pride.

This is not just a routine piece of legislation. Not just a package of measures to restore bridges and roads. But an expression of goodwill between Australians.

It is an act of faith in the future. A way of honouring the dignity and resilience that Australians have shown throughout this ordeal.

In committing to rebuild, we accept that this may well prove to be the most expensive season of natural disasters our nation has ever known. Individuals have lost homes and possessions. Businesses and farmers have lost premises, stock, equipment and crops. Communities have lost meeting places, shops and sporting facilities. And our nation has lost vital infrastructure on which countless livelihoods rely. We’ve seen roads washed away. Rail lines twisted and buckled. And bridges washed away like children’s toys. But we will rebuild.

No single level of government or sector of the community can do the job alone. Individuals will contribute. Family, neighbours, friends. Insurers. State and local government. Business and unions. Generous donors and philanthropists.

More than $200 million has been contributed to the Queensland Premier’s Relief Fund. Every dollar is welcome. Every dollar is an expression of shared concern. All those funds will go to helping Queenslanders who need a hand. Like those in the Lockyer Valley who didn’t even have time to prepare. Or those who didn’t have the insurance cover they thought they did. The Premier’s Relief Fund and funds in the other states will be there to help. Australians looking after Australians.

By far the greatest share will come from our national government, and that is as it should be. Money to rebuild the roads, ports, rail lines and public facilities that make our society work. The call on Commonwealth funds will be at least $5.6 billion; almost 30 times the amount of money in the Premier’s Relief Fund.

That’s $5.6 billion that the Australian Government needs to find above and beyond our normal expenditure. Our nation has rarely ever had to outlay such large sums in a peacetime disaster. And remember these figures are restricted to the damage bill associated with the summer floods. They do not include the damage from Cyclone Yasi, to which our contributions will be announced when the situation becomes clearer.

But for today, the Australian Government faces flood-related outlays estimated to be just over $5.6 billion. That’s not an abstract figure. It’s real money for real projects. Like repairing the Bruce Highway between Brisbane and Cairns. The Warrego Highway around Ipswich. The Capricorn Highway around Rockhampton. And the Calder and Sturt Highways in Victoria.

We will meet our obligations to the last cent. And we will do it by paying as we go. We will not delay the return to surplus for a single day. Nor will we take the soft option of borrowing. Pay as we go: it is the concept that lies at the very heart of this Bill.

Sound Budget principles say we should pay as we go in an economy that is growing strongly. And sound economic principles say we should not add to capacity pressures.

Even after the damage inflicted by the floods and cyclone, the economy will be back at capacity in 2011-12. We have $380 billion of mining projects in the pipeline. Skills shortages are looming. And wages are running at healthy levels. Those pressures are likely to be even more pronounced as we enter 2012-13, our target year for a return to surplus.

That target is not arbitrary. It is a vital macro-economic guidepost. We must ensure that the Australian Government does not add to aggregate demand at a time of rising cost pressures like the Howard government so recklessly did between 2004 and 2007. The demand for scarce labour and materials for flood reconstruction only heightens the need for fiscal moderation in the years ahead.

The measures I introduce in this Bill form a balanced package:

• cutting some spending programs;
• deferring some new infrastructure; and
• applying a one-off, 12 month temporary levy to those earning more than $50 000 per annum.

The spending cuts and deferrals will raise some $3.8 billion. The proposed levy will raise $1.8 billion. In other words, two dollars will be saved or deferred for every dollar raised by the levy.

Of course, the proposed levy is the aspect of our package that has attracted the most community attention. I always expected Australians to ask all the hard questions about why they are being requested to step up and pay more. But at the same time, I always believed our community would understand that additional contributions are required to meet real additional needs.

Australians accepted it when the Howard Government imposed a levy to buy back guns in the aftermath of Port Arthur. They accepted it to help dairy farmers and sugar farmers adjust to the pressures of economic change. They accepted it to help pay hard-earned employee entitlements after the collapse of Ansett. They are coming to accept it to rebuild smashed infrastructure that supports thousands of jobs and millions of livelihoods.

I profoundly believe in the fundamental good sense and decency of my fellow Australians. They know what is right. And they will do what is right. In proposing the levy, the Australian Government has received support from across the community.

I warmly welcome the bi-partisan support shown by the Premier of Western Australia, Colin Barnett, who said:

“I believe most Australians, most West Australians, are willing to contribute a little bit more to help Queensland get back on its feet.”

A sentiment that was reinforced by Premier Anna Bligh:

“As a nation we have come together in the past to help out the milk industry, the sugar industry, the workers of Ansett and to buy back guns after the Port Arthur tragedy.

I think the people of Queensland are at least as important as all of those other levies in the past.”

We’ve seen welcome endorsements from the NGO sector, including the Australian Council of Social Service, who stated:

“Overall we are pleased that the Federal Government has acted quickly to support the vital reconstruction efforts of the Queensland Government and support the idea that all Australians with the means to contribute to this effort do so through a flood disaster levy.”

And from The Salvation Army:

“All Australians need to share something of the burden and the horror that’s happened to so many in Queensland, and the way that the levy has been established, it takes the burden away from low-income earners.”

I also very sincerely appreciated the support expressed by Mr Brent Finlay, the President of AgForce in Queensland, who said:

“Given the enormity of what’s happened, with this natural disaster, anything that can help to get rural and regional Queensland, back up and running, we would support.”

The last word on third party endorsement should go to The Australian newspaper, which stated in its editorial last Saturday:

“The imposition of the levy is reasonable and responsible.”

I think that says it all.

As I stated previously, this is a one-off temporary levy. When the clock hits midnight on June 30, 2012, the levy will end. This Bill ensures it. Any further funding required for flood or cyclone recovery will come from additional spending cuts. We will pay as we go.

This levy is also limited in its application. No Australian earning under $50 000 will pay a cent. By restricting the levy to those earning over $50 000, half of our nation’s taxpayers will not be liable for the levy at all. Those who do pay will be levied according to their financial capacity. A levy of 0.5 per cent will be applied on taxable income between $50 001 and $100 000. And a levy of 1 per cent will be applied on taxable income above $100 000. In other words, the levy is progressive. It is fair.

Under the levy, a taxpayer earning $60 000 will pay 96 cents a week. That same taxpayer will have received tax cuts worth $25.96 per week over the past three years. So they are still $25 a week ahead. A person earning $80 000 a year will pay $2.88 a week: less than a cup of coffee, and ten times less than the tax cuts they’ve received over the last three years.

Most importantly, People who were affected by the floods will not pay this levy, including those seriously affected by recent disasters, including Cyclone Yasi. This Bill will provide exemptions for taxpayers who:

• received an Australian Government Disaster Recovery Payment;
• were affected by a declared disaster and meet at least one of the eligibility criteria for an Australian Government Disaster Recovery Payment – even if they haven’t received a payment; or
• are New Zealand Special Class Visa Holders who were technically ineligible for the Australian Government Disaster Recovery Payments but have received an ex-gratia natural disaster payment.

The Bill also makes provision for other exemptions to be made by legislative instrument should circumstances require.

I turn now to the expenditure measures that form the other significant element of our floods package. As announced, we will defer some infrastructure projects to help manage capacity constraints and redirect funding to immediate rebuilding. They will free-up skilled labour and materials for rebuilding and helping ease capacity constraints over the next two years, which are crucial years as we manage the demand pressures which accompany the mining boom.

Six Queensland roads projects will be delayed by periods of one to three years. This will save $325 million in the Budget period. We have also identified three projects in NSW and Victoria where funding delays and reductions will save approximately $675 million. These changes have been agreed by the respective State Governments. I also add this point: The burden of delay has been shared; even my own electorate is affected. But it remains the right thing to do.

As previously announced, the Government will also cut some spending programs and cap some others. There are no easy savings, but I am confident Australians will understand the need for these decisions. Hard decisions by a government that has kept spending lower than in any single year of the Howard government.

We will also cap two programs to limit their cost: the National Rental Affordability Scheme and the LPG Vehicle Scheme. And some lower priority education spending, where the outcome can be achieved through other programs, will be discontinued. This includes the Capital Development Pool and the Australian Learning and Teaching Council. In addition, some funding from the Building Better Regional Cities and Priority Regional Infrastructure Programs will be redirected to the cause of flood rebuilding.

The Government has also determined to abolish, defer and cap access to a number of carbon abatement programs. These include the Green Car Innovation Fund, the Cleaner Car Rebate Scheme and the Global Carbon Capture and Storage Institute. Some of these policies are less efficient than a carbon price and will no longer be necessary. Others will be better delayed until the full effects of a carbon price are felt.

The key to these savings is our determination to deliver a carbon price. If you want to cut carbon, the best way is to price carbon. Indirect measures have only ever been an imperfect proxy for a carbon price. As we move to a carbon price, those indirect measures can fall away. And so these expenditure measures are a firm down-payment and a clear sign of intent:

2011 is the year Australia decides on carbon pricing.

I turn now to the issue of accountability, which is so fundamental to the rebuilding process. I understand the desire of the Queensland Government to cut through the red tape and deliver rebuilding as fast as they can. To start the recovery, the Australian Government will make an advance payment to Queensland of $2 billion so rebuilding can start in more than 60 flood-affected communities. This payment will be made in the current financial year, as soon as financial controls and arrangements are finalised.

At the same time, we need to ensure rigorous accountability for what are very large sums of public money. That is why both the Australian and Queensland Governments are putting in place clear mechanisms to drive efficiency and accountability.

To begin, the Australian Government will sign a National Partnership Agreement with Queensland, establishing rigorous conditions for national funding. We have also made available one of the nation’s most outstanding military leaders, Major General Michael Slater, to chair the Queensland Reconstruction Authority. And just this week I announced that two distinguished Commonwealth appointees will sit on the Board of that Authority:

Mr Brad Orgill, former Chairman and CEO of UBS Australia and head of the BER Implementation Taskforce; and Ms Glenys Beauchamp, Secretary of the Department of Regional Australia, Regional Development and Local Government.

In addition, I have appointed the Minister for Agriculture, Fisheries and Forestry, Senator Ludwig, as the Minister Assisting the Attorney General on Queensland Floods Recovery. Senator Ludwig will sit on the Flood Recovery Committee of the Queensland Cabinet, and at the same time, report on progress to the Federal Cabinet.

Further to those measures, this week I announced the establishment of a Reconstruction Inspectorate to increase scrutiny and accountability of flood rebuilding projects. The Inspectorate will report directly to the Cabinet sub-committee on natural disasters, which is chaired by me. The Inspectorate will be led by the Honourable John Fahey, former Premier of NSW and former Federal Finance Minister. He will be joined by two leaders in the fields of accounting and construction:

Mr Martin Albrecht – former Managing Director of Thiess; and

Mr Matt Sheerin – head of Deloitte’s Queensland Audit Practice and a senior member of the nation’s accounting profession.

The Inspectorate will be empowered to:

Scrutinise contracts, especially those that are high value or complex;

Directly inspect projects to ensure they are meeting progress milestones;

Investigate complaints or issues raised by the public;

Help state agencies to develop contractual frameworks, tendering processes and project management systems;

Scrutinise requests for reimbursement by local government once projects are completed.

The Reconstruction Inspectorate will be supported as necessary by experts in relevant fields such as quantity surveying, construction management and contract law. The Inspectorate will also require the states to provide independently-audited financial statements to support any claim for funds.

We’ve got a lot of rebuilding to do. I want to make sure that every dollar we spend on rebuilding is a dollar that gets value for money.

In presenting this Bill, I am acutely conscious that we are only at the start of a long journey of reconstruction. It will not just take months. It will take years. But long after the camera crews have moved on, the resources of the Australian Government will be there to help rebuild: Road by road – bridge by bridge – track by track ... until the job is done.

As Australians, we will stick together. United in mateship. United in our shared desire to help those in need. This Bill formalises that desire to help. Beyond the legal and budgetary language, it simply says this:

You won’t be alone. We will get through this together. We won’t let go.

Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011

The Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill will introduce new tax rates for the 2011-12 financial year, which will give effect to the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill.

The existing tax rates will continue to apply for taxpayers who are exempt from paying the temporary flood and cyclone reconstruction levy.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Today we are debating yet another tax from a high-taxing, high-spending, wasteful Labor government. We are debating an increase in income tax rates for all Australians earning more than $50,000 a year unless they qualify for the specific exemption. So why do we have to debate this tax in the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011? We have to debate this tax because, after three years of Labor waste and mismanagement, our public finances are in such bad shape that, faced with an unexpected disaster, the government feels it has no choice but to whack on another tax. Let us be absolutely clear: if it had not been for the Prime Minister’s waste and mismanagement as Minister for Education with her school halls program, if it had not been for the waste and mismanagement with the pink batts program and with one program after another being maladministered by this Labor administration, there would be no need for this latest income tax hike.

This is the latest in a long list of new Labor taxes. Currently we are debating the flood tax, the mining tax, the carbon tax and student taxes—which of course come after the alcopops tax, the luxury car tax increase and the tax on the North-West shelf gas projects—a whole plethora of new and increased taxes introduced over the last three years of this Labor government. In fact, over the last three years more than $40 billion in new or increased taxes have been introduced by this government. This government has so lost touch with the Australian people that it does not even know a tax when it falls over one. The Prime Minister, the Treasurer and the Minister for Finance and Deregulation again and again went out there in radio land, in 7.30 Report land or on the news and Meet the Press and so on and claimed $40 billion worth of new and increased taxes as what? As savings.

This government thinks that when it whacks another tax onto the Australian people it is actually saving money. No doubt this is because this government thinks that all the money is the money of the government and that the government through its largess makes a decision as to how much it allows people to keep. So this Labor government thinks that, whenever it whacks on another tax on the unsuspecting Australian public, it saves some money for the government. It is a disgrace. Just to put it very squarely on the record, the coalition stands for lower taxes, the coalition stands for fairer and the coalition stands for simpler taxes. The coalition does not support this latest increase in the income tax rates applying to people across Australia.

In 2007 this government inherited a budget that was in very good shape: no government net debt, a $20 billion surplus, $60 billion’s worth of investment in the Future Fund—money put away for a rainy day—and what have we got now? We have had deficit after deficit. We have, as I mentioned, $40 billion’s worth of new and increased taxes and $94 billion’s worth of government net debt, yet still this government cannot find $1.8 billion to help fund the reconstruction effort in Queensland. This reconstruction effort is very important of course and is supported by the coalition. However, it should be able to be funded without having to go back to the Australian people in this ad hoc fashion, whacking yet another tax onto them.

The coalition has taken a very constructive and very bipartisan approach to this. We offered to sit down with the government and find the necessary savings. But that offer was not taken up. Whenever this government is faced with a challenge, whenever this government is faced with a problem, its first response—and instinct—is to go for another tax. This government never makes the tough decisions. This government does not do what is required to keep our public finances in healthy shape. If this government had its finances in order, there would be no need for this tax.

I will talk a little about the reconstruction effort. The Treasury tells us that current estimates are that the Commonwealth contribution to the reconstruction effort will be roughly $5.6 billion. That was an estimate identified before Cyclone Yasi, so chances are it is going to be quite a bit more. So we asked the government: ‘Given that chances are that your exposure is going to be quite a bit more than the $5.6 billion, what are you going to do if you do not have enough money? Are you going to whack on another tax? Are you going to increase it by more? Is the tax in these bills going to run for longer?’ ‘No,’ we were told, ‘there is no way we would do that.’ Of course, the Australian people know that they cannot trust this government when it says that there will not be another tax. ‘There will not be a carbon tax under the government I lead,’ the Prime Minister said. We know what happened to this. So we were a bit suspicious as to how credible these commitments were, but here we are—the government says: ‘No, no, we’re not going to increase this tax any further; we’re not going to make it run any longer. We’re just going to save some more money; we are going to cut some more spending in the budget.’

If you can cut some more spending down the track, if the expenditure will be more, why can you not do it now? In two months time we will have the budget; you can take a strategic approach to all of this. If you can make some more savings now why do you not do that now, and why not look at your revenue and spending commitments holistically in the budget in two months? The Commonwealth budget is $350 billion a year and you cannot find $2 billion out of $350 billion to help fund the necessary reconstruction effort in Queensland? This government is a joke. It is completely reckless when it comes to the management of public finances and that is the reason it nearly lost the election on 21 August last year and was only able to scrape back in with the support of two conservative Independents from New South Wales.

What sort of precedent has been set through this tax? Every time we have a natural disaster will the government come out and say, ‘Let’s have another tax’? We are going to have the bushfire tax and the flood tax and the—

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Parry interjecting—

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Yes, whatever tax you name, Senator Parry, you are quite right. The ingenuity and creativity of the government to come up with new taxes knows no end. Why did the government not wait until budget time? Why did they come up with this legislation now? Why did they announce it so quickly? It is because there is one thing that drives this government: the politics of getting away with introducing yet another tax.

This government is addicted to new taxes, but it also knows that taxes are unpopular. It knows that the Australian people have a lot of goodwill and generosity towards the people of Queensland and the reconstruction effort. This government thought that it would take advantage of that. This government thought it would strike while the iron is hot. This government thought there was no better time than the present to come up with a new tax: ‘This is the time to come up with the tax because people across Australia will let us get away with it. Let’s call it a flood levy. Let’s call it a mateship tax. Let’s give it a nice cuddly name and people will be happy about it.’ But, of course, the Australian people are not that stupid. They can see through this government. They have seen it again and again. When they were given supposedly high moral ground reasons to introduce another tax—Madam Acting Deputy President, you would well remember the alcopops tax, which was supposed to reduce binge drinking, which was supposed to reduce the consumption of alcopops at the same time that Treasury was counting on an increase in the consumption of alcopops. That is the sort of dishonest track record this government has when it comes to taxes: it sees an opportunity to get away with a new tax and goes through with it. That is what happens with this government.

The reality is that, in the face of tragedy, Australians had been donating generously. When Australians witness a tragedy like the one in Queensland, people are very generous and Australians have dug deep. But, after they have dug deep, in comes the government and whacks them with this tax. What do you think will happen when the next disaster comes around the corner, as it sadly but inevitably will? Do you think the Australian people will be a bit more circumspect, a bit more cautious, before they spend as much as they can possibly afford to support their fellow Australians in a time of need? Yes, because they will expect that this government will do as it has done before and whack them with yet another so-called emergency tax, a so-called mateship tax.

The government, supposedly, had made a whole series of savings, but, of course, hundreds of millions of dollars of those savings were reversed to get the vote of the Greens, Mr Wilkie and Senator Fielding. They have not yet got the vote of Senator Xenophon, as I understand it. They have been spending money left, right and centre, reversing savings and reversing spending cuts. Have the government identified any new, alternative spending cuts? No, they have not. So what did they say to us when we asked, ‘What’s going to happen?’ They said: ‘Wait for the budget. We’re going to organise all of that in the context of the budget.’ If you can organise those spending cuts in the context of the budget, why can you not organise the $1.8 billion worth of spending cuts that would be required in order not to have this tax as an ad hoc tax? Why would you not wait for the budget before proceeding with this? There has been no reasonable explanation for this from anyone in government.

Talking about strategic things, do you remember the Henry tax review, Madam Acting Deputy President? The Henry tax review was supposed to be this root and branch reform of our tax system, delivering a fairer and simpler tax system. The only thing we have ended up with out of that review is a multibillion-dollar new tax which was negotiated in private with three taxpayers, excluding all of their competitors from the process as well as the state and territory governments and all other stakeholders and the public at large. After the Prime Minister nearly lost the election but was saved by Mr Oakeshott and Mr Windsor, we were told that we were going to have a fair dinkum tax summit by 30 June 2011. We were told that, at that tax summit, the government would throw open all the recommendations of the Henry tax review and that there would be a strategic look at the taxation arrangements in this country, not this continuation of ad hoc tax grabs one after the other but a strategic look at what the taxation arrangements in the context of the spending commitments for Australia would need to be.

Is that going to happen? No. The promise very quickly made by the Prime Minister when she was desperate to get support to form a minority Labor government is about to be broken. The Treasury secretary, Ken Henry, let the cat out of the bag. I do not think he quite knew what he was doing when he quoted the Prime Minister as saying that it would not be happening before 30 June. But, of course, we have been hearing similar rumours. The Treasurer, Wayne Swan, does not want to have a strategic look at the tax system. He wants to continue to go ahead with tax grab, after tax grab, after tax grab, like this one, without being bothered by any strategic and serious reform assessment of the taxation needs of Australia. He does not want to be bothered by these sorts of strategic assessments in his pursuit of more and more money for this high-spending, wasteful Labor government.

So here we are with yet another Labor tax grab outside of any strategic context and which, in our judgment, is not in the public interest. In this context I would say to the member for Lyne and the member for New England that they have to realise that, unless they disassociate themselves from these sorts of Labor failures, these failures will also be their failures.

We had a debate in Senate estimates as to whether this was a tax. Senator Sherry was trying to argue this was not a tax. I refer Senator Sherry to the title of this bill which reads ‘income tax rates amendment bill’. What do you think an income tax rates amendment bill is going to do if it is not amending income tax rates? Let me be very clear on this for all Australian people: this is a bill to increase income tax for all Australians earning more than $50,000 unless they are in one of the few exemption areas. There is a lot of confusion about the exemption areas. We looked at the Prime Minister’s press release of 27 January as to who would be exempt. It said:

... anyone who received an Australian Government Disaster Recovery Payment for a flood event in 2010-11 will be exempt from the levy.

And a Treasury fact sheet said those who received an Australian Government Disaster Recovery Payment in relation to a flood event in 2011 would not have to pay the levy. So we asked this question in estimates: what about the victims of the WA bushfires? Don Randall, the very hardworking federal member for Canning, brought this to my attention. He said, ‘You’d better ask some questions about this in estimates,’ so I did. I asked the secretary of the finance department, and what did he say? He confirmed exactly that: only those who were subject to a flood event would not have to pay the levy. We thought that was a matter of public interest as a lot of constituents had approached us on this saying they were very concerned about it.

The West Australian were about to write a story on it so they presumably asked a question of the Prime Minister’s office. This is what the spokesman for Ms Gillard said, ‘Victims of this year’s WA bushfires will be exempted,’ and, ‘As the Prime Minister has made clear, if people have been hard hit by natural disasters in the last few weeks then it is only fair that they do not pay the levy.’ It is very nice for the Prime Minister’s spokesman to say that to a journalist when they are faced with what could be a bad story on the front page of a daily newspaper but to this day they have not actually adjusted the information on the Treasury website or in any of the official information. To this day the website still says that you are only going to be exempt if you were subject to a flood event.

Without wanting to be disrespectful, Prime Minister, we do not trust the word of your spokesman under pressure from a daily newspaper in Western Australia. We want to see that commitment in writing. If it is to be the case that all Australians subject to a natural disaster are going to be exempt, then you should be clarifying this today and you should be adjusting the information on your relevant websites today.

There have been too many broken promises by this Prime Minister for us to take at face value anything that she says particularly if that message is translated by one of her spin doctors in the context of a media story. I want to reflect on the approach taken to this tax by one of our colleagues in the lower house, namely the member for O’Connor. The member for O’Connor was elected on a platform to reverse the Canberra rip-off. It should now be clear to anyone that the people of O’Connor were deceived at the last election. Tony Crook is not here to reverse the rip-off; he is here helping Labor get rip-offs like this one through the parliament.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Senator, I do not want to interrupt your flow but you need to refer to the member as Mr Crook.

Mathias Cormann (WA, Liberal Party, Shadow Assistant Treasurer) Share this | Link to this | Hansard source

Mr Crook, the member for O’Connor, is not here to reverse the rip-off. He is helping Labor get rip-offs like this one through the parliament. Yet again the new member for O’Connor stood shoulder to shoulder with the Labor Prime Minister voting for, and not against, another Labor rip-off. Without the member for O’Connor, people across Australia, across Western Australia and across O’Connor would not be hit with this additional income tax grab. Without the member for O’Connor voting for it, this tax would have been defeated in the House of Representatives—and the people of O’Connor need to understand this very clearly. Wilson Tuckey would never have voted for a rip-off like this. He stood up for O’Connor and would never have voted for a Labor Party tax grab like this one. In fact, no Liberal member for O’Connor would have voted for this rip-off. So our message to the people of O’Connor is very clear: if you want to end Labor’s rip-off moving forward you need to vote for a change of government and the only way to achieve a change of government is to support your Liberal candidate for O’Connor at the next election.

I will conclude my remarks on this latest Labor Party tax grab. It is a tax grab by a desperate government that has been spending recklessly and has wasted taxpayers’ money. It has put our public finances in such bad shape that it feels it has been left with no choice other than to whack on yet another ad hoc tax. The time for ad hoc tax grabs should be over. We should be taking a strategic approach to our tax system. We as a parliament should be committed to lower, fairer and simpler taxes. Rather than come in with one tax grab after another outside of any strategic context, the Treasurer should commit himself to a fair dinkum tax summit. That was actually a very important achievement that the two key Independents got out of the negotiations with the government. I am disappointed that they are not working harder with us to ensure that this Labor government delivers on it. How many more ad hoc tax grabs will this government put forward between now and whenever this tax summit might finally happen some time in 2012? The Australian people deserve better. The Australian people deserve a government that does not whack on one new tax after another.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I rise today as a Queensland senator to support the Gillard Labor government’s initiative to implement a temporary flood levy to help rebuild the devastated flood and cyclone affected regions of Australia, including in my state of Queensland. In December and January, Queenslanders experienced the worst natural disaster in our state’s history. Lives were lost, homes were lost, schools were lost and infrastructure was lost. The damage bill is now in the billions. To this day, many people are still cleaning up their homes and their businesses and getting their lives back together.

Even though weeks have passed some Queenslanders are not yet able to move back to their homes and in some devastating situations are not able to move back at all. Businesses which were devastated by the floods are still closed. Stamford Plaza, the Jellyfish Restaurant and the Boardwalk Bar and Bistro in Brisbane, just to name a few, are still closed, and in some really sad cases some businesses no longer exist. While people in those areas are trying to get their lives back on track, another natural disaster took place: Cyclone Yasi was one of the biggest cyclones to hit Queensland in recent generations. This is why it is important for all of us to come together today and support these important pieces of legislation: 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. This legislation is necessary to help rebuild roads, bridges, railway lines, hospitals and schools damaged by flooding.

The federal government have estimated it will cost $5.6 billion to rebuild vital infrastructure in our flood affected areas—$1.8 billion will be raised through the temporary flood levy, which will apply to only those who earn an income above $50,000 a year. The federal government have natural disaster relief and recovery arrangements with all state and territory governments and have agreed to meet 75 per cent of the rebuilding cost in declared areas. This is what the flood levy will pay for. The levy will only apply to the 2011-12 financial year and will automatically be deducted by the Australian tax office—in the same way the Medicare levy is collected. It will be charged at 0.5c per cent of taxable income for those who earn more than $50,000 and one per cent of taxable income for those who earn in excess of $100,000. The federal government understand that those who have been directly affected by the floods have already incurred financial costs. This is why they will be exempt from the flood levy. This will be determined by claims made to Centrelink for the Australian government disaster recovery payment. Those who claim an AGDRP will not have the levy deducted from their 2011-12 income.

It is sad to see the opposition still refusing to come on board with this levy to help rebuild those areas affected by natural disasters. Just last week opposition Treasury spokesman Joe Hockey said:

We want to see Australia get back on its feet as quickly as possible. In fact, we believe that the government must do whatever it takes and whatever is required to rebuild infrastructure, rebuild communities and rebuild families as quickly as possible

Contrary to this and directly after this disingenuous claim, he stated 10 reasons why the coalition are not supporting a flood levy—a contradiction in massive proportions. It is also contradictory of the coalition to criticise the flood levy claiming that it is not the right way to raise funds to rebuild. Let us not forget levies are not unprecedented, and the Howard government did not get through its 12 years without implementing its own levies. In fact, every single year the coalition were in government they implemented levies, even though there were surpluses. From 1996 to 2005, a superannuation surcharge levy was implemented to impose extra taxes on the superannuation contributions of high-income earners. It raised $1.4 billion in the first four years. From 1996 to 1997, their gun buyback levy raised $500 million. From 1998 to 2006, their stevedoring levy raised more than $100 million. From 2002 to 2009, an 11c per litre levy was imposed on milk. From 2003 to 2006, a 3c per kilo levy was imposed on sugar which raised nearly $100 million. Additionally, the Howard government’s Ansett Airline levy collected $369 million from 2001 to 2003. Clearly their form on levies shows the coalition do not believe rebuilding infrastructure is worthy enough to impose a levy!

During the last election Mr Abbott promised to implement a paid parental leave scheme and fund it with, yes, a levy—a levy to allow men and women who earn over $150,000 a year to continue to receive full wages while they are on maternity leave. On 9 March, Mr Abbott told ABC AM:

My preference is always to see taxes lower but sometimes for very, very important social reasons, for national interest reasons you have got to say we need the money and we can’t summon the money out of thin air ...

Does he think that rebuilding roads, bridges, railway lines, schools and hospitals is not in the national interest? These people are still in this parliament and they supported the implementation of those levies, yet now they are turning their backs on Queensland communities who are in desperate need of vital infrastructure which was destroyed. But this is what the coalition and their leader, Mr Abbott, say to everything: no, no, no. They take the term ‘opposition’ to the extreme.

What about working families? What about working Australians who need access to roads, bridges and railway lines to get to their employment? If we do not rebuild this vital infrastructure, these working Australians will struggle to buy their weekly groceries and to pay their mortgages or their rent. It is essential to get their lives back on track after these natural disasters.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Ask them about a carbon tax and see what they say.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The opposition continue to describe the temporary flood levy as a tax. But once again, with contradiction, Mr Abbott said his own paid parental leave scheme would be funded—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Senator Macdonald, you know interjecting loudly across the chamber is non-parliamentary. I am going to call you up on it every time you do it from now on.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

I do not hear him; I block him out. The opposition continue to describe the temporary flood levy as a tax. But once again, with contradiction, Mr Abbott said his own paid parental leave scheme would be funded by a levy not a tax. He said:

The difference between a levy and a tax is that a levy is for a specific purpose and this is for a specific purpose.

Isn’t a flood levy, which is only going to be charged in the 2011-12 financial year and which is to be raised solely to help rebuild infrastructure, for a specific purpose?

Last year Joe Hockey was asked when does a levy become a tax and he replied, ‘When it becomes permanent.’ I understand, the word ‘temporary’ does not mean ‘permanent’. This is the coalition’s definition and is not defined in English. The flood levy has received support from third parties who believe it is necessary to help with rebuilding these affected areas. Agforce president Brent Finlay said, ‘Nobody likes a levy or a tax, but given the enormity of what’s happened with this natural disaster, anything that can help to get rural and regional Queensland back up and running, we would support ... but this is a huge task to rebuild after what has happened.’ Australian Council of Social Services CEO, Cassandra Goldie, said:

Overall we are pleased that the Federal Government has acted quickly to support the vital reconstruction efforts of the Queensland Government and support the idea that all Australians with the means to contribute to this effort do so through a flood disaster levy.

The Premier of Queensland, Anna Bligh, has also given her support for the levy to help rebuild our state and has pleaded with the opposition to see that Queenslanders are just as important as all those industries which need assistance. She said:

… when it comes to the levy I understand that no one wants to pay more but the people of Queensland didn’t want this disaster either. And we as a nation have come together in the past and put on one-off levies for many reasons; the buyback of guns, helping out the Ansett collapse, in relation to the milk and the sugar industry. So as a nation we have come together in the past to help out the milk industry, the sugar industry, the workers of Ansett and to buyback guns after the Port Arthur tragedy. I think the people of Queensland are at least as important as all of those other levies in the past.

The Gillard Labor government is committed to getting the budget back into surplus by 2012-13. By being in the black we can ensure that we have the fiscal means to fight back if we have to face another battle. Our swift action and fiscal discipline to get the budget back into surplus is described by Treasurer Wayne Swan as ‘the biggest positive turnaround in the budget’s position since the 1960s’. Our spending discipline will keep our economy as one of the strongest in the developed world. In January Mr Swan revealed labour force figures showing that unemployment fell from 5.2 per cent to five per cent in December and last year was a record high for job creation, with 364,000 new positions, 80 per cent of them full-time.

The opposition keeps calling for the government to stop our stimulus funding, but already 99.9 per cent of Building the Education Revolution projects have been completed or had construction commence. This project, which was a key aspect of our $42 billion Nation Building and Jobs Plan, helped keep people employed during the global financial crisis and has given our students and teachers new facilities which they never ever thought they would have. I have been to around 30 BER openings since the program commenced and it has been good to see my opposition colleagues as special guests at many of those events, even posing for photographs.

The coalition has also called for a cut to the GP Super Clinics Program. This again is an example of the opposition not being interested in fixing our health system. As Minister for Health and Ageing, the now Leader of the Opposition had no problem with stripping $1 billion out of health. Now that the Labor government is providing facilities for mums and dads and their families to access GPs at extended hours, have blood tests, see specialists, see a diabetes educator or see a physiotherapist, with all Medicare Benefits Scheme items bulk-billed, why would you want to take all of that away or prevent other communities accessing quality health care?

In my duty electorate of Dickson, superclinic nominees have successfully established the Strathpine GP superclinic. Since its first day of operation, on 11 January 2010, the clinic has had 71,176 appointments/consultations for 92,190 items of care. The clinic employs 15 GPs and nine nurses, including an Indigenous health nurse, and provides a whole range of healthcare services for its clientele. The opposition wants to cut this program completely.

The opposition also claims that this levy will push up the cost of living. From memory I recall that the highest tax rate in history honour went to the Howard government and was supported by Tony Abbott, Joe Hockey and Andrew Robb. In fact, it was 24.1 per cent—

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Order! Senator Furner, you need to refer to members of the lower house as ‘Mr Abbott’ et cetera.

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Mr Abbott, Mr Hockey and Mr Robb. In fact, it was 24.1 per cent in 2004-05 and 2005-06. This levy is only a small fraction of—to be more precise, 10 times less than—the tax cuts Australians have already received from the Labor government. That is because we are committed to ensuring our working Australians are better off. In our last three budgets, we have provided tax cuts to individuals, and our tax reforms have reduced income tax, small business tax, superannuation tax and tax on savings. We will have done all this—provided stimulus packages to keep people employed and built much needed infrastructure for our future generations—while still managing to get the budget back into surplus in a couple of years. This shows our strong economic management compared to the opposition’s election promises, which Treasury found to have an $11 billion black hole. Let us not forget that: it was an $11 billion black hole.

While we will raise $1.8 billion from the levy, savings from the budget will make up the rest of the $5.6 billion to rebuild flood affected areas. Yes, we have made tough decisions, but we have had to do so, and I commend Prime Minister Julia Gillard and Deputy Prime Minister Wayne Swan for their leadership and decisiveness in ensuring Queensland and Victoria will have vital infrastructure rebuilt. The ability to make tough decisions is exactly what a leader needs and something the coalition lacks.

Senator Xenophon said he may not support this legislation unless the states take out natural disaster insurance. I understand that the Queensland Treasurer is currently seeking quotes to test the market and to ensure that coverage includes roads. However, state Treasurer Andrew Fraser said most state insurers do not include roads in their coverage and that Queensland differed from other states due to its large size. He said:

… getting reinsurance coverage for Queensland is an entirely different proposition than it is for any other state.

Our state is prone to natural disasters, and the decentralised nature of our population means we have many government buildings and major roads spread across vast areas.

Queensland government Under Treasurer Gerard Bradley told the House of Representatives Standing Committee on Economics on 16 February that the Queensland government had looked at reinsurance for major events; however, they found that it would not be value for money. He said:

We looked at the case of the Queensland Government Insurance Fund and looked at the availability of reinsurance to cover major events. We sought reinsurance advice from our broking advisers and we did take that to the international insurance industry. But the costing of that and the risk provisions that they proposed did not represent value for money for the state in terms of the deductions for events and the exposures they were willing to cover. They did not, for example, cover natural disaster.

Mr Bradley stated that roads were not covered in other states’ insurance policies, and the fact that 80 per cent of the cost of this natural disaster is for road infrastructure, he believed, meant that:

… the availability and cost of seeking reinsurance for that infrastructure would be a major challenge.

So even if the state government had taken out insurance, we would still be in the same situation we are in now. We would still be here in this chamber looking for funds to pay for the roads—vital infrastructure needed for Queenslanders to get to work and school and needed to help businesses to conduct their daily operations.

The Sydney Morning Herald reported on 22 February that Anna Bligh said the last time the state government looked into reinsurance was in 2004. The story stated it ‘was offered a policy of more than a couple of hundred million dollars that did not cover roads and was therefore not good value’. A couple of hundred million dollars seems like a lot of taxpayer funds to pay for a policy which did not insure for the cost of this natural disaster.

On 23 February, the Brisbane Times reported that a University of Queensland professor supported the state government’s view that insurance would be hard to obtain. Professor John Quiggan said:

It’s also going to be difficult to get agreed opinion on assessments of damage (after disasters) …

It’s difficult enough for an individual ... there would be much bigger difficulties for the state … There are few companies big enough and expert enough.

Professor Tim Robinson from the Queensland University of Technology said he could see problems with getting insurance. He said:

The risk with insuring in the private sector is ... what’s to say an insurer wouldn’t go into liquidation and be unable to meet the claims the government was making?

Another heartbreaking tale I discovered while door-knocking in Brisbane and Longman was that some of those who were inundated by the floods were not covered by their insurance companies. Some policies covered clients for flash flooding from a storm but not flooding from a river. This is why it is important there is a standard definition for flood cover.

I am also fed up with the scaremongering the opposition are basing their arguments on. This levy will not stop people from donating or raising funds. Even as we speak, there are fundraising activities happening all over Queensland. On Sunday I attended the Family Fun Day fundraiser at the Caboolture Neighbourhood Centre. This Saturday I will be attending another fundraiser that the Ethnic Communities Council of Queensland is having for flood victims. We also had the fantastic fundraiser at Club Pine Rivers in January which raised more than $25,000 for the Premier’s disaster relief appeal. These two events occurred even after the flood levy was announced.

I think the opposition has underestimated the compassion that Australians have for their fellow countrymen and women. Volunteers came out in masses to help fellow Queenslanders in the days after the floods. When the water levels had receded and people were able to gain access to their homes not only did they have to sort through belongings but also they were greeted with layers of mud. But because of the Australian spirit, strangers pitched in and helped those who had been affected. It is our nature. Everyone lends a helping hand, and that is exactly what the nature of this levy is. For less than the cost of a cup of coffee, we can help rebuild much-needed infrastructure which was destroyed in this natural disaster. In fact, the member for Blair said last week that more than 85 per cent of people will pay less than $5 a week and half of all taxpayers will not have to pay the levy at all.

In conclusion, I believe it is important that the opposition puts aside politics and votes for this important piece of legislation to allow Queenslanders and Victorians to get their lives back on track. In a plea from Queensland, Premier Anna Bligh said:

I think it would be a great pity if every Queensland Senator, regardless of their politics or their background didn’t support the flood levy … Sometimes it’s important to put politics aside and put people first, and (I say to) Queensland Senators let’s put Queensland first.

I commend the bills to the Senate.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I wish to contribute some of my thoughts to this debate on the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and Income Tax Rates Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011. This is effectively another new tax. When I look back on the brief 2½ or so years I have been in this Senate chamber I have seen the alcopops tax and the car tax. We have the debate on the mining tax and also the tax that was never going to be under Prime Minister Gillard—the carbon tax is now well and truly on the agenda with the big announcement last week. In the photograph that accompanied the announcement were Greens leader, Bob Brown, and Greens deputy leader, Senator Milne, along with Rob Oakeshott, who will vote for the carbon tax tomorrow if he gets the opportunity, and Mr Combet and Mr Windsor. This is a tax that was never going to happen under a Gillard-led government, but that is now another reversal.

I want to highlight one simple fact. There are two sides to a budget: income and expenditure. The fact is that we live in a free enterprise economy and the more governments take out of the private sector the more they shrink the real money-earning sector of our nation, the private sector. That is what the government are doing. They have their hands in the pockets of business and workers all the time. They then wonder why business will not grow. Hang on—how can we have the money to grow when we have given it to the government? That is the bottom line of this issue.

As I have said, we have seen all the new and proposed taxes. I just want to take you back to those spending issues under the Rudd-Gillard government. The Building the Education Revolution program had a $1.7 billion blowout and up to $8 billion of waste. This levy—this tax—is set to raise $1.8 billion. It is there in the blowout of the Building the Education Revolution alone. There is a saying: save some money for a rainy day. That is what the government has not done. Unfortunately, we have had too many rainy days, especially in Queensland and Victoria, and hence the tremendous damage to business, infrastructure, houses et cetera.

We are looking for $1.8 billion here. The Home Insulation Program had $2.4 billion wasted and mismanaged. Of course, there was the five per cent increase in the Medicare levy for those earning between $50,000 and $100,000 a year and a one per cent increase for those earning above $100,000 a year. We have $2.4 billion wasted and mismanaged in the pink batts program. The laptops in schools program had a $1.2 billion blowout and less than half have been delivered. The solar homes program had $850 million in blowouts and the program was cancelled. And what a fiasco the Green Loans Program was! All of those people put in their own money to be trained to go out and assess homes to help them save electricity and the whole program collapsed. There was $300 million wasted on that program.

They spent $50 million advertising the stimulus package, they wasted $40 million on climate change advertising—with no action—and they employed 150 public servants to implement the emissions trading scheme that never was—$81.9 million wasted. There were 150 public servants employed to do nothing, yet the government bring this bill into the Senate looking for more money from the Australian people. Surely the thoughts of Australian people are justified when they say, ‘Hang on, government, how much have you wasted now?’

More was wasted on the UN Security Council bid—$35 million to advance the career of none other than Mr Rudd—and the 2020 summit that Mr Rudd held here soon after being elected into government was $2 million, for a great big talkfest. Then there are consultancies—$1.3 billion in contracts for consultancies—and now they are looking for $1.8 billion to give to the people affected by the floods. I support assistance for all those people who have been wiped out by the floods. I have been to the Mingoola-Tenterfield-Bonshaw area on the northern borders of New South Wales adjoining Queensland and I have seen the devastation for myself. I have seen the massive crop loss. I saw one farmer who had had 200 tonnes of pumpkins literally washed away. In fact the pumpkins were hanging off the centre pivot irrigators like Christmas decorations—a sad thing to see. There were 2,000-litre fuel tanks five metres up in the trees and hundreds and hundreds of kilometres of fencing simply destroyed. I have seen the damage and I know that the Minister for Agriculture, Fisheries and Forestry, Senator Ludwig, has also been there recently and seen it as well. We need to help these people get back on their feet—but another tax?

The point I make is that there are two sides to a budget. This government, and the Labor Party in general, have to learn about the expenditure side. All my life I have seen it—as soon as the Labor Party get into government and get control of the chequebook, what do they do? They send us broke. That is just common knowledge and it has been the common experience all of my life. I take you back to the late 80s and early 90s—whether it was Victoria, South Australia, Western Australia or Tasmania—when the so-called world’s greatest Treasurer, Paul Keating, was in this parliament sending us broke and once again calling for tax—more levies, more taxes, more money off the people. As I have said, we have already seen the taxes—the alcopops tax, the luxury car tax, the mining tax, the carbon tax and now the flood tax. It goes on and on. But the thing that annoys the Australian people most of all is when they see taxpayers’ money wasted. I have just highlighted many of those issues—billions and billions of dollars of wasted money that could have been saved for this rainy day. That money could have been available now, but instead it is a matter of: ‘Let’s get more off the Australian people.’

My colleague Senator Cormann raised issues about those who have been burnt out in Western Australia—are they going to be exempt from this levy? Who knows? We do not know if they will be. We know that those affected by the cyclone and the floods in Queensland certainly will be. If you had your power off for more than two days, you qualify for an exemption. I am sure Mr Warren Entsch, the MP up there in Cairns, qualifies; Senator Boswell probably qualifies; and I know my son David, with his wife Tammy and their little baby boy of just a few weeks—they had the power off for two and a half days—qualifies. They had no damage to the house—they might have lost a bit of food when the fridge went off—but they qualify. Who qualifies and who does not?

One of the big concerns I have is the volunteers who have helped to clean up this mess. I refer to the New South Wales State Emergency Services Volunteers Association. I received a letter from a friend, Charlie Moir, who says:

Volunteers of the State Emergency Service spend many hours training for and then performing their duties, which include flood and storm events. They give freely of their time to help their community’s respond to and then recover from natural disasters including the recent floods. They do this without seeking any remuneration for their time or efforts. If the Australian government were forced to provide a paid fulltime disaster commitment, it would certainly cost many hundreds of millions of dollars per year to staff. Volunteer emergency service workers thereby save the government and tax payers of Australia huge amounts in dollar terms every year.

So will those volunteers be exempt from this tax? If this tax is to go through the Senate—if Senator Xenophon is to capitulate and vote in favour of it—then I think they should be. These people should be exempt. If my son and members of parliament can be exempt because they had a couple of days with the electricity off at their residence, why cannot the volunteers who do so much work and training and put so much energy and effort into helping people recover from disasters be excluded as well?

If this levy goes through the Senate, I want to you to consider those who, during the next 12 months, may be retiring and claiming their superannuation. They will be on the one per cent. They will be paying, maybe, $6,000 or $7,000 if they take a lump sum payout. This is surely wrong and I would hope that, if this legislation does happen to go through the Senate, this is amended for a start. I oppose the levy as a whole because of the government waste and the increases in tax they have already inflicted on the Australian people but, if it were to pass, surely there would be some consideration for those who have worked all their life and saved their super in conjunction with their employers? Surely they will not be simply ripped off if they happen to retire in the next 12 months? Who knows? The government says the levy will be temporary, that it will be for 12 months. Who would trust them? Who would say it is only going to be for 12 months? It is like those famous words: ‘There will be no carbon tax under a Gillard-led government.’ Those famous words are now part of the propaganda history of our nation.

What about those people who have already donated? We know Australia is a generous country and a caring country. We know that more than $200 million was donated to and raised for the flood victims, especially for those in Queensland. We also know that, when the government announced this new levy, those donations dried up. People are saying: ‘Hang on, I volunteered my money. I have given generously and now the government is going to tax us more.’ That is what angers people. It is so annoying when people donate so much only to find the government hitting them with a double whammy.

There has been a lot said about the natural disasters in our country. For example, the Leader of the Greens, Senator Bob Brown, said on 16 January in Hobart—we are talking about climate change now:

It’s the single biggest cause—burning coal—for climate change and it must take its major share of responsibility for the weather events we are seeing unfolding now.

So it is coal-fired generators causing the floods. He was referring to the Brisbane floods. He also said:

There’s very little doubt that the burning of fossil fuels is responsible for the hottest oceans we’ve ever seen off Australia ...

Then we had Senator Milne, Deputy Leader of the Greens, on 1 February saying that Cyclone Yasi ‘is a tragedy of climate change’. What about the cyclones that my leader Warren Truss was telling me about? Sixty or 70 years ago a cyclone hit Cooktown where some 400 people were injured or killed. What caused that? What about the floods of the late 1800s? We certainly did not have the level of burning of fossil fuels in those days but we still had the natural disasters. To somehow suggest that a carbon tax should be put on or that industry should be taxed because it is industry that causes the floods and the cyclones is simply outrageous, and history will prove that.

The Australian people are annoyed about the fact that they have donated generously with their money and their time and now are facing another levy. They are annoyed about the government increasing taxes here, there and everywhere and then wasting the money—and I have gone through the list of waste. They are annoyed that those volunteers, who do so much, who happen to earn more than $50,000 gross income a year will be hit again after they have given up their time and their energy and effort after all the training they have done.

The coalition has identified more than $2 billion in savings. As I said, I support every bit of help we can give these people to get back on their feet. Some houses were not insured for flood. We know that is a very controversial issue, and we have seen it over many years, right back to 7 February 1991 when my home town of Inverell was flooded out. The argument is that the water did not come through the roof but came up through the lower level of the floor; hence, it was not storm and tempest but flood. We have heard those arguments for many years. But the big issue here is more robbing of the private sector. The more the government takes off the people in a levy or a tax, the less disposable income they have to spend each week to stimulate their local businesses, especially the small businesses. This is about the government taking another grab and not about showing any proper fiscal constraint and responsibility, which is typical when Labor gets control of the chequebook. That is why I oppose this levy. The government needs to learn to control and manage money properly, not to waste it, be responsible with it and show proper respect to the Australian people.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The Australian Greens support 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. In the work that was done by the government in arranging for more than $5 billion to go to relieving the suffering of people as a result of the extraordinary flood events that we have seen so far this summer, the Greens fed a series of proposals into how that money might best be found. Amongst the proposals that we accepted from government was this levy, which will raise $1.7 billion. It is notable that the levy will not be raised on people who have suffered as a result of the floods. It is very progressive in that it puts a 0.5 per cent impost on people who earn between $50,000 and $100,000 in the coming financial year. That increases for people earning more than $100,000 to an extra 0.5 per cent—that is, one per cent of their income over $100,000. It is very progressive and the majority of money here will be raised from high-income earners like us senators, who take home in excess of $100,000 per annum.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

All leaders get a lot more.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

The very observant senator from Queensland notes that leaders get more money—I think he is referring to me. Unlike him, I support this legislation because I am very willing to contribute this part of my income to the victims of the floods whereas he is not, even though he is from Queensland and I am not. That is the difference between Senator Macdonald and me. That having been said, the Greens negotiated also to ensure that, as part of this prescription, $100 million would be returned to the Solar Flagships program in the forward estimates and a proper consultation then undertaken to develop long-term policy for large-scale solar power. In doing so, we have saved a possible cut in that important program. Many jobs, including in rural and regional Australia, will also be created by that program. We also secured the restoration of the National Rental Affordability Scheme, which aims to have 50,000 new homes provided in the out-years from 2014-15. We also secured—along with Independent members of these houses—ongoing commitments to provide the key functions of the Australian Learning and Teaching Council, including the provision of awards, citations for excellence in teaching and peer reviews and acknowledgment. It is a good outcome and the government has very wisely accommodated the views of Independents and Greens in coming to that outcome, though the matter is not finally settled. It is unfortunate that the intransigence and the unhelpfulness of the opposition, led by Mr Abbott, has taken the view that there should not be—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

The government should pay as it has for every other cyclone and flood.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

We have just got it from the Queensland senator that the government should pay—which means in effect that taxpayers should generally pay anyway—and this levy, which is aimed at better off taxpayers, ought not be implemented. He is saying, in effect, that he wants to burden middle- and low-income earners with the payment of help—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

That is an outright lie.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

Senator Macdonald!

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

He should withdraw that, Madam Acting Deputy President. But I am not responsible for him—the opposition is. You can see the sensitivity and the vulnerability of the opposition through these interjections. What he is saying is that the impost of helping people who have been through these awesome circumstances, including the loss of many lives, ought to be put onto the shoulders of middle- and low-income earners in Australia.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

That’s an outright lie.

The Acting Deputy President:

Senator Macdonald, if you have a point of order you should raise it through the proper channels.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

What a poor performance from this Queensland senator in this important discussion. Senator Williams spoke of the concern he had about the comments I and my colleague Senator Milne, who I am sure will speak on this matter, made about the predictions from scientists that we would see worse and more destructive flood events, as well as heat, bushfire and drought events, as a result of climate change. I do not subscribe to this new political correctness which comes from the opposition implying that one ought not to speak about the generator of climate change, which is the burning of fossil fuels. I have not subscribed to it, and nor will I, because I believe that the evidence is in and is compelling—the scientists tell us it is more than 90 per cent the case that human generated fossil fuel emissions into the atmosphere are causing increased temperatures around the globe, including in the ocean, and one of the outcomes of that is the warmest oceans around northern Australia in recorded history. With La Nina, this is leading to the greater likelihood of greater precipitation events just as we have seen recently.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

It was going to be all drought for years; it was never going to rain again.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

It maybe difficult for Senator Williams to get his mind around this, but the predictions have been around for decades that not only would there be greater droughts—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

You said it was never going to rain again.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I never said it would never rain again. You have had your opportunity to speak and tell it as you see it. The fact is that scientists are predicting not only greater heat events but greater freezing events as well. It is hard for some people to get their minds around that. It is a challenge for all of us. I accept that these predictions are being borne out. What we have seen is the equal warmest year, globally, in recorded history, the hottest oceans of northern Australia in recorded history, some of the most devastating floods in recorded history and one of the most violent and destructive cyclones in recorded history. These fit into a pattern of prediction which has been developing in the scientific community.

The opposition says discussing this matter is out of place, yet it was okay for the Leader of the National Party to be condemning the failure to build more dams, which is a very political question, as early as 2 or 3 January and to be wading into the causative factors of the magnitude of floods. When it comes to talking about climate change, because of the vulnerability of the coal industry in particular, you must not talk about it. The opposition can play out their own fears and be self-censoring on this, but this is a matter for responsible and mature debate—and that debate will be had.

The Greens position is that the mining industry superprofits tax, as outlined by Treasury, ought to have been applied. We disagree with the government reducing that superprofits tax to the point where, according to evidence to Senate estimates last week, as much as $10 billion per annum will be lost to public expenditure. The opposition obviously thinks that the average taxpayer in Australia should make up the shortfall in funding for programs rather than the big iron ore and coal corporations—which by the way export a great deal of their profits overseas—paying to assist this nation to deal with its need for infrastructure and services in the future as well as the unforeseens, which I thinks are foreseens, although we cannot specify them, of the huge cost impacts of climate change. At the end of that spectrum we come to Sir Nicholas Stern’s projection that before the end of this century the impact of climate change on economies may be seen to be between five per cent and 20 per cent loss of gross national wealth, or productivity.

This will have a huge economic impact. The opposition may care to put its head in the coal pit on the matter, but the Greens will not, because it is responsible to be dealing now with this extraordinary projection of threat to the wellbeing of Australians and not leave it to our children or grandchildren to do that. Mr Abbott would not collect $1 from the miners through a reasonable tax on superprofits from the ore, which belongs to the Australian people. He would expect the Australian people to forgo the benefits of that arrangement, recommended by Treasury, which the Greens endorse. An amount of $148 billion over the coming 10 years may well be lost to Australians, to pay for such things as flood, cyclone, bushfire, hailstorm and sea level rise damage. That is the opposition’s choice, but it is not one that the Greens will subscribe to. We believe that the polluters should pay and we believe that those who cause the damage, with eyes wide open, should pay. We have known about this for decades. Indeed, I saw former Senator Richardson saying, quite rightly, on Q&A the other night that he first brought a bill on climate change before cabinet in 1988. Everybody has their eyes open on this issue and it is not responsible for us to say that, because the coal industry has not made provision for the damage it will do to the rest of society anymore than the tobacco industry did, it should now escape a reasonable tax which may help the country to adjust to the impact of climate change. That is not responsible.

Yesterday we saw Mr Abbott at a petrol station, talking about how he is going to create a popular revolt against the potential for fossil fuel emissions to impact on the economy, suggesting that it be ignored. That is basically what he is about: take no action. But what it is really about is Mr Abbott saying about the causers, the big polluters: ‘I am going to let them off the hook. Neither will we have a mining tax, to reasonably share with the Australian people the extraordinary profits they’re getting’—and I think they export 70 per cent of their profits overseas—‘nor will we ask them to be responsible for their part and pay a fair share for the damage as a result of climate change enhanced destructive weather events in Australia.’ Mr Abbott can shield the big coal corporations against the interests of the average Australian, low-income and middle-income earners in particular, but the Greens do not agree with that. This will be part of the debate about economic responsibility over the next century.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Mr Deputy Speaker, I raise a point of order on relevance. I have been listening to Senator Brown for the last 10 minutes and he has been talking about a carbon tax. Could you draw his attention to the fact that this bill that we are debating is about a flood levy and a flood tax. Whilst I appreciate that we allow a lot of latitude in these things, we are interested in Senator Brown’s views on a flood tax and on why he is supporting the Labor government on yet another new tax, rather than talking about some tax which has not yet been introduced.

Sue Boyce (Queensland, Liberal Party) Share this | Link to this | Hansard source

Thank you, Senator Macdonald. That is not a point of order.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

A very wise ruling, Acting Deputy President. That is an example of Senator Macdonald’s inability to know, after many years, the rules of the Senate and about proper debate. Of course, what he does not like to hear is my contention that if we had a proper superprofits tax on the coal industry and other miners who are digging up the ores, which belong to the Australian people, we may not even have to be debating a levy here today. But that is the way it goes. Poor Senator Macdonald, who is not standing up for his Queensland constituency in this debate, can argue his own case. I do not accept it. I endorse this levy, which not only has the government put to the Australian people but the polls show the majority of the Australian people support. I look forward to it passing the Senate.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

We have faced an unimaginable beginning to 2011, with incredible natural disasters taking place around Australia. My home state of Western Australia has not been immune. We saw devastating floods in the Gascoyne region, in December, and severe thunderstorms around various parts of Western Australia, including flooding, and widespread destructive bushfires in Perth’s eastern region. We also watched with grave concern as cyclones circled our coast, near Perth, in the Kimberley, near Karratha and in the Pilbara.

Having seen the tragic loss of life in Queensland I am, at least, thankful that at home in WA we had no fatalities. It was an incredible experience to visit the city of Armadale and speak to those who lost their homes during the fires. It reminded me of what those in Queensland must have gone through. It was incredible to see how quickly those fires—like floods—moved, even on a hot, windy day, swallowing suburban houses on the fringe of bushland in their path. Communities in Queensland have had similar experiences with floods. The spread of fire was rapid and stunning and it is confronting to acknowledge, particularly looking at Queensland, how it could have been so much worse. It is a reminder to all Western Australians to be fire-ready at home, especially those who live near bushland. As someone who grew up in Perth’s hills, I know firsthand that the enjoyment of our local environment’s beauty must be tempered with caution for what nature dishes out.

We know that the Gillard government moved quickly to support storm, flood and bushfire relief for disaster victims right around the country. It is notable that in Western Australia, as in Queensland, in Victoria and in Tasmania, the response to these disasters has been funded by both the Commonwealth and the state governments. The funding has been a part of what is called the natural disaster relief and recovery arrangements, which have been co-funded by state and federal governments on a fifty-fifty basis—a partnership for the relief of our communities—and has included emergency relief for people who have lost their homes, assistance for lost and damaged small businesses and reconstruction funds for community infrastructure. I remember speaking to George, who was washed out in his caravan park in Carnarvon, about the roll out of the $1,000 relief payment. He was very pleased about that payment, and my office was very pleased to assist him in accessing both that funding and relief funding under the NDRRA.

Having seen the devastating impact of storms, floods and fire in WA, I have thought long and hard about the national flood levy. I have concluded that, should Western Australia face widespread devastation like that experienced in Queensland, I would want—and in fact we would need—our nation to lend a hand to help us get back on our feet. It is in our national interest for us to help Queensland get back on its feet. As a strong and prosperous state, Queensland needs a helping hand so it can get back on track; for its people and its economy to flounder on their own would ultimately be a great drain on our nation. Queensland needs to be supported to get back on its feet generating wealth and prosperity for its own people and for the nation. It needs money to rebuild its ports, rail, public facilities and roads. That is a tall order and a significant call on Commonwealth finances. We know the bill will be in the order of $5.6 billion. Significant and critical infrastructure projects must be funded—things like the Bruce Highway between Brisbane and Cairns, the Warrego Highway around Ipswich, the Capricorn Highway around Rockhampton and the Calder and Sturt highways in Victoria.

The coalition leaves us with no plan to address the catastrophes that have befallen our nation’s communities and those critical pieces of economic infrastructure. On the other hand, the measures in the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011, which we have before us, are a balanced package. The package involves the cutting of some spending programs, the deferring of some other pieces of new infrastructure and the applying of a one-off, 12-month, temporary levy for those earning more than $50,000 a year. The levy is critical in fixing essential and vital infrastructure, infrastructure that those opposite have no plan for, because they do not want to introduce a flood levy. They have no plan for this essential infrastructure—for roads, for bridges, for ports or for railways. What would the nation do without a plan for fixing infrastructure? And the plan has a bill that will run into billions of dollars. We must have a flood levy to support the massive rebuilding effort and to help communities that have been torn apart on such a widespread scale get back on their feet. As I said, it is going to cost billions; it is estimated that the government will need to spend about $5.6 billion to rebuild the devastated communities, particularly those in Queensland. It is completely unrealistic to expect the people of Queensland and their government to do that alone. No state should have to face a disaster like this alone.

The federal government will need to meet approximately two-thirds of the costs by identifying budget savings, which is a very difficult task. The remaining funds required for the rebuild will be met through what I think is quite a modest temporary levy, considering the circumstances. The levy will not apply to people who have been victims of the recent floods, the recent bushfires in my home state of WA or cyclones. In fact, people in disaster affected areas who meet the criteria for the Australian government’s disaster recovery payment this year will be exempt from the levy.

Those opposite have no plan to address the crisis that this nation has faced this summer—no plan at all. They are simply trying to score political points, despite the fact that there are so many communities that so desperately need help to rebuild. Time and time again those opposite prove themselves narrow minded and visionless when it comes to the great questions facing this nation. As I said before, this is a temporary levy that will assist the costs of rebuilding vital infrastructure. It is for 2011-12 only, for floods that tore apart people’s lives, homes, businesses, roads, community buildings and vital infrastructure—things that were destroyed during the devastating floods.

I am pleased that the levy recognises the capacity to pay. It has been designed so that low-income earners do not pay anything. Higher income earners will need to pay a bit more. The levy will apply at 0.5 per cent of taxable income in excess of $50,000 and at one per cent of taxable income in excess of $100,000, and no levy is payable where a person has an income of $50,000 or less. As the Prime Minister said:

This is not just a routine piece of legislation, not just a package of measures to restore bridges and roads, but an expression of goodwill between Australians.

It’s an act of faith in the future, a way of honouring the dignity and resilience that Australians have shown throughout this ordeal.

I endorse those remarks and, in doing so, I would like to call on my Western Australian colleagues from all political parties to support this bill and this levy. Western Australia is not immune from the catastrophic potential of floods, cyclones or bushfires. We have had our own experience of this at home with the Gascoyne floods, the destructive south-west bushfires and what was, I think, a lucky escape from Cyclone Bianca. If the unthinkable were to happen in Western Australia, on the scale of the destruction in Queensland, we would need to be confident that the federal government had the capacity to help our communities rebuild. We can see how important this is, as the people of the Gascoyne region and in places like the shire of Armadale come to grips with the devastation and rebuild. Support for this levy is not just in the national interest; it is firmly in Western Australia’s interest. It is time for WA’s Liberals to stand up for what is clearly in both national and state interests and support this levy.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise today to support the flood levy. I want to talk about the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 in the context of the circumstances in which we find ourselves. The government announced the levy as a one-off levy in order to restore so much of the infrastructure damaged throughout Australia but particularly in Queensland, New South Wales as a result of extreme weather events—in this case, massive flooding and cyclone damage. The problem I have is that it is being described as a one-off event. What that fails to recognise is that we are living in a world which is warming. We have just lived through the warmest decade ever. We have seen record sea surface temperatures off Northern Australia and, on top of that, a La Nina event. Together, they have meant warmer atmosphere absorbing more moisture and, therefore, heavier rain events.

A recent paper by Professor David Karoly on cyclones says that the result of global warming is that you get the added intensity. What might have been previously a category 3 cyclone will become a category 5 cyclone or thereabouts because of climate change. His paper also shows, and I think this is particularly pertinent, that the genesis—that is, where these cyclones actually begin or form—has moved two degrees latitude further south. So we are now finding that these cyclones are capable of being generated further south and, with the warmer ocean temperatures, these cyclones will hit the Australian coast possibly as far as two degrees further south than they have ever hit before. This means that in some parts of Queensland and northern New South Wales, people will to have brace themselves for events that they have not been prepared for previously.

If we look at this in the context of where we have been, even in the last five years in Australia, we had the most appalling and horrendous fires in Victoria. As Matthew England, a leading Australian scientist, said:

The bushfires in Victoria were another good example of where the temperatures weren’t just broken by a little bit ... they were smashed. And when you see that, you’ve either got a freakish weather event well above the average or there’s a climate change signal to that.

I do not think there is any doubt that the intensity of those fires in Victoria was a result of years of intense drought, leading that event to be as bad as it was. At the same time as the fires, we had record high temperatures. A large number of people died from the heatwave in South Australia and Victoria, because the elderly, the sick and the young in particular are the most vulnerable to those extreme weather events. When we get an extreme heatwave like that, people often cannot afford air conditioning and then we get a resultant tragic death toll. We have had a decade of drought in the Murray-Darling which was far more intense than anything we have experienced before and now we have had these absolutely intense flooding events in Queensland, New South Wales, Victoria, Tasmania and fires in Western Australia.

You cannot say that restoring infrastructure is a one-off if that is the pattern. It is going to be the pattern in Australia because that is what is happening with less than one degree of warming locked in. What we are trying to do is constrain global temperature to less than two degrees and to do that we have to take action to reduce our greenhouse gas emissions. Also we have to recognise that, with that amount of heat locked in, we are going to experience extreme weather events, which means we need a long-term plan, not just a one-off.

I am supporting this levy but I am also supporting the idea that we need to have a national discussion about how we are going to do this. What is going to be the responsibility of the Commonwealth? What is going to be the responsibility of the states in terms of how they insure themselves and also prepare themselves for these events? But it also means that some responsibility has to be taken to run the three-dimensional mapping over the coastline, to show that to local government and to say: ‘Right. It’s now up to you to change your planning schemes to make sure that the buildings you are allowing to be built actually conform to the highest standards where there is an increasing threat of cyclone intensity.’ It also means that, where people have been given planning permission to build before on flood plains, that is re-examined in the light of what we have experienced. Further, it means that when state and federal governments plan infrastructure, whether it is roads, railways, sewerage works, waterworks or port facilities, they are built taking into account the risk of sea level rise, storm surge and intensity of weather events so that we are building with the recognition of what we have already locked in and the risk associated with what is coming in the future.

The Greens went into this negotiation on the flood levy saying it is really important that we do what we can to help restore the infrastructure in Queensland, but it is equally important that in the future we have a plan that looks at adaptation and a plan that looks at prevention. That is why, unfortunately, Senator Macdonald does not seem to get the connection between prevention and cure. At the moment we are dealing with cure and we are recognising that this was a terrible tragedy in terms of human lives, property infrastructure damage and crop losses. There are just so many aspects to it which have been heartbreaking, but that is curative. We are trying to restore what has happened, but we equally have to prevent it getting worse and, hence, we are moving on all fronts to try to reduce the risk associated with climate change.

In terms of what we were able to negotiate, the Greens recognise that a number of the programs that the government chose to axe as a result of trying to find the money for this package did not have a great deal of merit in reducing greenhouse gas emissions, but one that is really critical is the Solar Flagships program. We need to make sure that, in moving to the low-carbon future, we have large-scale renewable energy facilities built and online. If you are going to move from a coal-fired economy to a low-carbon economy, you need to get those renewables built in a fast time frame and the Solar Flagships program is essential to do that. I am very pleased that, in the course of these negotiations, the Greens were able to get the Solar Flagships program back on track. We managed to get $60 million and an additional $40 million back into the program, but we also got—which is incredibly important—agreement to a roundtable with the government and industry representatives to look at the rules that currently govern the Solar Flagships program.

Industry has been saying for a long time that the problem with the program is that the rules are written in such a way that they do not really do what industry needs the program to do. Industry does not want huge large-scale facilities funded on a one-dollar-for-two-dollar basis because investors will not go from a laboratory situation to a large-scale facility. What investors want to see is something on a small scale working, and if they see that working then they will invest to scale it up. By building a smaller scale facility, you learn better what works most efficiently and then you can scale it up. So I am hoping that, as a result of that roundtable, we will have rules written for the second phase of the Solar Flagships program that will make sure that the renewable energy industry gets the kind of government support targeted at what it needs.

I am appreciative of the fact that the government has agreed that a feed-in tariff can be on the agenda for discussion. That does not imply that anyone is accepting that idea at this point. The Greens have been arguing for a long time that what we need in Australia is a national gross feed-in tariff in order to bring on those large-scale renewables such as solar thermal and geothermal, for example, because we know that any carbon price is not going to be high enough of itself and the renewable energy target is not going to be designed in such a way as to bring on those technologies that are more expensive at the moment. So I am grateful for the opportunity to be able to sit around a table and talk about what might be possible in the future and at least getting that kind of discussion started is the beginning, hopefully, of a serious policy outcome.

On the National Rental Affordability Scheme, again the Greens have recognised that it made no sense to get rid of a scheme which is assisting people with cost-of-living pressures in the rental market. When you consider how much infrastructure and how many housing areas were devastated in Queensland by both flooding and the cyclone, it is incredibly important that the National Rental Affordability Scheme stays, as well as the ongoing commitment to the Australian Learning and Teaching Council. We have managed to have a good discussion with the government about not only making sure that the cuts proposed in the budget do not take out programs which are very important in the current context but also supporting the government’s very keen commitment to see the infrastructure rebuild that is so necessary after these devastating events.

The coalition’s position on this is, in my view, inexcusable. They say that they think the government should pay the full cost of the reconstruction. When they say the government should pay the full cost, they mean all taxpayers should pay the full cost—that is, everybody who pays taxes, from the lowest income earners who go across a tax threshold right up to the highest income earners. How would they pay? Because you take all that money out of the budget, which means you cut programs. So you would be asking all Australians to lose services—and often those services are the critical services to the low-income earners across the country—in order to refund Queensland.

The way this is being done now is to say, ‘Let’s target this at the people who can better afford to pay.’ It is a very progressive levy. I think that is an appropriate way to go. Having said that, however, what are we going to do next summer and what are we going to do the summer after that? How are we going to prepare ourselves for the reality that is climate change? How are we going to get people to actually sit down and look at those maps of where the extended coverage of a cyclone belt will be and at sea level rise and storm surge around the Australian coast? How are we going to get state and local and federal governments working much better together to plan schemes?

Mr Windsor, the Independent in the lower house, is talking about a long-term levy, which is exactly where the Greens are coming from, and if not a levy then a long-term plan of some kind for disaster. Senator Xenophon has been talking about insurance, and I have some sympathy with that. I have a motion on the books today saying, ‘If we have a situation where the Commonwealth pays two-thirds and the states pay one-third, what about the fact that some states don’t pay insurance and therefore have nothing and there’s a bigger bill to pay?’ They can say, ‘We actually won’t worry about it because the Commonwealth will come in and help us.’ Surely we need to have a national commitment from the states either that they reinsure or that they have some capacity to meet the inevitable consequences of disaster in the future so that the Commonwealth is not effectively coming in to rescue poor state government management. I have a lot of sympathy with looking at that big picture insurance question as well.

In my view, what this comes down to is calculating the risk. To me, from the science, the risk is so obvious. As Professor Karoly said, there is a potential for tropical cyclones to develop during the next 50-year period that are more intense than reported hitherto in the Southwest Pacific Basin, including supercyclones with central pressures below 900 hectopascals. An increase can be expected in the number of strong tropical cyclones impacting the Australian coastline. Some of these cyclones are likely to produce damaging winds, extreme flooding and destructive storm surges. Tropical cyclone formation and impacts in the Queensland region should slowly extend further southwards, as in towards the poles, with increasing numbers and severity of impacts over South-East Queensland and the New South Wales northern coast.

When you get leading scientists telling you that, you cannot say ‘one-off’. You cannot say, ‘We are not going to deal with climate change,’ because, if you are ignoring these risks, you are exposing hundreds of thousands of Australians in the future to exactly the same consequences that occurred in Queensland this year. What sort of irresponsible legislators would we be to say that we are going to ignore what the overwhelming body of science says and just say, ‘She’ll be right, mate; it’s not happening’? In my view, ‘She’ll be right, mate; it’s not happening. We don’t have to deal with it. Let the government pay. Just take it out of the taxes and we’ll just get on with it,’ is totally irresponsible. It shows no leadership whatsoever. In fact it is cowardly, popularist and expedient, and it does not take this country forward.

I want to see some real leadership in this parliament. I want to see the damage from this last summer rebuilt, but I want to see Queensland, New South Wales and other flood damaged areas around the country rebuilt with future risk in mind so that we do not make the same mistakes over again. People living in areas that are vulnerable should be made aware of the risk so that they can make the choices for themselves, their families, the way they look after their properties, where they buy, how they live and what they think, and local government can have no excuse for building their infrastructure right on the coastline. In rebuilding these bridges that go down and railways and so on, we have to look at how we take these risks into account.

I commend the government for facing up to the cost and for recognising that the cost should be borne not by everybody equally but by those who have the greatest ability to pay. But I would urge the government to think again about calling it a one-off. Let us recognise that we are in a warming world. We are in a world where we have less than one degree locked in and are on track to go beyond two degrees, at the current trajectory, with the misery that will come with it. So I want to see us dealing not only with the curative after-effects of extreme weather events. I want us to have the courage to face facts and to work to see what we can do to prevent these extreme weather events in the future.

Michaelia Cash (WA, Liberal Party, Shadow Parliamentary Secretary for Immigration) Share this | Link to this | Hansard source

I rise to speak on the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011. In considering the underlying public policy behind these two bills I think it is useful to recognise that there was a series of natural disasters that have caused havoc to the majority of Australian states, particularly in the last three months. In December 2010, the Carnarvon area in Western Australia and areas across New South Wales suffered major damage from flooding. During late 2010 and early January 2011, Queensland suffered major flooding that caused so much havoc that nearly three-quarters of the state was declared a natural disaster area. During January, parts of Victoria were subjected to major flooding and, in my home state of Western Australia, the Carnarvon region was again hit by severe flooding, which compounded the damage caused by the floods a month earlier.

Early last month, Cyclone Yasi devastated much of North Queensland, inflicting major damage to houses, public and private infrastructure and crops. Then, in mid-February, destructive winds from tropical Cyclone Carlos inflicted damage on Darwin and then proceeded down the west coast to lash Onslow, Exmouth and other areas down to Coral Bay. Then, in late-February, part of the Kelmscott and Roleystone residential areas, located about 30 kilometres east of Perth, lost 72 homes to a raging bushfire, with at least 30 more homes suffering damage. The damage was so significant that Premier Colin Barnett declared the area a disaster zone.

I provide this context of the damage caused by natural disasters in Australia over the past few months to illustrate that the damage was not confined to the east coast of Australia; there was major damage and financial loss in other parts of the continent—in particular, in Western Australia. There is no doubt that we as a nation have suffered severe economic loss and social upheaval as a consequence of the natural disasters. Current estimates put the cost of the damage suffered at around $5.6 billion; however, I think the actual cost will exceed this by several hundred million and may well reach $8 billion. There is no doubt that we have to offer major support to those who have been affected, and in many cases devastated, by these disasters and that the burden of the support must come from a national level.

In that regard, there are three main options to raise the required funding: raise taxes, temporarily increase the fiscal deficit or cut government spending. In political terms you can actually divide these three options into the categories of easy, less easy and downright lazy. Clearly, raising taxes or a temporarily increasing the fiscal deficit are the easy options. But I hasten to highlight that a government that takes these options is also taking the incredibly lazy option. Cutting government expenditure is the most economically responsible option, and that may well be why those opposite did not take that as the option of first choice—because that option requires a commitment to fiscal responsibility, political determination and skilled management of the economy, something that we know those on the other side are completely incapable of.

The bills that are before us today are not matters of good public policy; they are not bills that will better the nation. What we are debating here today are bills that are necessary for one reason and one reason only: the Gillard government’s first and only instinct when it comes to solving problems is to create a new tax. The imposition of this tax is one of political choice, not economic necessity. And the Prime Minister’s record to date in this regard is proof that, when it comes to making national economic decisions, the Gillard Labor government will always take the cheap political decision, to try and curry favour with its supporters, rather than take long-term economic decisions that are in the interests of this nation. Australians understand—they understand very well—that Prime Minister Gillard, consistent with left-wing ideology, has never seen a tax she does not like and has never seen a tax that, if it is in existence, she will not hike; such is the level of economic incompetence that engulfs the current Labor government.

This new flood tax may well go down in history as Labor’s laziest response to meeting the unanticipated costs associated with the repair and reconstruction of damaged public infrastructure. Labor’s default position is always to take the easy or lazy way out by failing to address its fiscal ineptitude and economic mismanagement. Labor has made a very deliberate choice to slug the mums and dads of Australia, because Gillard Labor, just like the Rudd Labor government, is addicted to increasing taxation. Why does it need to do this? Because it needs to satiate its appetite for its high-spending practices and its economic incompetence.

The inescapable reality in the debate before us is that, had there not been such a significant waste of taxpayers’ money on a number of the government’s poor-spending projects—and we can list them: the computers in schools program, the disastrous school halls program, the pink batts disaster, the Green Loans disasters, and the list goes on and on—we would actually not be standing here today; there would not be any need for the Labor government to bring these bills before the parliament. The entire budgeted revenue from this new flood tax is less than what has been wasted in the government’s Building the Education Revolution initiative alone. Think about that: had the government not wasted what is estimated to be $2.6 billion on its Building the Education Revolution program, there would be no need whatsoever to slug the mums and dads of Australia with this new tax.

The Prime Minister, in her second reading speech on this legislation, said:

I always expected Australians to ask all the hard questions about why they are being requested to step up and pay more. But at the same time, I always believed our community would understand that additional contributions are required to meet real additional needs.

Only a Prime Minister who is completely, totally and utterly out of her depth would seek to exploit people’s generosity to flood victims in an attempt to win acceptance for what is just yet another Labor Party tax. We all remember that, prior to the imposition of this flood tax, the Prime Minister called on Australians to donate their time, to donate their money, to help those who had been affected by the natural disasters—and, in typical Australian style, they did. We all saw it on the TV. With instantaneous communications it was beamed into our homes each night. Australians whose property was not directly affected by the cyclone or floods were moved to go out and help their fellow Australians. I remember the images and the efforts of these absolutely fantastic volunteers, who were often seen waist-deep in water and covered in mud, helping out those who had suffered so much loss as a consequence of the natural disasters. This really typified what Australian mateship was all about.

But what these volunteers did not know when they were called upon by the Prime Minister of Australia to donate their time and to so generously donate their money was that she would then slug those same generous people with this flood tax. That is exactly what the Gillard Labor government have done. That is their way of saying ‘thankyou’ to the people of Australia: slug them with a tax.

Australians are entitled to feel betrayed and duped by Prime Minister Gillard. The Prime Minister promised Australians—as she has done time and time again—that this year would be a year of delivery. But what the Prime Minister forgot to tell the people of Australia is that the year of delivery will come at their financial expense. Ms Gillard pitches this new tax as a mateship tax. But what the Prime Minister forgets is that mateship is all about helping people; it is not about taxing them. The Prime Minister and the Labor Party treat the people of Australia as if they are a never-ending pot of money in which the Labor Party can put their grubby little hands to take out money and spend and waste it with no form of accountability whatsoever. They forget that governments do not spend their own money; they spend taxpayers’ money. Taxpayers are entitled to demand that government will spend their money wisely. In doing so, a government’s first option should never, ever be to tax them. Its first option should always be to cut back on additional spending when additional funds need to be found for disasters such as these ones.

In her second reading speech, the Prime Minister also said that this was a one-off, temporary levy and when the clock hits midnight on 30 June 2012 the levy will end—the bill ensures it. I can only assume by that statement that the Prime Minister is living in a self-delusional reality, because there is going to be nothing temporary about this legislation. The pain that is going to be felt by the mums and dads of Australia as a result of Labor’s economic incompetence will well and truly be felt after the clock hits midnight on 30 June 2012. Why? Because the people of Australia know that this tax is but one of a suite of taxes that the Prime Minister of Australia has pledged to slug the Australian people with during her time in office.

Has the Prime Minister of Australia already forgotten her recent announcement regarding her conviction to slug the mums and dads with a carbon tax—an announcement that is a complete, total and utter betrayal of the Australian people? We all remember prior to the 2010 election the Prime Minister making the solemn commitment to the Australian people: ‘There will be no carbon tax under a government I lead.’ She also said, ‘I rule out a carbon tax.’ Then, having categorically ruled out the carbon tax before the election, she has categorically ruled it in after the election. When the Prime Minister says, in relation to the flood levy, that it is a one-off, temporary levy and that when the clock hits midnight on 30 June 2012 the levy will end, she conveniently forgets the ongoing pain that is going to be felt by the mums and dads of Australia as a result of her betrayal when it comes to implementing the carbon tax that she said prior to the election her government would never, ever implement.

The price of this betrayal will be paid by the mums and dads of Australia, long after the flood levy has ceased, every time they pay their electricity bill. It is estimated that the carbon tax will add $300 a year to the average family’s power bill. It will also add 6.5c to the price of a litre of petrol. So, long after the clock has ticked over on 30 June 2012, every time you flick on your electricity you will pay Labor’s carbon tax. Every time you put petrol into your car at the bowser you will be paying Labor’s carbon tax.

Long after the flood levy ceases on 30 June 2012, there is another tax that Australians will be feeling the pain of, and that is the minerals resource rent tax. Again, it is nothing more and nothing less than a sham. This is a bad tax that will have a destructive impact on our mining industry and our energy sector. Again, is it good public policy? No, because this tax, like the carbon tax and the flood tax, exists for one reason and one reason alone: to bail the Labor government out of a financial black hole. It seems that the only plan of this Labor government is to continue in the high-taxing, high-spending style of previous Labor governments.

I say to the people of Australia: if you think that it is bad now, just wait until 1 July, when the Greens take control of the Senate. What other taxes will the Labor government impose on the people of Australia? Will we have an inheritance tax? Should Australians pay death duties? That is a favourite of Senator Bob Brown. Should high-income-earning Australians be slugged with a special tax surcharge without there being a definition of what a high-income earner is? Nothing can be ruled out under this Labor government and everything must be ruled in.

Some time ago, the Prime Minister claimed that this new tax would not be imposed on those affected by the floods. But, as usual, in making this statement there was a broad and sweeping claim made to try and curry political favour with those affected. It was a broad statement with no specifics about who would be exempted. If you go to clause 4-10 of the bill, which deals with the temporary flood reconstruction levy, there is an interesting provision. It gives the relevant minister the discretion to determine if a person is to be regarded as a member of a class of individuals who will be exempted from this tax. There will be many people who have been affected by our recent natural disaster who would be very concerned about the political implications of this discretion and the fact that any decisions are going to be made on the basis of an undrafted legislative instrument which gives the government power to do something or to not do something.

I am also very concerned that there is no guarantee in this legislation that people outside the flood and cyclone damaged areas of Queensland will benefit from the funds that are being raised by this tax. Where is the statutory guarantee that people in Carnarvon in Western Australia or the people in Victoria who have lost their homes and life savings as a consequence of the floods and the bushfires will be recipients of this tax?

The coalition, despite the protestations of those on the other side, has set out an economically responsible way to find the $1.8 billion for the reconstruction. There is plenty of scope in the budget to cut, reprioritise and defer spending in order to find the $1.8 billion that the government plans to raise through this new tax. This is a fundamentally unfair tax. It is wrong in principle. It is bad public policy. The legislation should be opposed.

Claire Moore (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

The Senate today is addressing two pieces of law, the Tax Laws Amendment (Temporary Flood Reconstruction Levy) Bill 2011 and the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011. These bills will put taxes into the Australian system. That is not an unusual thing in this place. If you go back over the history of the Senate, many debates have taken place on tax proposals raised on all sides of the chamber and whether they would be good for the Australian nation. Nobody yet in the history of the Australian Constitution—and I have not checked every debate—has put forward a tax and said, ‘I want to harm the Australian economy and I want to harm Australian citizens.’

The three elements that I want to talk about today are three things that should be discussed and debated when any tax or levy or any other proposal is put before this chamber. One is the clarity of the arrangements, with the questions of why there is a need and how it is going to happen answered. The second thing is confidence. The community need to be confident that there are processes in place to ensure that the money that is being raised will be effectively allocated and that there will be reviews into how things are occurring. The last thing, and something which applies particularly to this discussion, is the issue of compassion. The particular payment that is being put before the Senate today is very strongly linked to a need. Governments and communities need to work together and take a compassionate view to ensure that people have fair assessments and a fair response.

From some of the more enthusiastic contributions that we have heard so far in the debate, you might have thought that talking about a tax in this place is unusual. In fact, when I had a look at it, I found that we have spent many exciting hours in this chamber debating whether a tax is a levy or a levy is a tax and how it would operate. I refer anyone interested in those debates to Hansard. You can go back through Hansard and see how much true enjoyment there is in working out a definition in that way.

There has been a request for us to agree to impose a tax for a particular period of time—one financial year. The terms of that tax have been clearly spelt out in the legislation—who will be impacted, how much will be raised and what its impact will be. There is no debate about the way that it will operate. Other senators have looked at the process in great detail. For people who earn less than $50,000 a year, there will not be any payment required. People earning between $50,000 and $100,000 a year will pay 0.5 per cent. People earning over $100,000 will pay one per cent. All of that is clear. People can talk with whomsoever they choose to work out exactly what that will be on a weekly, fortnightly, monthly or annual basis. It will be collected through the tax office, as indeed all other taxes and levies are collected. It is also clear that people who have received a Commonwealth payment because of various disasters will not be subject to this tax.

There will be questions about whether that is appropriate and fair. There have been questions raised in this place and in the wider community about the methodology for allocating the Commonwealth payments. As we have said in this place before, there were no changes to the way that Commonwealth payments were allocated during the recent disasters in Australia. It was done in the way that it has been done in previous times. However, there are always questions about whether everybody who claims should receive the payment or not. There is again clarity here, though. People’s claims are investigated. The government has stated that there will be reviews under this Commonwealth process. People who are found to have defrauded the system will be prosecuted—clarity. We believe that people who make claims are doing so in good faith. They tell us their situation and then they receive a payment. Under the proposal before us today, those people will not be affected by the two tax bills that we are talking about.

So we have clarity about who will be able to make claims and who will have the tax put on them, we will be able to clearly work out how much people will have to pay individually and there will be an understanding of the reason this particular tax has been imposed. As a Queensland senator, I am very clear about the need for this particular tax. In the three months that have just passed there has been enormous destruction in Queensland. People are still assessing the impact of both the flooding and the cyclone across Queensland. As at the end of this month we have identified 68 of our local government areas that have been affected by either the floods or the cyclone. Applications for emergent assistance grants from the Queensland government have totalled 39,279 for the floods and 11,390 for Cyclone Yasi; for essential household contents grants, 8,451 for the floods and 2,807 for Yasi; and for the essential services safety and reconnection scheme—another state based program for supporting people at this time—116 for the floods and three for Yasi. As at the end of February, 376,172 claims have been made for the Australian government disaster recovery payment. For the disaster income recovery subsidy, 50, 408 claims have been made. Ex gratia claims for payments to New Zealanders who have been caught up in the disasters total 341.

Behind every one of those claims a need has been identified—some immediate impact on individuals, families or businesses as a result of the recent floods and cyclone. There is no need for debate over the size of the need. It is clear that there is a massive requirement for rebuilding and recovery across Queensland—or, I should say, most of Queensland. It is very difficult to draw lines, but I do not think there are many families across the state who have not been impacted in one way or another. It is essential that there be clarity about how the program will operate so that people will have a sense of security that their governments, at all levels, are responding to the need that has been identified.

The program that the federal government has proposed is, again, very clear: $1.8 billion of the response will come through the taxation legislation that we are debating today; $2.8 billion will come from identified spending cuts, which have been made public; and about $1 billion will come from delaying programs, all of which has also been made openly available to the public. Again, it is clear that the levy is but one aspect of the response. There cannot be a single way of responding to the range of needs that have come forward, but one element that the government has put forward is the legislation we are debating today.

It is so important that the way the response will operate is made absolutely clear to the community, to the people involved in providing services and to governments at the federal, state and local level. Clarity must be ensured. The next aspect is confidence. The community and governments need to be confident that the federal government is working effectively and cooperatively with the other levels of government and that there will be a process for ensuring that when claims are received they will be reviewed very quickly and that the best method for spending the money will be ensured. There must be confidence in the various programs that have been put in place, including that which Mr Fahey heads up—which we have talked about in this place a number of times—as well as programs at the Queensland state level. These disaster response arrangements have been put in place to ensure that the community can have confidence that their governments are responding, that their governments are working cooperatively and that there is an understanding of what the needs are and how the response will operate.

It is therefore particularly timely to talk about the announcement made yesterday at three levels of government in Queensland about support for local government. There has been a range of discussion over the past couple of months about the way the arrangements for disaster relief between federal, state and local governments will operate. There has always been the understanding that the federal responsibility would be about 75 per cent, but there has been ongoing discussion at the local government level about which of their services would receive federal money and what they would be responsible for themselves. These discussions have been very, very detailed. Yesterday in Queensland an announcement was made that ensured that the federal government, the state government and local councils could be clear about exactly what infrastructure would receive Commonwealth support, what infrastructure would be the responsibility of state governments and what local governments and bodies within local governments with an income base would be responsible for in the recovery process, which will take months and years. I think that announcement was a very important step in ensuring that the various levels of the community, at this time of great need, will be able to see that their governments are able to put aside, as much as possible, political differences. That is always difficult, but it will ensure that people will know exactly which elements of recovery are being carried forward by which level of government.

The other element I want to talk about is compassion. I have mentioned today the number of people who have identified their own needs and the needs of their families and have come to various levels of government and put forward their claims. Each one of those claims has its own story. In the speeches that various senators made in the earlier discussion about the floods, the cyclone and the bushfires in Western Australia, senators were able to make personal comments about individuals they had met and families they knew and to identify the massive impact that this recent stream of natural disasters has had right across the country.

I talked about the sense of deep sadness and loss in Queensland when the raging Brisbane River was going past where I live and you saw people’s belongings being washed away. In those moments you could sense the pain that people were suffering, their need for compassion and their need for confidence in feeling that they would have an effective government response in their time of need. That is seen across the state. Rather than having what is for some people seemingly important political bickering, we need an effective, cooperative process that ensures that people have a clear understanding about what will be done to support them. We must not forget that we are talking about people who have lost their futures. All levels of government have to identify the loss and determine an avenue by which a response can most effectively be put in place. That applies across the whole range of government services. Today’s discussion is looking particularly at infrastructure and at rebuilding in that way, but I think it is most important that we also look at government responses to individual medical circumstances, including, most importantly, issues around mental health support into the future for individuals and families who have suffered great loss and great shock.

In relation to the compassion element of this debate, I also want to talk a bit about some of the comments that have been made that people are seemingly resentful that they have contributed either in a charity sense or by way of volunteering and that they feel somehow betrayed or angered that their services were not recognised or valued and that they may well be caught up in payment of the tax bills that we are discussing today. I have to admit, in working with a lot of people over the last few weeks, I have not had this issue raised personally with me. I have actually heard people talk about the fact that they gave willingly because they sensed a need. They gave money where they could and they gave personal help where they could. Any expectation that the federal government would put in place a modest tax impost for one financial year was not a reason for them being in any way regretful or angered or upset that they had responded to a need, which had been identified through the media, after seeing what had happened in Queensland through floods and the cyclone. It is certainly worrying that people who, for whatever reason—and mostly I am sure it was just from seeing the shock and fear in the community—made a personal decision to give in some way would somehow feel that that was the wrong thing to do. That has been an argument that has been raised in this place and also in the media over the last couple of weeks. If people do feel that way in terms of their future giving, that is something we would have to consider.

I would hope that every time an Australian citizen sees anybody suffering—in their own state, other parts of Australia or internationally—they would try to find a way in which they could help. We are seeing that now, with the Australian response to the horror that is happening in Christchurch. I cannot remember a time when someone, in their thought process about giving help, would say, ‘We must stop because somewhere down the track we might have to pay something in another way.’ I have not sensed that. In fact, I think that one of the good things about our community is that there is this sense that people want to cooperate and work together and help. In the number of post-flood recovery events that have been going on across Queensland over the last few months, at no stage has anyone come up and said, ‘I am sorry that I gave to the flood appeal, because now I might have to pay 60c a week in a flood levy’ or, ‘I am very upset that I went out and helped people clear out the mud from their homes or remove timber that had fallen around areas in North Queensland, because I might now have to pay a heightened tax’—which is very modest—‘for 12 months.’ Some people want to make that argument politically and want to thump the table and talk about slugging mums and dads. I am neither a mum nor a dad and I will be paying this levy should it go through. It is something that never crossed my mind at that stage. So, in trying to draw a differentiation, that could be one political argument you could make. But you cannot make the argument that there is not a need.

You cannot make the argument that there are not processes in place to ensure that expenditure will be made openly and transparently and that people will have the payments and processes reviewed in the following months when anything is made out. And you certainly cannot make the argument that the people who are making the claims, the people who have had their livelihoods, their homes, their schooling and their futures impacted by something over which they had no control—flood and cyclone—should not have an expectation that their governments, federal, state and local, have a responsibility to provide them with service, to make sure that their issues are heard and to make sure that there is a cooperative understanding across all levels of government as part of their job in governing.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

It is very important that we return some honesty and truthfulness to the debate before the chamber on 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. From listening to the Labor and Greens senators speaking, you would think that all compassion lies with them and that, for some reason, the opposition does not want to help in the flood and cyclone recovery in my state and in the recovery from the natural calamities that have happened in other states. Nothing could be further from the truth. The coalition has shown time and time again that it is prepared to assist with these natural and, indeed, other calamities. You have only to go back as recently as Cyclone Larry that hit and devastated Innisfail four or five years ago to see the extent of the support given by the then Commonwealth government—a scheme of support which, gratefully I say, has been replicated by the current government in relation to Cyclone Yasi.

But this is not about compassion and helping people. You would think from the speeches in this debate from Labor and the Greens—and the last speaker in this debate was a typical example when she talked about people’s belongings floating down the flooded Brisbane River; people who have lost their futures—if you did not look at this closely that the money being raised here was going to go to those people. Nothing could be further from the truth. The Greens and the Labor Party would have you believe that it is all about helping out people. This money, when it is raised, will go to wasteful profligate state governments that have spent everything they have ever had—state governments that are technically broke, like the government of Queensland. It will go to them to prop up the Queensland government for things which the Queensland government should have been planning for in any case and should have insured against. This is not about helping particular individuals, as the fine speeches and the fine words of Labor and Greens speakers would have you believe. It is all about propping up state Labor governments that could not afford to do the work that they should have expected.

This bill is dishonest in itself. It is called the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill. I will guarantee that this will be anything but temporary. It is simply another tax for a political party running a government that cannot handle money and cannot handle spending. If this is a temporary levy for a major natural disaster that is happening this year, what are we going to do for the major natural disaster which will happen next year and the following year and the following year? We all know, living in this wonderful country of Australia, that every year there will be at least one major natural disaster. You can bet your last dollar that the Labor Party will come to us this time next year and say, ‘Oh, we have another major disaster in a part of Australia. We will just continue this temporary levy for the Queensland floods and Cyclone Yasi on for another year.’ Because there will be disasters every year, because there have been disasters every year since European settlement—and I am sure a long time before that as well—governments put money aside as they expect to have to look after recoveries from these natural disasters.

I have already tabled in the Senate a list of natural disasters which have occurred since the mid-1800s. Was there, in any of those, a special levy arranged by the government to pay for reconstruction of infrastructure in the states or territories where those disasters occurred? Of course there was not. How much did we spend on drought relief? How much have we spent on Cyclone Larry alone? How much have we spent on floods and fires? We have spent billions and billions of dollars, and so we should. Governments are expected to anticipate and plan properly for this expenditure. But because the Labor government has wasted so much of its money on so many failed schemes, because it has wasted the $20 billion surplus handed over to it when it got into government, we now find the Labor government has no money left and so have to put on a new tax to help pay for recovery, a new tax called the mining tax and a new carbon tax simply to try to compensate for its profligate spending.

I listened with some interest to Senator Bob Brown and Senator Milne railing against the carbon producers—the coal companies, big mining companies, those huge multinational companies that send all of their profits overseas and therefore they have to be bad; that is the sort of thing that you used to get from eastern Europe and in communist Russia in years gone by—but, for all this concern about letting these multinational companies work, let us have a look at this bill. It says in clause 4-10(1), ‘Temporary flood and cyclone reconstruction levy’:

(1)

You must pay extra income tax ... for the 2011-12 financial year if:

(a)

you are an individual; and

(b)

your taxable income—

is such and such. Can I see anywhere here in this bill where these multinational mining companies that are making these huge profits and sending all the money offshore are mentioned? Surely, Senator Ludlam, interject and tell me that I am wrong, that I have misread it.

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I have 20 minutes.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

You have got 20 minutes. Good, I shall listen intently to Senator Ludlam, on behalf of the Greens, telling me why the multinational coal companies are exempted from this tax, or perhaps I am misreading it. This bill—the bill we are voting on—clearly says ‘if you are an individual’. As Senator Cash very perceptively pointed out, too, the bill goes on to say that you do not have to pay:

(2) ... if you are a member of a class of individuals specified in a legislative instrument made by the Minister for the purposes of this subsection.

(3) The Minister may only specify a class of individuals for—

that purpose—

if the Minister is satisfied that the class was affected by a natural disaster that happened in Australia ...

That gives a lot of power to the minister. Taking the example to the nth degree—and I am sure this would not be allowed to happen in Australia—does that mean that the minister could say, ‘If you are a class of people that happen to belong to a union then you don’t have to pay’?

David Feeney (Victoria, Australian Labor Party, Parliamentary Secretary for Defence) Share this | Link to this | Hansard source

Senator Feeney interjecting—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Is that what it says or not? Give me an interpretation, Senator. As I indicated, I doubt that the minister would ever do that, but that is how sloppily this has been drawn up. Which is the class that can get out of this? The whole thing has been quite poorly done, as you would expect. It again demonstrates that the Labor Party can simply not be trusted with looking after money.

I have also heard the Greens raving about the fact that because the coalition says that this should be paid from the general revenue of government then that in some way means the coalition is attacking lower income families, whereas this levy goes only on what they think in their minds are wealthy families—those who earn $50,000 or more. If the Greens believe that our general taxation system is so bad that it impacts on the poor and lets the rich off, why don’t they do something about fixing the general taxation system? Why don’t they introduce a bill? Why don’t they convince their coalition partners in government, the Labor Party, that the whole tax system should be changed? Why should the people they refer to as ‘poor’ escape only flood levies? Why do they have to pay for what some call middle-class welfare? Senator Ludlam agrees, so why isn’t he doing something? Why is he supporting this particular flood levy that exempts so-called poor families and taxes so-called rich families when it is apparently okay if all the other expenditure of government burdens the so-called poor people in Australia? Come on—let us have a bit of truthfulness and honesty in this whole debate.

The other point I want to make is that I understood that the government had decided that it needed a certain amount of money and so was going to make a certain number of cuts to its bloated expenditure which even the Prime Minister indicated would be able to be cut. The government said: ‘We’ve got bloated expenditure in these areas. We’ll cut that to help with the recovery and in addition to that we’ll recover some additional money through this flood levy.’ I may be incorrect on this, but I think the figure they were looking to gather through additional taxation was $1.8 billion. The government said, ‘There will be $1.8 billion from additional taxation plus these savings and that will help us deal with the recovery.’

But, having said that, to get the votes necessary to get this $1.8 billion deal through the parliament the government then went out and said, ‘Of those savings we were going to make, we are actually going to pay the Greens $100 million to restore the Solar Flagships program.’ That is okay, but what happened to the $1.8 billion? The Greens demanded $100 million of it for the return of one of their pet projects. The Greens also demanded for their support for this flood levy another $264 million for the National Rental Affordability Scheme. It is probably a good idea but—hang on—we were collecting $1.8 billion and already Ms Gillard has paid out $100 million and $264 million just to get the votes to get the new tax through parliament.

Then she went to Mr Wilkie, who had a real issue with the fact that Ms Gillard was going to get $88 million in savings from the Australian Learning and Teaching Council fund to put into the Queensland flood recovery. But—hang on—to get Mr Wilkie’s pretty expensive vote, she said, ‘Okay, you can have $88 million for that.’ That is a total of $452 million that Ms Gillard paid out to get the votes to get the new tax through this parliament.

She promised Senator Fielding for his vote $500 million for Victoria. Senator Fielding, do you really think that the reconstruction effort from the Commonwealth taxpayer would have excluded Victoria? Do you seriously think that even Ms Gillard was going to say, ‘We are only going to spend the money we collect in Queensland, Western Australia and New South Wales and not in Victoria’? Of course they were always going to spend it in Victoria as well. Well done to Senator Fielding, I guess, for getting a confirmation from this government that $500 million will be spent in his home state. I wonder if that perhaps makes people in New South Wales and Western Australia a little bit nervous that they will not get anything because their vote was not needed to get this through the parliament.

One wonders what sort of money the Labor Party will be throwing Senator Xenophon’s way to get his vote to support this. I know Senator Xenophon is an honourable man. I know he will not be bought off by any sorts of bribes or inducements. But I emphasise to Senator Xenophon the uselessness and futile nature of promises made by this government. We all remember Ms Gillard saying a few days before the last election with hand on heart, ‘I promise that there will be no carbon tax under a government I lead.’ How much more of a promise could that be? What more could you say? I am sure many of the people of Australia foolishly, as it turned out, believed her. Yet here we are a few short months later with the Prime Minister introducing the tax she promised not to introduce.

Time unfortunately does not permit me to go through any more of the rather shallow, if I might say somewhat euphemistically, contributions made by Labor and Greens senators in this debate. But I come back to the point I made right at the beginning, that this is not about helping individual people in Queensland, Western Australia and Victoria who have suffered as a result of natural calamities. I have heard a lot of stories about people who have had interactions with those who suffered, and they are not on their own. Compassion and concern do not rest with Labor and the Greens. I have been up in the cyclone areas a number of times and in fact sat through the fringes of it. We do this every second or third year. It is a disaster, it is a huge impact on people’s lives, but it happens. We live in the north knowing that cyclones will come every couple of years. It is such a great place to live that cyclones, floods, even droughts, will not send us away, but we know that those natural calamities will come. The fact that people have been hurt and will suffer for many years to come is not a reason for a new tax which will make their recovery and their futures even more difficult.

My colleagues have at some length gone through the flaws in this bill where people who have suffered but not directly, people who have contributed an enormous amount in time and effort which is even greater than money, will be penalised again by this new flood tax. We perhaps have not heard the stories of many people who I have become aware of who did not really want the $1,000—in fact they had made a decision not to go and get it—but who then said, ‘Well, it is not the $1,000 we are concerned about; it is the fact that if you get the payment then you are not subject to this levy.’ That was their issue in doing that. A lot of people might have thought that. Those same people, I might say, got the $1,000, gave it away to someone else and continued on. But this sort of stupid legislation brings out all these anomalies, these inconsistencies.

I raise again that these bills that the government is asking us to support in the Senate—and I hope that Senator Xenophon and Senator Fielding have looked at this—indicate that the minister can exclude different classes of people from payment of the levy. One would assume that the minister would do the right thing, but why wasn’t the legislation drafted in such a way that might have addressed that issue? Perhaps we can take this up further in the committee stages of the debate. I am waiting for Senator Ludlam to tell me that I am wrong in the fact that only individuals pay this tax. I am waiting for him to tell me about the multinational profit-making companies that send all their profits overseas, as the Greens, as Senator Brown and Senator Milne, kept telling us about in their contributions. I am waiting for him to tell me if these bills do in fact address those issues. Perhaps it is in another piece of legislation that is not before me at the moment. But I look forward to that.

In the end result, these flood levy bills are not about raising money for individuals; they are about raising money for governments like my own state government, the Queensland government, which is broke through its own inefficiency, and bailing them out of a political problem. (Time expired)

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

I am sure that I, along with many other senators, will be watching the clock with interest to see how long Senator Macdonald lasts before interjecting. The clock has started.

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Senator Ian Macdonald interjecting—

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Twelve seconds! I found most of Senator Macdonald’s speech incomprehensible and largely forgettable but there are a couple of issues on which we do agree and so I would like to address those first. You quite forcefully raised the issue about how on earth we use a one-off levy to address a rolling series of disasters. I think that is an entirely fair question. Also you raised the issue of compassion. I do not think anybody in here would question the compassion of coalition senators or MPs in the other place. You are from Queensland, Senator Macdonald. I find it difficult to visualise what it must have been like for people who were there or people clearing the mess up afterwards. In Western Australia we have suffered a series of quite horrific rolling disasters as well, not on the scale of what befell Queensland, obviously, but people have been up against it there as well. I do not think anybody here or necessarily even outside this building is questioning your compassion. I think they are questioning your competence to be able, for example, to add up. The $100 million or thereabouts that the government was persuaded by the Australian Greens to return to Solar Flagships amounts, I think, to about 1.7 per cent of the overall package. I will leave it to government senators, if they choose to, to talk about how they made that shortfall up. The $260 million that you rightly pointed out has been returned to the NRAS account, the National Rental Affordability Scheme, is funding deferred, so that actually should not be added to the total of whatever it was you added up because that is funding that will be in the forward estimates post 2014-15 and of course the government then is free to use that money as part of this package for disaster reconstruction. But I would have thought you would be well aware that you should not be adding that $260-odd million to what we took out of the package. That program has been deferred and I think that is a very good thing.

I do not propose to speak at great length on the Income Tax Rates Amendment (Temporary Flood Reconstruction Levy) Bill 2011 or the related bill. I think your reading of it is entirely correct—through you, Mr Acting Deputy President—in that this is not a tax on the mining industry. That was known formerly as the resource super profits tax and now it goes under a different acronym. The government in its negotiations with the big mining companies gave away—I know these are rubbery figures and the secretary of the Treasury pointed that out quite sharply on Thursday—up to $100 billion from the forward estimates, and the opposition wants no tax at all. So being lectured about why we are not taxing the mining industry in a flood levy bill from the side of this chamber that is not interested in chasing any of those profits at all—

Ian Macdonald (Queensland, Liberal Party, Shadow Parliamentary Secretary for Northern and Remote Australia) Share this | Link to this | Hansard source

Isn’t that a bit inconsistent?

Scott Ludlam (WA, Australian Greens) Share this | Link to this | Hansard source

Four minutes. I think it is quite extraordinary. This was not proposed to be a tax on the mining industry.

While we are focusing, quite rightly, on Queensland and Victoria, I want to point out some of the issues that residents in different parts of Western Australia have been grappling with over this last, disastrous summer. In just two months we have had devastating fires at Lake Clifton, just south of the city, and in Kelmscott and Roleystone at the same time, that really devastated part of the Darling Scarp communities. There have been floods in Carnarvon and the Gascoyne and damage from Cyclone Bianca across the mid-western wheat belt towns. Similarly to Queenslanders, residents of the Pilbara and the Kimberley are fairly familiar with those quite devastating formations crossing the coast. It happened again last week, when a cyclone menaced the Pilbara coast before heading back out to sea. Carnarvon, about 900 kilometres north of Perth, in December got its entire annual rainfall in 22 hours. I think the town was largely saved, but some of the irrigators and pastoralists close to town lost everything. Our hearts are with them. It is important to recognise and remember that this is not affecting anybody specifically; it affects all of us now.

The question that Senator Brown, Senator Milne and all of us have raised, subsequent to those disasters which overtook different communities in Australia is: why is this happening? We know that Australia is subject to frequent capricious weather, whether it be the drought or flooding rains of legend or wildfires. We do live in a country with a pretty violent climate. The question, of course, is: why would we want to make that worse? Climatologists have been telling us for literally decades—quite a long period of time—that in loading up gases that thermally warm the lower atmosphere and the ocean we are effectively trapping more heat in the weather system. That heat has got to go somewhere and it is making our weather more violent. Professor Glikson, from ANU, published material through the latter part of last year that showed that extreme weather events are increasing in frequency and intensity, very much as predicted. It showed that the number of cyclones has increased by a factor of about two in the last 30 years and floods by a factor of about three. This phenomenon is obviously not restricted to Australia. The year 2010 saw a string of extreme weather events, including heatwaves and fires in Russia, severe droughts in Brazil and Mexico, cyclones in the US and the Caribbean and floods in Pakistan, Western China and, of course, right here in Australia. We are all in this together. We have to remember—and this goes to Senator Macdonald’s point about how you use a one-off levy to tackle the rolling series of events that are overtaking us—that this is the age of climate change. This is what climate change is like at the beginning: we have these extreme weather events. It is not a question of whether an individual weather event can be tied to climate change or not. The fact is we are loading the dice and are making these things more frequent. There is no point asking if a particular fire has the fingerprints of climate change on it when we are changing our entire weather system.

I want to speak briefly about one of the funding proposals which the government put forward to help put together the package. The levy is only part of it; in fact the bulk of the funding is made up elsewhere. One of the more curious decisions, and one which we were very happy to see the government give a bit of ground on, was the proposal to cut the National Rental Affordability Scheme by almost a third, in order to fund five per cent of flood reconstruction costs in Queensland. That really came out of left field. I must admit we did not see that coming. Hidden in the fine print of the government’s reconstruction package was the inclusion of about $264 million swiped out of the budget for the National Rental Affordability Scheme. That was achieved by cutting the original target of 50,000 affordable properties to only 35,000. The proposal sparked an outcry in the affordable housing sector, and that was followed by a determination to have the program restored. We achieved that goal about a fortnight ago. How the proposal to kill NRAS came about in the first place is still a bit of a mystery. It was in contrast to the government’s original promise to treat NRAS as though it was a 10-year project and to double the target to 100,000 if the scheme was successful.

We thought it was a surreal proposition that we should be raiding funds for two of the most important emerging industries in Australia in this generation—that is, large-scale solar energy and affordable housing—for relatively minuscule budget savings. That is not to mention the irony of taking money out of one pot for building housing for the vulnerable and putting it into another pot ostensibly for building housing for the vulnerable. We know that the housing crisis and the housing shortage is just as sharp in Queensland as it is anywhere else. We strongly argued that more significant savings could be made in other areas of the budget, but in the end the proposal that we took to government was a fairly simple one: keep the target of 50,000 homes—50,000 incentives or residences—but extend the target date. The affordable housing sector stormed this building about a fortnight ago, during the last sitting week, and pointed out the happy coincidence, if you could call it that, that the construction timetable for NRAS was wildly ambitious and somewhat behind target. It can take up to two years for NRAS applicants to get approval and funding from the department and another two years to get planning approval for an inner city, high-density or multi-unit dwelling through state and territory planning systems. So the NRAS was actually subject to a delay not because it was failing but because it was succeeding and because applicants had started to hit something of a critical mass. The program is, therefore, a couple of years behind schedule, simply because of the long lead times involved in assembling project finance and planning approvals. That is not the sign of a failing program. We read it as a sign of success.

By simply extending the target date to 2015 the government will use funds earmarked for NRAS for disaster reconstruction and then restore NRAS funding from 2014-15 to achieve the original target of 50,000 dwellings. That is the agreement we reached with the government. It is not correct for Senator Macdonald to be adding that to some kind of imaginary total of funding that we clawed back from the government. We have restored the program and we have delayed its final implementation, but that is not a problem because this is a scheme that was running somewhat behind anyway. This has given us the opportunity to articulate the distressing level to which our housing system is simply broken: the current gap in affordable rental housing is roughly half a million dwellings, the achingly long waiting list to access social housing is just short of a quarter of a million dwellings, and the number of people who are currently homeless is perhaps 105,000 people, in one of the wealthiest countries in the world.

Something hidden in these figures that is well worth remembering is that this scheme was established to help an entirely new class of people who are now falling through the gaps: essential workers. NRAS was not a homelessness scheme. We are no longer just talking about our most needy or vulnerable when it comes to the housing crisis in Australia. We are talking about our nurses, teachers, and many other people earning under $60,000 who can no longer afford the average priced rental property. That is partly why this thing is such an important part of the housing landscape.

The community sector and private housing sector came out side-by-side for the same thing. In the last fortnight I was very pleased to stand alongside the Australian Council of Social Service, National Shelter, the National Affordable Housing Summit, the Housing Industry Association, the Community Housing Federation of Australia, the Combined Pensioners and Superannuants Association, the Benevolent Society, Mission Australia, the Property Council, BGC, a number of private affordable housing developers, and even former ANZ Chief Economist Saul Eslake.

While we can remind the government of the merits of long-term memory and of sticking by a fundamentally useful program, we also need to remember that in the scheme of things the $1 billion investment in NRAS, which is extremely welcome, vanishes in comparison to the more or less $50 billion spent annually on tax breaks provided to housing owners and investors through capital gains exemptions, negative gearing and so on. We have got this structural imbalance in the housing market and that is why we are having to work so hard to shorten these waiting lists. Add to this another $13 billion spent by the Commonwealth, states and territories on the first home owners grant in the last decade, and you can see how far we have dug ourselves into a structurally unfair system in which the demands of investors seeking increasing returns are pitted directly against the human right to affordable housing.

The Gillard government, to its credit, has listened to the considerable evidence that the scheme is working, that an affordable housing industry is emerging in Australia, and that the human right of an affordable home for all is well worth protecting. With those remarks I will close my comments on the flood levy. I look forward to participating, and the Australian Greens look forward to participating, in the inquiry into these bills, but we are hoping for a relatively speedy package so that the Commonwealth can do its bit to fund reconstruction in the disaster hit areas of Queensland and elsewhere.

(Quorum formed)

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Tax Laws Amendment (Temporary Flood and Cyclone Reconstruction Levy) Bill 2011 and the related bill. During the past few weeks and months the devastation caused by a series of natural disasters has been enormous. This has been aptly described by a number of people as a summer of misery, anguish and pain. Unless you have been directly affected or have actually seen the devastation, imagining the scale of this calamity is nigh on impossible. Certainly the graphic scenes on television, on the internet and on Facebook provide some insight, but the combined efforts of the floods and Cyclone Yasi, and on top of that the bushfires in Western Australia and floods further north in that state, have created a disaster almost beyond imagination. The floods in Queensland alone covered an area described as five times the size of Victoria or, as depicted by another, as large as the combined areas of the Netherlands, Belgium, France and Germany. And that does not reflect the destruction in New South Wales and the ongoing floods in Victoria. Even in my home state of Tasmania serious damage was caused by flooding. It was not on the scale of Queensland, but nevertheless this has been serious and has had a serious impact on many families, businesses and communities in Tasmania. So it is evident that many in this chamber know—either personally through family members, friends and neighbours or through constituents—people who have been affected by these disasters.

However, the worst aspect of these disasters is the loss of life—grandparents, parents, children, even babies. Families have been torn apart by these bizarre and horrific events. Australians are a stoic lot but the grief that has been felt across Australia is enormous. While we can rebuild after the damage, recover the property and allow life to eventually return to normal, lives are gone forever and it will have an enduring effect on those families and communities.

Millions of Australians have been affected not only directly by the loss of homes, businesses and properties but through hospitals which once cared for the people but are no longer there. Where do the children go to school in the short term? When roads are destroyed how do they get anywhere? The rail lines, which took produce to and from the markets, have also gone. Indirectly this will have an impact on all Australians. Huge production areas in the flood regions will take time to return to producing food and other commodities for all Australians. I do not wish to downplay the extraordinary emergency services that have provided shelter, food and support in these communities, but the long-term task of rebuilding has only just started. It will take months, even years. To date Australians have been extremely generous with their donations—approximately $200 million—and there has been assistance from various other state service organisations and individual efforts.

Australians have a long tradition of helping each other in times of adversity. I do not recall anyone refusing to assist in managing the recent bushfires in New South Wales or, more recently, in Victoria. The reverse is what I remember. There were offers of assistance from across Australia. If this were not true we would not have the substantial public donations that have been received to date. I know many such individual donations from Tasmania. For example, the mother of one of my staff, a pensioner, donated $1,000 of her meagre savings. This desire of Australians to pull together is something that the coalition just simply do not understand. The true Aussie spirit has emerged stronger than ever for the majority of Australians. There is so much to do—schools to be rebuilt, roads to be repaired or reconstructed, rail lines to be re-established, and hospitals to be returned to operational status to provide care in their communities. There is a seemingly endless list of what has to be done. There is emergency relief in place. The Australian Taxation Office is implementing support strategies such as allowing extra time to lodge tax statements, providing payments, and even helping to reconstruct tax records that have been lost. Centrelink has sent thousands of extra staff to assist families affected by the devastation to at least begin to manage their situations and start the long process of recovery.

As I said earlier, this is only the start. How do we manage the estimated recovery cost of $5.6 billion? A responsible government cannot throw its hands in the air and cry, ‘Disaster, disaster—let’s stop managing the country; forget about the future,’ because that is what I hear from those opposite. Mind you, it is hardly surprising. Australia is lucky that the Labor government, with the assistance of Independent members and the Greens, are collectively able to see the rabble that the coalition are. We are managing this country. If the coalition had been left to manage the global financial crisis, Australia would have had another type of disaster, and certainly not one caused by natural events but by a monetary incapacity. Australia would have been in recession and the very low levels of unemployment would have been much higher instead of the current high employment levels we are now experiencing. We would have been poorly positioned to recover and compete internationally. If you recall it was those opposite who said, ‘Put your head in the sand, sit back and let’s wait and see what happens.’ That is their record.

The government’s response to the current situation is balanced. We recognise the need to rebuild large parts of this country and we are also aware of the present and future needs of the Australian economy. Sound business practices say that we should pay as we go in an economy that is growing strongly. Despite the damage caused by these disasters the economy will be returning to capacity in 2011-12. As an example, there are $360 billion in mining projects for the future and wages are at healthy levels. Realistically, skills shortages will be an issue, especially with the recovery program that will be necessary. As we enter 2012-13 these pressures will continue to exist, which is why it is important that it be a return-to-surplus year. We do not intend to make the same mistakes of the Howard government between 2004 and 2007. The demand for labour and materials for reconstruction will increase the need for fiscal moderation in the coming years. That is why the solution being provided by the Labor government is what Australians need—and it is balanced.

Some spending programs will be cut. From time to time priorities do need to be reassessed. This is one of these times. Programs cannot be set in concrete because times and circumstances change. There is always a need to deal with such changes. Some infrastructure programs are being deferred—not scrapped, deferred; they do not mean the same thing. Once again there is a need to reprioritise our spending and to recognise that there is not an infinite number of skilled workers who can perform magic by working in more than one place at a time. Reconstruction and recovery must occur, not just for the families, the businesses and the communities that have been affected but for the benefit of all Australians.

Applying a one-off, 12-month, temporary levy is to raise $1.8 billion to assist with the recovery. It is approximately one-third of the cost of the recovery program. This is part of the balanced approach reported earlier. It takes into consideration the current economic circumstances, expectations of the future and the immediate need to get Australia fully functioning again. The levy has received most of its attention from the coalition. I have not had one person from the community, not one fair-minded Australian, complain about this levy. Why? Because politicking is the sole concern of those opposite. They are not even worried about the hypocrisy, the double standards and their inability to count. They do not care when their single concern is opposing everything.

The Labor government has recognised that there is not an equal ability of all Australians to contribute to the recovery at the same rate. It is called fairness, which is not a word in the vocabulary of those opposite. That is why there are exemptions for some people such as those who have received an Australian government disaster payment, and those who were affected by a declared disaster and meet at least one of the eligibility criteria for an Australian disaster recovery payment, even if they have not received a payment. Also exempt are New Zealand special class visa holders who have been technically ineligible for Australian government disaster recovery payments but who have received an ex gratia natural disaster payment.

But we have not forgotten about the Australian population. Remember, we are talking about taxable annual income in 2011 and 2012. This levy targets those who can afford to pay to ensure that unnecessary cuts are not made to important programs. These are not draconian imposts. About 50 per cent of taxpayers will pay nothing, over 60 per cent will pay less than $1 per week, over 70 per cent will pay less than $2 per week and over 85 per cent will pay less than $5 per week.

What do we hear from our opponents? ‘Australians can’t afford levies. Levies are not economically responsible. We can make other savings in our economy.’ This seems to be a new tune that the opposition are playing. I remind you that, during the Howard years, in 1996-97 we had the firearms buyback levy and the introduction of the superannuation surcharge, in 1998-99 the stevedoring levy, in 1999-2000 the dairy industry levy, in 2001 and 2002 the Ansett levy, in 2003-04 the sugar levy, and in 2004-05 the Newcastle disaster levy. Were they concerned about the financial implications for the Australian community then? No, absolutely not.

Let us just look at the levies year by year. In 1996, we had the firearms levy and the superannuation surcharge; in 1997, the firearms levy and the superannuation surcharge; in 1998, the superannuation surcharge; in 1999, the stevedoring levy and the superannuation surcharge; in 2000, the stevedoring levy, the milk levy, the East Timor levy and the superannuation surcharge; in 2001, the stevedoring levy, the milk levy, the East Timor levy, the Ansett levy and the superannuation levy; in 2002, the stevedoring levy, the milk levy, the Ansett levy and the superannuation surcharge; and, in 2003, the stevedoring levy, the milk levy, the Ansett levy, the sugar levy and the superannuation surcharge. In 2004, what did we have? We had the stevedoring levy, the milk levy, the sugar levy and the superannuation levy. In 2005, we had the stevedoring levy, the milk levy, the sugar levy and the superannuation levy. In 2006—oh, we only had three levies. We had the stevedoring levy, the milk levy and the sugar levy. In 2007 we only had one levy, and that was the milk levy.

Were these levies one-offs? No, not all of them—rarely. Was the budget ever in surplus other than in 1996-97? It was always in surplus, but we still had the levies. Were any of these levies in response to a natural disaster affecting thousands of people? No, no and no. In fairness, I would agree that the motivation for the firearms buyback levy and the Ansett levy could be considered altruistic. The others were driven by political ideology with no regard for the Australian community and its financial capacity. Mind you, they did contribute to funds for the election pork-barrelling of the Howard years. However, the list does not end there. How were the coalition going to fund their parental leave program? With a $6 billion levy over two years!

Here is a quick summary of the litany of economic opposition for purely political purposes. First, there are those proposed election campaign promises: a $10.6 billion black hole. Then there are savings of $5.2 billion blocked in both houses, close to $2 billion in savings blocked by opposing Pharmaceutical Benefits Scheme reforms, and $700 million of savings double-counted in their flood response. After weeks of claiming that the NBN could provide savings, it did not appear in their list of savings. Did someone tell them that there were not real savings, or did they work it out for themselves? There were two private senators’ bills in the Senate that would have cost $500 million if passed. The politicians who are now vehemently opposing this levy are predominantly the same politicians who showed absolutely no concern during the 11 long years of the Howard government. Have they changed? I cannot see any signs of that, and I do not believe the Australian public can.

The Liberal Premier of Western Australia said:

I believe most Australians, most West Australians, are willing to contribute a little bit more to help Queensland get back on its feet.

The Australian Council of Social Service said:

Overall we are pleased that the Federal Government has acted quickly to support the vital reconstruction efforts of the Queensland Government and support the idea that all Australians with the means to contribute to this effort do so through a flood disaster levy …

The Salvation Army said:

All Australians need to share something of the burden and the horror that’s happened to so many in Queensland, and the way that the levy has been established, it takes the burden away from low-income earners.

The President of AgForce in Queensland said:

… given the enormity of what’s happened, with this natural disaster, anything that can help to get rural and regional Queensland, back up and running, we would support …

Finally, an editorial in the Australian newspaper—and we on this side know how much the opposition rely on the Australian for their political motivations, particularly in their strategies during question times here in the Senate—said:

… the imposition of the levy is reasonable and responsible.

You cannot get any more categorical an endorsement than the support of the Australian newspaper. I know there are other issues that require consideration—the handling of future natural disasters, insurance practices, different jurisdictions and others—but these bills need to be passed and they need to be passed now.

As someone who was affected, not as directly as some in this chamber, as I had family involved in the cyclone and affected by the flooding in Queensland, I think it is important that we acknowledge all of those who rallied and demonstrated the very true Aussie spirit of getting together. I noted the call from the Brisbane mayor calling for support and the thousands of people who put on their gumboots, sunscreen and insect repellent and picked up their brooms and shovels and went to the aid of their fellow neighbours. To me that is what the Australian community spirit is all about. I want to place on record my appreciation as I had a daughter, her husband and their two little children survive the cyclone. Thank goodness they were not as affected as some others, but their home and property did suffer structural damage. That neighbourly spirit—that spirit that Australians demonstrate over and over again when there is a natural disaster—was there at the forefront when we had our young people looking out for our old, when we had neighbour looking out for neighbour. These are the great qualities that we as Australians should all be immensely proud of. So I urge those opposite to reconsider their position on this very important legislation and to demonstrate they are not just knockers and they are not in the mode of opposition that opposes everything that comes into this chamber. I urge those on the other side to do the right thing and support this legislation, to help the government take the action that is needed. I highly commend it to this chamber.

Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

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?

Kate Lundy (ACT, Australian Labor Party, Parliamentary Secretary to the Prime Minister) Share this | Link to this | Hansard source

Where will these cuts go?

Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

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.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

She needs to get out and talk to her constituents.

Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

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

Mark Furner (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

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

Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

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.

Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak to the bills relating to the temporary flood reconstruction levy. In doing so I acknowledge the people of Australia for their generous spirit and willingness to help fellow Australians during the natural disasters which have recently beset our nation.

The damage caused by the recent flooding is unprecedented and the task of rebuilding is significant. We all know this. The donations made by generous Australians and the flood levy funding are two very different things. Donations are Australians helping Australians, and they have been generous, from both individuals and companies. The money from these donations will go to helping Australians and Australian families and small businesses rebuild their houses and restart their businesses.

As a nation which does not turn its back on our fellow citizens, our neighbours or shirk the hard yards, we must now fully face the destruction and devastation and rebuild lives, homes, businesses and infrastructure. We want devastated communities to get back on their feet and in true Australian style we are all willing to pitch in. The Commonwealth has an important responsibility to make sure that our essential economic infrastructure is rebuilt. All Australians understand that tough decisions are in order as we work to fix damaged roads, bridges, railways and public infrastructure. That is a different job and we acknowledge that it is a huge and expensive task.

The costs to the Commonwealth from this disaster are expected to be about $5.6 billion. We will need to meet two-thirds of these costs by reprioritising existing spending. The remainder will come through this essential flood levy so that we can properly finance the rebuilding that needs to be done following the floods. This levy is an important part of the reconstruction and it will raise an estimated $1.8 billion towards flood recovery. It will be achieved through 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.

Under the government’s plan, a levy of 0.5 per cent will be imposed in the 2011-12 income year for taxpayers who earn over $50,000. A levy of one per cent will be applied on the part of the taxpayer’s income above $100,000. The levy will be paid through tax taken out of regular pay packets in the same way that people pay the Medicare levy. This ensures that taxpayers will not receive a tax bill at the end of the financial year. Taxpayers who earn less than $50,000 in 2011-12 or who are exempt for other reasons will not pay the levy.

To put the payment in perspective, it is significant to note that 60 per cent of taxpayers will pay less than a dollar a week. A person earning $65,000 a year will pay just $1.44 for the levy. A taxpayer on $80,000 a year will be asked to sacrifice $2.88 a week—less than the price of a cup of coffee in most outlets. Of course, people in flood affected areas who have received the Australian government disaster recovery payment for a flood event in 2010-11 will not have to pay the levy. The levy does not apply to businesses.

It is important to note that the Gillard government has also established the Australian government Reconstruction Inspectorate. This body will oversee strict new oversight and accountability provisions to ensure value for money is delivered in the massive task of rebuilding flood ravaged regions. The Gillard government wants to make sure that every cent of our flood rebuilding package goes where it is needed and we are determined to get value for taxpayers’ dollars.

States will be required to provide independently audited financial statements to support any claim for infrastructure rebuilding, including verification of spending against any advance payments made. The board of the Queensland Reconstruction Authority will also include two federal appointees, and the inspectorate will work closely with state authorities to provide an additional level of checks and balances for the expenditure of funds.

It is evident that the Gillard government is getting on with the very important task of helping fellow Australians through strong leadership and an effective plan for how we can all help. I have to say that I am particularly disappointed that those opposite do not have the same priorities. The opposition is not concentrating first and foremost on those who are suffering and need immediate help. It looks not only disorganised and fragmented but also mean-spirited when it comes to offering a hand to Australians in dire need as a result of these horrendous floods.

In stark contrast to those opposite, I am proud to say that the majority of Australians have opened their hearts and accepted the need to pull together to help fellow Australians. Australians are always happy to help fellow citizens in so many ways: emotionally, financially and physically. It is part of our national psyche to offer a hand. Australians dig deep for each other in hard times and they overwhelmingly know that this levy is needed to rebuild flood affected regions. They understand that the reconstruction is going to take a lot of time and dollars and that even though the federal government has made big cuts to the budget, the levy is essential. They understand that the impact of recent disasters on our farmers and agricultural production has been huge. Queensland is responsible for one-third of our fruit and vegetable production. Our tourism industry was already under pressure as a result of the high Australian dollar and even more so after the floods in Queensland. There are also the flow-on effects on other businesses.

The Gillard government is on track with a mature and effective solution which does not entail absurd and incorrect savings such as those put forward by the opposition. Even the shadow Treasurer admitted his own savings were not enough to cover the estimated damage bill from the January floods. The Liberal Party has suggested cuts to BER projects. Which school project does the opposition think we need to abandon? The opposition also put forward cuts in aid to Indonesia as part of its alternative to a flood levy.

The Gillard government’s view is very different. We say there is no need to cut Australia’s aid program or our spending on defence and counterterrorism because we know that these measures help to keep Australia safe and secure. Our aid program is an investment in Australia’s security. Tackling poverty in our region also means tackling the root causes of conflict and terrorism. Our aid program also helps nations improve law and order, prevent and recover from conflict, and manage a range of transnational threats such as people trafficking, illicit drugs, HIV-AIDS and other communicable diseases. Our longstanding aid program serves our national interest by creating a more secure, stable and economically prosperous region.

Paying for the reconstruction in the considered way outlined by the government is the right thing to do. The impact of the floods is devastating.

Debate interrupted.